Document:

Exhibit 10.37

 

 

AGREEMENT AND PLAN OF MERGER

 

by and among

 

SANTOS INTERNATIONAL HOLDINGS PTY LTD.

 

SANTOS ACQUISITION CO.

 

and

 

TIPPERARY CORPORATION

 

dated as of

 

July 1, 2005

 

 

 

TABLE OF CONTENTS

 

 

	
  ARTICLE I [RESERVED]

  	
   

  
	
   

  	
   

  
	
  ARTICLE
  II THE MERGER

  	
   

  
	
   

  	
   

  
	
  2.1

  	
  The
  Merger

  	
   

  
	
  2.2

  	
  Effective
  Time

  	
   

  
	
  2.3

  	
  Effects
  of the Merger

  	
   

  
	
  2.4

  	
  Articles
  of Incorporation and Bylaws

  	
   

  
	
  2.5

  	
  Directors
  and Officers of the Surviving Corporation

  	
   

  
	
  2.6

  	
  The
  Shareholders’ Meeting

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  III CONVERSION OF SECURITIES

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Effect
  on Capital Stock

  	
   

  
	
  3.2

  	
  Surrender
  and Payment

  	
   

  
	
  3.3

  	
  Treatment
  of Stock Options and Warrants

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY 8

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Organization

  	
   

  
	
  4.2

  	
  Capitalization

  	
   

  
	
  4.3

  	
  Authorization;
  Validity of Agreement

  	
   

  
	
  4.4

  	
  No
  Violations; Approvals

  	
   

  
	
  4.5

  	
  SEC
  Reports and Financial Statements

  	
   

  
	
  4.6

  	
  Absence
  of Certain Changes

  	
   

  
	
  4.7

  	
  Absence
  of Undisclosed Liabilities

  	
   

  
	
  4.8

  	
  Information
  to Be Supplied

  	
   

  
	
  4.9

  	
  Employee
  Benefit Plans; ERISA

  	
   

  
	
  4.10

  	
  Litigation;
  Compliance with Law

  	
   

  
	
  4.11

  	
  Intellectual
  Property

  	
   

  
	
  4.12

  	
  Material
  Contracts

  	
   

  
	
  4.13

  	
  Properties

  	
   

  
	
  4.14

  	
  Taxes

  	
   

  
	
  4.15

  	
  Environmental Matters

  	
   

  
	
  4.16

  	
  Investment Company

  	
   

  
	
  4.17

  	
  Public Utility Holding
  Company Act

  	
   

  
	
  4.18

  	
  Required Vote by Company
  Shareholders

  	
   

  
	
  4.19

  	
  Brokers

  	
   

  
	
  4.20

  	
  Article 13.03 of the TBCA

  	
   

  
	
  4.21

  	
  Oil and Gas

  	
   

  
	
  4.22

  	
  Recommendation of Company
  Board of Directors; Opinion of Financial Advisor

  	
   

  

 

 

	
  4.23

  	
  Affiliate Transactions

  	
   

  
	
  4.24

  	
  Derivative
  Transactions and Hedging

  	
   

  
	
  4.25

  	
  Insurance

  	
   

  
	
  4.26

  	
  No
  Other Representations or Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  V REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Organization

  	
   

  
	
  5.2

  	
  Authorization;
  Validity of Agreement

  	
   

  
	
  5.3

  	
  Consents
  and Approvals; No Violations

  	
   

  
	
  5.4

  	
  Information to be Supplied

  	
   

  
	
  5.5

  	
  Interim
  Operations of Merger Sub

  	
   

  
	
  5.6

  	
  Financing

  	
   

  
	
  5.7

  	
  Beneficial
  Ownership of Shares

  	
   

  
	
  5.8

  	
  Brokers

  	
   

  
	
  5.9

  	
  No
  Other Representations or Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Interim
  Operations of the Company

  	
   

  
	
  6.2

  	
  Acquisition Proposals

  	
   

  
	
  6.3

  	
  Access to Information

  	
   

  
	
  6.4

  	
  Further
  Action; Reasonable Best Efforts

  	
   

  
	
  6.5

  	
  Directors’
  and Officers’ Insurance and Indemnification

  	
   

  
	
  6.6

  	
  Publicity

  	
   

  
	
  6.7

  	
  Merger Sub

  	
   

  
	
  6.8

  	
  Employee Benefits

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  VII CONDITIONS TO MERGER

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Conditions
  to Each Party’s Obligation To Effect the Merger

  	
   

  
	
  7.2

  	
  Conditions
  to the Obligation of the Company to Effect the Merger

  	
   

  
	
  7.3

  	
  Conditions
  to Obligations of Purchaser and Merger Sub to Effect the Merger

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII TERMINATION

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Termination

  	
   

  
	
  8.2

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Fees and Expenses

  	
   

  
	
  9.2

  	
  Amendment; No Waiver

  	
   

  
	
  9.3

  	
  Survival

  	
   

  
	
  9.4

  	
  Notices

  	
   

  
	
  9.5

  	
  Interpretation;
  Definitions

  	
   

  
	
  9.6

  	
  Headings; Schedules

  	
   

  

 

iii

 

	
  9.7

  	
  Counterparts

  	
   

  
	
  9.8

  	
  Entire Agreement

  	
   

  
	
  9.9

  	
  Severability

  	
   

  
	
  9.10

  	
  Governing Law

  	
   

  
	
  9.11

  	
  Assignment

  	
   

  
	
  9.12

  	
  Parties in Interest

  	
   

  

 

iv

 

TABLE OF DEFINED TERMS

 

	
  Affiliates

  	
  46

  
	
  Agreement

  	
  1

  
	
  Applicable
  Laws

  	
  7

  
	
  Article 5.12

  	
  4

  
	
  Articles of
  Incorporation

  	
  2

  
	
  Articles of
  Merger

  	
  2

  
	
  beneficial
  ownership

  	
  46

  
	
  Board

  	
  1

  
	
  Business Day

  	
  47

  
	
  Bylaws

  	
  2

  
	
  Certificate

  	
  4

  
	
  Certificate
  of Merger

  	
  2

  
	
  Closing

  	
  2

  
	
  Closing Date

  	
  2

  
	
  Code

  	
  47

  
	
  Company

  	
  1

  
	
  Company
  Articles

  	
  2

  
	
  Company
  Balance Sheet

  	
  14

  
	
  Company
  Bylaws

  	
  2

  
	
  Company
  Common Stock

  	
  1

  
	
  Company
  Cumulative Preferred Stock

  	
  9

  
	
  Company
  Disclosure Letter

  	
  8

  
	
  Company
  Employee

  	
  39

  
	
  Company
  Material Contracts

  	
  20

  
	
  Company
  Non-Cumulative Preferred Stock

  	
  9

  
	
  Company
  Preferred Stock

  	
  9

  
	
  Company
  Properties

  	
  21

  
	
  Company
  Property

  	
  21

  
	
  Company SEC
  Documents

  	
  12

  
	
  Dissenting
  Shares

  	
  5

  
	
  Effective
  Time

  	
  2

  
	
  Environmental
  Claim

  	
  48

  
	
  Environmental
  Laws

  	
  48

  
	
  Exchange Act

  	
  12

  
	
  Exchange
  Fund

  	
  6

  
	
  GAAP

  	
  13

  
	
  Governmental
  Entity

  	
  12

  
	
  Hazardous
  Substance

  	
  48

  
	
  Intellectual
  Property

  	
  19

  
	
  Leased
  Properties

  	
  21

  
	
  Leased
  Property

  	
  21

  
	
  Liens

  	
  10

  
	
  Litigation

  	
  48

  
	
  Material
  Adverse Effect

  	
  49

  
	
  Merger
  Consideration

  	
  5

  
	
  Merger Sub

  	
  1

  
	
  Merger Sub
  Common Stock

  	
  4

  
	
  Outside Date

  	
  42

  
	
  Owned
  Properties

  	
  21

  
	
  Owned
  Property

  	
  20

  
	
  Parent

  	
  1

  
	
  Paying Agent

  	
  6

  
	
  Permitted
  Exceptions

  	
  49

  
	
  Person

  	
  50

  
	
  Proxy
  Statement

  	
  3

  
	
  Purchaser

  	
  1

  
	
  Release

  	
  50

  
	
  Required
  Vote

  	
  24

  
	
  Return

  	
  50

  
	
  SEC

  	
  3

  
	
  Secretary of
  State

  	
  2

  
	
  Securities
  Act

  	
  12

  
	
  Shareholders’
  Meeting

  	
  3

  
	
  Stock Option
  Agreements

  	
  8

  
	
  Stock
  Options

  	
  8

  
	
  Subsidiary

  	
  50

  
	
  Surviving
  Corporation

  	
  2

  
	
  Tax

  	
  50

  
	
  Taxes

  	
  50

  
	
  TBCA

  	
  1

  
	
  Termination
  Fee

  	
  44

  
	
  Third Party
  Acquisition Event

  	
  50

  
	
  Warrant
  Agreements

  	
  8

  
	
  Warrants

  	
  8

  

 

v

 

AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER, dated as of July 1, 2005 (this “Agreement”),
by and among Tipperary Corporation, a Texas corporation (the “Company”), Santos International Holdings Pty Ltd., a
corporation incorporated under the laws of the Australian Capital Territory
A.B.N. 57 057 585 869 (“Purchaser”), and Santos Acquisition Co., a Texas
corporation and wholly-owned Subsidiary of Purchaser (“Merger Sub”).

 

WHEREAS, the Boards of Directors of each of the Company, Purchaser and
Merger Sub have each approved this Agreement and the merger of the Company with
and into Merger Sub (the “Merger”), upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the Texas
Business Corporation Act, as amended (the “TBCA”);

 

WHEREAS, the Board of Directors of the Company (the “Board”) has
determined that the Merger is fair to, and in the best interest of, its
shareholders; and

 

WHEREAS, Slough Estates USA, Inc., a Delaware corporation (“SUSA”), is
the beneficial owner of approximately 53.64% of the issued and outstanding
common stock, U.S.$0.02 par value, of the Company (the “Company Common Stock”),
and simultaneously with the execution and delivery of this Agreement, and as a
condition and inducement to Purchaser’s willingness to enter into this
Agreement, Slough Estates plc, a public limited company organized under the
laws of England and Wales and the ultimate parent of SUSA, has entered into an Interest
Purchase Agreement (the “IPA”) providing for certain matters with respect to
its shares of Company Common Stock and certain other actions relating to the Merger
and the other transactions contemplated by this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:

 

ARTICLE I

 

[RESERVED]

 

ARTICLE II

 

THE MERGER

 

2.1           The Merger.

 

Upon the terms
and subject to the conditions of this Agreement, and in accordance with the
provisions of the TBCA, Santos Ltd., a corporation incorporated under the laws
of South Australia (“Parent”), shall cause Merger Sub to be merged with and
into the Company at the Effective Time. 
As a result of the Merger, the separate

 

1

 

corporate
existence of Merger Sub shall cease and the Company shall continue its
existence as a wholly owned Subsidiary of Purchaser.  The Company, in its capacity as the
corporation surviving the Merger, is hereinafter sometimes referred to as the “Surviving
Corporation”.  Without limiting the
generality of the foregoing, upon the Merger, all the rights, privileges,
immunities, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation and all the obligations, duties, debts and
liabilities of the Company and Merger Sub shall be the obligations, duties,
debts and liabilities of the Surviving Corporation.

 

2.2           Effective Time.

 

As promptly as
possible on the Closing Date, the parties hereto shall cause the Merger to be
consummated by delivering to the Secretary of State of the State of Texas (the “Secretary
of State”) articles of merger (the “Articles of Merger”) in such form as is
required by and executed in accordance with Article 5.04 of the TBCA.  The Merger shall become effective when a
certificate of merger (the “Certificate of Merger”) is issued to the Surviving
Corporation by the Secretary of State or at such later time as shall be agreed
upon by Purchaser and the Company and specified in the Articles of Merger (the “Effective
Time”).  Prior to the filing referred to
in this Section 2.2 and unless this Agreement shall have been terminated and
the transactions contemplated herein abandoned pursuant to Section 8.1, a
closing (the “Closing”) shall be held at 10:00 a.m., Houston time, on a date to
be specified by the parties hereto, which shall be no later than the Business
Day after satisfaction or waiver (by the party entitled to waive the condition)
of all of the conditions set forth in Article VII (except for those conditions
that can by their nature be satisfied only at the time of the Closing), but
subject to the satisfaction or waiver of those conditions) (the “Closing Date”),
at the offices of Chamberlain, Hrdlicka, White, Williams & Martin, 1200
Smith Street, Suite 1400, Houston, Texas 77002, unless another date and/or
place is agreed to in writing by the parties hereto.

 

2.3           Effects of the Merger.

 

From and after
the Effective Time, the Merger shall have the effects set forth in Article 5.06
of the TBCA.

 

2.4           Articles of Incorporation and Bylaws.

 

Pursuant to
the Merger, (a) the Company’s Articles of Incorporation, as in effect on the
date of this Agreement (the “Company Articles”), shall be the Articles of
Incorporation of the Surviving Corporation (the “Articles of Incorporation”)
until thereafter changed or amended as provided therein or by Applicable Law,
and (b) the Company’s Bylaws, as in effect on the date of this Agreement (the “Company
Bylaws”), shall be the Bylaws of the Surviving Corporation (the “Bylaws”) until
thereafter changed or amended as provided therein or by Applicable Law.

 

2.5           Directors and Officers of the Surviving Corporation.

 

From and after
the Effective Time, (a) the directors of Merger Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the

 

2

 

directors of the Surviving
Corporation until their successors shall have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in
accordance with the Articles of Incorporation and the Bylaws and (b) the
officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.

 

2.6           The Shareholders’ Meeting.

 

(a)       As promptly as practicable after the
execution of this Agreement, the Company shall, in accordance with Applicable
Law and the Company Articles and the Company Bylaws:

 

(i)    duly call, give notice of, convene and hold a special
meeting of the holders of shares of Company Common Stock for the sole purpose
of considering and voting upon approval of the Merger, this Agreement and the
transactions contemplated by this Agreement (such meeting, including any
postponement or adjournment thereof, is referred to as the “Shareholders’
Meeting”), and shall use its reasonable best efforts to hold the Shareholders’
Meeting no later than 45 days after such date; and

 

(ii)   prepare and file with the Securities and Exchange
Commission (the “SEC”) a preliminary proxy or information statement relating to
this Agreement, and take all lawful actions to obtain and furnish the
information required to be included by the SEC in the Proxy Statement, and,
after consultation with Purchaser, to respond promptly to any comments made by
the SEC or the staff of the SEC (the “SEC Staff”) with respect to the
preliminary proxy or information statement and cause a definitive proxy or
information statement (together with any amendments or supplements thereto, the
“Proxy Statement”) to be mailed to the holders of shares of Company Common
Stock as soon as practicable, which Proxy Statement shall include all
information required under Applicable Laws to be furnished to the holders of
shares of Company Common Stock in connection with the Merger and the
transactions contemplated by this Agreement; and

 

(iii)  include in the Proxy Statement the
recommendation of the Board to the extent not previously withdrawn in
compliance with Section 6.2(e).

 

(b)       The Company shall promptly notify
Purchaser of any comments from the SEC Staff with respect to the Proxy Statement
or any request of the SEC Staff for additional information and shall supply
Purchaser with copies of all correspondence between the Company or its
representatives, on the one hand, and the SEC Staff, on the other hand, with
respect to the Proxy Statement.

 

(c)      Except as otherwise provided in
Section 6.2, the Company, acting through the its board of directors, shall (i)
recommend adoption of this Agreement

 

3

 

and include in the Proxy Statement such
recommendation and (ii) use its reasonable best efforts to solicit and obtain
such adoption.  Notwithstanding any
Company Adverse Recommendation Change or the commencement, public proposal,
public disclosure or communication to the Company of any Acquisition Proposal
with respect to the Company or any of its Subsidiaries, or any other fact or
circumstance, the Company shall submit this Agreement to the shareholders of
the Company at the Shareholders’ Meeting for the purpose of adopting this
Agreement, with such disclosures as shall be required by Applicable Law.  At any such Shareholders’ Meeting following
any such withdrawal, amendment or modification of the recommendation of this
Agreement by the Company’s board of directors, the Company may submit this Agreement
to its shareholders without a recommendation or with a negative recommendation
(although the approval of this Agreement by the Company’s board of directors
may not be rescinded or amended), in which event the Company’s board of
directors may communicate the basis for its lack of a recommendation or
negative recommendation to its shareholders in the Proxy Statement or an
appropriate amendment or supplement thereto.

 

ARTICLE III

 

CONVERSION OF SECURITIES

 

3.1           Effect on Capital Stock.

 

At the
Effective Time, by virtue of the Merger and without any action on the part of
Purchaser, Merger Sub or the Company or their respective shareholders and
shareholders, as applicable:

 

(a)       Each share of common stock, par
value U.S.$1.00 per share, of Merger Sub (“Merger Sub Common Stock”) issued and
outstanding immediately prior to the Effective Time shall be converted into one
fully paid and nonassessable share of common stock, par value U.S.$0.02 per
share, of the Surviving Corporation. 
Such newly issued shares shall thereafter constitute all of the issued
and outstanding Surviving Corporation capital stock.

 

(b)       Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time, excluding any
shares of Company Common Stock owned by Purchaser, Merger Sub or the Company or
any of their respective Subsidiaries or any shareholders properly exercising
rights to dissent pursuant to Article 5.12 of the TBCA (“Article 5.12”), as
provided in Section 3.1(d), shall be converted into and represent the right to
receive in cash, without interest, an amount equal to the Merger
Consideration.  At the Effective Time,
all shares of Company Common Stock shall no longer be outstanding and
automatically shall be cancelled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any shares
of Company Common Stock (a “Certificate”) shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration or in the
case of holders of Dissenting Shares the right to receive the applicable
payments set forth in Section 3.1(d).

 

4

 

(c)       Each share of the Company capital
stock held in the treasury of the Company automatically shall be cancelled and
retired and no payment shall be made in respect thereof. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
that is owned by Purchaser or any of its Subsidiaries shall be cancelled and
retired and no payment shall be made in respect thereof.

 

(d)       Notwithstanding anything in this
Agreement to the contrary, the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by any holder
of Company Common Stock that is entitled to demand and properly demands payment
of the fair value of such shares of Company Common Stock pursuant to, and that
complies in all respects with, the provisions of Article 5.12 (the “Dissenting
Shares”) shall not be converted into the right to receive the Merger
Consideration as provided in Section 3.1(b), but, instead, such holder of
Company Common Stock shall be entitled to such rights (but only such rights) as
are granted by Article 5.12.  At the
Effective Time, all Dissenting Shares shall no longer be outstanding and
automatically shall be cancelled and shall cease to exist, and, except as
otherwise provided by Applicable Laws, each holder of Dissenting Shares shall
cease to have any rights with respect to the Dissenting Shares, other than such
rights as are granted by Article 5.12. 
Notwithstanding the foregoing, if any such holder of shares of Company
Common Stock (i) shall have failed to establish entitlement to relief as a
dissenting shareholder as provided in Article 5.12, (ii) shall have effectively
withdrawn demand for relief as a dissenting shareholder with respect to such
Dissenting Shares or lost the right to relief as a dissenting shareholder and
payment for such Dissenting Shares under Article 5.12, or (iii) shall have
failed to file a complaint with the appropriate court seeking relief as to the
determination of the value of all such Dissenting Shares within the time
provided in Article 5.12, such holder of Company Common Stock shall forfeit or,
in the event a court of competent jurisdiction shall determine that holder of
Company Common Stock is not entitled to the relief provided by Article 5.12,
lose the right to relief as a dissenting shareholder with respect to such
Dissenting Shares, and such Dissenting Shares shall be deemed to have been
converted at the Effective Time into, and shall have become, the right to
receive the Merger Consideration as provided in Section 3.1(b) without
interest.  The Company shall give prompt
notice to Purchaser of any demands for appraisal of any shares of Company
Common Stock and any attempted withdrawals of such demands and any other
instruments served pursuant to the TBCA and received by the Company relating to
shareholder dissent rights, and Purchaser shall have the opportunity to participate
in all negotiations and proceedings with respect to such demands.  Prior to the Effective Time, the Company
shall not, without the prior written consent of Purchaser, make any payment
with respect to, or settle or offer to settle, any such demands, or agree to do
any of the foregoing.

 

(e)       The “Merger Consideration” shall be
an amount equal to $7.41 cash per share of Company Common Stock.

 

5

 

3.2           Surrender and Payment.

 

(a)       Paying Agent and Exchange Fund. 
Prior to the Effective Time, on behalf of the holders of shares of
Company Common Stock, Purchaser shall designate, or shall cause to be
designated Morgan Guaranty & Trust Co. or another bank or trust company
reasonably acceptable to the Company to act as agent for the payment of the
Merger Consideration in respect of Certificates, upon surrender of such
Certificates in accordance with this Article III from time to time after the
Effective Time (the “Paying Agent”). 
Prior to the Effective Time, Parent shall deposit, or cause Purchaser or
Merger Sub to deposit, with the Paying Agent cash in amounts sufficient for the
payment of the Merger Consideration pursuant to Section 3.1(b) upon surrender
of such Certificates (such cash, the “Exchange Fund”).  The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Purchaser, on a daily basis,
provided that no such investment shall affect Purchaser’s obligation to pay the
Merger Consideration in accordance with the terms of this Agreement.  Any portion of the Exchange Fund (including
any interest and other income resulting from investments of the Exchange Fund)
that remains undistributed to the holders of shares of Company Common Stock one
year after the date of the mailing required by Section 3.2(b) shall be
delivered to Purchaser, upon demand by Purchaser, and holders of Certificates
that have not theretofore complied with this Section 3.2 shall thereafter look
only to Purchaser for payment of any claim to the Merger Consideration.

 

(b)       Exchange Procedure. 
As soon as reasonably practicable after the Effective Time, Purchaser
shall instruct the Paying Agent to mail to each holder of record of a
Certificate which immediately prior to the Effective Time represented outstanding
shares of Company Common Stock (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
held by such holder of Company Common Stock shall pass, only upon proper
delivery of the Certificates to the Paying Agent and shall be in such form and
have such other provisions as Purchaser may reasonably specify), and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration.  Upon
surrender of a Certificate for cancellation to the Paying Agent or to such
other agent or agents as may be reasonably appointed by Purchaser, together
with such letter of transmittal, duly completed and validly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder
of such Certificate shall be entitled to receive in exchange therefor the
amount of cash into which the shares of Company Common Stock formerly
represented by the Certificate shall have been converted pursuant to Section 3.1(b),
and the Certificate so surrendered shall be cancelled.  In the event of a transfer of ownership of
Company Common Stock that is not registered in the stock transfer books of the
Company, the proper amount of cash may be paid in exchange therefor to a Person
other than the Person in whose name the Certificate so surrendered is
registered if the Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such payment shall pay any
transfer or other Taxes required by reason of the payment to a Person other
than the registered holder of the Certificate or establish to the reasonable
satisfaction of Purchaser that the Tax has been paid or is not applicable.  No interest shall be paid or shall accrue on
any Merger Consideration, cash in lieu of fractional shares or on any unpaid
dividends and distributions payable to holders of

 

6

 

Certificates. 
In the event of a transfer of ownership of shares of Company Common Stock
that is not registered in the transfer records of the Company, the Merger
Consideration payable in respect of such shares of Company Common Stock may be
paid to a transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and the Person requesting such
exchange shall pay to the Exchange Agent in advance any transfer or other Taxes
required by reason of the delivery of the Merger Consideration in any name
other than that of the registered holder of the Certificate surrendered, or
required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such Tax has been paid or is not payable.  Until surrendered as contemplated by this
Section 3.1, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration payable in respect of the shares of Company Common Stock
represented by such Certificate.

 

(c)       Stock Transfer Books. 
At the close of business on the day on which the Effective Time occurs,
the stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. 
If, after the Effective Time, any Certificates are presented to the
Surviving Corporation or the Paying Agent for transfer or any other reason,
they shall be converted into the Merger Consideration payable in respect of the
shares of Company Common Stock previously represented by such Certificates and
any dividends or other distributions to which the holders thereof are entitled
pursuant to Section 3.1(g), without any interest thereon.

 

(d)       No Liability; Termination of
Exchange Fund.  None of Purchaser, Merger Sub, the Surviving
Corporation or the Paying Agent shall be liable to any Person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.  All
funds held by the Paying Agent for payment to the holders of unsurrendered
Certificates and unclaimed one year after the Effective Time shall be returned
to Purchaser, after which time any holder of unsurrendered Certificates shall
look as a general creditor only to Purchaser for payment of the funds to which
the holder of unsurrendered Certificates may be due, subject to Applicable
Laws.  If any Certificates shall not have
been surrendered prior to five years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any Governmental
Entity), any such cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by all applicable laws, statutes,
orders, rules, regulations, policies or guidelines promulgated, or judgments,
decisions or orders entered by any Governmental Entity (collectively, “Applicable
Laws”), become the property of the Surviving Corporation, free and clear of all
claims or interest of any Person previously entitled thereto.

 

(e)       Lost Certificates. 
If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming a Certificate to be
lost, stolen or destroyed, the Paying Agent will issue in exchange for

 

7

 

such lost, stolen or destroyed Certificate
the Merger Consideration deliverable in respect thereof as determined in
accordance with Section 3.1(b) if the Person to whom the Merger Consideration
is paid shall, as a condition precedent to the payment thereof, provide the
Surviving Corporation a bond in such sum as the Surviving Corporation may
reasonably direct or otherwise indemnify the Surviving Corporation in a manner
reasonably satisfactory to it against any claim that may be made against the
Surviving Corporation with respect to the Certificate claimed to have been
lost, stolen or destroyed.

 

(f)            No Further Ownership Rights in
Company Common Stock.  The Merger Consideration
paid in accordance with the terms of this Article III in respect of
Certificates that have been surrendered in accordance with the terms of this
Agreement shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock represented thereby.

 

3.3           Treatment of Stock Options and Warrants.

 

The Company,
the Board and each relevant committee of the Board shall, effective immediately
prior to the consummation of the Merger, cause each option to purchase shares
of Company Common Stock (collectively, the “Stock Options”) and each warrant to
purchase shares of company common stock (collectively, the “Warrants”) that is
outstanding immediately prior to the consummation of the Merger, whether
granted under the 1987 Employee Stock Option Plan or the 1997 Long-Term
Incentive Plan, each as amended to
date (collectively, the “Stock Option Agreements”), or under the Warrants set
forth on Schedule 2.3(a) attached hereto (collectively, the “Warrant
Agreements”), or otherwise, to become fully vested and/or exercisable.  Immediately prior to the Effective Time, the
Company shall cause each then outstanding Stock Option, to be cancelled in
exchange for an amount in cash (less any applicable withholding), payable at
the Effective Time, equal to the product of (i) the number of unexercised
shares of Company Common Stock subject to such Stock Option and (ii) the
excess, if any, of the Merger Consideration over the per share exercise price
of such Stock Option.  Immediately prior
to the Effective Time, the Company shall cause each then outstanding Warrant,
to be cancelled in exchange for an amount in cash (less any applicable
withholding), payable at the Effective Time, equal to the product of (i) the
number of shares of Company Common Stock subject to such Warrant and (ii) the
excess, if any, of the Merger Consideration over the per share exercise price
of such Warrant.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the disclosure letter delivered by the Company
to Purchaser prior to the execution and delivery of this Agreement (the “Company
Disclosure Letter”) (each section of which qualifies the correspondingly
numbered representation, warranty or covenant to the extent specified therein
and such other representations, warranties or covenants to the extent a matter
in such section is disclosed in such a way as to make its relevance to such
other representation, warranty or covenant reasonably apparent), the Company
hereby represents and warrants to Purchaser and Merger Sub as follows:

 

8

 

4.1           Organization.

 

Each of the
Company and its Subsidiaries is a corporation or other entity duly incorporated
or formed, as the case may be, validly existing, and in good standing, where
applicable, under the laws of the jurisdiction of its incorporation or formation,
has all requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, and is qualified or licensed to do
business as a foreign corporation or other entity and is in good standing,
where applicable, in each jurisdiction in which the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed individually or in the aggregate has
not had, and would not be reasonably likely to have or result in, a Material
Adverse Effect on the Company.  The
Company has previously made available to Purchaser a complete and correct copy
of each of the Company Articles and the Company Bylaws, as currently in effect.

 

4.2           Capitalization.

 

(a)       The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock, 10,000,000
shares of cumulative preferred stock, par value U.S. $1.00 per share (the “Company
Cumulative Preferred Stock”) and 10,000,000 shares of non-cumulative preferred
stock, par value U.S. $1.00 per share (the “Company Non-Cumulative Preferred
Stock” and together with the Company Cumulative Preferred Stock, the “Company
Preferred Stock”).  As of the close of
business on June 29, 2005 (the “Cut-Off Time”), (i) 41,360,994 shares of
Company Common Stock are issued and outstanding, (ii) 9,600 shares of Company
Common Stock are issued and held in the treasury of the Company, (iii) no shares
of Preferred Stock are issued and outstanding, (iv) 249,000 shares of Company
Common Stock are reserved for issuance upon exercise of Stock Options under the
Stock Option Plans, and (v) 3,579,900 shares of Company Common Stock are
reserved for issuance under the Warrants. 
From the Cut-off Time to the date of this Agreement, no additional
shares of Company Common Stock have been issued (other than pursuant to Company
Options and Company Warrants which were outstanding as of the Cut-off Time and
are disclosed in Section 4.2(a) of the Company Disclosure Letter), no
additional Company Options or Company Warrants have been issued or granted, and
there has been no increase in the number of shares of Company Common Stock
issuable upon exercise of the Company Options and Company Warrants from those
issuable under such Company Options and Company Warrants as of the Cut-off
Time.  No bonds, debentures, notes or
other indebtedness having the right to vote (or convertible into or
exchangeable for securities having the right to vote) on any matters on which
shareholders of the Company may vote are issued or outstanding.  All the outstanding shares of the Company’s
capital stock are, and all shares that may be issued or granted pursuant to the
exercise of the Stock Options will be, when issued or granted in accordance
with the respective terms thereof, duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights, with no personal liability
attaching to ownership thereof.  Except as
set forth above or in Section 4.2(a) of the Company Disclosure Letter, there
are no outstanding or authorized (i) options, warrants, calls, pre-emptive
rights, subscriptions or other rights, convertible

 

9

 

securities, agreements, claims or commitments
of any character obligating the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other equity interest in, the
Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests, (ii) contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any capital stock of the Company or any Subsidiary of the Company or
any such securities or agreements listed in clause (i) of this sentence or
(iii) voting trusts or similar agreements to which the Company or any of its
Subsidiaries is a party with respect to the voting of the capital stock of the
Company.  Section 4.2(a) of the Company
Disclosure Letter sets forth the following information with respect to each
Company Option and Company Warrant outstanding as of the Cut-off Time: (i) name
of the holder; (ii) number of shares of Company Common Stock issuable upon
exercise thereof; (iii) exercise price; and (iv) issue
date.  At the Effective Time, there will
not be any outstanding subscriptions, options, warrants, calls, preemptive
rights, subscriptions, or other rights, convertible or exchangeable securities,
agreements, claims or commitments of any character by which the Company or any
of its Subsidiaries will be bound calling for the purchase or issuance of any
shares of the capital stock of the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or any other such
securities or agreements.

 

(b)       (i) Except as set forth in Section
4.2(b) of the Company Disclosure Letter, all of the outstanding shares of
capital stock (or equivalent equity interests of entities other than
corporations) of each of the Company’s Subsidiaries are beneficially owned,
directly or indirectly, by the Company free and clear of any mortgage, lien,
pledge, charge, encumbrance or other security interest (including any
restriction on the right to vote, sell or otherwise dispose of such capital
stock or ownership interests) (collectively, “Liens”), other than such
restrictions as may exist under Applicable Law, and all such shares or other
ownership interests have been duly authorized and validly issued and are fully
paid and non-assessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof, and (ii) neither the Company nor
any of its Subsidiaries owns any shares of capital stock or other securities
of, or interest in, any other Person, except for (A) shares of capital stock or
other securities of non-affiliates that (x) do not constitute more than a 5%
interest in such non-affiliates or (y) have an aggregate value (per issuer)
that does not exceed U.S.$100,000, and (B) the securities of the Subsidiaries
of the Company or any Subsidiary of the Company, or is obligated to make any
capital contribution to or other investment in any other Person.

 

(c)       Except as set forth in Section
4.2(c) of the Company Disclosure Letter, no material indebtedness of the
Company or any of its Subsidiaries contains any restriction upon (i) the
prepayment of any indebtedness of the Company or any of its Subsidiaries, (ii)
the incurrence of indebtedness by the Company or any of its Subsidiaries, or
(iii) the ability of the Company or any of its Subsidiaries to grant any Lien
on the properties or assets of the Company or any of its Subsidiaries.

 

10

 

4.3           Authorization; Validity of Agreement.

 

The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and, subject to approval of its shareholders as contemplated by Section 2.6
hereof if required by Applicable Law, to consummate the transactions
contemplated hereby.  The execution and
delivery by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby have been duly approved and authorized
by the Board and, other than approval and adoption of this Agreement and the
Merger by the requisite vote of the holders of the outstanding shares of
Company Common Stock, no other corporate proceedings on the part of the Company
are necessary to approve and authorize the execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby.  This Agreement has
been duly executed and delivered by the Company, and assuming due
authorization, execution and delivery of this Agreement by each of Purchaser
and Merger Sub, is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except that such enforcement
may be subject to or limited by (a) bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors’ rights generally, and
(b) the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity).

 

4.4           No Violations; Approvals.

 

(a)       Neither the execution and delivery
of this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) violate any provision of the Company
Articles or Company Bylaws, or any provision of the certificate of
incorporation, bylaws or similar governing documents of any of its Subsidiaries,
(ii) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination, cancellation or amendment under,
accelerate the performance required by, or result in the creation of any Lien
upon any of the respective properties or assets of the Company or any of its
Subsidiaries under, or result in the acceleration or trigger of any payment,
time of payment, vesting or increase in the amount of any compensation or
benefit payable pursuant to, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, guarantee, other evidence of indebtedness,
lease, license, contract, collective bargaining agreement, agreement or other
legally binding instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their respective
assets or properties may be bound, or (iii) violate any federal, state, local
or foreign order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, any of its Subsidiaries or any of their assets;
except in the case of clause (ii) for such violations, breaches, defaults,
Liens or failure to obtain consents which would not have a Material Adverse
Effect on the Company.

 

(b)      Except as set forth in Section
4.4(b) of the Company Disclosure Letter, no material filing or registration
with, notification to, or authorization, consent or approval of, any federal,
state, local or foreign court, arbitral, legislative,

 

11

 

executive or regulatory authority or agency
(a “Governmental Entity”) or any third party is legally required to be made by
the Company in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) the filing with the SEC of a proxy statement in
definitive form relating to the meeting of the Company’s shareholders to be
held in connection with this Agreement and the transactions contemplated
hereby, (ii) the approval and adoption of this Agreement and the Merger by the
requisite vote of the shareholders of the Company, (iii) such filings,
authorizations or approvals as may be required under any foreign competition
laws, rules or regulations, and (iv) the filing of the Articles of Merger with
the Secretary of State.

 

4.5           SEC Reports and Financial Statements.

 

(a) The Company has
filed with the SEC all forms and documents required to be filed by it since
January 1, 2002 under the Securities Exchange Act of 1934, as amended (together
with the rules and regulations thereunder, the “Exchange Act”), including (a)
its Annual Reports on Form 10-K for the years ended December 31, 2004, December
31, 2003 and December 31, 2002, respectively, (b) its Quarterly Report on Form
10-Q for the period ended March 31, 2005, (c) all proxy statements relating to
meetings of shareholders of the Company since January 1, 2002 (in the form
mailed to shareholders) and (d) all other forms, reports and registration
statements filed by the Company with the SEC since January 1, 2002 (other than
registration statements on Form S-8 or preliminary materials and registration
statements in forms not declared effective). 
The documents described in clauses (a)-(c) above, as amended (whether
filed before, on or after the date hereof), are referred to in this Agreement
collectively as the “Company SEC Documents”. 
Except as corrected in subsequent Company SEC Documents filed prior to
the date hereof, the Company SEC Documents, including the financial statements
and schedules included therein and the documents incorporated by reference therein,
(x) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading and (y) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act of 1933, as amended
(together with the rules and regulations thereunder, the “Securities Act”) as
the case may be, and the applicable rules and regulations of the SEC
thereunder.

 

(b)  The December 31, 2004 consolidated balance
sheet of the Company and the related consolidated statements of income, changes
in shareholders’ equity and cash flows (including, in each case, the related
notes, where applicable), as reported in the Company’s Annual Report on Form
10-K for the fiscal year ended December 31, 2004 filed with the SEC under the
Exchange Act, and the unaudited consolidated balance sheets of the Company and
its Subsidiaries (including the related notes, where applicable) as of March
31, 2005 and the related (i) unaudited consolidated statements of income for
the three-month period then ended and (ii) unaudited consolidated statements of
cash flows and changes in shareholders’ equity for the three-month period then
ended (in each case including the related notes, where applicable), as reported
in the Company’s Quarterly Report on Form 10-Q for the period ended March

 

12

 

31,
2005 filed with the SEC under the Exchange Act, fairly present, and the
financial statements to be filed by the Company with the SEC after the date of
this Agreement will fairly present (subject, in the case of unaudited
statements, to recurring audit adjustments normal in nature and amount), in all
material respects, the consolidated financial position and the results of the
consolidated operations, cash flows and changes in shareholders’ equity of the
Company and its Subsidiaries as of the respective dates or for the respective
fiscal periods therein set forth; each of such statements (including the
related notes, where applicable) complies, and the financial statements to be
filed by the Company with the SEC after the date of this Agreement will comply,
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto; and each of such statements
(including the related notes, where applicable) has been, and the financial
statements to be filed by the Company with the SEC after the date of this
Agreement will be, prepared in accordance with generally accepted accounting
principles (“GAAP”) consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as permitted
by Form 10-Q.  The books and records of
the Company and its Subsidiaries have been, and are being, maintained in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions. 
PricewaterhouseCoopers LLP is an independent public accounting firm with
respect to the Company and has not resigned or been dismissed as independent
public accountants of the Company.

 

4.6           Absence of Certain Changes.

 

(a)       Except as disclosed in the Company
SEC Documents filed by the Company with the SEC prior to the date of this
Agreement (the “Specified Company SEC Documents”), to the extent that it is
reasonably apparent that the disclosure in the Specified Company SEC Documents
is responsive to the matters set forth in this Section 4.6(a) or except as set
forth in Section 4.6 of the Company Disclosure Letter, since March 31, 2005
until the date of this Agreement, (a) the Company and its Subsidiaries have
conducted their respective operations only in the ordinary course consistent
with past practice, (b) there has not occurred or continued to exist any event,
change, occurrence, effect, fact, circumstance or condition which, individually
or in the aggregate, has had, or would be reasonably likely to have or result
in, a Material Adverse Effect on the Company, (c) neither the Company nor any
of its Subsidiaries has (i) increased the wages, salaries, compensation,
pension, or other fringe benefits or perquisites payable to any executive
officer, employee, or director from the amount thereof in effect as of March
31, 2005, granted any severance or termination pay, entered into any contract
to make or grant any severance or termination pay, made any loans or paid any
bonus (except for salary increases, bonus payments and severance or termination
payments made in the ordinary course of business consistent with past
practices), (ii) suffered any strike, work stoppage, slow-down or other labor
disturbance, (iii) been a party to a collective bargaining agreement, contract
or other agreement or understanding with a labor union or organization, (iv)
had any union organizing activities, or (v) revalued, or had knowledge of any
reason that required revaluing, any of the Company Assets in any material
respect, including writing down the value of any of the Company Assets or
writing off notes or accounts receivable, in each case in any material respect
and other than in the ordinary course of business consistent with past
practice.

 

13

 

(b)       The indebtedness outstanding under
the TOGA Credit Facility as of the date of this Agreement is set forth on
Section 4.6(b) of the Company Disclosure Letter.

 

4.7           Absence of Undisclosed Liabilities. 

 

Except as disclosed
in the Specified Company SEC Documents, including as reflected or reserved
against in the balance sheet dated as of March 31, 2005 constituting a portion
of the financial statements included in the Company’s Quarterly Report on Form
10-Q for the term ended March 31, 2005 (the “Company Balance Sheet”) or in the
notes thereto, to the extent that it is reasonably apparent that the disclosure
in the Specified Company SEC Documents is responsive to the matters set forth
in this Section 4.7, and except for liabilities in respect of Litigation (which
are the subject of Section 4.10) and liabilities under Environmental Laws
(which are the subject of Section 4.15), neither the Company nor any of its
Subsidiaries had as of that date or would not be reasonably likely to have or
result in any liabilities that were material to the Company and its
Subsidiaries taken as a whole and that were required to be set forth in the
Company Balance Sheets or the notes thereto in accordance with GAAP.  Except as disclosed in the Specified Company
SEC Documents, since the date of the Company Balance Sheet, neither the Company
nor its Subsidiaries has incurred any liabilities that would be required to be
reflected or reserved against in a consolidated balance sheet of the Company
and its Subsidiaries prepared in accordance with GAAP, except for (a)
liabilities incurred in the ordinary course of business, (b) liabilities that
have not had a Material Adverse Effect on the Company, (c) liabilities
resulting from the execution and delivery of this Agreement or relating to the
transactions contemplated hereby, (d) liabilities in respect of Litigation
(which are the subject of Section of 4.10), and (e) liabilities under
Environmental Laws (which are the subject of Section 4.15).

 

4.8           Information to Be Supplied.

 

(a)       The Proxy Statement and the other
documents required to be filed by the Company with the SEC in connection with
the Merger and the other transactions contemplated hereby will comply as to
form in all material respects with the requirements of the Exchange Act and
will not, on the date of its filing or, in the case of the Proxy Statement, on
the date it is mailed to shareholders of the Company and at the time of the
Shareholders’ Meeting, and none of the written information supplied or to be
supplied by the Company expressly for inclusion or incorporation by reference
in the Proxy Statement or other documents required to be filed by the Company
with the SEC will at the time the same are filed with the SEC and first
published, sent or given to the Company’s shareholders, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading.

 

(b)           Notwithstanding the foregoing
provisions of this Section 4.8, no representation or warranty is made by the
Company with respect to statements made or incorporated by reference in the
Proxy Statement based on information supplied

 

14

 

by
Purchaser or Merger Sub expressly for inclusion or incorporation by reference
therein or based on information which is not included in or incorporated by
reference in such documents but which should have been disclosed pursuant to
Section 5.4.

 

4.9           Employee Benefit Plans; ERISA.

 

(a)       Section 4.9(a) of the Company
Disclosure Letter contains a true and complete list of each “employee benefit
plan” as defined in Section 3(3) of ERISA (defined below) (“ERISA Plan”) and
each bonus, deferred compensation, incentive compensation, stock purchase,
stock option, stock award, severance or termination benefit, hospitalization or
other medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or arrangement,
each employment, retention or severance agreement or arrangement which cannot
be terminated in fewer than three months without liability or without liability
exceeding the greater of or one week of salary for each year of service or one
month of salary and each other material employee benefit plan, program,
agreement or arrangement, currently or within the preceding 5 years sponsored,
maintained or contributed to by the Company or by any trade or business,
whether or not incorporated (an “ERISA Affiliate”), that together with the
Company would be deemed a “single employer” for purposes of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for the
benefit of any employee or former employee or director of the Company or any
ERISA Affiliate employed in the United States (the “Plans”).

 

(b)       With respect to each Plan, the
Company has heretofore delivered or made available to Purchaser true and
complete copies of each of the following documents:

 

(i)    the Plan;

 

(ii)   the most recent annual report and
actuarial report;

 

(iii)  the most recent Summary Plan
Description required under ERISA with respect thereto;

 

(iv)  if the Plan is funded through a trust or third party
funding vehicle, the trust or other funding agreement and the latest financial
statements thereof; and

 

(v)   the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify under
Section 401(a) of the Code and each voluntary employees’ benefit association
intended to qualify under Section 501(c)(9) of the Code.

 

(c)       No liability under Title IV of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists (or would exist in the case of any
Plan termination or withdrawal by any employer from the Plan) that presents a
material risk to the Company or any ERISA Affiliate of

 

15

 

incurring a liability under such Title, other
than liability for contributions due in the ordinary course and premiums due
the Pension Benefit Guaranty Corporation (“PBGC”) (which contributions and
premiums have been paid when due), except for such liabilities that would not
have a Material Adverse Effect on the Company.

 

(d)       No “ERISA Plan”, is a “multiemployer
pension plan,” as defined in Section 3(37) of ERISA, nor is any ERISA Plan a
plan described in Section 4063(a) of ERISA.

 

(e)       No ERISA Plan or any trust
established thereunder has incurred any “accumulated funding deficiency” as
defined in Section 302 of ERISA and Section 412 of the Code, whether or not
waived, or any liens under those sections of ERISA and the Code, as of the last
day of the most recent fiscal year of each ERISA Plan ended prior to the
Closing Date or with respect to the year following such fiscal year.  Each ERISA Plan intended to be “qualified”
within the meaning of Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified (or timely application has been
made therefor); no event has occurred before or since the date of such
determination that would materially adversely affect such qualification; and
each trust maintained thereunder has been determined by the Internal Revenue
Service to be exempt from taxation under Section 501(a) of the Code.  All contributions or other payments required
to have been made by Company and its Subsidiaries to or under any Plan by
Applicable Law or the terms of such Plan have been timely and properly
made.  Each Plan has been operated and
administered in all material respects in accordance with its terms and
Applicable Law, including but not limited to ERISA and the Code except where a
failure to so operate or administer would not have a Material Adverse Effect on
the Company.  There are no pending, or to
the knowledge of the Company, threatened, material claims by or on behalf of
any Plan, by any employee or beneficiary covered under any such Plan, or
otherwise involving any such Plan (other than routine claims for benefits).

 

(f)        With respect to each Plan, on or
following the Effective Date, the Surviving Corporation or the Purchaser or
both shall have the right to terminate and amend the Plan at any time, and any
such termination or amendment shall not result in any material increased cost.

 

(g)       With respect to each Plan, all
required filings with the government and all required notices to the
participants of the Plan have been timely made.

 

(h)       With respect to each Plan, there has
been no violation of Sections 401 through 412 of ERISA, and no violation that
would result in tax or penalties under Section 502 of ERISA or Section 4975 of
the Code.

 

(i)        The consummation of the transaction
contemplated in this Agreement will not result in the payment, vesting or acceleration
of any benefit.

 

(j)        With respect to each Plan, no
reportable event (as defined in Section 4043 of ERISA) has occurred.

 

16

 

(k)       Except to the extent required under
Sections 601 et seq. of ERISA and Section 4980B of the Code (“COBRA”) no Plan
provides for health or welfare benefits to any retired or former employee and
there is no such benefit or payment to any such employee of the Company and its
Subsidiaries or obligation to pay such benefit or make such payment.

 

(l)        The Company and its Subsidiaries
have complied with COBRA and the Health Insurance Portability and
Accountability Act of 1996.

 

(m)      No payment that is owed or may
become due to any director, officer, employee, or agent of the Company or its
Subsidiaries will be non-deductible to them or subject to tax under
Section 280G or Section 4999 of the Code, and no requirement to “gross up”
or otherwise compensate any such individual exists because of such a tax.

 

(n)       The Company and its Subsidiaries
have not violated the Worker Adjustment and Retraining Notification Act or any
similar law.

 

(o)       Each Subsidiary of the Company that
employs personnel in Australia:

 

(i)    is not a party to any agreement or
arrangement with any union or industrial organization in respect of
superannuation benefits for any of its employees or sub-contractors;

 

(ii)   has complied with its obligations under
agreements with its employees and sub-contractors in respect of superannuation
benefits in all material respects;

 

(iii)  is only obliged to make employer contributions to the
funds to which the employee contributions are made on behalf of each of its
employees and sub-contractors at the relevant statutory rate per annum of their
respective superannuation salaries in accordance with the Superannuation
Guarantee (Administration) Act 1992 (Cth) (“SGAA”) and other
associated Applicable Laws;

 

(iv)  only contributes to, and only has an
obligation to make payments to superannuation funds which only provide
accumulation benefits to its employees and sub-contractors;

 

(v)   confirms that to the knowledge of the Company, the
funds to which the employee contributions are made by such Subsidiary have
satisfied all relevant Applicable Laws governing superannuation funds in all
material respects, and in particular, have been complying superannuation funds
within the meaning of the Superannuation Industry
(Supervision) Act 1993 (Cth) (“SIS”) and have otherwise been
administered and managed by the trustee company in a manner that complies with
the SIS in all material respects;

 

17

 

(vi)  has complied in all material respects with all of its
obligations, duties and liabilities under the governing rules of the funds to
which employee contributions are made by such Subsidiary including making all
contributions to the funds required to be made under their rules; and

 

(vii) has in all material respects made contributions to
superannuation funds as required by any Applicable Law or agreement in respect of
all employees (and anyone considered an employee for the purposes of the SGAA,
including contributions required to be made in accordance with the SGAA to
ensure that it incurs no liability for superannuation guarantee charge.

 

4.10         Litigation; Compliance with Law.

 

(a)       Except as disclosed in Section
4.10(a) of the Company Disclosure Letter and except for claims under
Environmental Laws (which are the subject of Section 4.15), (a) there is no
suit, claim, action, proceeding or investigation pending or, to the knowledge
of the Company, threatened, against the Company or any of its Subsidiaries ,
any of their respective properties or assets or any of the Company’s officers
or directors (in their capacities as such), (b) there is no agreement, order,
judgment, decree, injunction or award of any Governmental Entity against and/or
binding upon the Company, any of its Subsidiaries or any of the Company’s
officers or directors (in their capacities as such) that, in the case of either
clause (a) or (b), individually or in the aggregate has had, or would be
reasonably likely to have or result in, a Material Adverse Effect on the
Company, and (c) there is no Litigation that the Company or any of its
Subsidiaries has pending against other parties, where such Litigation is
intended to enforce or preserve material rights of the Company or any of its
Subsidiaries which would have a Material Adverse Effect on the Company.

 

(b)       Except for ERISA (which is the
subject of Section 4.9), Tax laws (which are the subject of Section 4.14), and
Environmental Laws (which are the subject of Section 4.15), each of the Company
and its Subsidiaries has complied, and is in compliance, in all material
respects with all Applicable Laws and all licenses, permits, variances and
approvals of Governmental Entities necessary for the lawful conduct of their
respective businesses as currently conducted which affect the respective
businesses of the Company or any of its Subsidiaries, the Company Real Property
and/or the Company Assets, and the Company and its Subsidiaries have not been
and are not in violation in any material respect of any such Law or any
licenses, permits, variances or approvals of Governmental Entities necessary
for the lawful conduct of their respective businesses as currently conducted;
nor has any notice, charge, claim or action has been received by the Company or
any of its Subsidiaries or been filed, commenced, or to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries alleging any
violation of the foregoing, except in each case as would not be reasonably
likely to have or result in a Material Adverse Effect on the Company.

 

(c)       The Company and its Subsidiaries
hold all licenses, permits, variances and approvals of Governmental Entities
necessary for the lawful conduct of their respective businesses as currently
conducted, except for licenses, permits, variances

 

18

 

or approvals under Environmental Laws (which
are the subject of Section 4.15) and except where the failure to hold such
licenses, permits, variances or approvals has not had, or would not be
reasonably likely to have or result in a Material Adverse Effect on the
Company.  Neither the Company nor any of
its Subsidiaries has received notice that any license, permit, variance or
approvals of Governmental Entities will be terminated or modified or cannot be
renewed in the ordinary course of business, and the Company has no knowledge of
any reasonable basis for any such termination, modification or nonrenewal, in
each case except for any such terminations, modifications or nonrenewals that
individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company.  The execution, delivery and performance of
this Agreement and the consummation of the merger or any other transactions
contemplated hereby do not and will not violate any license, permit, variance
or approvals of Governmental Entities, or result in any termination, modification
or nonrenewal thereof, except in each case for any such violations,
terminations, modifications or nonrenewals that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company.

 

4.11         Intellectual Property.

 

(a)       The Company and its Subsidiaries own
free and clear of any Lien or possess licenses or other valid rights to use,
all patents, patent rights, domain names, trademarks (registered or
unregistered), trade dress, trade names, copyrights (registered or
unregistered), service marks, trade secrets, know-how and other confidential or
proprietary rights and information, inventions (patentable or unpatentable),
processes, formulae, as well as all goodwill symbolized by any of the foregoing
(collectively, “Intellectual Property”) necessary in connection with the
business of the Company and its Subsidiaries as currently conducted, except
where the failure to possess such rights or licenses would not have a Material
Adverse Effect on the Company.

 

(b)      To the knowledge of the Company,
except as disclosed in Section 4.11 of the Company Disclosure Letter, (i) the
conduct, products or services of the business of the Company and its
Subsidiaries as currently conducted do not infringe upon any Intellectual
Property of any third party except where such infringement would not have a
Material Adverse Effect on the Company, (ii) there are no claims or suits
pending or, to the knowledge of the Company, threatened (x) alleging that the
Company’s or its Subsidiaries’ conduct, products or services infringe upon any
Intellectual Property of any third party except where such infringement would
not have a Material Adverse Effect on the Company, or (y) challenging the
Company’s or its Subsidiaries’ ownership of, right to use, or the validity or
enforcement of any license or other agreement relating to the Company’s and its
Subsidiaries’ Intellectual Property except where such challenge would not have
a Material Adverse Effect on the Company, and (iii) no Person is infringing
upon any Intellectual Property of the Company or its Subsidiaries except where
such infringement would not have a Material Adverse Effect on the Company.  Except as set forth in Section 4.4 or 4.11 of
the Company Disclosure Letter, the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not result in the
loss of, or any encumbrance on, the rights of the Company or

 

19

 

any Subsidiary with respect to the
Intellectual Property owned or used by them, except where such loss or
encumbrance would not have a Material Adverse Effect on the Company.

 

4.12         Material Contracts.

 

(a)       Except as disclosed in the Specified
Company SEC Documents, to the extent that it is reasonably apparent that the
disclosure in the Specified Company SEC Documents is responsive to the matters
set forth in this Section 4.12(a), as of the date of this Agreement, neither
the Company nor any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (whether written or oral) (i) which is
a material contract (as defined in Item 601(b)(10) of Regulation S-K of the
SEC) to be performed after the date of this Agreement, (ii) which materially
restrains, limits or impedes the Company’s or any of its Subsidiaries’, or will
materially restrain, limit or impede the Surviving Corporation’s, ability to
compete with or conduct any business or any line of business, including geographic
limitations on the Company’s or any of its Subsidiaries’ or the Surviving
Corporation’s activities, (iii) which is a material production sharing
agreement, joint venture or operating agreement, balancing agreement, farm-out
or farm-in agreement, enhanced oil recovery agreement, unitization and pooling
agreement or other similar contract or agreement relating to the exploration,
development and production of oil and natural gas, (iv) which is a material
take-or-pay agreement or other similar agreement that entitles purchasers of
production to receive delivery of Hydrocarbons without paying therefor, or (v)
which is otherwise material to the Company and its Subsidiaries taken as a
whole. Each contract, arrangement, commitment or understanding of the type described
in this Section 4.12(a), whether or not set forth in Section 4.12(a) of the
Company Disclosure Letter or disclosed in the Specified Company SEC Documents,
is referred to herein as a “Company Material Contract.”  Except for the Gas Sales Agreement with OERL (a
summary of which has been provided to Purchaser), the Company has previously
made available to Purchaser true, complete and correct copies of each Company
Material Contract.

 

(b)       (i) Each Company Material Contract
is valid and binding and in full force and effect, (ii) the Company and each of
its Subsidiaries has performed all obligations required to be performed by it
to date under each Company Material Contract, (iii) no event or condition
exists which constitutes or, after notice or lapse of time or both, would
constitute a default on the part of the Company or any of its Subsidiaries
under any such Company Material Contract and (iv) to the knowledge of the
Company, no other party to such Company Material Contract is in default in any
respect thereunder, except in each case where there has not been, and would not
be reasonably likely to be, individually or in the aggregate, a material
adverse effect on the rights or remedies of the Company or its Subsidiaries
under such Company Material Contracts.

 

4.13         Properties.

 

(a)       Section 4.13(a) of the Company
Disclosure Letter sets forth a complete and correct list of (i) all real
property and interests in real property owned in fee by the Company or any its
Subsidiaries (individually, an “Owned Property” and

 

20

 

collectively, the “Owned Properties”), and (ii) all real property and interests
in real property leased, subleased, or otherwise occupied by the Company or any
of its Subsidiaries as lessee (individually, a “Leased Property” and
collectively, the “Leased Properties”) setting forth information sufficient to
specifically identify such Owned Real Property and Leased Properties, as the
case may be, and the legal owner thereof. 
Such Leased Properties, together with the Owned Properties, are referred
to herein individually as a “Company Property” and collectively as the “Company
Properties.”

 

(b)       Except as set forth in Section
4.13(b) of the Company Disclosure Letter, each of the Company and its Subsidiaries
has good, marketable and insurable fee simple title to all of its respective
Owned Properties and all buildings, structures and other improvements located
thereon, free and clear of all Liens, except for Permitted Exceptions.

 

(c)       Except as set forth in Section
4.13(c) of the Company Disclosure Letter, the Company or one of its
Subsidiaries is in possession of the Leased Properties leased pursuant to each
lease or sublease, and each such lease or sublease grants to the Company or its
Subsidiary, as the case may be, the exclusive right to possess, without
disruption, the Leased Property pursuant thereto.  Each of the Company and its Subsidiaries has
good and valid title to the leasehold estate or other interest created under
its respective Company Leases, free and clear of any liens, claims or encumbrances,
except where the failure to have such good and valid title would not have a
Material Adverse Effect.

 

(d)       Except as set forth in Section
4.13(d) of the Company Disclosure Letter, each of the Company and its
Subsidiaries has good and valid title to all its assets reflected on the
Company Balance Sheet or acquired after the date thereof, except for (i) assets
sold or otherwise disposed of in the ordinary course of business since the date
of such balance sheet, (ii) properties and assets the loss of which would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company, (iii) assets reflected on the Company Balance Sheet that are subject
to a capital lease where the Company or any of its Subsidiaries is the lessee,
and (iv) Permitted Exceptions.

 

4.14         Taxes.

 

(a)       All material Returns required to be
filed with any taxing authority by the Company and its Subsidiaries have been
filed in accordance with all Applicable Laws;

 

(b)           the Company and its Subsidiaries
have timely paid all material Taxes shown as due and payable on the Returns,
other than those which are being contested in good faith by appropriate
proceedings;

 

(c)           as of the time of filing all such
Returns were true and correct in all material respects;

 

21

 

(d)           the Company has set up an adequate
reserve for the payment of all Taxes anticipated to be payable in respect of
the period subsequent to the last period when returns were filed;

 

(e)           neither the Company nor any
Subsidiary will have any liability for any Taxes in excess of the amounts paid
or the reserves so established except to the extent that any such liability
would not have a Material Adverse Effect;

 

(f)            as of the date of this Agreement,
there is no action, suit, proceeding, investigation, audit or claim pending
against or with respect to the Company or any of its Subsidiaries in respect of
any Tax where there is a reasonable possibility of a determination or decision
against the Company or any of its Subsidiaries that would result in a Material
Adverse Effect;

 

(g)           there are no Tax sharing,
allocation, indemnification or similar agreements or arrangements, whether
written or unwritten, in effect under which the Company or any of its
Subsidiaries will be liable for any material Taxes of any Person other than the
Company or any Subsidiary of the Company;

 

(h)           neither the Company nor any of its
Subsidiaries has entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of a material amount of
Taxes, nor is any request for such a waiver or extension pending;

 

(i)            there are no Liens (subject to
Permitted Exceptions) for Taxes on any asset of the Company or its
Subsidiaries;

 

(j)            neither the Company nor any of its
Subsidiaries has entered into, has any liability in respect of, or has any
filing obligations with respect to, any “listed transactions,” as defined in Section 1.6011-4(b)(2) of
the treasury regulations;

 

(k)           neither the Company nor any of its
Subsidiaries will be required to include any material item of income in, or
exclude any material item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any voluntary
change in method of accounting initiated by the Company or any of its Subsidiaries
for a taxable period ending on or prior to the Closing Date under Section 481(c) of
the Code (or any corresponding or similar provisions of Applicable Law relating
to state, local or foreign Tax); and

 

(l)            no jurisdiction where the Company or
any of its Subsidiaries does not file a Return has made a claim in writing that
the Company or any of its Subsidiaries is required to file a Return for a
material amount of Taxes for such jurisdiction.

 

4.15         Environmental Matters.

 

(a)           Except as disclosed in Section 4.15(a) of
the Disclosure Letter, and except for such matters that individually or in the
aggregate have not had, and

 

22

 

would
not be reasonably likely to have or result in, a Material Adverse Effect on the
Company, the Company and its Subsidiaries have complied, and are in compliance,
with all applicable Environmental Laws, which compliance includes the
possession of all permits required under applicable Environmental Laws and
compliance with the terms and conditions thereof and the making and filing with
all applicable Governmental Entities of all reports, forms and documents and
the maintenance of all records required to be made, filed or maintained by it
under any Environmental Law.  Neither the
Company nor any of its Subsidiaries has received any communication (written or,
if oral, would be reasonably likely to result in a formal claim) from any
Person, whether a Governmental Entity, citizens group, employee or otherwise,
that alleges that the Company or any of its Subsidiaries is not in compliance
with Environmental Laws and that has not been resolved in all material
respects.

 

(b)           Except as disclosed in Section 4.15(a) of
the Disclosure Letter, and for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company, there are no Environmental Claims
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the knowledge of the Company, against any Person
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law.

 

(c)           Except for such matters that individually
or in the aggregate have not had, and would not be reasonably likely to have or
result in, a Material Adverse Effect on the Company, neither the Company nor
any of its Subsidiaries is subject to any liability or obligation (accrued,
contingent or otherwise) to cleanup, correct, abate or to take any response,
remedial or corrective action under or pursuant to any Environmental Laws,
relating to (i) environmental conditions on, under, or about any of the
properties or assets owned, leased, operated or used by the Company or any of
its Subsidiaries or any predecessor thereto at the present time or in the past,
including the air, soil, surface water and groundwater conditions at, on,
under, from or near such properties, or (ii) the past or present use, management,
handling, transport, treatment, generation, storage, disposal or Release of any
Hazardous Substances, whether on-site at any Company Real Property, or at any
off-site location.  The Company has
provided or made available to Purchaser all material studies, assessments,
reports, data, results of investigations or audits, analyses and test results,
in the possession, custody or control of the Company or any of its Subsidiaries
relating to (x) the environmental conditions on, under or about any of the
properties or assets owned, leased, operated or used by any of the Company and
its Subsidiaries or any predecessor in interest thereto at the present time or
in the past and (y) any Hazardous Substances used, managed, handled,
transported, treated, generated, stored or Released by any Person on, under,
about or from, any of the properties, assets and businesses of the Company or
any of its Subsidiaries.

 

(d)           Except for such matters that
individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company, to the
knowledge of the Company, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release,

 

23

 

emission,
discharge, presence or disposal of any Hazardous Substance, that would be
reasonably likely to form the basis of any Environmental Claim against the
Company or any of its Subsidiaries or against any Person whose liability for
such Environmental Claim the Company or any of its Subsidiaries has retained or
assumed either contractually or by operation of law.

 

(e)           Without in any way limiting the
generality of the foregoing, there are no underground storage tanks located at any
property currently owned, leased or operated by the Company or any of its
Subsidiaries.

 

(f)            Neither the Company nor any of its
Subsidiaries is required by virtue of the transactions contemplated by this
Agreement, or as a condition to the effectiveness of any transactions
contemplated by this Agreement, (i) to perform a site assessment for
Hazardous Substances at any Company Real Property or (ii) to remove or
remediate any Hazardous Substances from any Company Real Property.

 

(g)           Purchaser and Merger Sub acknowledge
that the representations and warranties contained in this Section 4.15 are
the only representations and warranties being made by the Company with respect
to compliance with, or liability or claims under, Environmental Laws or with
respect to permits, licenses or governmental authorizations issued or required
under Environmental Laws, that no other representation by the Company contained
in this Agreement shall apply to any such matters and that no other
representation or warranty, express or implied, is being made with respect
thereto.

 

4.16         Investment Company.

 

Neither the Company nor any of its Subsidiaries is an “investment
company,” a company “controlled” by an “investment company,” or an “investment
adviser” within the meaning of the Investment Company Act of 1940, as amended,
or the Investment Advisers Act of 1940, as amended.

 

4.17         Public Utility Holding Company Act.

 

Neither the Company nor any of its Subsidiaries is 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,” as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.

 

4.18         Required Vote by Company
Shareholders.

 

The affirmative vote of the holders of at least two-thirds of the
outstanding shares of the Company Common Stock entitled to vote hereon is the
only vote of the Company required by the TBCA, the Company Articles or the
Company Bylaws to approve this Agreement and the transactions contemplated
hereby (the “Required Vote”).

 

24

 

4.19         Brokers.

 

Except for Houlihan Lokey Howard & Zukin (“HLHZ”), 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 Company.  The Company is solely responsible for the
fees and expenses of HLHZ which fees and expenses shall be paid by the Company
at the Closing; provided that, in the absence of sufficient cash, Purchaser
shall fund the payment of such fees or expenses at closing without any
reduction in the Merger Consideration. 
The Company’s arrangements with HLHZ have been disclosed to Purchaser
prior to the date hereof.

 

4.20         Article 13.03 of the TBCA.

 

Prior to the date of this Agreement, the Board has taken all action
necessary to exempt under or make not subject to (a) the provisions of Article 13.03
of the TBCA or (b) any “fair price,” “moratorium,” “control share
acquisition” or other state takeover law or state law that purports to limit or
restrict business combinations or the ability to acquire or vote shares: (a) the
execution of this Agreement, (b) the Merger and (c) the transactions
contemplated by this Agreement.

 

4.21         Oil and Gas.

 

(a)           The Company has furnished Purchaser
prior to the date of this Agreement with the report of Data Consulting
Services, a division of Schlumberger Technology Corporation, estimating the
Company’s and its Subsidiaries’ proved oil and gas reserves as of December 31,
2004 (the “Reserve Report”).  The
factual, non-interpretive data on which the Reserve Report was based for
purposes of estimating the oil and gas reserves set forth in the Reserve Report
was accurate in all material respects.

 

(b)           All operated producing oil and gas
wells included in the Reserve Report have been operated and produced and, to
the knowledge of the Company, drilled, in accordance in all material respects
with generally accepted oil and gas field practices and in compliance in all
material respects with applicable oil and gas leases and Applicable Law.

 

(c)           All material proceeds from the sale
of crude oil, natural gas liquids and other hydrocarbons produced from crude
oil or natural gas (“Hydrocarbons”) produced from the Oil and Gas Properties
are being received by the Company and its Subsidiaries in a timely manner and
are not being held in suspense for any reason (except in the ordinary course of
business).

 

(d)           Except as disclosed in the Specified
Company SEC Documents, neither the Company nor any of its Subsidiaries has
received any material advance, take-or-pay or other similar payments that
entitles purchasers of production to receive deliveries of Hydrocarbons without
paying therefor, and, on a net, company-wide basis, the Company is neither
underproduced nor overproduced, in either case, to any material extent, under
gas balancing or similar arrangements.

 

25

 

(e)           The Company and its Subsidiaries
have good and defensible title to all oil and gas properties forming the basis
for the reserves reflected in the Reserve Report as attributable to interests
owned by the Company and its Subsidiaries, except for those defects in title
that do not have a Material Adverse Effect on the Company, and are free and
clear of all Liens, except for (i) Permitted Liens and (ii) Liens
associated with obligations reflected in the Reserve Report.  The oil and gas leases and other agreements
that provide the Company and its Subsidiaries with operating rights in the Oil
and Gas Properties are legal, valid and binding and in full force and effect,
and the rentals, royalties and other payments due thereunder have been properly
and timely paid and there is no existing default (or event that, with notice or
lapse of time or both, would become a default) under any of such oil and gas
leases or other agreements, except, in each case, as individually or in the
aggregate has not had, and would not be reasonably likely to have or result in,
a Material Adverse Effect on the Company.

 

(f)            Section 4.21(f) of the
Company Disclosure Letter sets forth the working interest and net revenue
interest in the Comet Ridge Joint Venture of each of the parties to the Comet
Ridge Joint Venture in respect of (i) production, (ii) leasehold
ownership and leasehold operating expenses, and (iii) acquisition,
drilling, development, workover and capital costs (both before and after
project payout).

 

4.22         Recommendation of Company Board of
Directors; Opinion of Financial Advisor.

 

(a)           The Board, at a meeting duly called
and held, duly adopted resolutions (i) determining that this Agreement and
the transactions contemplated hereby are fair to, and in the best interests of,
the shareholders of the Company, (ii) approving this Agreement and the
transactions contemplated hereby, (iii) resolving to recommend adoption of
this Agreement and approval of the Merger and the other transactions
contemplated hereby by the shareholders of the Company and (iv) directing
that the adoption of this Agreement and the approval of the Merger and the
other transactions contemplated hereby be submitted to the Company’s
shareholders for consideration in accordance with this Agreement, which
resolutions, as of the date of this Agreement, have not been subsequently
rescinded, modified or withdrawn in any way.

 

(b)           The Company has received an opinion
of Houlihan Lokey Howard & Zukin (“HLHZ”) to the effect that, as of
the date of this Agreement, the Merger Consideration to be received by the
holders of shares of Company Common Stock (other than Purchaser, Merger Sub or
the Company) in the Merger is fair, from a financial point of view, to such
holders, a signed copy of which has been, or will promptly be, delivered to
Purchaser.  The Company has received the
approval of HLHZ to permit the inclusion of a copy of its written opinion in
its entirety in the Proxy Statement, subject to HLHZ’s review of the Proxy
Statement.

 

4.23         Affiliate Transactions.

 

The Specified SEC Company Documents sets forth all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether

 

26

 

or not entered
into in the ordinary course of business, to or by which the Company or any of
its Subsidiaries, on the one hand, and any of their respective officers or
directors (or any of their respective Affiliates, other than the Company or any
of its direct or indirect wholly owned Subsidiaries) on the other hand, are or
have been a party or otherwise bound or affected, and that (a) are
currently pending, in effect or have been in effect during the past 12 months, (b) involve
continuing liabilities and obligations that, individually or in the aggregate,
have been, are or will be material to the Company and its Subsidiaries, taken
as a whole and (c) are not Company Plans disclosed in Section 4.9(a) of
the Company Disclosure Letter.

 

4.24         Derivative Transactions and Hedging.

 

No Derivative Transactions (including each outstanding Hydrocarbon or
financial hedging position attributable to the Hydrocarbon production of the
Company and its Subsidiaries) have been entered into by the Company or any of
its Subsidiaries or for the account of any of its customers as of the date of
this Agreement.

 

4.25         Insurance.

 

Section 4.26 of the Company Disclosure Letter contains a complete
and correct list of all material insurance policies maintained by or on behalf
of any of the Company and its Subsidiaries as of the date of this Agreement.
Such policies are, and at the Closing policies or replacement policies having
substantially similar coverages will be, in full force and effect, and all
premiums due thereon have been or will be paid. The Company and its
Subsidiaries have complied in all material respects with the terms and
provisions of such policies. With respect to any material insurance claim
submitted by the Company or any of its Subsidiaries since January 1, 2004,
neither the Company nor any of its Subsidiaries has received any refusal of coverage,
reservation of rights or other notice that the issuer of the applicable
insurance policy or policies is not willing or able to perform its obligations
thereunder.

 

4.26         No Other Representations or
Warranties.

 

Except for the representations and warranties contained in this Article IV,
neither the Company nor any other Person makes any other express or implied
representation or warranty on behalf of the Company or any of its Affiliates.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB

 

Parent, Purchaser and Merger Sub, jointly and
severally, represent and warrant to the Company as follows:

 

5.1           Organization.

 

Each of Parent, Purchaser, Merger Sub and each of their respective
Subsidiaries is a corporation or other entity duly incorporated or formed, as
the case may

 

27

 

be, validly
existing, and in good standing, where applicable, under the laws of the
jurisdiction of its incorporation or formation, has all requisite corporate or
other power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now
being conducted, and is qualified or licensed to do business as a foreign
corporation or other entity and is in good standing, where applicable, in each
jurisdiction in which the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
organized, existing and in good standing or to have such power and authority,
or to be so qualified or licensed would not have a Material Adverse Effect on
Purchaser.  Each of Purchaser and Merger
Sub has previously made available to the Company a complete and correct copy of
each of its certificate of incorporation and bylaws, as currently in effect.

 

5.2           Authorization; Validity of Agreement.

 

Each of Parent, Purchaser and Merger Sub has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  The
execution and delivery by Purchaser and Merger Sub of this Agreement and the
consummation by Purchaser and Merger Sub of the transactions contemplated
hereby have been duly authorized by the respective boards of directors of
Purchaser and Merger Sub, Purchaser has approved and adopted this Agreement and
the Merger and has caused the sole shareholder of Merger Sub to approve and
adopt this Agreement, and no other corporate proceedings on the part of
Purchaser or Merger Sub are necessary to authorize the execution and delivery
of this Agreement by Purchaser or Merger Sub and the consummation of the
transactions contemplated hereby.  This
Agreement has been duly executed and delivered by each of Purchaser and Merger
Sub and, assuming due authorization, execution and delivery of this Agreement
by the Company, is a valid and binding obligation of each of Purchaser and
Merger Sub enforceable against each of them in accordance with its terms,
except that such enforcement may be subject to or limited by (i) bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors’ rights generally, and (ii) the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).

 

5.3           Consents and Approvals; No
Violations.

 

(a)           Neither the execution and delivery
of this Agreement by Parent, Purchaser and Merger Sub nor the consummation by Parent,
Purchaser and Merger Sub of the transactions contemplated hereby will (i) violate
any provision of the respective certificate of incorporation or bylaws or
similar governmental documents of Parent or Purchaser or any of its
Subsidiaries, including Merger Sub, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, guarantee, other evidence of indebtedness,
license, lease, contract, agreement or other instrument or obligation to which Parent
or Purchaser or any of its Subsidiaries, including Merger Sub, is a party or by
which any of them or any of their assets may be bound or (iii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent

 

28

 

or
Purchaser or any of its Subsidiaries, including Merger Sub, or any of their
assets; except in the case of clauses (ii) and (iii) for violations,
breaches or defaults which would not have a Material Adverse Effect on
Purchaser or Merger Sub.

 

(b)           No material filing or registration
with, notification to, or authorization, consent or approval of any
Governmental Entity or any third party is legally required to be made by Parent,
Purchaser or Merger Sub in connection with the execution and delivery of this
Agreement by Parent, Purchaser or Merger Sub or the consummation by Purchaser
or Merger Sub of the transactions contemplated hereby, except for (i) the
filing with the SEC of the Proxy Statement, (ii) the filing of the
Articles of Merger with the Secretary of State, and (iii) the lodgement of
an announcement to the Australian Stock Exchange.

 

5.4           Information to be Supplied.

 

(a)           Each
of the Proxy Statement and the other documents required to be filed by
Purchaser with the SEC in connection with the Merger and the other transactions
contemplated hereby will comply as to form, in all material respects, with the
requirements of the Exchange Act and will not, on the date of its filing, and
none of the information supplied or to be supplied by Parent, Purchaser and
Merger Sub expressly for inclusion or incorporation by reference in the Proxy
Statement will, in the case of the Proxy Statement on the dates the Proxy
Statement is mailed to shareholders of the Company and at the time of the
Shareholders’ Meeting will not, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading.

 

(b)           Notwithstanding
the foregoing provisions of this Section 5.4, no representation or
warranty is made by Parent or Purchaser with respect to statements made or
incorporated by reference in the Proxy Statement based on information supplied
by the Company expressly for inclusion or incorporation by reference therein or
based on information which is not made in or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 4.8.

 

5.5           Interim Operations of Merger Sub.

 

Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has engaged in no business
other than in connection with entering into this Agreement and engaging in the
transactions contemplated by this Agreement.

 

5.6           Financing.

 

Parent shall cause Purchaser and Merger Sub to have as of the date of
this Agreement and immediately prior to the consummation of the Merger
sufficient funds to enable Merger Sub to consummate the Merger on the terms
contemplated by this Agreement.

 

29

 

5.7           Beneficial Ownership of Shares.

 

Neither Purchaser nor any of its Affiliates or Associates beneficially
owns more than 5% of the outstanding shares of capital stock of the Company or
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any capital stock of the Company,
other than as contemplated by this Agreement.

 

5.8           Brokers.

 

Except for Merrill Lynch & Co. (“Merrill”), 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 Purchaser or Merger Sub.  Purchaser is solely responsible for the fees
and expenses of Merrill, which
fees and expenses shall be paid by Purchaser at the Closing.

 

5.9           No Other Representations or
Warranties.

 

Except for the representations and warranties contained in this Article V,
none of Parent, Purchaser, Merger Sub or any other Person makes any other
express or implied representation or warranty on behalf of Purchaser, Merger Sub
or any of their respective Affiliates.

 

ARTICLE VI

 

COVENANTS

 

6.1           Interim Operations of the Company.

 

During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of Purchaser (which consent shall
not be unreasonably withheld, conditioned or delayed), the Company and its
Subsidiaries shall carry on their respective businesses in the ordinary course
consistent with past practice and in a manner not involving the entry by the
Company or any Subsidiary into businesses that are materially different from
the businesses of the Company and its Subsidiaries on the date hereof, and
shall use reasonable best efforts to preserve their business organizations and
goodwill intact, and maintain existing relations with suppliers, customers,
employees, officers and directors. 
Without limiting the generality of the foregoing or as otherwise
contemplated by this Agreement or consented to in writing by Purchaser (which
consent shall not be unreasonably withheld, conditioned or delayed), the
Company shall not, and shall not permit any of its Subsidiaries to:

 

(a)           declare or pay any dividends on, or
make other distributions in respect of, any of its capital stock;

 

30

 

(b)           (i) repurchase, redeem or
otherwise acquire any shares of the capital stock of the Company or any
Subsidiary of the Company, or any securities convertible into or exercisable
for any shares of the capital stock of the Company or any Subsidiary of the
Company, (ii) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock, or (iii) authorize,
issue, deliver, sell, hypothecate or pledge or authorize or propose the
issuance, delivery, sale, hypothecation or pledge of, any shares of its capital
stock or any securities convertible into or exercisable for, or any rights,
warrants or options to acquire, any such shares, or enter into any agreement
with respect to any of the foregoing, except, in the case of clauses (ii) and
(iii), for the issuance of Company Common Stock upon the exercise or fulfillment
of rights or options issued or existing pursuant to employee benefit plans,
programs or arrangements or upon exercise of the Warrants, all to the extent
outstanding and in existence on the date of this Agreement and in accordance
with their present terms and in each case to the extent the same are disclosed
to the Purchaser on Section 4.2(a) of the Company Disclosure
Schedule;

 

(c)           amend the Company Articles, the
Company Bylaws, the certificate of incorporation, bylaws or other
organizational documents of any Subsidiary, or other similar governing
documents of the Company or any Subsidiary;

 

(d)           make any capital expenditures in
excess of U.S.$125,000 in the aggregate, other than those which are made in the
ordinary course of business and in accordance with the Company’s capital budget
previously provided to Purchaser, or which are necessary to maintain existing
assets in good repair or to maintain operations as currently conducted;

 

(e)           acquire or agree to acquire, by
merging or consolidating with, or by purchasing a substantial equity interest
in or a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof;

 

(f)            change its methods of accounting in
effect at December 31, 2004, except as required by changes in GAAP as
concurred to by the Company’s independent auditors;

 

(g)           (i) fail to cause TOGA to
operate the Comet Ridge Joint Venture and other TOGA operated permits in
accordance with the terms of the applicable joint venture operating agreements
and the relevant petroleum legislation and regulations in all material
respects, or to maintain operatorship of the same, (ii) fail to cause TOGA
to consult with Purchaser before it exercises any voting right it may have
under the Comet Ridge Joint Venture and to take account of Purchaser’s
reasonable representations, (iii) fail to cause TOGA to provide Purchaser
with production reports and management accounts and authorizations for
expenditures in relation to the Comet Ridge Joint Venture, (iv) fail to
cause TOGA to provide Purchaser with copies of all minutes of meetings of the
Comet Ridge Joint Venture parties or use its reasonable best efforts to
facilitate Purchaser’s attendance at such meetings, (v) cause TOGA to
enter into any new gas

 

31

 

supply
agreements or amend any existing gas supply agreement without first consulting
Purchaser, except in each case to the extent that it would violate Applicable Law
to do so;

 

(h)           (i) except as required by
Applicable Law or as required to maintain qualification pursuant to the Code,
adopt, amend, or terminate any employee benefit plan (including any Plan) or
any agreement, arrangement, plan or policy between the Company or any
Subsidiary of the Company and one or more of its current or former directors,
officers or employees, or (ii) except for normal increases in the ordinary
course of business consistent with past practice as set forth in Section 6.1(h) of
the Company Disclosure Letter, or except as required by Applicable Law,
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any Plan or agreement as
in effect as of the date hereof (including the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or performance
units or shares);

 

(i)            other than activities in the
ordinary course of business consistent with past practice, sell, lease,
encumber, assign or otherwise dispose of, or agree to sell, lease, encumber,
assign or otherwise dispose of, any of its material assets, properties or other
rights or agreements;

 

(j)            other than in the ordinary course of
business consistent with past practice, incur any indebtedness for borrowed
money or assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or other
entity;

 

(k)           create, renew, amend or terminate or
give notice of a proposed renewal, amendment or termination of, any material
contract, agreement or lease for goods, services or office space to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or their respective properties is bound, other than the
renewal in the ordinary course of business of any lease the term of which
expires prior to the Closing Date;

 

(l)            fail to provide Purchaser with any
details relating to any proposed acquisition of or application for Oil and Gas
Properties, including full details of any minimum exploration commitment in
connection therewith, except to the extent it would violate Applicable Law to
do so;

 

(m)          fail to maintain its insurance
policies in full force and effect, except to the extent such policies cease to be
available on commercially reasonable terms, and in such event the Company shall
notify Purchaser of such non-renewal or termination of policy; or

 

(n)           or agree to do any of the foregoing.

 

6.2           Acquisition Proposals.

 

(a)           The Company agrees that, except as
expressly contemplated by this Agreement, neither it nor any of its
Subsidiaries shall, and the Company shall, and

 

32

 

shall
cause its Subsidiaries and affiliates (as such term in used in Rule 12b-2
under the Exchange Act) to, cause their respective officers, directors,
investment bankers, attorneys, accountants, financial advisors, agents and
other representatives not to (i) directly or indirectly initiate, solicit,
knowingly encourage or facilitate (including by way of furnishing information)
any inquiries or the making or submission of any proposal that constitutes, or
could reasonably be expected to lead to, an Acquisition Proposal, (ii) participate
or engage in discussions or negotiations with, or disclose any non-public
information or data relating to the Company or any of its Subsidiaries or
afford access to the properties, books or records of the Company or any of its
Subsidiaries to any Person that has made an Acquisition Proposal or to any
person in contemplation of an Acquisition Proposal, or (iii) accept an
Acquisition Proposal or enter into any agreement, including any letter of
intent, memorandum of understanding, agreement in principle, merger agreement,
acquisition agreement, option agreement, joint venture agreement, partnership
agreement or other similar agreement, arrangement or understanding, (A) constituting
or related to, or that is intended to or could reasonably be expected to lead
to, any Acquisition Proposal (other than an Acceptable Confidentiality
Agreement permitted pursuant to this Section 6.2) or (B) requiring,
intended to cause, or which could reasonably be expected to cause the Company
to abandon, terminate or fail to consummate the merger or any other transaction
contemplated by this Agreement (each an “Acquisition Agreement”). Any violation
of the foregoing restrictions by any of the Company’s Subsidiaries or by any
representatives of the Company or any of its Subsidiaries, whether or not such
representative is so authorized and whether or not such representative is
purporting to act on behalf of the Company or any of its Subsidiaries or
otherwise, shall be deemed to be a breach of this Agreement by the Company.
Notwithstanding anything to the contrary in this Agreement, the Company and its
board of directors may take any actions described in clause (ii) of this Section 6.2(a) with
respect to a third party if at any time prior to the Effective Time (x) the
Company receives a written Acquisition Proposal from such third party (and such
Acquisition Proposal was not initiated, solicited, knowingly encouraged or
facilitated by the Company or any of its Subsidiaries or any of their
respective officers, directors, investment bankers, attorneys, accountants, financial
advisors, agents or other representatives) and (y) such proposal constitutes,
or the Company’s board of directors determines in good faith (after
consultation with its financial advisors and outside legal counsel) that such
proposal could reasonably be expected to lead to, a Superior Proposal, provided
that the Company shall not deliver any information to such third party without
entering into an Acceptable Confidentiality Agreement.  Notwithstanding the foregoing, the Company
shall be entitled to waive any “standstill” or similar provision in any
Acceptable Confidentiality Agreement which would preclude such Person from
making an Acquisition Proposal to the Company, provided that such waiver is for
the limited purpose of enabling such Person to make an Acquisition Proposal to
the Company during the 45-day period following execution of such Acceptable
Confidentiality Agreement, and any such waiver shall not constitute a breach of
this Section 6.2. Nothing contained in this Section 6.2 shall
prohibit the Company or its board of directors from taking and disclosing to
the Company’s shareholders a position with respect to an Acquisition Proposal
to the extent required by Applicable Law.

 

33

 

(b)           Neither (i) the Company’s board
of directors nor any committee thereof shall directly or indirectly (A) withdraw
(or amend or modify in a manner adverse to Purchaser or Merger Sub), or
publicly propose to withdraw (or amend or modify in a manner adverse to
Purchaser or Merger Sub), the approval, recommendation or declaration of
advisability by the Company’s board of directors or any such committee thereof
of this Agreement, the merger or the other transactions contemplated by this
Agreement or (B) recommend, adopt or approve, or propose publicly to
recommend, adopt or approve, any Acquisition Proposal (any action described in
this clause (i) being referred to as a “Company Adverse Recommendation
Change”) nor (ii) shall the Company or any of its Subsidiaries execute or
enter into an Acquisition Agreement. Notwithstanding the foregoing, at any time
prior to the Effective Time, and subject to the Company’s compliance at all
times with the provisions of this Section 6.2 and Section 2.6, in
response to a Superior Proposal, the Company Board may make a Company Adverse
Recommendation Change; provided, however, that the Company shall not be
entitled to exercise its right to make a Company Adverse Recommendation Change
in response to a Superior Proposal (X) until three Business Days after the
Company provides written notice to Purchaser (a “Company Notice”) advising
Purchaser that the Company’s board of directors or a committee thereof has
received a Superior Proposal, specifying the material terms and conditions of
such Superior Proposal, and identifying the Person or group making such
Superior Proposal and (Y) if during such three Business Day period, Purchaser
proposes any alternative transaction (including any modifications to the terms
of this Agreement), unless the Company’s board of directors determines in good
faith (after consultation with its financial advisors and outside legal
counsel, and taking into account all financial, legal, and regulatory terms and
conditions of such alternative transaction proposal) that such alternative
transaction proposal is not at least as favorable to the Company and its
shareholders from a financial point of view as the Superior Proposal (it being
understood that any change in the financial or other material terms of a
Superior Proposal shall require a new Company Notice and a new three Business
Day period under this Section 6.2(b)).

 

(c)           In addition to the obligations of
the Company set forth in paragraphs (a) and (b) of this Section 6.2,
as promptly as practicable after receipt thereof, the Company shall advise
Purchaser in writing of any request for information or any Acquisition Proposal
received from any Person, or any inquiry, discussions or negotiations with
respect to any Acquisition Proposal, and the terms and conditions of such
request, Acquisition Proposal, inquiry, discussions or negotiations, and the
Company shall promptly provide to Purchaser copies of any written materials
received by the Company in connection with any of the foregoing, and the
identity of the Person or group making any such request, Acquisition Proposal
or inquiry or with whom any discussions or negotiations are taking place. The
Company agrees that it shall simultaneously provide to Purchaser any non-public
information concerning the Company or its Subsidiaries provided to any other
Person or group in connection with any Acquisition Proposal which was not
previously provided to Purchaser. The Company and shall keep Purchaser fully
informed of the status of any Acquisition Proposals (including the identity of
the parties and price involved and any changes to any material terms and
conditions thereof). The Company agrees not to release any third party from, or
waive any provisions of, any confidentiality or standstill agreement to which
it is a party.

 

34

 

(d)           Immediately after the execution and
delivery of this Agreement, the Company will, and will cause its Subsidiaries
and their respective officers, directors, employees, investment bankers,
attorneys, accountants and other agents to, cease and terminate any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any possible Acquisition Proposal. The Company agrees that it
shall (i) take the necessary steps to promptly inform its officers,
directors, investments bankers, attorneys, accountants, financial advisors,
agents or other representatives involved in the transactions contemplated by
this Agreement of the obligations undertaken in this Section 6.2 and (ii) request
each Person who has heretofore executed a confidentiality agreement in
connection with such Person’s consideration of acquiring the Company or any
portion thereof to return or destroy (which destruction shall be certified in
writing by an executive officer of such Person) all confidential information
heretofore furnished to such Person by or on the Company’s behalf.

 

(e)           For purposes of this Section 6.2:

 

(i)    For purposes of this Agreement, “Acquisition
Proposal” shall mean any bona fide proposal, whether or not in writing, for the
(i) direct or indirect acquisition or purchase of a business or assets
that constitutes 10% or more of the net revenues, net income or the assets
(based on the fair market value thereof) of the Company and its Subsidiaries,
taken as a whole, (ii) direct or indirect acquisition or purchase of 10%
or more of any class of equity securities or capital stock of the Company or
any of its Subsidiaries whose business constitutes 10% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole, or (iii) merger, consolidation, restructuring, transfer of assets
or other business combination, sale of shares of capital stock, tender offer,
exchange offer, recapitalization, stock repurchase program or other similar
transaction that if consummated would result in any Person or Persons
beneficially owning 10% or more of any class of equity securities of the
Company or any of its Subsidiaries whose business constitutes 10% or more of
the net revenues, net income or assets of the Company and its Subsidiaries,
taken as a whole, other than the transactions contemplated by this Agreement.

 

(ii)   The term “Superior Proposal” shall
mean any bona fide written Acquisition Proposal made by a third party to
acquire (which term shall include a parent to parent merger or other business
combination with a similar result), directly or indirectly, pursuant to a
tender offer, exchange offer, merger, share exchange, consolidation or other
business combination, (A) 50% or more of the assets of the Company and its
Subsidiaries, taken as a whole, or (B) 50% or more of the equity
securities of the Company, in each case on terms which the Company’s board of
directors determines in good faith (after consultation with its financial
advisors and outside legal counsel, and taking into account all financial,
legal and regulatory terms and conditions of the Acquisition Proposal and this
Agreement, including any alternative transaction (including any modifications
to the terms of this Agreement) proposed by Purchaser in response to such
Superior Proposal, including any conditions to and expected timing of

 

35

 

consummation, and any risks of
non-consummation, of such Acquisition Proposal) to be superior to the Company
and its shareholders (in their capacity as shareholders) from a financial point
of view as compared to the transactions contemplated hereby and to any
alternative transaction (including any modifications to the terms of this
Agreement) proposed by Purchaser hereto pursuant to this Section 6.2.

 

6.3           Access to Information.

 

From the date of this Agreement until the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, afford to Purchaser and to
its officers, employees, accountants, counsel and its authorized
representatives (including environmental consultants) reasonable access during
normal business hours upon reasonable prior notice all of its properties,
contracts, books, commitments, records, data and books and personnel and,
during such period, the Company shall furnish to Purchaser upon request (a) a
copy of each report, letter, registration statement and other document filed or
received by it during such period pursuant to the requirements of the Exchange
Act and (b) such other information used in the operation of its business
as Purchaser may reasonably request and the provision of which is not
inconsistent with Applicable Laws or would represent a material breach of any
agreements.  Purchaser and its authorized
representatives will conduct all such inspections in a manner which will
minimize any disruptions of the business and operations of the Company and its
Subsidiaries.  Until the Effective Time,
Purchaser will hold any such information in accordance with the provisions of
the Confidentiality Agreement and will cause such information to be so held by
their Representatives (as defined in the Confidentiality Agreement).  Upon a termination of this Agreement pursuant
to Section 8.1, Purchaser and its Representatives shall return (and hold
confidential) all information provided pursuant to this Section 6.3 and
all other Information (as defined in the Confidentiality Agreement) pursuant to
the procedures set forth in the Confidentiality Agreement.

 

6.4           Further Action; Reasonable Best
Efforts.

 

(a)           Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under Applicable
Laws to consummate and make effective the transactions contemplated by this
Agreement, including using reasonable best efforts to satisfy the conditions
precedent to the obligations of any of the parties hereto, to obtain all
necessary authorizations, consents and approvals, and to effect all necessary
registrations and filings.  Each of the
parties hereto will furnish to the other parties such necessary information and
reasonable assistance as such other parties may reasonably request in
connection with the foregoing and will provide the other parties with copies of
all filings made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.

 

36

 

(b)           The Company shall (i) take all
actions necessary to ensure that no Applicable Law relating to state takeover
or business combination matters or any similar Applicable Law is or becomes
applicable to this Agreement, the merger or any of the other transactions
contemplated by this Agreement and (ii) if any such Applicable Law or
similar Applicable Law becomes applicable to this Agreement, the merger or any
of the other transactions contemplated by this Agreement, take all action
necessary to ensure that the merger and the other transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
Applicable Law on this Agreement, the Merger and the other transactions
contemplated by this Agreement.

 

(c)           In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and/or directors of the
Surviving Corporation shall take or cause to be taken all such necessary
action.

 

(d)           Each of the parties hereto shall use
reasonable best efforts to prevent the entry of, and to cause to be discharged
or vacated, any order or injunction of a Governmental Entity precluding,
restraining, enjoining or prohibiting consummation of the Merger or any of the
other transactions contemplated by this Agreement.

 

6.5           Directors’ and Officers’ Insurance
and Indemnification.

 

(a)           For six years after the Effective
Time, Purchaser shall cause the Surviving Corporation to indemnify and hold
harmless, to the greatest extent permitted by law as of the date of this
Agreement, the individuals who on or prior to the Effective Time were officers,
directors and employees of the Company or its Subsidiaries (collectively, the “Indemnitees”)
with respect to all acts or omissions by them in their capacities as such or
taken at the request of the Company or any of its Subsidiaries at any time
prior to the Effective Time. Purchaser shall cause the Surviving Corporation to
honor all indemnification agreements with Indemnitees (including under the
Company’s by-laws) in effect as of the date hereof in accordance with the terms
thereof. The Company has disclosed to Purchaser all such indemnification
agreements prior to the date of this Agreement.

 

(b)           For six years after the Effective
Time, Purchaser shall procure the provision of officers’ and directors’ liability
insurance in respect of acts or omissions occurring prior to the Effective Time
covering each such Person currently covered by the Company’s officers’ and
directors’ liability insurance policy on terms with respect to coverage and in
amounts no less favorable than those of such policy in effect on the date
hereof; provided, however, that if the annual aggregate premiums for such
insurance at any time during such period shall exceed 200% of the per annum
rate of premium paid by the Company and its Subsidiaries as of the date hereof
for such insurance, then the Purchaser shall solely be obligated to provide
such officers’ and directors’ liability insurance as may be obtained for 200%
of such per annum rate of premium.

 

37

 

(c)           The obligations of Purchaser under
this Section 6.5 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 6.5 applies
without the consent of such affected Indemnitee (it being expressly agreed that
the Indemnitees to whom this Section 6.5 applies shall be third party
beneficiaries of this Section 6.5).

 

(d)           The provisions of this Section 6.5
are intended to be for the benefit of, and shall be enforceable by, each
Indemnitee and his or her heirs and representatives.

 

6.6           Publicity.

 

Neither the Company, Purchaser, Merger Sub nor any of their respective
affiliates shall issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
transactions contemplated by this Agreement without the prior consultation of
the other party, except as may be required by law or by any listing agreement
with a national securities exchange if all reasonable efforts have been made to
consult with the other party.

 

6.7           Merger Sub. 

 

Purchaser will
take all action necessary (a) to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement and, to the extent permitted by the
TBCA, in accordance with Article 5.16 of the TBCA, as soon as reasonably
practicable following the completion of the Shareholders’ Meeting and (b) to
ensure that, prior to the Effective Time, Merger Sub shall not conduct any business
or make any investments other than as specifically contemplated by this
Agreement.  Purchaser shall not, and
shall not permit Merger Sub to take, any action that would result in the breach
of any representation of Purchaser hereunder (except for representations and
warranties made as of a specific date) such that the Company would have the
right to terminate this Agreement pursuant to Section 8.1.

 

6.8           Employee Benefits.

 

(a)           Purchaser hereby agrees to, and
agrees to cause the Surviving Corporation to, honor, and to make required
payments when due under, all contracts, agreements, arrangements, policies,
plans and commitments of the Company and its Subsidiaries in effect as of the
date hereof that are applicable with respect to any employee, officer, director
or executive or former employee, officer, director or executive of the Company
or any Subsidiary thereof, including the Plans in existence as of the date
hereof, and that are disclosed in Section 4.9 of the Company Disclosure
Letter.  Nothing herein shall be
construed to prohibit the Surviving Corporation from amending or terminating
such contracts, agreements, arrangements, policies, plans and commitments in
accordance with the terms thereof and with Applicable Law.

 

(b)           In addition to the foregoing, Purchaser
hereby agrees that, for a period of six months after the Effective Time, it
shall continue to maintain benefits for

 

38

 

the
employees and former employees of the Company and its Subsidiaries which in the
aggregate are no less favorable taken as a whole (on a value or cost basis)
than those provided to them under the Plans on the date hereof.

 

(c)           For purposes of all employee benefit
plans, programs and arrangements maintained by or contributed to by Surviving
Corporation and its Subsidiaries, Purchaser shall cause the Surviving
Corporation to cause each such plan, program or arrangement to treat the prior
service with the Company and its Affiliates of each person who is an employee
or former employee of the Company or its Subsidiaries immediately prior to the
Effective Time (a “Company Employee”) (to the same extent such service is
recognized under analogous plans, programs or arrangements of the Company or
its Affiliates prior to the Effective Time) as service rendered to the
Surviving Corporation, for purposes of eligibility to participate and vesting
(and only for purposes of benefit accrual and determination of benefit levels
solely with respect to service awards, vacation and severance); provided,
however, that any benefits provided by the Surviving Corporation under any (i) ERISA
Plans, (ii) nonqualified employee benefit or deferred compensation plans,
stock option, bonus or incentive plans or (iii) other employee benefit or
fringe benefit programs, that may be in effect generally for employees of the
Surviving Corporation or its Subsidiaries from time to time, shall be reduced
by benefits in respect of the same years of service under analogous plans,
programs and arrangements maintained by or contributed to by the Company, the
Surviving Corporation or their Subsidiaries. Surviving Corporation shall (x)
waive all limitations as to preexisting conditions exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Company Employees under any welfare benefit plans that such Company
Employees may be eligible to participate in after the Effective Time, other
than limitations or waiting periods that are already in effect with respect to
such employees and that have not been satisfied as of the Effective Time under
any welfare benefit plan maintained for the Company Employees immediately prior
to the Effective Time and (y) provide each Company Employee with credit for any
co-payments and deductibles paid prior to the Effective Time in satisfying any
applicable deductible or out-of-pocket requirements under any welfare plans
that such employees are eligible to participate in after the Effective Time.

 

(d)           Nothing in this Agreement shall be
construed as requiring Purchaser or any of its Affiliates to employ any Company
Employee for any length of time following the Effective Time. Nothing in this
Agreement, express or implied, shall be construed to prevent Purchaser or its
Affiliates from (i) terminating, or modifying the terms of employment of,
any Company Employee following the Effective Time or (ii) terminating or
modifying to any extent in accordance with its terms any Company benefit plan
or any other employee benefit plan, program, agreement or arrangement that Purchaser
or its Affiliates may establish or maintain; provided, however, that to the
extent that, and for so long as, a Company Employee remains employed by
Purchaser or any of its Subsidiaries during the [six month] period following
the Effective Time, the compensation and benefits payable to such employee
during such period shall be subject to Section 6.8(b).

 

39

 

ARTICLE VII

 

CONDITIONS TO MERGER

 

7.1           Conditions to Each Party’s
Obligation To Effect the Merger.  The respective obligation of each party to
effect the Merger shall be subject to the satisfaction on or prior to the
Closing Date of each of the following conditions (any or all of which may be
waived by the parties hereto in writing, in whole or in part, to the extent
permitted by Applicable Law):

 

(a)           This Agreement and the Merger shall
have been adopted and approved by the Required Vote;

 

(b)           No statute, rule, order, decree or
regulation shall have been enacted or promulgated, and no action shall have
been taken, by any Governmental Entity of competent jurisdiction which
temporarily, preliminarily or permanently restrains, precludes, enjoins or
otherwise prohibits the consummation of the Merger or makes the Merger illegal;
and

 

(c)           Other than filing the Articles of
Merger in accordance with the TBCA, all authorizations, consents and approvals
of all Governmental Entities required to be obtained prior to consummation of
the Merger shall have been obtained, except for such authorizations, consents,
and approvals the failure of which to be obtained individually or in the
aggregate has not had, and would not be reasonably likely to have or result in,
a Material Adverse Effect on any party to this Agreement.

 

7.2           Conditions to the Obligation of the
Company to Effect the Merger.  The obligation of the Company to effect the
Merger is further subject to the satisfaction or waiver at or prior to the
Effective Time of the following conditions:

 

(a)           (i) The representations and
warranties of each of Parent, Purchaser and Merger Sub (other than those set
forth in Sections 5.1 and 5.3(a)) shall be true and correct in all material
respects both at and as of the date of this Agreement and at and as of the
Closing Date, as if made at and as of such time (except to the extent expressly
made as of an earlier date, in which case as of such date); and (ii) the
representations and warranties of each of Parent, Purchaser and Merger Sub set
forth in Sections 5.1 and 5.3(a) of this Agreement shall be true and
correct (without giving effect to any limitation as to “materiality” or “Material
Adverse Effect” set forth therein) both at and as of the date of this Agreement
and at and as of the Closing Date, as if made at and as of such time (except to
the extent expressly made as of an earlier date, in which case as of such
date), except where the failure of such representations and warranties to be so
true and correct (without giving effect to any limitation as to “materiality”
or “Material Adverse Effect” set forth therein) individually or in the
aggregate has not had, and would not be reasonably likely to have or result in,
a Material Adverse Effect on Purchaser. 
The Company shall have received a certificate signed on behalf of
Purchaser by each of two senior executive officers of Purchaser to the
foregoing effect;

 

40

 

(b)           Each of Purchaser and Merger Sub
shall have performed in all material respects its obligations under this
Agreement required to be performed by it at or prior to the Effective Time
pursuant to the terms of this Agreement, and the Company shall have received a
certificate signed on behalf of each of Purchaser and Merger Sub by the Chief
Executive Officer of each of Purchaser and Merger Sub to such effect; and

 

(c)           There shall not be pending any suit,
action or proceeding by any Governmental Entity seeking to restrain, preclude,
enjoin or prohibit the Merger or any of the other transactions contemplated by
this Agreement.

 

7.3           Conditions to Obligations of
Purchaser and Merger Sub to Effect the Merger.  The obligations of Purchaser and Merger Sub to
effect the Merger are further subject to the satisfaction or waiver at or prior
to the Effective Time of the following conditions:

 

(a)           (i) the representations and
warranties of the Company set forth in this Agreement (other than those set
forth in Sections 4.1, 4.2, 4.3 and 4.20) shall be true and correct as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date, which must be true and correct as of
such specific date) as of the Closing Date as though made on and as of the
Closing Date, except, in each case, where the failure of such representations
and warranties to be true and correct would not have a Material Adverse Effect
on the Company; and (ii) the representations and warranties of the Company
set forth in Sections 4.1, 4.2, 4.3 and 4.20 of this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an
earlier date, which must be true and correct as of such specific date) as of
the Closing Date as though made on and as of the Closing Date.  Purchaser shall have received a certificate
signed on behalf of the Company by each of two senior executive officers of the
Company to the foregoing effect;

 

(b)           The Company shall have performed in
all material respects each of its obligations under this Agreement required to
be performed by it at or prior to the Effective Time pursuant to the terms of
this Agreement, and Purchaser shall have received a certificate signed on
behalf of the Company by the Chief Executive Officer or Chief Financial Officer
to such effect;

 

(c)           There shall not be pending any suit,
action or proceeding by any Governmental Entity seeking to restrain, preclude,
enjoin or prohibit the Merger or any of the other transactions contemplated by
this Agreement;

 

(d)           All material consents and approvals
of any Person that the Company or any of its Subsidiaries are required to
obtain in connection with the consummation of the Merger, including consents
and approvals from parties to loans, contracts, leases or other agreements,
shall have been obtained, and a copy of each such consent and approval shall
have been provided to Purchaser at or prior to the Closing, except for such
consents and approvals the failure of which to be obtained individually or

 

41

 

in
the aggregate would not be reasonably likely to have or result in a Material
Adverse Effect on the Company; and

 

(e)           All of the closing conditions under
the Interest Purchase Agreement, dated as of the date hereof, by and among the Purchaser
and Slough Estates plc (the “IPA”) (other than those conditions which relate to
actions to be taken at the closing of the Transfer (as defined in the IPA) and
the other transactions contemplated by the IPA) have been satisfied or waived
(subject to Applicable Law and in accordance with the terms of the IPA) and the
consummation of the Transfer and the other transactions contemplated by the IPA
shall have occurred; provided that this condition shall be deemed satisfied if
the Effective Time occurs simultaneously with the closing of the Transfer and
the other transaction contemplated by the IPA.

 

ARTICLE VIII

 

TERMINATION

 

8.1           Termination.

 

Notwithstanding anything herein to the contrary, this Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after shareholder adoption of this Agreement:

 

(a)           By the mutual consent of Purchaser
and the Company in a written instrument.

 

(b)           By either the Company or Purchaser
upon written notice to the other, if:

 

(i)    the Effective Time shall not have
been occurred on or before December 31, 2005 (the “Outside Date”); provided that the right to terminate this
Agreement pursuant to this Section 8.1(b)(i) shall not be available
to a party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to have
occurred on or before such date; or

 

(ii)   any Governmental Entity shall have
issued a statute, rule, order, decree or regulation or taken any other action
(which statute, rule, order, decree, regulation or other action the parties
hereto shall have used their reasonable best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting consummation of the
Merger or making the Merger illegal and such statute, rule, order, decree,
regulation or other action shall have become final and nonappealable (provided
that the terminating party is not then in breach of Section 6.4).

 

(c)           By the Company:  at any time prior to the Effective Time upon
written notice to Purchaser, if there shall have been a material breach by
Purchaser or Merger Sub of any representations, warranty, covenant or agreement
set forth in this

 

42

 

Agreement,
which breach would reasonably be expected to result in any condition set forth
in Section 7.1 not being satisfied and such breach is not reasonably
capable of being cured and such condition is not reasonably capable of being
satisfied within 30 days following the receipt by Purchaser of written notice
of such breach from the Company (provided that Company is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein).

 

(d)           By Purchaser:

 

(i)    at any time prior to the Effective
Time upon written notice to the Company, if there shall have been a material
breach by the Company of any representations, warranty, covenant or agreement
set forth in this Agreement, which breach would reasonably be expected to
result in any condition set forth in Section 7.1 not being satisfied and
such breach is not reasonably capable of being cured and such condition is not
reasonably capable of being satisfied within 30 days following the receipt by
the Company of written notice of such breach from Purchaser (provided that
Purchaser is not then in material breach of any representation, warranty,
covenant or other agreement contained herein); or

 

(ii)   if, prior to the Effective Time upon
written notice to the Company, the Board shall have withdrawn, modified or
changed in a manner adverse to Purchaser or Merger Sub its approval or
recommendation of this Agreement or the Merger or shall have recommended an
Acquisition Proposal or shall have executed a definitive agreement relating to
an Acquisition Proposal with a Person other than Purchaser or Merger Sub.

 

8.2           Effect of Termination.

 

In the event of the termination of this Agreement as provided in Section 8.1,
written notice thereof shall forthwith be given by the terminating party to the
other parties specifying the provision of this Agreement pursuant to which such
termination is made, and except as provided in this Section 8.2, this
Agreement shall forthwith become null and void after the expiration of any
applicable period following such notice. 
In the event of such termination, there shall be no liability on the
part of Parent, Purchaser, Merger Sub or the Company, except (a) as set
forth in Section 9.1 of this Agreement and (b) with respect to the
requirement to comply with the Confidentiality Agreement; provided that nothing
herein shall relieve any party from any liability or obligation with respect to
any willful breach of this Agreement.

 

43

 

ARTICLE IX

 

MISCELLANEOUS

 

9.1           Fees and Expenses.

 

(a)           All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs or expenses, except as provided in
Sections 9.1(b) and 9.1(c).

 

(b)           If this Agreement is terminated by
Purchaser pursuant to Section 8.1(d)(ii), then the Company shall pay to
Purchaser in immediately available funds a termination fee in an amount equal
to U.S.$12.0 million (the “Termination Fee”).

 

(c)           If (i) this Agreement is
terminated by Purchaser or the Company pursuant to Section 8.1(b)(i) or
8.1(b)(iii) and (ii)(A) an Acquisition Proposal has been made and
publicly announced or communicated to the Company’s shareholders after the date
of this Agreement and prior to the effective date of such termination and (B) concurrently
with or within 9 months of the date of such termination a Third Party
Acquisition Event occurs, then the Company shall within one Business Day of the
occurrence of such a Third Party Acquisition Event (including any revisions or
amendments thereto), if any, pay to Purchaser the Termination Fee.

 

(d)           Any payment of the Termination Fee
pursuant to this Section 9.1 shall be made within one Business Day after
termination of this Agreement (or as otherwise expressly set forth in this
Agreement) by wire transfer of immediately available funds.  If the Company fails to pay to Purchaser the
Termination Fee when due hereunder, the Company shall pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee and/or expense
at the publicly announced prime rate for leading money center banks as
published in The Wall Street Journal from the date such fee was required to be
paid to the date it is paid.

 

9.2           Amendment; No Waiver.

 

(a)           Any provision of this Agreement may
be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Purchaser and Merger Sub or, in the case of a waiver, by the party
against whom the waiver is to be effective; provided that (i) any waiver
or amendment shall be effective against a party only if the board of directors
of such party approves such waiver or amendment and (ii) after the
adoption of this Agreement by the shareholders of the Company, no such
amendment or waiver shall, without the further approval of such shareholders
and each party’s board of directors, alter or change (x) the amount or kind of
consideration to be received in exchange for any shares of capital stock of the
Company, (y) prior to the Effective Time, any term of the Company Articles or
(z) any of the terms or conditions of this Agreement if such

 

44

 

alteration
or change would adversely affect the holders of any shares of capital stock of the
Company.

 

(b)           No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by Applicable Law.

 

9.3           Survival.

 

The representations and warranties contained in this Agreement or in
any certificates or other documents delivered prior to or as of the Effective
Time shall survive until (but not beyond) the Effective Time.  The
covenants and agreements of the parties hereto (including the Surviving
Corporation after the Merger) shall survive the Effective Time without
limitation (except for those which, by their terms, contemplate a shorter
survival period).

 

9.4           Notices.

 

All notices and other communications hereunder shall be in writing and
shall be deemed given upon (a) transmitter’s confirmation of a receipt of
a facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand, (c) the expiration of five Business
Days after the day when mailed in the United States by certified or registered
mail, postage prepaid, or (d) delivery in Person, addressed at the
following addresses (or at such other address for a party as shall be specified
by like notice):

 

(a)           if to the Company, to:

 

Tipperary Corporation

633 Seventeenth Street

Suite 1800

Denver, CO 80202

Phone: 303-293-9379

Facsimile: 303-293-3428

Attn: David Bradshaw

 

with copies to:

 

Jones &
Keller, P.C.

1625 Broadway

16th
Floor

Denver, CO
80202

	
  Telephone:

  	
   

  	
  303-573-1600

  
	
  Facsimile:

  	
   

  	
  303-573-8133

  
	
  Attention:

  	
   

  	
  Reid Godbolt

  

 

45

 

and

 

Eugene I.
Davis

c/o PIRINATE
Consulting Group, LLC

5 Canoe Brook
Drive

Livingston, NJ
07039

	
  Telephone:

  	
   

  	
  973-533-9027

  
	
  Facsimile:

  	
   

  	
  973-535-1843

  

 

(b)           if to Purchaser or Merger Sub, to:

 

Santos
International Holdings Pty Ltd.

Ground Floor
Santos House

91 King
William Street

Adelaide 5000

South
Australia

	
  Telephone:

  	
   

  	
  61 8 8218 5111

  
	
  Facsimile:

  	
   

  	
  61 8 8218 5287

  
	
  Attention:

  	
   

  	
  Company Secretary

  

 

with a copy
to:

 

Chamberlain,
Hrdlicka, White, Williams & Martin

1200 Smith
Street, Suite 1400

Houston, Texas
77002

	
  Telephone:

  	
   

  	
  713 658-1818

  
	
  Facsimile:

  	
   

  	
  713 658-2553

  
	
  Attention:

  	
   

  	
  Ralph K. Miller, Jr.

  

 

9.5           Interpretation; Definitions.

 

When a reference is made in this Agreement to Sections, such reference
shall be to a Section of this Agreement unless otherwise indicated.
Whenever the words “include”, “includes” or “including” are used in this
Agreement they shall be deemed to be followed by the words “without limitation”.  The phrase “made available” when used in this
Agreement shall mean that the information referred to has been made available
to the party to whom such information is to be made available.  The word “affiliates” when used in this
Agreement shall have the respective meanings ascribed to them in Rule 12b-2
under the Exchange Act.  The phrase “beneficial
ownership” and words of similar import when used in this Agreement shall have
the meaning ascribed to it in Rule 13d-3 under the Exchange Act.

 

46

 

The following terms have the following definitions:

 

(a)           “Acceptable Confidentiality
Agreement” means an agreement that imposes obligations and restrictions on the
counterparty thereto which are substantially similar to the terms that are
binding on the other party to this Agreement, as applicable, under the
Confidentiality Agreement.

 

(b)           “Business Day” means any day other
than Saturday and Sunday and any day on which banks are not required or
authorized to close in the State of New York.

 

(c)           “Code” means the Internal Revenue
Code of 1986, as amended.

 

(d)           “Comet Ridge Joint Venture” means
each of the unincorporated joint ventures between:  (i) the current parties to the Model Form Operating
Agreement dated 15 May 1992 between Tri-Star Petroleum Company, Bert
Wallace, Tipperary Oil and Gas Corporation, Piper Petroleum Company, Amerind
Oil Co. Ltd, Nations Bank of Texas NA (Trustee for Trust #1190, 1191, 1362,
1363 and 1364), Byron L. Keil and Mary Ann Keil (Co-Trustees of the Byron L.
Keil and Mary Ann Keil Revocable Trust Agreement dated 3/18/88), Curbstone Ltd,
John H. Davis and Clovelly Oil Company, Inc; (ii) the current parties to the Model Form Operating Agreement dated 17
December 2002 between Tipperary Oil & Gas (Australia) Pty Ltd,
Craig Ltd, the Estate of W.D. Kennedy, Origin Energy CSG Limited, Oil Company
of Australia (Moura) Pty Ltd, OCA (CSG) Pty Limited, Tipperary CSG Inc,
Tipperary Corporation, Tipperary Queensland Inc and Wilbanks Pecos County
Production Company Inc; and (iii) the current parties to the Model Form Operating Agreement dated 25
November 2003 between Tipperary Oil & Gas (Australia) Pty Ltd (as
Operator) and Craig Ltd, The Estate of W.D. Kennedy, Origin Energy CSG Limited,
Oil Company of Australia (Moura) Pty Ltd, OCA (CSG) Pty Limited, Tipperary CSG
Inc, Tipperary Corporation, Tipperary Queensland Inc and Wilbanks Pecos County
Production Company Inc.

 

(e)           “Company Assets” means all of the
properties and assets (real, personal or mixed, tangible or intangible) of the
Company and its Subsidiaries.

 

(f)            “Confidentiality Agreement” means
that certain confidentiality agreement, dated April 11, 2005, by and among
the Company, TOGA, Purchaser and Slough Estates plc.

 

(g)           “Derivative Transaction” means any
swap transaction, option, warrant, forward purchase or sale transaction,
futures transaction, cap transaction, floor transaction or collar transaction
relating to one or more currencies, commodities, bonds, equity securities,
loans, interest rates, catastrophe events, weather-related events,
credit-related events or conditions or any indexes, or any other similar
transaction (including any option with respect to any of these transactions) or
combination of any of these transactions, including collateralized mortgage
obligations or other similar instruments or any debt or equity instruments
evidencing or embedding any such types of transactions,

 

47

 

and
any related credit support, collateral or other similar arrangements related to
such transactions; provided, however, that no Australian gas sales contract
entered into in the ordinary course of business consistent with past practice
shall constitute a “Derivative Transaction.”

 

(h)           “Environmental Claim” means any
claim, lien, action, demand, proceeding, investigation or written notice to the
Company or its Subsidiaries by any Person or entity alleging non-compliance
with or potential liability (including potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resource damages,
personal injuries or penalties) arising out of, based on, or resulting from (a) the
presence, or release into the environment, of any Hazardous Substance at any
location, whether or not owned, leased, operated or used by the Company or its
Subsidiaries or (b) circumstances forming the basis of any violation, or
alleged violation of any applicable Environmental Law.

 

(i)            “Environmental Laws” means all
Applicable Laws, including common law, relating to pollution, cleanup,
restoration or protection of the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata and natural resources) or
to the protection of flora or fauna or their habitat or to human or public
health or safety, including (i) Applicable Laws relating to emissions,
discharges, Releases or threatened Releases of Hazardous Substances, or
otherwise relating to the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, including the Comprehensive Environmental Response,
Compensation, and Liability Act and the Resource Conservation and Recovery Act,
and (ii) the Occupational Safety and Health Act.

 

(j)            “Hazardous Substance” means (i) chemicals,
pollutants, contaminants, wastes, toxic and hazardous substances, and oil and
petroleum products, (ii) any substance that is or contains asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon gas or related materials or lead
or lead-based paint or materials, (iii) any substance, material or waste
that requires investigation, removal or remediation under any Environmental
Law, or is defined, listed or identified as hazardous, toxic or otherwise
dangerous under any Environmental Laws or (iv) any substance that is
toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous.

 

(k)           “Knowledge” means, with respect to
the Company, the actual knowledge of the individuals listed in Section 9.5(j)
of the Company Disclosure Letter, after due inquiry.

 

(l)            “Litigation” means any action,
claim, suit, proceeding, citation, summons, subpoena, inquiry or investigation
of any nature, civil, criminal or regulatory, in law or in equity, by or before
any Governmental Entity or arbitrator (including worker’s compensation claims).

 

48

 

(m)          “Material Adverse Effect” means with
respect to the Company (i) a material adverse effect on the business,
results of operations or financial condition of the Company and its
Subsidiaries taken as a whole; provided, that none of the following shall be
deemed, either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether there has been or
will be, a Material Adverse Effect: (A) changes and effects attributable
to changes in Laws of general applicability or interpretations thereof by
courts or governmental authorities, (B) any change in GAAP, (C) changes
and effects attributable to or resulting from changes in general industry
conditions or general economic conditions, including changes in commodity
prices, (D) national or international political conditions, including any
engagement in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist
attack occurring prior to, on or after the date of this Agreement, (E) any
action or omission of the Company or Purchaser or any Subsidiary of any of them
taken with the prior written consent of the other party hereto, and (F) with
respect to Purchaser or Merger Sub, any circumstance, change, event or effect
which materially impairs the ability of Purchaser or Merger Sub to consummate
the transactions contemplated hereby, and (G) changes and effects
attributable to the announcement or pendency of this Agreement or the Merger;
or (ii) any change or effect that prevents or materially impedes or delays
the consummation by the Company of the Merger and the other transactions
contemplated hereby.

 

(n)           “Oil and Gas Properties” means all
of the Company’s or any of its Subsidiaries’ right, title and interest in, to
and under, or derived from oil and gas leases, licenses, authorities to
prospect and rights, Wells and Units, including all land, facilities, personal
property and equipment, contracts and information pertaining or relating
thereto.

 

(o)           “Permitted Exceptions” means (i) statutory
Liens for current taxes, assessments or other governmental charges not yet
delinquent (or that may subsequently be paid without penalty) or the amount or
validity of which is being contested in good faith; (ii) mechanics’,
carriers’, workers’, repairers’ and similar Liens arising or incurred in the
ordinary course of business; (iii) zoning, entitlement and other land use
and environmental regulations by any Governmental Entity; (iv) Liens
relating to purchase money security interests entered into in the ordinary
course of business consistent with past practice; (v) Liens relating to
lessors’ interests in leased tangible personal property; (vi) with respect
to real property, the standard exceptions to title which appear as part of
Chicago Title Insurance Company’s printed form of title insurance policy; (vii) any
other covenants, conditions, restrictions, reservations, rights, claims,
rights-of-ways, easements and other encumbrances or matters of record affecting
title which do not, individually or in the aggregate, have a material adverse
effect on the value or current use of the assets of the party subject to such
Lien, taken as a whole; (ix) Liens incurred in the ordinary course of
business to secure the performance of bids, tenders, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance and repayment bonds
and other similar obligations; and (x) Liens securing obligations reflected on
the Company Balance Sheet.

 

49

 

(p)           “Person” means any natural Person,
firm, individual, partnership, joint venture, business trust, trust,
association, corporation, company, unincorporated entity or Governmental
Entity.

 

(q)           “Release” means any release, spill,
emission, migration, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, or leaching into the environment.

 

(r)            “Return” means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes or any amendment thereto, and including any schedule or
attachment thereto.

 

(s)           “Subsidiary” means with respect to
any Person, any other Person of which 50% or more of the securities or other
interests having by their terms ordinary voting power for the election of directors
or others performing similar functions are directly or indirectly owned by such
Person; and in addition, with respect to any representation and warranty of the
Company, the term Subsidiary shall mean any such other Persons of which 50% or
more of such securities or other interests are or were at any time directly or
indirectly owned by the Company, provided that the Company’s representation and
warranty with respect to such Subsidiary shall only relate to the period during
which the Company directly or indirectly owned such Subsidiary.

 

(t)            “Tax” or “Taxes” mean all federal,
state, local or foreign taxes, assessments, duties, levies or similar charges
of any kind including, without limitation, all income, payroll, withholding,
unemployment insurance, social security, sales, use, service, leasing, excise, goods
and services, franchise, gross receipts, value added, alternative or add-on
minimum, estimates, occupation, real and personal property, stamp, duty,
transfer, workers’ compensation, severance, windfall profits, or other Tax,
charge, fee, levy or assessment of the same or of a similar nature, including
any interest, penalty or addition thereto, whether disputed or not.

 

(u)           “Third Party Acquisition Event”
means the consummation of an Acquisition Proposal involving the purchase of at
least 2/3rds of the equity securities of the Company or all or substantially
all of the consolidated assets of the Company and its Subsidiaries, taken as a
whole.

 

(v)           “TOGA” means Tipperary Oil and Gas
Australia Pty Ltd.

 

(w)          “TOGA Credit Facility” means that
certain senior credit facility of AUS$150,000,000 with the Australia and New
Zealand Banking Group Ltd. and BOS International (Australia), Ltd.

 

(x)            “Unit” means the area covered by a
unitization, communitization or pooling agreement or order applicable to Wells,
but only as to those formations in which a Well or Wells are currently
completed and producing Hydrocarbons.

 

50

 

(y)           “Well” means a well for the purpose
of producing Hydrocarbons or disposing of fluids produced in connection with
the production of Hydrocarbons.

 

9.6           Headings; Schedules.

 

The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.  Disclosure of any matter
pursuant to any Section of the Company Disclosure Letter, the Slough
Disclosure Letter or Merger Sub Disclosure Letter shall not be deemed to be an
admission or representation as to the materiality of the item so disclosed.

 

9.7           Counterparts.

 

This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.

 

9.8           Entire Agreement.

 

This Agreement and the Confidentiality Agreement constitute the entire
agreement, and supersede all prior agreements and understandings (written and
oral), among the parties with respect to the subject matter of this Agreement.

 

9.9           Severability.

 

If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, unenforceable or against its regulatory policy, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

 

9.10         Governing Law.

 

This Agreement shall be governed, construed and enforced in accordance
with the laws of the State of Texas without giving effect to the principles of
conflicts of law thereof.

 

9.11         Assignment.

 

Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other
parties.  Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and assigns.

 

51

 

9.12         Parties in Interest.

 

This Agreement shall be binding upon and inure solely to the benefit of
each party to this Agreement and their permitted assignees, and (other than
Sections 6.5 and 9.11) nothing in this Agreement, express or implied, is intended
to or shall confer upon any other Person any rights, benefits or remedies of
any nature whatsoever under or by reason of this Agreement.  Without limiting the foregoing, no direct or
indirect holder of any equity interests or securities of any party to this
Agreement (whether such holder is a limited or general partner, member,
shareholder or otherwise), nor any affiliate of any party to this Agreement,
nor any director, officer, employee, representative, agent or other controlling
Person of each of the parties to this Agreement and their respective affiliates
shall have any liability or obligation arising under this Agreement or the
transactions contemplated hereby.

 

******

 

52

 

IN WITNESS WHEREOF, Purchaser,
Merger Sub and the Company have caused this Agreement to be signed by their
respective officers thereunto duly authorized as of the date first written
above.

 

	
   

  	
  Signed for and on behalf of SANTOS

  
	
   

  	
  INTERNATIONAL

  
	
   

  	
  HOLDINGS PTY LTD.

  
	
   

  	
  A.B.N. 57 057 585 869 by its duly

  
	
   

  	
  appointed Attorney in the presence of:

  
	
   

  	
   

  
	
   

  	
  /s/ Christian J. Paech

  	
   

  
	
   

  	
  Witness

  
	
   

  	
  Printed Name:

  	
  Christian J. Paech

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Andrew L. Winter

  	
   

  
	
   

  	
  Attorney

  
	
   

  	
  Printed Name:

  	
  Andrew L. Winter

  	
   

  
	
   

  	
   

  
	
   

  	
  SANTOS ACQUISITION CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Andrew L. Winter

  	
   

  
	
   

  	
  Name:

  	
  Andrew L. Winter

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TIPPERARY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L. Bradshaw

  	
   

  
	
   

  	
  Name:

  	
  David L. Bradshaw

  	
   

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
								

 

 

Santos Ltd. joins in the execution and delivery of this Agreement and
Plan of Merger dated June 30, 2005 by and among Santos International Holdings
Pty Ltd, Santos Acquisition Co. and Tipperary Corporation for the limited
purpose of evidencing the agreement of Santos Ltd. to be bound by and subject
to the provisions of Sections 2.1, 3.2(a), 5.1, 5.2, 5.3, 5.4, 5.6 and 5.9 of
said Agreement.

 

	
   

  	
  Signed for and on behalf of SANTOS LTD.

  
	
   

  	
  A.B.N. 80 007 550 923 by its duly

  
	
   

  	
  appointed Attorney in the presence of:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Christian J. Paech

  	
   

  
	
   

  	
  Witness

  
	
   

  	
  Printed Name:

  	
  Christian J. Paech

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Andrew L. Winter

  	
   

  
	
   

  	
  Attorney

  
	
   

  	
  Printed Name:

  	
  Andrew L. Winter

  	
   

  

 

 

SCHEDULE 2.3(a)

 

WARRANTS

 

	
  Holder

  	
   

  	
  Date of

  Grant

  	
   

  	
  Exercise

  Price

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Andrew Mayers

  	
   

  	
  06/03/03

  	
   

  	
  $

  	
  2.13

  	
   

  	
  25,000

  	
   

  
	
  Anthony Speed

  	
   

  	
  07/08/02

  	
   

  	
  $

  	
  1.65

  	
   

  	
  25,000

  	
   

  
	
  Anthony Speed

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  15,000

  	
   

  
	
  Charles T Maxwell

  	
   

  	
  05/03/00

  	
   

  	
  $

  	
  2.63

  	
   

  	
  50,000

  	
   

  
	
  Charles T Maxwell

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  D. Leroy Sample

  	
   

  	
  11/30/00

  	
   

  	
  $

  	
  3.00

  	
   

  	
  50,000

  	
   

  
	
  D. Leroy Sample

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  10/01/90

  	
   

  	
  $

  	
  2.00

  	
   

  	
  201,900

  	
   

  
	
  David L Bradshaw

  	
   

  	
  04/01/96

  	
   

  	
  $

  	
  4.63

  	
   

  	
  50,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  50,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  09/24/99

  	
   

  	
  $

  	
  1.50

  	
   

  	
  50,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  01/03/00

  	
   

  	
  $

  	
  1.50

  	
   

  	
  100,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  02/03/03

  	
   

  	
  $

  	
  1.81

  	
   

  	
  40,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  200,000

  	
   

  
	
  Douglas Kramer

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  Eugene I Davis

  	
   

  	
  01/25/94

  	
   

  	
  $

  	
  2.75

  	
   

  	
  50,000

  	
   

  
	
  Eugene I Davis

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  15,000

  	
   

  
	
  Eugene I Davis

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  James F Knott

  	
   

  	
  02/09/00

  	
   

  	
  $

  	
  2.00

  	
   

  	
  144,000

  	
   

  
	
  James H Marshall

  	
   

  	
  02/09/00

  	
   

  	
  $

  	
  2.00

  	
   

  	
  144,000

  	
   

  
	
  Jeff T Obourn

  	
   

  	
  01/30/01

  	
   

  	
  $

  	
  3.75

  	
   

  	
  50,000

  	
   

  
	
  Jeff T Obourn

  	
   

  	
  02/03/03

  	
   

  	
  $

  	
  1.81

  	
   

  	
  20,000

  	
   

  
	
  Jeff T Obourn

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  07/11/96

  	
   

  	
  $

  	
  4.31

  	
   

  	
  50,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  15,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  09/24/99

  	
   

  	
  $

  	
  1.50

  	
   

  	
  200,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  02/03/03

  	
   

  	
  $

  	
  1.81

  	
   

  	
  10,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  50,000

  	
   

  
	
  Marshall D Lees

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  01/01/99

  	
   

  	
  $

  	
  2.00

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  06/29/00

  	
   

  	
  $

  	
  3.44

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  01/01/02

  	
   

  	
  $

  	
  1.65

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  02/08/04

  	
   

  	
  $

  	
  3.92

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  Slough Estates USA, Inc.

  	
   

  	
  12/22/98

  	
   

  	
  $

  	
  3.00

  	
   

  	
  500,000

  	
   

  
	
  Slough Estates USA, Inc.

  	
   

  	
  12/23/99

  	
   

  	
  $

  	
  2.00

  	
   

  	
  1,200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3,579,900

  	
   

  

 

Schedule 2.3(a)Exhibit 10.38

 

AMENDED
AND RESTATED

 

AGREEMENT
AND PLAN OF MERGER

 

by and among

 

SANTOS
INTERNATIONAL HOLDINGS PTY LTD.

 

SANTOS
ACQUISITION CO.

 

and

 

TIPPERARY
CORPORATION

 

dated as of

 

JULY 4,
2005

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I [RESERVED]

  	
   

  
	
   

  	
   

  
	
  ARTICLE II THE MERGER

  	
   

  
	
   

  	
   

  
	
  2.1

  	
  The Merger

  	
   

  
	
  2.2

  	
  Effective Time

  	
   

  
	
  2.3

  	
  Effects of the Merger

  	
   

  
	
  2.4

  	
  Articles of Incorporation and Bylaws

  	
   

  
	
  2.5

  	
  Directors and Officers of the Surviving
  Corporation

  	
   

  
	
  2.6

  	
  The Shareholders’ Meeting

  	
   

  
	
  2.7

  	
  Board of Directors

  	
   

  
	
   

  	
   

  
	
  ARTICLE III CONVERSION OF SECURITIES

  	
   

  
	
   

  	
   

  
	
  3.1

  	
  Effect on Capital Stock

  	
   

  
	
  3.2

  	
  Surrender and Payment

  	
   

  
	
  3.3

  	
  Treatment of Stock Options and Warrants

  	
   

  
	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND
  WARRANTIES OF THE COMPANY

  	
   

  
	
   

  	
   

  
	
  4.1

  	
  Organization

  	
   

  
	
  4.2

  	
  Capitalization

  	
   

  
	
  4.3

  	
  Authorization; Validity of Agreement

  	
   

  
	
  4.4

  	
  No Violations; Approvals

  	
   

  
	
  4.5

  	
  SEC Reports and Financial Statements

  	
   

  
	
  4.6

  	
  Absence of Certain Changes

  	
   

  
	
  4.7

  	
  Absence of Undisclosed Liabilities

  	
   

  
	
  4.8

  	
  Information to Be Supplied

  	
   

  
	
  4.9

  	
  Employee Benefit Plans; ERISA

  	
   

  
	
  4.10

  	
  Litigation; Compliance with Law

  	
   

  
	
  4.11

  	
  Intellectual Property

  	
   

  
	
  4.12

  	
  Material Contracts

  	
   

  
	
  4.13

  	
  Properties

  	
   

  
	
  4.14

  	
  Taxes

  	
   

  
	
  4.15

  	
  Environmental Matters

  	
   

  
	
  4.16

  	
  Investment Company

  	
   

  
	
  4.17

  	
  Public Utility Holding Company Act

  	
   

  
	
  4.18

  	
  Required Vote by Company Shareholders

  	
   

  
	
  4.19

  	
  Brokers

  	
   

  
	
  4.20

  	
  Article 13.03 of the TBCA

  	
   

  
	
  4.21

  	
  Oil
  and Gas

  	
   

  
				

 

 

	
  4.22

  	
  Recommendation of Company Board of
  Directors; Opinion of Financial Advisor

  	
   

  
	
  4.23

  	
  Affiliate Transactions

  	
   

  
	
  4.24

  	
  Derivative Transactions and Hedging

  	
   

  
	
  4.25

  	
  Insurance

  	
   

  
	
  4.26

  	
  No Other Representations or Warranties

  	
   

  
	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND
  WARRANTIES OF PURCHASER AND MERGER SUB

  	
   

  
	
   

  	
   

  
	
  5.1

  	
  Organization

  	
   

  
	
  5.2

  	
  Authorization; Validity of Agreement

  	
   

  
	
  5.3

  	
  Consents and Approvals; No Violations

  	
   

  
	
  5.4

  	
  Information to be Supplied

  	
   

  
	
  5.5

  	
  Interim Operations of Merger Sub

  	
   

  
	
  5.6

  	
  Financing

  	
   

  
	
  5.7

  	
  Beneficial Ownership of Shares

  	
   

  
	
  5.8

  	
  Brokers

  	
   

  
	
  5.9

  	
  No Other Representations or Warranties

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI COVENANTS

  	
   

  
	
   

  	
   

  
	
  6.1

  	
  Interim Operations of the Company

  	
   

  
	
  6.2

  	
  Acquisition Proposals

  	
   

  
	
  6.3

  	
  Access to Information

  	
   

  
	
  6.4

  	
  Further Action; Reasonable Best Efforts

  	
   

  
	
  6.5

  	
  Directors’ and Officers’ Insurance and Indemnification

  	
   

  
	
  6.6

  	
  Publicity

  	
   

  
	
  6.7

  	
  Merger
  Sub

  	
   

  
	
  6.8

  	
  Employee Benefits

  	
   

  
	
  6.9

  	
  Other Covenants of Purchaser and Merger Sub

  	
   

  
	
   

  	
   

  
	
  ARTICLE VII CONDITIONS TO MERGER

  	
   

  
	
   

  	
   

  
	
  7.1

  	
  Conditions to Each Party’s Obligation To
  Effect the Merger

  	
   

  
	
   

  	
   

  
	
  ARTICLE VIII TERMINATION

  	
   

  
	
   

  	
   

  
	
  8.1

  	
  Termination

  	
   

  
	
  8.2

  	
  Effect of Termination

  	
   

  
	
   

  	
   

  
	
  ARTICLE IX MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  9.1

  	
  Fees and Expenses

  	
   

  
	
  9.2

  	
  Amendment; No Waiver

  	
   

  
	
  9.3

  	
  Survival

  	
   

  
	
  9.4

  	
  Notices

  	
   

  
	
  9.5

  	
  Interpretation; Definitions

  	
   

  
				

 

iii

 

	
  9.6

  	
  Headings; Schedules

  	
   

  
	
  9.7

  	
  Counterparts

  	
   

  
	
  9.8

  	
  Entire Agreement

  	
   

  
	
  9.9

  	
  Severability

  	
   

  
	
  9.10

  	
  Governing Law

  	
   

  
	
  9.11

  	
  Assignment

  	
   

  
	
  9.12

  	
  Parties in Interest

  	
   

  

 

iv

 

TABLE
OF DEFINED TERMS

 

	
  Acceptable
  Confidentiality Agreement

  	
  48

  
	
  Acquisition
  Agreement

  	
  35

  
	
  Acquisition
  Proposal

  	
  37

  
	
  Affiliates

  	
  48

  
	
  Agreement

  	
  1

  
	
  Applicable
  Laws

  	
  9

  
	
  Article 5.12

  	
  6

  
	
  Articles of
  Incorporation

  	
  3

  
	
  Articles of
  Merger

  	
  2

  
	
  beneficial
  ownership

  	
  48

  
	
  Board

  	
  1

  
	
  Business Day

  	
  48

  
	
  Bylaws

  	
  3

  
	
  Certificate

  	
  6

  
	
  Certificate
  of Merger

  	
  2

  
	
  Closing

  	
  2

  
	
  Closing Date

  	
  2

  
	
  COBRA

  	
  18

  
	
  Code

  	
  48

  
	
  Comet Ridge
  Joint Venture

  	
  48

  
	
  Company

  	
  1

  
	
  Company
  Adverse Recommendation Change

  	
  36

  
	
  Company
  Articles

  	
  3

  
	
  Company
  Assets

  	
  49

  
	
  Company
  Balance Sheet

  	
  16

  
	
  Company
  Bylaws

  	
  3

  
	
  Company
  Common Stock

  	
  1

  
	
  Company
  Cumulative Preferred Stock

  	
  11

  
	
  Company
  Disclosure Letter

  	
  10

  
	
  Company
  Employee

  	
  41

  
	
  Company
  Material Contracts

  	
  22

  
	
  Company
  Non-Cumulative Preferred Stock

  	
  11

  
	
  Company
  Notice

  	
  36

  
	
  Company
  Preferred Stock

  	
  11

  
	
  Company
  Properties

  	
  23

  
	
  Company
  Property

  	
  23

  
	
  Company SEC
  Documents

  	
  14

  
	
  Confidentiality
  Agreement

  	
  49

  
	
  Cut-Off Time

  	
  11

  
	
  Derivative
  Transaction

  	
  49

  
	
  Dissenting
  Shares

  	
  7

  
	
  Effective
  Time

  	
  2

  
	
  Environmental
  Claim

  	
  49

  
	
  Environmental
  Laws

  	
  49

  
	
  ERISA

  	
  17

  
	
  ERISA
  Affiliate

  	
  17

  
	
  ERISA Plan

  	
  17

  
	
  Exchange Act

  	
  14

  
	
  Exchange
  Fund

  	
  8

  
	
  Form 15
  Date

  	
  42

  
	
  GAAP

  	
  15

  
	
  Governmental
  Entity

  	
  13

  
	
  Hazardous
  Substance

  	
  50

  
	
  HLHZ

  	
  27

  
	
  Hydrocarbons

  	
  27

  
	
  Indemnitees

  	
  39

  
	
  Independent
  Directors

  	
  5

  
	
  Intellectual
  Property

  	
  21

  
	
  IPA

  	
  1

  
	
  knowledge

  	
  50

  
	
  Leased
  Properties

  	
  23

  
	
  Leased
  Property

  	
  23

  
	
  Liens

  	
  12

  
	
  Litigation

  	
  50

  
	
  Material
  Adverse Effect

  	
  50

  
	
  Merger

  	
  1

  
	
  Merger
  Consideration

  	
  7

  
	
  Merger Sub

  	
  1

  
	
  Merger Sub
  Common Stock

  	
  6

  
	
  Merrill

  	
  32

  
	
  Oil and Gas
  Properties

  	
  51

  
	
  Outside Date

  	
  44

  
	
  Owned
  Properties

  	
  23

  
	
  Owned
  Property

  	
  22

  
	
  Parent

  	
  2

  
	
  Paying Agent

  	
  7

  
	
  PBGC

  	
  17

  
	
  Permitted
  Exceptions

  	
  51

  
	
  Person

  	
  51

  
	
  Plans

  	
  17

  
	
  Proxy
  Statement

  	
  3

  
	
  Purchaser

  	
  1

  
	
  Release

  	
  51

  
	
  Required
  Vote

  	
  26

  
	
  Reserve
  Report

  	
  27

  
	
  Return

  	
  51

  

 

v

 

	
  SEC

  	
  3

  
	
  SEC Staff

  	
  3

  
	
  Secretary of
  State

  	
  2

  
	
  Securities
  Act

  	
  14

  
	
  SGAA

  	
  19

  
	
  Shareholders’
  Meeting

  	
  3

  
	
  SIS

  	
  19

  
	
  Specified
  Company SEC Documents

  	
  15

  
	
  Stock Option
  Agreements

  	
  10

  
	
  Stock
  Options

  	
  10

  
	
  Subsidiary

  	
  51

  
	
  Superior
  Proposal

  	
  37

  
	
  Surviving
  Corporation

  	
  2

  
	
  SUSA

  	
  1

  
	
  Tax

  	
  52

  
	
  Taxes

  	
  52

  
	
  TBCA

  	
  1

  
	
  Termination
  Fee

  	
  45

  
	
  Third Party
  Acquisition Event

  	
  52

  
	
  TOGA

  	
  52

  
	
  TOGA Credit
  Facility

  	
  52

  
	
  Unit

  	
  52

  
	
  Warrant
  Agreements

  	
  10

  
	
  Warrants

  	
  10

  
	
  Well

  	
  52

  

 

vi

 

AMENDED
AND RESTATED

 

AGREEMENT
AND PLAN OF MERGER

 

THIS AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER, dated as of July 4, 2005 (this “Agreement”), by and among
Tipperary Corporation, a Texas corporation (the “Company”), Santos International Holdings Pty Ltd., a
corporation incorporated under the laws of the Australian Capital Territory
A.B.N. 57 057 585 869 (“Purchaser”), and Santos Acquisition Co., a Texas
corporation and wholly-owned Subsidiary of Purchaser (“Merger Sub”), and amends
and restates in entirety the Agreement and Plan of Merger, dated as of July 1,
2005, by and among the Company, Purchaser and Merger Sub.

 

WHEREAS, the Boards of Directors of each of
the Company, Purchaser and Merger Sub have each approved this Agreement and the
merger of the Company with and into Merger Sub (the “Merger ”), upon the terms
and subject to the conditions set forth in this Agreement and in accordance
with the Texas Business Corporation Act, as amended (the “TBCA”;

 

WHEREAS, the Board of Directors of the
Company (the “Board”) has determined that the Merger is fair to, and in the
best interest of, its shareholders; and

 

WHEREAS, on July 4, 2005, Slough Estates
USA, Inc., a Delaware corporation (“SUSA”), the beneficial owner of
approximately 53.64% of the issued and outstanding common stock, U.S.$0.02 par
value, of the Company (the “Company Common Stock”), simultaneously with the
execution and delivery of this Agreement, and as a condition and inducement to
Purchaser’s willingness to enter into this Agreement, Slough Estates plc, a
public limited company organized under the laws of England and Wales and the
ultimate parent of SUSA, entered into an Amended and Restated Interest Purchase
Agreement (the “IPA”) with Purchaser providing for certain matters with respect
to its shares of Company Common Stock and certain other actions relating to the
Merger and the other transactions contemplated by this Agreement, and this IPA
amended and restated in its entirety the Interest Purchase Agreement, dated as
of July 1, 2005, by and between Slough Estates plc and Purchaser.

 

NOW, THEREFORE, in consideration of the
foregoing and the respective representations, warranties, covenants and
agreements set forth herein, the parties hereto agree as follows:

 

ARTICLE I

 

[RESERVED]

 

1

 

ARTICLE II

 

THE MERGER

 

2.1                                 The Merger.

 

Upon the terms
and subject to the conditions of this Agreement, and in accordance with the
provisions of the TBCA, Santos Ltd., a corporation incorporated under the laws
of South Australia (“Parent”), shall cause Merger Sub to be merged with and
into the Company at the Effective Time. 
As a result of the Merger, the separate corporate existence of Merger
Sub shall cease and the Company shall continue its existence as a wholly owned
Subsidiary of Purchaser.  The Company, in
its capacity as the corporation surviving the Merger, is hereinafter sometimes
referred to as the “Surviving Corporation”. 
Without limiting the generality of the foregoing, upon the Merger, all
the rights, privileges, immunities, powers and franchises of the Company and
Merger Sub shall vest in the Surviving Corporation and all the obligations,
duties, debts and liabilities of the Company and Merger Sub shall be the
obligations, duties, debts and liabilities of the Surviving Corporation.

 

2.2                                 Effective Time.

 

As promptly as
possible on the Closing Date, the parties hereto shall cause the Merger to be
consummated by delivering to the Secretary of State of the State of Texas (the “Secretary
of State”) articles of merger (the “Articles of Merger”) in such form as is
required by and executed in accordance with Article 5.04 of the TBCA.  The Merger shall become effective when a
certificate of merger (the “Certificate of Merger”) is issued to the Surviving
Corporation by the Secretary of State or at such later time as shall be agreed
upon by Purchaser and the Company and specified in the Articles of Merger (the “Effective
Time”).  Prior to the filing referred to
in this Section 2.2 and unless this Agreement shall have been terminated
and the transactions contemplated herein abandoned pursuant to Section 8.1,
a closing (the “Closing”) shall be held at 10:00 a.m., Houston time, on a
date to be specified by the parties hereto, which shall be no later than the
Business Day after satisfaction or waiver (by the party entitled to waive the
condition) of all of the conditions set forth in Article VII (except for
those conditions that can by their nature be satisfied only at the time of the
Closing), but subject to the satisfaction or waiver of those conditions) (the “Closing
Date”), at the offices of Chamberlain, Hrdlicka, White, Williams &
Martin, 1200 Smith Street, Suite 1400, Houston, Texas 77002, unless
another date and/or place is agreed to in writing by the parties hereto.

 

2.3                                 Effects of the Merger.

 

From and after
the Effective Time, the Merger shall have the effects set forth in Article 5.06
of the TBCA.

 

2.4                                 Articles of Incorporation and Bylaws.

 

Pursuant to
the Merger, (a) the Company’s Articles of Incorporation, as in effect on
the date of this Agreement (the “Company Articles”), shall be the Articles of 

 

2

 

Incorporation of the Surviving Corporation (the “Articles of
Incorporation”) until thereafter changed or amended as provided therein or by
Applicable Law, and (b) the Company’s Bylaws, as in effect on the date of
this Agreement (the “Company Bylaws”), shall be the Bylaws of the Surviving
Corporation (the “Bylaws”) until thereafter changed or amended as provided
therein or by Applicable Law.

 

2.5                                 Directors and Officers of the
Surviving Corporation.

 

From and after
the Effective Time, (a) the directors of Merger Sub immediately prior to
the Effective Time shall, from and after the Effective Time, be the directors
of the Surviving Corporation until their successors shall have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Articles of Incorporation and the Bylaws and (b) the
officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.

 

2.6                                 The Shareholders’ Meeting.

 

(a)                      As promptly as practicable after the
execution of this Agreement, the Company shall, in accordance with Applicable
Law and the Company Articles and the Company Bylaws:

 

(i)                                          duly call, give notice of, convene
and hold a special meeting of the holders of shares of Company Common Stock for
the sole purpose of considering and voting upon approval of the Merger, this
Agreement and the transactions contemplated by this Agreement (such meeting,
including any postponement or adjournment thereof, is referred to as the “Shareholders’
Meeting”), and shall use its reasonable best efforts to hold the Shareholders’
Meeting no later than 45 days after such date; and

 

(ii)                                       prepare and file with the Securities
and Exchange Commission (the “SEC”) a preliminary proxy or information
statement relating to this Agreement, and take all lawful actions to obtain and
furnish the information required to be included by the SEC in the Proxy
Statement, and, after consultation with Purchaser, to respond promptly to any
comments made by the SEC or the staff of the SEC (the “SEC Staff”) with respect
to the preliminary proxy or information statement and cause a definitive proxy
or information statement (together with any amendments or supplements thereto,
the “Proxy Statement”) to be mailed to the holders of shares of Company Common
Stock as soon as practicable, which Proxy Statement shall include all
information required under Applicable Laws to be furnished to the holders of
shares of Company Common Stock in connection with the Merger and the
transactions contemplated by this Agreement; and

 

3

 

(iii)                                    include in the Proxy Statement the
recommendation of the Board to the extent not previously withdrawn in
compliance with Section 6.2(e).

 

(b)                     The Company shall promptly notify
Purchaser of any comments from the SEC Staff with respect to the Proxy
Statement or any request of the SEC Staff for additional information and shall
supply Purchaser with copies of all correspondence between the Company or its
representatives, on the one hand, and the SEC Staff, on the other hand, with
respect to the Proxy Statement.

 

(c)                      Except as otherwise provided in Section 6.2,
the Company, acting through the its board of directors, shall (i) recommend
adoption of this Agreement and include in the Proxy Statement such
recommendation and (ii) use its reasonable best efforts to solicit and
obtain such adoption.  Notwithstanding
any Company Adverse Recommendation Change or the commencement, public proposal,
public disclosure or communication to the Company of any Acquisition Proposal
with respect to the Company or any of its Subsidiaries, or any other fact or
circumstance, the Company shall submit this Agreement to the shareholders of
the Company at the Shareholders’ Meeting for the purpose of adopting this
Agreement, with such disclosures as shall be required by Applicable Law.  At any such Shareholders’ Meeting following
any such withdrawal, amendment or modification of the recommendation of this
Agreement by the Company’s board of directors, the Company may submit this
Agreement to its shareholders without a recommendation or with a negative
recommendation (although the approval of this Agreement by the Company’s board
of directors may not be rescinded or amended), in which event the Company’s
board of directors may communicate the basis for its lack of a recommendation
or negative recommendation to its shareholders in the Proxy Statement or an
appropriate amendment or supplement thereto.

 

(d)                     Purchaser and Merger Sub hereby
agree to vote all shares of Company Common Stock held by them in favor of the
Merger at the Shareholders Meeting.

 

2.7                                 Board of Directors.

 

(a)                      Promptly following the closing of
the Transfer (as defined in the IPA) and for so long thereafter as Purchaser
and/or Merger Sub own in aggregate more than fifty percent (50%) of the Company
Common Stock, and subject to Section 2.7(c), Merger Sub shall be entitled
to designate up to such number of directors, rounded up to the nearest whole
number constituting at least a majority of the directors, on the Board (and on
each board or other governing body of the Company’s Subsidiaries) as will give
Merger Sub representation on the Board (and on each board or other governing
body of the Company’s Subsidiaries) equal to the product of the number of
directors on the Board (and on each board or other governing body of the
Company’s Subsidiaries) (giving effect in the case of the Board to any increase
in the number of directors pursuant to this Section 2.3) and the
percentage that such number of shares of Company Common Stock so purchased
bears to the total number of outstanding shares of Company Common Stock, and
the Company shall use all reasonable efforts to, upon Merger Sub’s request, 

 

4

 

promptly,
at Merger Sub’s election, in accordance with Article 2.34 of the TBCA,
increase the size of the Board (and each board or other governing body of the
Company’s Subsidiaries) and/or secure the resignation of such number of
directors as is necessary to enable Merger Sub’s designees to be elected to the
Board (and to each board or other governing body of the Company’s Subsidiaries)
and to cause Merger Sub’s designees to be so elected. At such times, subject to
Section 2.7(c), the Company will cause individuals designated by Merger
Sub to constitute a majority of each committee of the Board (and each board or
other governing body of the Company’s Subsidiaries), other than the special
committee of the Board established to take action under this Agreement which
committee shall be composed only of Independent Directors (as defined
below).  The provisions of this Section 2.7(a) are
in addition to and not in limitation of any rights which Merger Sub, Purchaser
or any of their affiliates may otherwise have, subject to the terms of this Section 2.7,
as a holder or beneficial owner of shares of Company Common Stock.

 

(b)                     The Company’s obligation to appoint
designees to the Board shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. 
The Company promptly shall take all action required pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder in order to fulfill its
obligations under this Section 2.7, provided, that, Merger Sub shall have
timely provided to the Company the information and consents with respect to
Merger Sub and its designees, officers, directors and affiliates required by Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder. Merger Sub will supply to the
Company in writing any information with respect to itself and its nominees,
officers, directors and affiliates required under the Exchange Act pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder.

 

(c)                      In the event that Merger Sub’s
designees are elected or designated to the Board, then, until the Effective
Time, the Company shall cause the Board to have at least seven directors,
including at least three directors who are directors on the date of this
Agreement and who are not officers of the Company or any of its Subsidiaries
(such directors, the “Independent Directors”); provided, however, that, if any
Independent Director is unable to serve due to death or disability or any other
reason, the remaining Independent Directors shall be entitled to elect or
designate another individual (or individuals) who serve(s) as a director (or
directors) on the date of this Agreement (provided that no such individual is
an employee of the Company or its Subsidiaries) to fill the vacancy, and such
director (or directors) shall be deemed to be an Independent Director (or
Independent Directors) for purposes of this Agreement.  If no Independent Director then remains, the
other directors shall designate three individuals who are directors on the date
of this Agreement, provided that such individuals shall not be employees,
officers or affiliates of the Company, Purchaser or Merger Sub (or, in the
event there shall be less than two directors available to fill the vacancies as
a result of such individuals’ deaths, disabilities or refusals to serve, such
smaller number of individuals who are directors on the date of this Agreement)
to fill the vacancies and such directors shall be deemed Independent Directors
for purposes of this Agreement.  Prior to
the Effective Time, Purchaser and Merger Sub shall cause any amendment of this
Agreement, any termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the obligations or other
acts of 

 

5

 

Merger
Sub or Purchaser or waiver of any of the Company’s rights under this Agreement,
not to be effected without the affirmative vote of a majority of the
Independent Directors; provided, however, that if there shall be no Independent
Directors then in office, such actions may be authorized by a majority vote of
the Board in accordance with the terms and conditions of this Agreement.

 

ARTICLE III

 

CONVERSION OF
SECURITIES

 

3.1                                 Effect on Capital Stock.

 

At the
Effective Time, by virtue of the Merger and without any action on the part of
Purchaser, Merger Sub or the Company or their respective shareholders and
shareholders, as applicable:

 

(a)                      Each share of common stock, par value
U.S.$1.00 per share, of Merger Sub (“Merger Sub Common Stock”) issued and
outstanding immediately prior to the Effective Time shall be converted into one
fully paid and nonassessable share of common stock, par value U.S.$0.02 per
share, of the Surviving Corporation. 
Such newly issued shares shall thereafter constitute all of the issued
and outstanding Surviving Corporation capital stock.

 

(b)                     Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time, excluding any shares
of Company Common Stock owned by Purchaser, Merger Sub or the Company or any of
their respective Subsidiaries or any shareholders properly exercising rights to
dissent pursuant to Article 5.12 of the TBCA (“Article 5.12”), as
provided in Section 3.1(d), shall be converted into and represent the
right to receive in cash, without interest, an amount equal to the Merger
Consideration.  At the Effective Time,
all shares of Company Common Stock shall no longer be outstanding and
automatically shall be cancelled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any shares
of Company Common Stock (a “Certificate”) shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration or in the
case of holders of Dissenting Shares the right to receive the applicable
payments set forth in Section 3.1(d).

 

(c)                      Each share of the Company capital
stock held in the treasury of the Company automatically shall be cancelled and
retired and no payment shall be made in respect thereof. Each share of Company
Common Stock issued and outstanding immediately prior to the Effective Time
that is owned by Purchaser or any of its Subsidiaries shall be cancelled and
retired and no payment shall be made in respect thereof.

 

(d)                     Notwithstanding anything in this
Agreement to the contrary, the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by any holder
of Company Common Stock that is entitled to

 

6

 

demand
and properly demands payment of the fair value of such shares of Company Common
Stock pursuant to, and that complies in all respects with, the provisions of Article 5.12
(the “Dissenting Shares”) shall not be converted into the right to receive the
Merger Consideration as provided in Section 3.1(b), but, instead, such
holder of Company Common Stock shall be entitled to such rights (but only such
rights) as are granted by Article 5.12. 
At the Effective Time, all Dissenting Shares shall no longer be
outstanding and automatically shall be cancelled and shall cease to exist, and,
except as otherwise provided by Applicable Laws, each holder of Dissenting
Shares shall cease to have any rights with respect to the Dissenting Shares,
other than such rights as are granted by Article 5.12.  Notwithstanding the foregoing, if any such
holder of shares of Company Common Stock (i) shall have failed to
establish entitlement to relief as a dissenting shareholder as provided in Article 5.12,
(ii) shall have effectively withdrawn demand for relief as a dissenting
shareholder with respect to such Dissenting Shares or lost the right to relief
as a dissenting shareholder and payment for such Dissenting Shares under Article 5.12,
or (iii) shall have failed to file a complaint with the appropriate court
seeking relief as to the determination of the value of all such Dissenting
Shares within the time provided in Article 5.12, such holder of Company
Common Stock shall forfeit or, in the event a court of competent jurisdiction
shall determine that holder of Company Common Stock is not entitled to the
relief provided by Article 5.12, lose the right to relief as a dissenting
shareholder with respect to such Dissenting Shares, and such Dissenting Shares
shall be deemed to have been converted at the Effective Time into, and shall
have become, the right to receive the Merger Consideration as provided in Section 3.1(b) without
interest.  The Company shall give prompt
notice to Purchaser of any demands for appraisal of any shares of Company
Common Stock and any attempted withdrawals of such demands and any other
instruments served pursuant to the TBCA and received by the Company relating to
shareholder dissent rights, and Purchaser shall have the opportunity to
participate in all negotiations and proceedings with respect to such
demands.  Prior to the Effective Time,
the Company shall not, without the prior written consent of Purchaser, make any
payment with respect to, or settle or offer to settle, any such demands, or
agree to do any of the foregoing.

 

(e)                      The “Merger Consideration” shall be
an amount equal to $7.43 cash per share of Company Common Stock.

 

3.2                                 Surrender and Payment.

 

(a)                      Paying Agent and Exchange Fund. 
Prior to the Effective Time, on behalf of the holders of shares of
Company Common Stock, Purchaser shall designate, or shall cause to be
designated Morgan Guaranty & Trust Co. or another bank or trust
company reasonably acceptable to the Company to act as agent for the payment of
the Merger Consideration in respect of Certificates, upon surrender of such
Certificates in accordance with this Article III from time to time after
the Effective Time (the “Paying Agent”). 
Prior to the Effective Time, Parent shall deposit, or cause Purchaser or
Merger Sub to deposit, with the Paying Agent cash in amounts sufficient for the
payment of the Merger Consideration pursuant to Section 3.1(b) upon
surrender of such Certificates (such cash, the “Exchange Fund”).  The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Purchaser, on a daily basis,
provided that no such

 

7

 

investment shall affect Purchaser’s obligation
to pay the Merger Consideration in accordance with the terms of this
Agreement.  Any portion of the Exchange
Fund (including any interest and other income resulting from investments of the
Exchange Fund) that remains undistributed to the holders of shares of Company
Common Stock one year after the date of the mailing required by Section 3.2(b) shall
be delivered to Purchaser, upon demand by Purchaser, and holders of
Certificates that have not theretofore complied with this Section 3.2
shall thereafter look only to Purchaser for payment of any claim to the Merger
Consideration.

 

(b)                     Exchange Procedure. 
As soon as reasonably practicable after the Effective Time, Purchaser
shall instruct the Paying Agent to mail to each holder of record of a
Certificate which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates held by such holder of Company Common Stock shall
pass, only upon proper delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Purchaser may
reasonably specify), and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration.  Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
reasonably appointed by Purchaser, together with such letter of transmittal,
duly completed and validly executed, and such other documents as may reasonably
be required by the Paying Agent, the holder of such Certificate shall be
entitled to receive in exchange therefor the amount of cash into which the
shares of Company Common Stock formerly represented by the Certificate shall
have been converted pursuant to Section 3.1(b), and the Certificate so
surrendered shall be cancelled.  In the
event of a transfer of ownership of Company Common Stock that is not registered
in the stock transfer books of the Company, the proper amount of cash may be
paid in exchange therefor to a Person other than the Person in whose name the
Certificate so surrendered is registered if the Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the Person requesting
such payment shall pay any transfer or other Taxes required by reason of the
payment to a Person other than the registered holder of the Certificate or
establish to the reasonable satisfaction of Purchaser that the Tax has been
paid or is not applicable.  No interest
shall be paid or shall accrue on any Merger Consideration, cash in lieu of
fractional shares or on any unpaid dividends and distributions payable to
holders of Certificates.  In the event of
a transfer of ownership of shares of Company Common Stock that is not
registered in the transfer records of the Company, the Merger Consideration
payable in respect of such shares of Company Common Stock may be paid to a
transferee if the Certificate representing such shares of Company Common Stock
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and the Person requesting such exchange shall
pay to the Exchange Agent in advance any transfer or other Taxes required by
reason of the delivery of the Merger Consideration in any name other than that
of the registered holder of the Certificate surrendered, or required for any
other reason, or shall establish to the satisfaction of the Exchange Agent that
such Tax has been paid or is not payable. 
Until surrendered as contemplated by this Section 3.1, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender

 

8

 

the Merger Consideration payable in
respect of the shares of Company Common Stock represented by such Certificate.

 

(c)                      Stock Transfer Books. 
At the close of business on the day on which the Effective Time occurs,
the stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock that were outstanding
immediately prior to the Effective Time. 
If, after the Effective Time, any Certificates are presented to the
Surviving Corporation or the Paying Agent for transfer or any other reason,
they shall be converted into the Merger Consideration payable in respect of the
shares of Company Common Stock previously represented by such Certificates and
any dividends or other distributions to which the holders thereof are entitled
pursuant to Section 3.1(g), without any interest thereon.

 

(d)                     No Liability; Termination of
Exchange Fund.  None of Purchaser, Merger Sub, the Surviving
Corporation or the Paying Agent shall be liable to any Person in respect of any
cash delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.  All
funds held by the Paying Agent for payment to the holders of unsurrendered
Certificates and unclaimed one year after the Effective Time shall be returned
to Purchaser, after which time any holder of unsurrendered Certificates shall
look as a general creditor only to Purchaser for payment of the funds to which
the holder of unsurrendered Certificates may be due, subject to Applicable
Laws.  If any Certificates shall not have
been surrendered prior to five years after the Effective Time (or immediately
prior to such earlier date on which any Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Entity), any such cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by all applicable laws,
statutes, orders, rules, regulations, policies or guidelines promulgated, or
judgments, decisions or orders entered by any Governmental Entity
(collectively, “Applicable Laws”), become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto.

 

(e)                      Lost Certificates. 
If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming a Certificate to be
lost, stolen or destroyed, the Paying Agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration deliverable in
respect thereof as determined in accordance with Section 3.1(b) if
the Person to whom the Merger Consideration is paid shall, as a condition
precedent to the payment thereof, provide the Surviving Corporation a bond in
such sum as the Surviving Corporation may reasonably direct or otherwise
indemnify the Surviving Corporation in a manner reasonably satisfactory to it
against any claim that may be made against the Surviving Corporation with respect
to the Certificate claimed to have been lost, stolen or destroyed.

 

(f)                                    No Further Ownership Rights in
Company Common Stock.  The Merger Consideration
paid in accordance with the terms of this Article III in respect of
Certificates that have been surrendered in accordance with the terms of this
Agreement 

 

9

 

shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
represented thereby.

 

3.3                                 Treatment of Stock Options and
Warrants.

 

The Company,
the Board and each relevant committee of the Board shall, effective immediately
prior to the consummation of the Merger, cause each option to purchase shares
of Company Common Stock (collectively, the “Stock Options”) and each warrant to
purchase shares of Company Common Stock (collectively, the “Warrants”) that is
outstanding immediately prior to the consummation of the Merger, whether
granted under the 1987 Employee Stock Option Plan or the 1997 Long-Term
Incentive Plan, each as amended to
date (collectively, the “Stock Option Agreements”), or under the Warrants set
forth on Schedule 2.3(a) attached hereto (collectively, the “Warrant
Agreements”), or otherwise, to become fully vested and/or exercisable.  Immediately prior to the Effective Time, the
Company shall cause each then outstanding Stock Option, to be cancelled in
exchange for an amount in cash (less any applicable withholding), payable at
the Effective Time, equal to the product of (i) the number of unexercised
shares of Company Common Stock subject to such Stock Option and (ii) the
excess, if any, of the Merger Consideration over the per share exercise price
of such Stock Option.  Immediately prior
to the Effective Time, the Company shall cause each then outstanding Warrant,
to be cancelled in exchange for an amount in cash (less any applicable
withholding), payable at the Effective Time, equal to the product of (i) the
number of shares of Company Common Stock subject to such Warrant and (ii) the
excess, if any, of the Merger Consideration over the per share exercise price
of such Warrant.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

Except as set forth in the disclosure letter
delivered by the Company to Purchaser prior to the execution and delivery of
this Agreement (the “Company Disclosure Letter”) (each section of which
qualifies the correspondingly numbered representation, warranty or covenant to
the extent specified therein and such other representations, warranties or
covenants to the extent a matter in such section is disclosed in such a
way as to make its relevance to such other representation, warranty or covenant
reasonably apparent), the Company hereby represents and warrants to Purchaser
and Merger Sub as follows:

 

4.1                                 Organization.

 

Each of the
Company and its Subsidiaries is a corporation or other entity duly incorporated
or formed, as the case may be, validly existing, and in good standing, where
applicable, under the laws of the jurisdiction of its incorporation or formation,
has all requisite corporate or other power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, and is qualified or licensed to do
business as a foreign corporation or other entity and is in good standing,
where applicable, in each jurisdiction in which the nature of the business
conducted by it makes such qualification or licensing necessary, 

 

10

 

except where the
failure to be so qualified or licensed individually or in the aggregate has not
had, and would not be reasonably likely to have or result in, a Material
Adverse Effect on the Company.  The
Company has previously made available to Purchaser a complete and correct copy
of each of the Company Articles and the Company Bylaws, as currently in effect.

 

4.2                                 Capitalization.

 

(a)                      The authorized capital stock of the
Company consists of 100,000,000 shares of Company Common Stock, 10,000,000
shares of cumulative preferred stock, par value U.S. $1.00 per share (the “Company
Cumulative Preferred Stock”) and 10,000,000 shares of non-cumulative preferred
stock, par value U.S. $1.00 per share (the “Company Non-Cumulative Preferred
Stock” and together with the Company Cumulative Preferred Stock, the “Company
Preferred Stock”).  As of the close of
business on June 29, 2005 (the “Cut-Off Time”), (i) 41,360,994 shares
of Company Common Stock are issued and outstanding, (ii) 9,600 shares of
Company Common Stock are issued and held in the treasury of the Company, (iii) no
shares of Preferred Stock are issued and outstanding, (iv) 249,000 shares
of Company Common Stock are reserved for issuance upon exercise of Stock
Options under the Stock Option Plans, and (v) 3,579,900 shares of Company
Common Stock are reserved for issuance under the Warrants.  From the Cut-Off Time to the date of this
Agreement, no additional shares of Company Common Stock have been issued (other
than pursuant to Company Options and Company Warrants which were outstanding as
of the Cut-Off Time and are disclosed in Section 4.2(a) of the
Company Disclosure Letter), no additional Company Options or Company Warrants
have been issued or granted, and there has been no increase in the number of
shares of Company Common Stock issuable upon exercise of the Company Options
and Company Warrants from those issuable under such Company Options and Company
Warrants as of the Cut-Off Time.  No
bonds, debentures, notes or other indebtedness having the right to vote (or
convertible into or exchangeable for securities having the right to vote) on
any matters on which shareholders of the Company may vote are issued or
outstanding.  All the outstanding shares
of the Company’s capital stock are, and all shares that may be issued or
granted pursuant to the exercise of the Stock Options will be, when issued or
granted in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and non-assessable and free of preemptive rights,
with no personal liability attaching to ownership thereof.  Except as set forth above or in Section 4.2(a) of
the Company Disclosure Letter, there are no outstanding or authorized (i) options,
warrants, calls, pre-emptive rights, subscriptions or other rights, convertible
securities, agreements, claims or commitments of any character obligating the
Company or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock or other equity interest in, the Company or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or
equity interests, (ii) contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock
of the Company or any Subsidiary of the Company or any such securities or
agreements listed in clause (i) of this sentence or (iii) voting
trusts or similar agreements to which the Company or any of its Subsidiaries is
a party with respect to the voting of the capital stock of the Company.  Section 4.2(a) of the Company
Disclosure Letter sets forth the following information with respect to each
Company Option and Company 

 

11

 

Warrant
outstanding as of the Cut-Off Time: (i) name of the holder; (ii) number
of shares of Company Common Stock issuable upon exercise thereof; (iii) exercise
price; and (iv) issue date.  At the Effective Time, there will not be any
outstanding subscriptions, options, warrants, calls, preemptive rights,
subscriptions, or other rights, convertible or exchangeable securities,
agreements, claims or commitments of any character by which the Company or any
of its Subsidiaries will be bound calling for the purchase or issuance of any
shares of the capital stock of the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or any other such
securities or agreements.

 

(b)                     (i) Except as set forth in Section 4.2(b) of
the Company Disclosure Letter, all of the outstanding shares of capital stock
(or equivalent equity interests of entities other than corporations) of each of
the Company’s Subsidiaries are beneficially owned, directly or indirectly, by
the Company free and clear of any mortgage, lien, pledge, charge, encumbrance
or other security interest (including any restriction on the right to vote,
sell or otherwise dispose of such capital stock or ownership interests)
(collectively, “Liens”), other than such restrictions as may exist under
Applicable Law, and all such shares or other ownership interests have been duly
authorized and validly issued and are fully paid and non-assessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof, and (ii) neither the Company nor any of its Subsidiaries owns any
shares of capital stock or other securities of, or interest in, any other
Person, except for (A) shares of capital stock or other securities of
non-affiliates that (x) do not constitute more than a 5% interest in such
non-affiliates or (y) have an aggregate value (per issuer) that does not exceed
U.S.$100,000, and (B) the securities of the Subsidiaries of the Company or
any Subsidiary of the Company, or is obligated to make any capital contribution
to or other investment in any other Person.

 

(c)                      Except as set forth in Section 4.2(c) of
the Company Disclosure Letter, no material indebtedness of the Company or any
of its Subsidiaries contains any restriction upon (i) the prepayment of
any indebtedness of the Company or any of its Subsidiaries, (ii) the
incurrence of indebtedness by the Company or any of its Subsidiaries, or (iii) the
ability of the Company or any of its Subsidiaries to grant any Lien on the
properties or assets of the Company or any of its Subsidiaries.

 

4.3                                 Authorization; Validity of Agreement.

 

The Company
has the requisite corporate power and authority to execute and deliver this
Agreement and, subject to approval of its shareholders as contemplated by Section 2.6
hereof if required by Applicable Law, to consummate the transactions
contemplated hereby.  The execution and
delivery by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby have been duly approved and authorized
by the Board and, other than approval and adoption of this Agreement and the
Merger by the requisite vote of the holders of the outstanding shares of
Company Common Stock, no other corporate proceedings on the part of the Company
are necessary to approve and authorize the execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby.  This Agreement has
been duly executed and delivered by the 

 

12

 

Company, and assuming
due authorization, execution and delivery of this Agreement by each of
Purchaser and Merger Sub, is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to or limited by (a) bankruptcy, insolvency or
other similar laws, now or hereafter in effect, affecting creditors’ rights
generally, and (b) the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding at law or in equity).

 

4.4                                 No Violations; Approvals.

 

(a)                      Neither the execution and delivery
of this Agreement by the Company nor the consummation by the Company of the
transactions contemplated hereby will (i) violate any provision of the
Company Articles or Company Bylaws, or any provision of the certificate of
incorporation, bylaws or similar governing documents of any of its
Subsidiaries, (ii) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, result in the termination of or a right of termination, cancellation or
amendment under, accelerate the performance required by, or result in the
creation of any Lien upon any of the respective properties or assets of the
Company or any of its Subsidiaries under, or result in the acceleration or
trigger of any payment, time of payment, vesting or increase in the amount of
any compensation or benefit payable pursuant to, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, guarantee, other evidence
of indebtedness, lease, license, contract, collective bargaining agreement,
agreement or other legally binding instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their respective assets or properties may be bound, or (iii) violate any
federal, state, local or foreign order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any of its Subsidiaries or any of their
assets; except in the case of clause (ii) for such violations, breaches,
defaults, Liens or failure to obtain consents which would not have a Material
Adverse Effect on the Company.

 

(b)                  Except as set forth in Section 4.4(b) of
the Company Disclosure Letter, no material filing or registration with,
notification to, or authorization, consent or approval of, any federal, state,
local or foreign court, arbitral, legislative, executive or regulatory
authority or agency (a “Governmental Entity”) or any third party is legally
required to be made by the Company in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (i) the filing with the
SEC of a proxy statement in definitive form relating to the meeting of the
Company’s shareholders to be held in connection with this Agreement and the
transactions contemplated hereby, (ii) the approval and adoption of this
Agreement and the Merger by the requisite vote of the shareholders of the
Company, (iii) such filings, authorizations or approvals as may be
required under any foreign competition laws, rules or regulations, and (iv) the
filing of the Articles of Merger with the Secretary of State.

 

13

 

4.5                                 SEC Reports and Financial Statements.

 

(a) The
Company has filed with the SEC all forms and documents required to be filed by
it since January 1, 2002 under the Securities Exchange Act of 1934, as
amended (together with the rules and regulations thereunder, the “Exchange
Act”), including (a) its Annual Reports on Form 10-K for the years
ended December 31, 2004, December 31, 2003 and December 31,
2002, respectively, (b) its Quarterly Report on Form 10-Q for the
period ended March 31, 2005, (c) all proxy statements relating to
meetings of shareholders of the Company since January 1, 2002 (in the form
mailed to shareholders) and (d) all other forms, reports and registration
statements filed by the Company with the SEC since January 1, 2002 (other
than registration statements on Form S-8 or preliminary materials and
registration statements in forms not declared effective).  The documents described in clauses (a)-(c) above,
as amended (whether filed before, on or after the date hereof), are referred to
in this Agreement collectively as the “Company SEC Documents”.  Except as corrected in subsequent Company SEC
Documents filed prior to the date hereof, the Company SEC Documents, including
the financial statements and schedules included therein and the documents
incorporated by reference therein, (x) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and (y) complied in all material
respects with the applicable requirements of the Exchange Act and the
Securities Act of 1933, as amended (together with the rules and
regulations thereunder, the “Securities Act”) as the case may be, and the
applicable rules and regulations of the SEC thereunder.

 

(b)  The December 31,
2004 consolidated balance sheet of the Company and the related consolidated
statements of income, changes in shareholders’ equity and cash flows
(including, in each case, the related notes, where applicable), as reported in
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2004 filed with the SEC under the Exchange Act, and the unaudited consolidated
balance sheets of the Company and its Subsidiaries (including the related
notes, where applicable) as of March 31, 2005 and the related (i) unaudited
consolidated statements of income for the three-month period then ended and (ii) unaudited
consolidated statements of cash flows and changes in shareholders’ equity for
the three-month period then ended (in each case including the related notes,
where applicable), as reported in the Company’s Quarterly Report on Form 10-Q
for the period ended March 31, 2005 filed with the SEC under the Exchange
Act, fairly present, and the financial statements to be filed by the Company
with the SEC after the date of this Agreement will fairly present (subject, in
the case of unaudited statements, to recurring audit adjustments normal in
nature and amount), in all material respects, the consolidated financial
position and the results of the consolidated operations, cash flows and changes
in shareholders’ equity of the Company and its Subsidiaries as of the
respective dates or for the respective fiscal periods therein set forth; each
of such statements (including the related notes, where applicable) complies,
and the financial statements to be filed by the Company with the SEC after the
date of this Agreement will comply, with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto;
and each of such statements (including the related notes, where applicable) has
been, and

 

14

 

the financial
statements to be filed by the Company with the SEC after the date of this
Agreement will be, prepared in accordance with generally accepted accounting
principles (“GAAP”) consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q.  The books
and records of the Company and its Subsidiaries have been, and are being,
maintained in accordance with GAAP and any other applicable legal and
accounting requirements and reflect only actual transactions.  PricewaterhouseCoopers LLP is an independent
public accounting firm with respect to the Company and has not resigned or been
dismissed as independent public accountants of the Company.

 

4.6                                 Absence of Certain Changes.

 

(a)                      Except as disclosed in the Company
SEC Documents filed by the Company with the SEC prior to the date of this
Agreement (the “Specified Company SEC Documents”), to the extent that it is
reasonably apparent that the disclosure in the Specified Company SEC Documents
is responsive to the matters set forth in this Section 4.6(a) or
except as set forth in Section 4.6 of the Company Disclosure Letter, since
March 31, 2005 until the date of this Agreement, (a) the Company and
its Subsidiaries have conducted their respective operations only in the
ordinary course consistent with past practice, (b) there has not occurred
or continued to exist any event, change, occurrence, effect, fact, circumstance
or condition which, individually or in the aggregate, has had, or would be
reasonably likely to have or result in, a Material Adverse Effect on the
Company, (c) neither the Company nor any of its Subsidiaries has (i) increased
the wages, salaries, compensation, pension, or other fringe benefits or
perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of March 31, 2005, granted any severance or
termination pay, entered into any contract to make or grant any severance or
termination pay, made any loans or paid any bonus (except for salary increases,
bonus payments and severance or termination payments made in the ordinary
course of business consistent with past practices), (ii) suffered any
strike, work stoppage, slow-down or other labor disturbance, (iii) been a
party to a collective bargaining agreement, contract or other agreement or
understanding with a labor union or organization, (iv) had any union
organizing activities, or (v) revalued, or had knowledge of any reason
that required revaluing, any of the Company Assets in any material respect,
including writing down the value of any of the Company Assets or writing off
notes or accounts receivable, in each case in any material respect and other
than in the ordinary course of business consistent with past practice.

 

(b)                     The indebtedness outstanding under
the TOGA Credit Facility as of the date of this Agreement is set forth on Section 4.6(b) of
the Company Disclosure Letter.

 

4.7                                 Absence of Undisclosed Liabilities. 

 

Except as
disclosed in the Specified Company SEC Documents, including as reflected or
reserved against in the balance sheet dated as of March 31, 2005
constituting a portion of the financial statements included in the Company’s
Quarterly Report on Form 10-Q for the term ended March 31, 2005 (the “Company
Balance Sheet”) 

 

15

 

or in the notes
thereto, to the extent that it is reasonably apparent that the disclosure in
the Specified Company SEC Documents is responsive to the matters set forth in
this Section 4.7, and except for liabilities in respect of Litigation
(which are the subject of Section 4.10) and liabilities under
Environmental Laws (which are the subject of Section 4.15), neither the
Company nor any of its Subsidiaries had as of that date or would not be reasonably
likely to have or result in any liabilities that were material to the Company
and its Subsidiaries taken as a whole and that were required to be set forth in
the Company Balance Sheets or the notes thereto in accordance with GAAP.  Except as disclosed in the Specified Company
SEC Documents, since the date of the Company Balance Sheet, neither the Company
nor its Subsidiaries has incurred any liabilities that would be required to be
reflected or reserved against in a consolidated balance sheet of the Company
and its Subsidiaries prepared in accordance with GAAP, except for (a) liabilities
incurred in the ordinary course of business, (b) liabilities that have not
had a Material Adverse Effect on the Company, (c) liabilities resulting
from the execution and delivery of this Agreement or relating to the
transactions contemplated hereby, (d) liabilities in respect of Litigation
(which are the subject of Section of 4.10), and (e) liabilities under
Environmental Laws (which are the subject of Section 4.15).

 

4.8                                 Information to Be Supplied.

 

(a)                      The Proxy Statement and the other
documents required to be filed by the Company with the SEC in connection with
the Merger and the other transactions contemplated hereby will comply as to
form in all material respects with the requirements of the Exchange Act and
will not, on the date of its filing or, in the case of the Proxy Statement, on
the date it is mailed to shareholders of the Company and at the time of the
Shareholders’ Meeting, and none of the written information supplied or to be
supplied by the Company expressly for inclusion or incorporation by reference
in the Proxy Statement or other documents required to be filed by the Company
with the SEC will at the time the same are filed with the SEC and first published,
sent or given to the Company’s shareholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.

 

(b)                                 Notwithstanding the foregoing
provisions of this Section 4.8, no representation or warranty is made by
the Company with respect to statements made or incorporated by reference in the
Proxy Statement based on information supplied by Purchaser or Merger Sub
expressly for inclusion or incorporation by reference therein or based on
information which is not included in or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 5.4.

 

4.9                                 Employee Benefit Plans; ERISA.

 

(a)                      Section 4.9(a) of the
Company Disclosure Letter contains a true and complete list of each “employee
benefit plan” as defined in Section 3(3) of ERISA (defined below) (“ERISA
Plan”) and each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, stock award, severance or 

 

16

 

termination
benefit, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement
plan, program, agreement or arrangement, each employment, retention or
severance agreement or arrangement which cannot be terminated in fewer than
three months without liability or without liability exceeding the greater of or
one week of salary for each year of service or one month of salary and each
other material employee benefit plan, program, agreement or arrangement,
currently or within the preceding 5 years sponsored, maintained or contributed
to by the Company or by any trade or business, whether or not incorporated (an “ERISA
Affiliate”), that together with the Company would be deemed a “single employer”
for purposes of Section 4001 of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), for the benefit of any employee or former
employee or director of the Company or any ERISA Affiliate employed in the
United States (the “Plans”).

 

(b)                     With respect to each Plan, the
Company has heretofore delivered or made available to Purchaser true and
complete copies of each of the following documents:

 

(i)             the Plan;

 

(ii)          the most recent annual report and
actuarial report;

 

(iii)       the most recent Summary Plan
Description required under ERISA with respect thereto;

 

(iv)      if the Plan is funded through a
trust or third party funding vehicle, the trust or other funding agreement and
the latest financial statements thereof; and

 

(v)         the most recent determination letter
received from the Internal Revenue Service with respect to each Plan intended
to qualify under Section 401(a) of the Code and each voluntary
employees’ benefit association intended to qualify under Section 501(c)(9) of
the Code.

 

(c)                      No liability under Title IV of ERISA
has been incurred by the Company or any ERISA Affiliate that has not been
satisfied in full, and no condition exists (or would exist in the case of any
Plan termination or withdrawal by any employer from the Plan) that presents a
material risk to the Company or any ERISA Affiliate of incurring a liability
under such Title, other than liability for contributions due in the ordinary
course and premiums due the Pension Benefit Guaranty Corporation (“PBGC”)
(which contributions and premiums have been paid when due), except for such
liabilities that would not have a Material Adverse Effect on the Company.

 

(d)                     No “ERISA Plan”, is a “multiemployer
pension plan,” as defined in Section 3(37) of ERISA, nor is any ERISA Plan
a plan described in Section 4063(a) of ERISA.

 

17

 

(e)                      No ERISA Plan or any trust
established thereunder has incurred any “accumulated funding deficiency” as
defined in Section 302 of ERISA and Section 412 of the Code, whether
or not waived, or any liens under those sections of ERISA and the Code, as of
the last day of the most recent fiscal year of each ERISA Plan ended prior to
the Closing Date or with respect to the year following such fiscal year.  Each ERISA Plan intended to be “qualified”
within the meaning of Section 401(a) of the Code has been determined
by the Internal Revenue Service to be so qualified (or timely application has
been made therefor); no event has occurred before or since the date of such
determination that would materially adversely affect such qualification; and
each trust maintained thereunder has been determined by the Internal Revenue
Service to be exempt from taxation under Section 501(a) of the
Code.  All contributions or other
payments required to have been made by Company and its Subsidiaries to or under
any Plan by Applicable Law or the terms of such Plan have been timely and
properly made.  Each Plan has been
operated and administered in all material respects in accordance with its terms
and Applicable Law, including but not limited to ERISA and the Code except
where a failure to so operate or administer would not have a Material Adverse
Effect on the Company.  There are no
pending, or to the knowledge of the Company, threatened, material claims by or
on behalf of any Plan, by any employee or beneficiary covered under any such
Plan, or otherwise involving any such Plan (other than routine claims for
benefits).

 

(f)                        With respect to each Plan, on or
following the Effective Date, the Surviving Corporation or the Purchaser or
both shall have the right to terminate and amend the Plan at any time, and any
such termination or amendment shall not result in any material increased cost.

 

(g)                     With respect to each Plan, all
required filings with the government and all required notices to the
participants of the Plan have been timely made.

 

(h)                     With respect to each Plan, there has
been no violation of Sections 401 through 412 of ERISA, and no violation that
would result in tax or penalties under Section 502 of ERISA or Section 4975
of the Code.

 

(i)                         The consummation of the transaction
contemplated in this Agreement will not result in the payment, vesting or
acceleration of any benefit.

 

(j)                         With respect to each Plan, no
reportable event (as defined in Section 4043 of ERISA) has occurred.

 

(k)                      Except to the extent required under
Sections 601 et seq. of ERISA and Section 4980B of the Code (“COBRA”) no
Plan provides for health or welfare benefits to any retired or former employee
and there is no such benefit or payment to any such employee of the Company and
its Subsidiaries or obligation to pay such benefit or make such payment.

 

(l)                         The Company and its Subsidiaries
have complied with COBRA and the Health Insurance Portability and
Accountability Act of 1996.

 

18

 

(m)                   No payment that is owed or may
become due to any director, officer, employee, or agent of the Company or its
Subsidiaries will be non-deductible to them or subject to tax under Section 280G
or Section 4999 of the Code, and no requirement to “gross up” or otherwise
compensate any such individual exists because of such a tax.

 

(n)                     The Company and its Subsidiaries
have not violated the Worker Adjustment and Retraining Notification Act or any
similar law.

 

(o)                     Each Subsidiary of the Company that
employs personnel in Australia:

 

(i)                                          is not a party to any agreement or
arrangement with any union or industrial organization in respect of
superannuation benefits for any of its employees or sub-contractors;

 

(ii)                                       has complied with its obligations under
agreements with its employees and sub-contractors in respect of superannuation
benefits in all material respects;

 

(iii)                                    is only obliged to make employer
contributions to the funds to which the employee contributions are made on
behalf of each of its employees and sub-contractors at the relevant statutory
rate per annum of their respective superannuation salaries in accordance with
the Superannuation Guarantee (Administration) Act 1992
(Cth) (“SGAA”) and other associated Applicable Laws;

 

(iv)                                   only contributes to, and only has an
obligation to make payments to superannuation funds which only provide
accumulation benefits to its employees and sub-contractors;

 

(v)                                      confirms that to the knowledge of
the Company, the funds to which the employee contributions are made by such
Subsidiary have satisfied all relevant Applicable Laws governing superannuation
funds in all material respects, and in particular, have been complying
superannuation funds within the meaning of the Superannuation
Industry (Supervision) Act 1993 (Cth) (“SIS”) and have otherwise
been administered and managed by the trustee company in a manner that complies
with the SIS in all material respects;

 

(vi)                                   has complied in all material
respects with all of its obligations, duties and liabilities under the
governing rules of the funds to which employee contributions are made by
such Subsidiary including making all contributions to the funds required to be
made under their rules; and

 

(vii)                                has in all material respects made
contributions to superannuation funds as required by any Applicable Law or
agreement in respect of all employees (and anyone considered an employee for
the purposes of the 

 

19

 

SGAA, including contributions required to be
made in accordance with the SGAA to ensure that it incurs no liability for superannuation
guarantee charge.

 

4.10                           Litigation; Compliance with Law.

 

(a)                      Except as disclosed in Section 4.10(a) of
the Company Disclosure Letter and except for claims under Environmental Laws
(which are the subject of Section 4.15), (a) there is no suit, claim,
action, proceeding or investigation pending or, to the knowledge of the
Company, threatened, against the Company or any of its Subsidiaries , any of
their respective properties or assets or any of the Company’s officers or
directors (in their capacities as such), (b) there is no agreement, order,
judgment, decree, injunction or award of any Governmental Entity against and/or
binding upon the Company, any of its Subsidiaries or any of the Company’s
officers or directors (in their capacities as such) that, in the case of either
clause (a) or (b), individually or in the aggregate has had, or would be
reasonably likely to have or result in, a Material Adverse Effect on the
Company, and (c) there is no Litigation that the Company or any of its
Subsidiaries has pending against other parties, where such Litigation is
intended to enforce or preserve material rights of the Company or any of its
Subsidiaries which would have a Material Adverse Effect on the Company.

 

(b)                     Except for ERISA (which is the
subject of Section 4.9), Tax laws (which are the subject of Section 4.14),
and Environmental Laws (which are the subject of Section 4.15), each of
the Company and its Subsidiaries has complied, and is in compliance, in all
material respects with all Applicable Laws and all licenses, permits, variances
and approvals of Governmental Entities necessary for the lawful conduct of
their respective businesses as currently conducted which affect the respective
businesses of the Company or any of its Subsidiaries, the Company Real Property
and/or the Company Assets, and the Company and its Subsidiaries have not been
and are not in violation in any material respect of any such Law or any
licenses, permits, variances or approvals of Governmental Entities necessary
for the lawful conduct of their respective businesses as currently conducted;
nor has any notice, charge, claim or action has been received by the Company or
any of its Subsidiaries or been filed, commenced, or to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries alleging any
violation of the foregoing, except in each case as would not be reasonably
likely to have or result in a Material Adverse Effect on the Company.

 

(c)                      The Company and its Subsidiaries
hold all licenses, permits, variances and approvals of Governmental Entities
necessary for the lawful conduct of their respective businesses as currently
conducted, except for licenses, permits, variances or approvals under
Environmental Laws (which are the subject of Section 4.15) and except
where the failure to hold such licenses, permits, variances or approvals has
not had, or would not be reasonably likely to have or result in a Material
Adverse Effect on the Company.  Neither
the Company nor any of its Subsidiaries has received notice that any license,
permit, variance or approvals of Governmental Entities will be terminated or
modified or cannot be renewed in the ordinary course of business, and the
Company has no knowledge of any reasonable basis for any such termination, modification
or nonrenewal, in each case except for any such terminations, modifications or
nonrenewals

 

20

 

that individually or in the aggregate
have not had, and would not be reasonably likely to have or result in, a
Material Adverse Effect on the Company. 
The execution, delivery and performance of this Agreement and the
consummation of the merger or any other transactions contemplated hereby do not
and will not violate any license, permit, variance or approvals of Governmental
Entities, or result in any termination, modification or nonrenewal thereof,
except in each case for any such violations, terminations, modifications or
nonrenewals that individually or in the aggregate have not had, and would not
be reasonably likely to have or result in, a Material Adverse Effect on the
Company.

 

4.11                           Intellectual Property.

 

(a)                      The Company and its Subsidiaries own
free and clear of any Lien or possess licenses or other valid rights to use,
all patents, patent rights, domain names, trademarks (registered or
unregistered), trade dress, trade names, copyrights (registered or
unregistered), service marks, trade secrets, know-how and other confidential or
proprietary rights and information, inventions (patentable or unpatentable),
processes, formulae, as well as all goodwill symbolized by any of the foregoing
(collectively, “Intellectual Property”) necessary in connection with the
business of the Company and its Subsidiaries as currently conducted, except
where the failure to possess such rights or licenses would not have a Material
Adverse Effect on the Company.

 

(b)                     To the knowledge of the Company,
except as disclosed in Section 4.11 of the Company Disclosure Letter, (i) the
conduct, products or services of the business of the Company and its
Subsidiaries as currently conducted do not infringe upon any Intellectual
Property of any third party except where such infringement would not have a
Material Adverse Effect on the Company, (ii) there are no claims or suits
pending or, to the knowledge of the Company, threatened (x) alleging that the
Company’s or its Subsidiaries’ conduct, products or services infringe upon any
Intellectual Property of any third party except where such infringement would
not have a Material Adverse Effect on the Company, or (y) challenging the
Company’s or its Subsidiaries’ ownership of, right to use, or the validity or
enforcement of any license or other agreement relating to the Company’s and its
Subsidiaries’ Intellectual Property except where such challenge would not have
a Material Adverse Effect on the Company, and (iii) no Person is
infringing upon any Intellectual Property of the Company or its Subsidiaries
except where such infringement would not have a Material Adverse Effect on the
Company.  Except as set forth in Section 4.4
or 4.11 of the Company Disclosure Letter, the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
result in the loss of, or any encumbrance on, the rights of the Company or any
Subsidiary with respect to the Intellectual Property owned or used by them,
except where such loss or encumbrance would not have a Material Adverse Effect
on the Company.

 

4.12                           Material Contracts.

 

(a)                      Except as disclosed in the Specified
Company SEC Documents, to the extent that it is reasonably apparent that the
disclosure in the Specified 

 

21

 

Company
SEC Documents is responsive to the matters set forth in this Section 4.12(a),
as of the date of this Agreement, neither the Company nor any of its
Subsidiaries is a party to or bound by any contract, arrangement, commitment or
understanding (whether written or oral) (i) which is a material contract
(as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement, (ii) which materially
restrains, limits or impedes the Company’s or any of its Subsidiaries’, or will
materially restrain, limit or impede the Surviving Corporation’s, ability to
compete with or conduct any business or any line of business, including
geographic limitations on the Company’s or any of its Subsidiaries’ or the
Surviving Corporation’s activities, (iii) which is a material production
sharing agreement, joint venture or operating agreement, balancing agreement,
farm-out or farm-in agreement, enhanced oil recovery agreement, unitization and
pooling agreement or other similar contract or agreement relating to the
exploration, development and production of oil and natural gas, (iv) which
is a material take-or-pay agreement or other similar agreement that entitles
purchasers of production to receive delivery of Hydrocarbons without paying
therefor, or (v) which is otherwise material to the Company and its
Subsidiaries taken as a whole. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.12(a), whether or
not set forth in Section 4.12(a) of the Company Disclosure Letter or
disclosed in the Specified Company SEC Documents, is referred to herein as a “Company
Material Contract.”  Except for the Gas
Sales Agreement with OERL (a summary of which has been provided to Purchaser),
the Company has previously made available to Purchaser true, complete and
correct copies of each Company Material Contract.

 

(b)                     (i) Each Company Material
Contract is valid and binding and in full force and effect, (ii) the
Company and each of its Subsidiaries has performed all obligations required to
be performed by it to date under each Company Material Contract, (iii) no
event or condition exists which constitutes or, after notice or lapse of time
or both, would constitute a default on the part of the Company or any of its
Subsidiaries under any such Company Material Contract and (iv) to the
knowledge of the Company, no other party to such Company Material Contract is
in default in any respect thereunder, except in each case where there has not
been, and would not be reasonably likely to be, individually or in the
aggregate, a material adverse effect on the rights or remedies of the Company
or its Subsidiaries under such Company Material Contracts.

 

4.13                           Properties.

 

(a)                      Section 4.13(a) of the
Company Disclosure Letter sets forth a complete and correct list of (i) all
real property and interests in real property owned in fee by the Company or any
its Subsidiaries (individually, an “Owned Property” and collectively, the “Owned
Properties”), and (ii) all real property and interests in real property
leased, subleased, or otherwise occupied by the Company or any of its
Subsidiaries as lessee (individually, a “Leased Property” and collectively, the
“Leased Properties”) setting forth information sufficient to specifically
identify such Owned Real Property and Leased Properties, as the case may be,
and the legal owner thereof.  Such Leased
Properties, together with the Owned Properties, are referred to herein
individually as a “Company Property” and collectively as the “Company
Properties.”

 

22

 

(b)                     Except as set forth in Section 4.13(b) of
the Company Disclosure Letter, each of the Company and its Subsidiaries has
good, marketable and insurable fee simple title to all of its respective Owned
Properties and all buildings, structures and other improvements located
thereon, free and clear of all Liens, except for Permitted Exceptions.

 

(c)                      Except as set forth in Section 4.13(c) of
the Company Disclosure Letter, the Company or one of its Subsidiaries is in
possession of the Leased Properties leased pursuant to each lease or sublease,
and each such lease or sublease grants to the Company or its Subsidiary, as the
case may be, the exclusive right to possess, without disruption, the Leased
Property pursuant thereto.  Each of the
Company and its Subsidiaries has good and valid title to the leasehold estate
or other interest created under its respective Company Leases, free and clear
of any liens, claims or encumbrances, except where the failure to have such
good and valid title would not have a Material Adverse Effect.

 

(d)                     Except as set forth in Section 4.13(d) of
the Company Disclosure Letter, each of the Company and its Subsidiaries has
good and valid title to all its assets reflected on the Company Balance Sheet
or acquired after the date thereof, except for (i) assets sold or
otherwise disposed of in the ordinary course of business since the date of such
balance sheet, (ii) properties and assets the loss of which would not,
individually or in the aggregate, have a Material Adverse Effect on the
Company, (iii) assets reflected on the Company Balance Sheet that are
subject to a capital lease where the Company or any of its Subsidiaries is the
lessee, and (iv) Permitted Exceptions.

 

4.14                           Taxes.

 

(a)                      All material Returns required to be
filed with any taxing authority by the Company and its Subsidiaries have been filed
in accordance with all Applicable Laws;

 

(b)                                 the Company and its Subsidiaries
have timely paid all material Taxes shown as due and payable on the Returns,
other than those which are being contested in good faith by appropriate
proceedings;

 

(c)                                  as of the time of filing all such
Returns were true and correct in all material respects;

 

(d)                                 the Company has set up an adequate
reserve for the payment of all Taxes anticipated to be payable in respect of
the period subsequent to the last period when returns were filed;

 

(e)                                  neither the Company nor any
Subsidiary will have any liability for any Taxes in excess of the amounts paid
or the reserves so established except to the extent that any such liability
would not have a Material Adverse Effect;

 

(f)                                    as of the date of this Agreement,
there is no action, suit, proceeding, investigation, audit or claim pending
against or with respect to the Company 

 

23

 

or any of its Subsidiaries in respect
of any Tax where there is a reasonable possibility of a determination or
decision against the Company or any of its Subsidiaries that would result in a
Material Adverse Effect;

 

(g)                                 there are no Tax sharing,
allocation, indemnification or similar agreements or arrangements, whether
written or unwritten, in effect under which the Company or any of its
Subsidiaries will be liable for any material Taxes of any Person other than the
Company or any Subsidiary of the Company;

 

(h)                                 neither the Company nor any of its
Subsidiaries has entered into an agreement or waiver extending any statute of
limitations relating to the payment or collection of a material amount of
Taxes, nor is any request for such a waiver or extension pending;

 

(i)                                     there are no Liens (subject to Permitted
Exceptions) for Taxes on any asset of the Company or its Subsidiaries;

 

(j)                                     neither the Company nor any of its
Subsidiaries has entered into, has any liability in respect of, or has any
filing obligations with respect to, any “listed transactions,” as defined in Section 1.6011-4(b)(2) of
the treasury regulations;

 

(k)                                  neither the Company nor any of its
Subsidiaries will be required to include any material item of income in, or
exclude any material item of deduction from, taxable income for any taxable
period (or portion thereof) ending after the Closing Date as a result of any
voluntary change in method of accounting initiated by the Company or any of its
Subsidiaries for a taxable period ending on or prior to the Closing Date under Section 481(c) of
the Code (or any corresponding or similar provisions of Applicable Law relating
to state, local or foreign Tax); and

 

(l)                                     no jurisdiction where the Company or
any of its Subsidiaries does not file a Return has made a claim in writing that
the Company or any of its Subsidiaries is required to file a Return for a
material amount of Taxes for such jurisdiction.

 

4.15                           Environmental Matters.

 

(a)                      Except as disclosed in Section 4.15(a) of
the Disclosure Letter, and except for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company, the Company and its Subsidiaries
have complied, and are in compliance, with all applicable Environmental Laws,
which compliance includes the possession of all permits required under
applicable Environmental Laws and compliance with the terms and conditions
thereof and the making and filing with all applicable Governmental Entities of
all reports, forms and documents and the maintenance of all records required to
be made, filed or maintained by it under any Environmental Law.  Neither the Company nor any of its
Subsidiaries has received any communication (written or, if oral, would be
reasonably likely to result in a formal claim) from any Person, whether a
Governmental Entity, citizens group, employee or otherwise, that alleges that
the 

 

24

 

Company
or any of its Subsidiaries is not in compliance with Environmental Laws and
that has not been resolved in all material respects.

 

(b)                     Except as disclosed in Section 4.15(a) of
the Disclosure Letter, and for such matters that individually or in the
aggregate have not had, and would not be reasonably likely to have or result
in, a Material Adverse Effect on the Company, there are no Environmental Claims
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or, to the knowledge of the Company, against any Person
whose liability for any Environmental Claim the Company or any of its
Subsidiaries has retained or assumed either contractually or by operation of
law.

 

(c)                      Except for such matters that
individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company, neither
the Company nor any of its Subsidiaries is subject to any liability or
obligation (accrued, contingent or otherwise) to cleanup, correct, abate or to
take any response, remedial or corrective action under or pursuant to any Environmental
Laws, relating to (i) environmental conditions on, under, or about any of
the properties or assets owned, leased, operated or used by the Company or any
of its Subsidiaries or any predecessor thereto at the present time or in the
past, including the air, soil, surface water and groundwater conditions at, on,
under, from or near such properties, or (ii) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
Release of any Hazardous Substances, whether on-site at any Company Real
Property, or at any off-site location. 
The Company has provided or made available to Purchaser all material
studies, assessments, reports, data, results of investigations or audits, analyses
and test results, in the possession, custody or control of the Company or any
of its Subsidiaries relating to (x) the environmental conditions on, under or
about any of the properties or assets owned, leased, operated or used by any of
the Company and its Subsidiaries or any predecessor in interest thereto at the
present time or in the past and (y) any Hazardous Substances used, managed,
handled, transported, treated, generated, stored or Released by any Person on,
under, about or from, any of the properties, assets and businesses of the Company
or any of its Subsidiaries.

 

(d)                     Except for such matters that
individually or in the aggregate have not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company, to the
knowledge of the Company, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release,
emission, discharge, presence or disposal of any Hazardous Substance, that
would be reasonably likely to form the basis of any Environmental Claim against
the Company or any of its Subsidiaries or against any Person whose liability
for such Environmental Claim the Company or any of its Subsidiaries has
retained or assumed either contractually or by operation of law.

 

(e)                      Without in any way limiting the
generality of the foregoing, there are no underground
storage tanks located at any property currently owned, leased or operated by
the Company or any of its Subsidiaries.

 

25

 

(f)                                    Neither the Company nor any of its
Subsidiaries is required by virtue of the transactions contemplated by this
Agreement, or as a condition to the effectiveness of any transactions
contemplated by this Agreement, (i) to perform a site assessment for Hazardous
Substances at any Company Real Property or (ii) to remove or remediate any
Hazardous Substances from any Company Real Property. 

 

(g)                                 Purchaser and Merger Sub acknowledge
that the representations and warranties contained in this Section 4.15 are
the only representations and warranties being made by the Company with respect
to compliance with, or liability or claims under, Environmental Laws or with
respect to permits, licenses or governmental authorizations issued or required
under Environmental Laws, that no other representation by the Company contained
in this Agreement shall apply to any such matters and that no other
representation or warranty, express or implied, is being made with respect
thereto.

 

4.16                           Investment Company.

 

Neither the Company nor any of its Subsidiaries is an “investment
company,” a company “controlled” by an “investment company,” or an “investment
adviser” within the meaning of the Investment Company Act of 1940, as amended,
or the Investment Advisers Act of 1940, as amended.

 

4.17                           Public Utility Holding Company Act.

 

Neither the Company nor any of its Subsidiaries is 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,” as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended.

 

4.18                           Required Vote by Company
Shareholders.

 

The affirmative vote of the holders of at least two-thirds of the
outstanding shares of the Company Common Stock entitled to vote hereon is the
only vote of the Company required by the TBCA, the Company Articles or the
Company Bylaws to approve this Agreement and the transactions contemplated
hereby (the “Required Vote”).

 

4.19                           Brokers.

 

Except for Houlihan Lokey Howard & Zukin (“HLHZ”), 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 Company.  The Company is solely responsible for the
fees and expenses of HLHZ which fees and expenses shall be paid by the Company
at the Closing; provided that, in the absence of sufficient cash, Purchaser
shall fund the payment of such fees or expenses at closing without any
reduction in the Merger Consideration. 
The Company’s arrangements with HLHZ have been disclosed to Purchaser
prior to the date hereof.

 

26

 

4.20                           Article 13.03 of the TBCA.

 

Prior to the date of this Agreement, the Board has taken all action
necessary to exempt under or make not subject to (a) the provisions of Article 13.03
of the TBCA or (b) any “fair price,” “moratorium,” “control share
acquisition” or other state takeover law or state law that purports to limit or
restrict business combinations or the ability to acquire or vote shares: (a) the
execution of this Agreement, (b) the Merger and (c) the transactions
contemplated by this Agreement.

 

4.21                           Oil and Gas.

 

(a)                                  The Company has furnished Purchaser
prior to the date of this Agreement with the report of Data Consulting
Services, a division of Schlumberger Technology Corporation, estimating the
Company’s and its Subsidiaries’ proved oil and gas reserves as of December 31,
2004 (the “Reserve Report”).  The
factual, non-interpretive data on which the Reserve Report was based for
purposes of estimating the oil and gas reserves set forth in the Reserve Report
was accurate in all material respects.

 

(b)                                 All operated producing oil and gas
wells included in the Reserve Report have been operated and produced and, to
the knowledge of the Company, drilled, in accordance in all material respects
with generally accepted oil and gas field practices and in compliance in all
material respects with applicable oil and gas leases and Applicable Law.

 

(c)                                  All material proceeds from the sale
of crude oil, natural gas liquids and other hydrocarbons produced from crude
oil or natural gas (“Hydrocarbons”) produced from the Oil and Gas Properties
are being received by the Company and its Subsidiaries in a timely manner and
are not being held in suspense for any reason (except in the ordinary course of
business).

 

(d)                                 Except as disclosed in the Specified
Company SEC Documents, neither the Company nor any of its Subsidiaries has
received any material advance, take-or-pay or other similar payments that
entitles purchasers of production to receive deliveries of Hydrocarbons without
paying therefor, and, on a net, company-wide basis, the Company is neither
underproduced nor overproduced, in either case, to any material extent, under
gas balancing or similar arrangements.

 

(e)                                  The Company and its Subsidiaries
have good and defensible title to all oil and gas properties forming the basis
for the reserves reflected in the Reserve Report as attributable to interests
owned by the Company and its Subsidiaries, except for those defects in title
that do not have a Material Adverse Effect on the Company, and are free and
clear of all Liens, except for (i) Permitted Exceptions and (ii) Liens
associated with obligations reflected in the Reserve Report.  The oil and gas leases and other agreements
that provide the Company and its Subsidiaries with operating rights in the Oil
and Gas Properties are legal, valid and binding and in full force and effect,
and the rentals, royalties and other payments due thereunder have been properly
and timely paid and there is no existing default (or event that, with notice or
lapse of time or both, would

 

27

 

become a default)
under any of such oil and gas leases or other agreements, except, in each case,
as individually or in the aggregate has not had, and would not be reasonably
likely to have or result in, a Material Adverse Effect on the Company.

 

(f)                                    Section 4.21(f) of the
Company Disclosure Letter sets forth the working interest and net revenue
interest in the Comet Ridge Joint Venture of each of the parties to the Comet
Ridge Joint Venture in respect of (i) production, (ii) leasehold
ownership and leasehold operating expenses, and (iii) acquisition,
drilling, development, workover and capital costs (both before and after
project payout).

 

4.22                           Recommendation of Company Board of
Directors; Opinion of Financial Advisor.

 

(a)                                  The Board, at a meeting duly called
and held, duly adopted resolutions (i) determining that this Agreement and
the transactions contemplated hereby are fair to, and in the best interests of,
the shareholders of the Company, (ii) approving this Agreement and the
transactions contemplated hereby, (iii) resolving to recommend adoption of
this Agreement and approval of the Merger and the other transactions
contemplated hereby by the shareholders of the Company and (iv) directing
that the adoption of this Agreement and the approval of the Merger and the
other transactions contemplated hereby be submitted to the Company’s
shareholders for consideration in accordance with this Agreement, which
resolutions, as of the date of this Agreement, have not been subsequently
rescinded, modified or withdrawn in any way.

 

(b)                                 The Company has received an opinion
of HLHZ to the effect that, as of the date of this Agreement, the Merger
Consideration to be received by the holders of shares of Company Common Stock
(other than Purchaser, Merger Sub or the Company) in the Merger is fair, from a
financial point of view, to such holders, a signed copy of which has been, or
will promptly be, delivered to Purchaser. 
The Company has received the approval of HLHZ to permit the inclusion of
a copy of its written opinion in its entirety in the Proxy Statement, subject
to HLHZ’s review of the Proxy Statement.

 

4.23                           Affiliate Transactions.

 

The Specified SEC Company Documents sets forth all agreements,
contracts, transfers of assets or liabilities or other commitments or
transactions, whether or not entered into in the ordinary course of business,
to or by which the Company or any of its Subsidiaries, on the one hand, and any
of their respective officers or directors (or any of their respective
Affiliates, other than the Company or any of its direct or indirect wholly
owned Subsidiaries) on the other hand, are or have been a party or otherwise
bound or affected, and that (a) are currently pending, in effect or have
been in effect during the past 12 months, (b) involve continuing liabilities
and obligations that, individually or in the aggregate, have been, are or will
be material to the Company and its Subsidiaries, taken as a whole and (c) are
not Company Plans disclosed in Section 4.9(a) of the Company
Disclosure Letter.

 

28

 

4.24                           Derivative Transactions and Hedging.

 

No Derivative Transactions (including each outstanding Hydrocarbon or
financial hedging position attributable to the Hydrocarbon production of the
Company and its Subsidiaries) have been entered into by the Company or any of
its Subsidiaries or for the account of any of its customers as of the date of
this Agreement.

 

4.25                           Insurance.

 

Section 4.26 of the Company Disclosure Letter contains a complete
and correct list of all material insurance policies maintained by or on behalf
of any of the Company and its Subsidiaries as of the date of this Agreement.
Such policies are, and at the Closing policies or replacement policies having
substantially similar coverages will be, in full force and effect, and all
premiums due thereon have been or will be paid. The Company and its
Subsidiaries have complied in all material respects with the terms and
provisions of such policies. With respect to any material insurance claim
submitted by the Company or any of its Subsidiaries since January 1, 2004,
neither the Company nor any of its Subsidiaries has received any refusal of
coverage, reservation of rights or other notice that the issuer of the
applicable insurance policy or policies is not willing or able to perform its
obligations thereunder.

 

4.26                           No Other Representations or
Warranties.

 

Except for the representations and warranties contained in this Article IV,
neither the Company nor any other Person makes any other express or implied representation
or warranty on behalf of the Company or any of its Affiliates.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB

 

Parent, Purchaser and Merger Sub, jointly and
severally, represent and warrant to the Company as follows:

 

5.1                                 Organization.

 

Each of Parent, Purchaser, Merger Sub and each of their respective
Subsidiaries is a corporation or other entity duly incorporated or formed, as
the case may be, validly existing, and in good standing, where applicable,
under the laws of the jurisdiction of its incorporation or formation, has all
requisite corporate or other power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its business
as it is now being conducted, and is qualified or licensed to do business as a
foreign corporation or other entity and is in good standing, where applicable,
in each jurisdiction in which the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
organized, existing and in good standing or to have such power and authority,
or to be so qualified or licensed would not have a Material Adverse Effect on
Purchaser.  Each of

 

29

 

Purchaser and Merger Sub has previously made
available to the Company a complete and correct copy of each of its certificate
of incorporation and bylaws, as currently in effect.

 

5.2                                 Authorization; Validity of Agreement.

 

Each of Parent, Purchaser and Merger Sub has the requisite corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby.  The
execution and delivery by Purchaser and Merger Sub of this Agreement and the
consummation by Purchaser and Merger Sub of the transactions contemplated
hereby have been duly authorized by the respective boards of directors of
Purchaser and Merger Sub, Purchaser has approved and adopted this Agreement and
the Merger and has caused the sole shareholder of Merger Sub to approve and
adopt this Agreement, and no other corporate proceedings on the part of
Purchaser or Merger Sub are necessary to authorize the execution and delivery
of this Agreement by Purchaser or Merger Sub and the consummation of the
transactions contemplated hereby.  This
Agreement has been duly executed and delivered by each of Purchaser and Merger
Sub and, assuming due authorization, execution and delivery of this Agreement
by the Company, is a valid and binding obligation of each of Purchaser and Merger
Sub enforceable against each of them in accordance with its terms, except that
such enforcement may be subject to or limited by (i) bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors’ rights generally, and (ii) the effect of general principles of
equity (regardless of whether enforceability is considered in a proceeding at
law or in equity).

 

5.3                                 Consents and Approvals; No
Violations.

 

(a)                                  Neither the execution and delivery
of this Agreement by Parent, Purchaser and Merger Sub nor the consummation by
Parent, Purchaser and Merger Sub of the transactions contemplated hereby will (i) violate
any provision of the respective certificate of incorporation or bylaws or
similar governmental documents of Parent or Purchaser or any of its
Subsidiaries, including Merger Sub, (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or
acceleration) under, any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, guarantee, other evidence of indebtedness,
license, lease, contract, agreement or other instrument or obligation to which
Parent or Purchaser or any of its Subsidiaries, including Merger Sub, is a
party or by which any of them or any of their assets may be bound or (iii) violate
any order, writ, injunction, decree, statute, rule or regulation
applicable to Parent or Purchaser or any of its Subsidiaries, including Merger
Sub, or any of their assets; except in the case of clauses (ii) and (iii) for
violations, breaches or defaults which would not have a Material Adverse Effect
on Purchaser or Merger Sub.

 

(b)                                 No material filing or registration
with, notification to, or authorization, consent or approval of any
Governmental Entity or any third party is legally required to be made by
Parent, Purchaser or Merger Sub in connection with the execution and delivery
of this Agreement by Parent, Purchaser or Merger Sub or the consummation by
Purchaser or Merger Sub of the transactions contemplated hereby,

 

30

 

except for (i) the
filing with the SEC of the Proxy Statement, (ii) the filing of the
Articles of Merger with the Secretary of State, and (iii) the lodgement of
an announcement to the Australian Stock Exchange.

 

5.4                                 Information to be Supplied.

 

(a)                                  Each
of the Proxy Statement and the other documents required to be filed by
Purchaser with the SEC in connection with the Merger and the other transactions
contemplated hereby will comply as to form, in all material respects, with the
requirements of the Exchange Act and will not, on the date of its filing, and
none of the information supplied or to be supplied by Parent, Purchaser and Merger
Sub expressly for inclusion or incorporation by reference in the Proxy
Statement will, in the case of the Proxy Statement on the dates the Proxy
Statement is mailed to shareholders of the Company and at the time of the
Shareholders’ Meeting will not, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they are made, not misleading.

 

(b)                                 Notwithstanding
the foregoing provisions of this Section 5.4, no representation or
warranty is made by Parent or Purchaser with respect to statements made or
incorporated by reference in the Proxy Statement based on information supplied
by the Company expressly for inclusion or incorporation by reference therein or
based on information which is not made in or incorporated by reference in such
documents but which should have been disclosed pursuant to Section 4.8.

 

5.5                                 Interim Operations of Merger Sub.

 

Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and has engaged in no business
other than in connection with entering into this Agreement and engaging in the
transactions contemplated by this Agreement.

 

5.6                                 Financing.

 

Parent shall cause Purchaser and Merger Sub to have as of the date of
this Agreement and immediately prior to the consummation of the Merger
sufficient funds to enable Merger Sub to consummate the Merger on the terms
contemplated by this Agreement.

 

5.7                                 Beneficial Ownership of Shares.

 

Neither Purchaser nor any of its Affiliates or Associates beneficially
owns more than 5% of the outstanding shares of capital stock of the Company or
is a party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of any capital stock of the Company,
other than as contemplated by this Agreement.

 

31

 

5.8                                 Brokers.

 

Except for Merrill Lynch & Co. (“Merrill”), 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 Purchaser or Merger Sub.  Purchaser is solely responsible for the fees
and expenses of Merrill, which
fees and expenses shall be paid by Purchaser at the Closing.

 

5.9                                 No Other Representations or
Warranties.

 

Except for the representations and warranties contained in this Article V,
none of Parent, Purchaser, Merger Sub or any other Person makes any other
express or implied representation or warranty on behalf of Purchaser, Merger
Sub or any of their respective Affiliates.

 

ARTICLE VI

 

COVENANTS

 

6.1                                 Interim Operations of the Company.

 

During the period from the date of this Agreement and continuing until
the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of Purchaser (which consent shall
not be unreasonably withheld, conditioned or delayed), the Company and its
Subsidiaries shall carry on their respective businesses in the ordinary course
consistent with past practice and in a manner not involving the entry by the
Company or any Subsidiary into businesses that are materially different from
the businesses of the Company and its Subsidiaries on the date hereof, and
shall use reasonable best efforts to preserve their business organizations and
goodwill intact, and maintain existing relations with suppliers, customers,
employees, officers and directors. 
Without limiting the generality of the foregoing or as otherwise
contemplated by this Agreement or consented to in writing by Purchaser (which
consent shall not be unreasonably withheld, conditioned or delayed), the
Company shall not, and shall not permit any of its Subsidiaries to:

 

(a)                                  declare or pay any dividends on, or
make other distributions in respect of, any of its capital stock;

 

(b)                                 (i) repurchase, redeem or
otherwise acquire any shares of the capital stock of the Company or any Subsidiary
of the Company, or any securities convertible into or exercisable for any
shares of the capital stock of the Company or any Subsidiary of the Company, (ii) split,
combine or reclassify any shares of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (iii) authorize, issue,
deliver, sell, hypothecate or pledge or authorize or propose the issuance,
delivery, sale, hypothecation or pledge of, any shares of its capital stock or
any securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter

 

32

 

into any agreement
with respect to any of the foregoing, except, in the case of clauses (ii) and
(iii), for the issuance of Company Common Stock upon the exercise or
fulfillment of rights or options issued or existing pursuant to employee
benefit plans, programs or arrangements or upon exercise of the Warrants, all
to the extent outstanding and in existence on the date of this Agreement and in
accordance with their present terms and in each case to the extent the same are
disclosed to the Purchaser on Section 4.2(a) of the Company Disclosure
Schedule;

 

(c)                                  amend the Company Articles, the
Company Bylaws, the certificate of incorporation, bylaws or other
organizational documents of any Subsidiary, or other similar governing
documents of the Company or any Subsidiary;

 

(d)                                 make any capital expenditures in
excess of U.S.$125,000 in the aggregate, other than those which are made in the
ordinary course of business and in accordance with the Company’s capital budget
previously provided to Purchaser, or which are necessary to maintain existing
assets in good repair or to maintain operations as currently conducted;

 

(e)                                  acquire or agree to acquire, by
merging or consolidating with, or by purchasing a substantial equity interest
in or a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization or
division thereof;

 

(f)                                    change its methods of accounting in
effect at December 31, 2004, except as required by changes in GAAP as
concurred to by the Company’s independent auditors;

 

(g)                                 (i) fail to cause TOGA to
operate the Comet Ridge Joint Venture and other TOGA operated permits in
accordance with the terms of the applicable joint venture operating agreements
and the relevant petroleum legislation and regulations in all material
respects, or to maintain operatorship of the same, (ii) fail to cause TOGA
to consult with Purchaser before it exercises any voting right it may have
under the Comet Ridge Joint Venture and to take account of Purchaser’s
reasonable representations, (iii) fail to cause TOGA to provide Purchaser
with production reports and management accounts and authorizations for
expenditures in relation to the Comet Ridge Joint Venture, (iv) fail to
cause TOGA to provide Purchaser with copies of all minutes of meetings of the
Comet Ridge Joint Venture parties or use its reasonable best efforts to
facilitate Purchaser’s attendance at such meetings, (v) cause TOGA to
enter into any new gas supply agreements or amend any existing gas supply
agreement without first consulting Purchaser, except in each case to the extent
that it would violate Applicable Law to do so;

 

(h)                                 (i) except as required by
Applicable Law or as required to maintain qualification pursuant to the Code,
adopt, amend, or terminate any employee benefit plan (including any Plan) or
any agreement, arrangement, plan or policy between the Company or any
Subsidiary of the Company and one or more of its current or former directors,
officers or employees, or (ii) except for normal increases in the ordinary
course of business consistent with past practice as set forth in Section 6.1(h) of
the Company

 

33

 

Disclosure Letter, or
except as required by Applicable Law, increase in any manner the compensation
or fringe benefits of any director, officer or employee or pay any benefit not
required by any Plan or agreement as in effect as of the date hereof (including
the granting of stock options, stock appreciation rights, restricted stock,
restricted stock units or performance units or shares);

 

(i)                                     other than activities in the
ordinary course of business consistent with past practice, sell, lease,
encumber, assign or otherwise dispose of, or agree to sell, lease, encumber,
assign or otherwise dispose of, any of its material assets, properties or other
rights or agreements;

 

(j)                                     other than in the ordinary course of
business consistent with past practice, incur any indebtedness for borrowed
money or assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or other
entity;

 

(k)                                  create, renew, amend or terminate or
give notice of a proposed renewal, amendment or termination of, any material
contract, agreement or lease for goods, services or office space to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or their respective properties is bound, other than the
renewal in the ordinary course of business of any lease the term of which
expires prior to the Closing Date;

 

(l)                                     fail to provide Purchaser with any
details relating to any proposed acquisition of or application for Oil and Gas
Properties, including full details of any minimum exploration commitment in
connection therewith, except to the extent it would violate Applicable Law to
do so;

 

(m)                               fail to maintain its insurance
policies in full force and effect, except to the extent such policies cease to
be available on commercially reasonable terms, and in such event the Company
shall notify Purchaser of such non-renewal or termination of policy; or

 

(n)                                 or agree to do any of the foregoing.

 

6.2                                 Acquisition Proposals.

 

(a)                                  The Company agrees that, except as
expressly contemplated by this Agreement, neither it nor any of its
Subsidiaries shall, and the Company shall, and shall cause its Subsidiaries and
affiliates (as such term in used in Rule 12b-2 under the Exchange Act) to,
cause their respective officers, directors, investment bankers, attorneys,
accountants, financial advisors, agents and other representatives not to (i) directly
or indirectly initiate, solicit, knowingly encourage or facilitate (including
by way of furnishing information) any inquiries or the making or submission of
any proposal that constitutes, or could reasonably be expected to lead to, an
Acquisition Proposal, (ii) participate or engage in discussions or
negotiations with, or disclose any non-public information or data relating to
the Company or any of its Subsidiaries or afford access to the properties,
books or records of the Company or any of its Subsidiaries to any Person

 

34

 

that has made an
Acquisition Proposal or to any person in contemplation of an Acquisition
Proposal, or (iii) accept an Acquisition Proposal or enter into any
agreement, including any letter of intent, memorandum of understanding,
agreement in principle, merger agreement, acquisition agreement, option
agreement, joint venture agreement, partnership agreement or other similar
agreement, arrangement or understanding, (A) constituting or related to,
or that is intended to or could reasonably be expected to lead to, any
Acquisition Proposal (other than an Acceptable Confidentiality Agreement
permitted pursuant to this Section 6.2) or (B) requiring, intended to
cause, or which could reasonably be expected to cause the Company to abandon,
terminate or fail to consummate the merger or any other transaction
contemplated by this Agreement (each an “Acquisition Agreement”). Any violation
of the foregoing restrictions by any of the Company’s Subsidiaries or by any
representatives of the Company or any of its Subsidiaries, whether or not such
representative is so authorized and whether or not such representative is
purporting to act on behalf of the Company or any of its Subsidiaries or
otherwise, shall be deemed to be a breach of this Agreement by the Company.
Notwithstanding anything to the contrary in this Agreement, the Company and its
board of directors may take any actions described in clause (ii) of this Section 6.2(a) with
respect to a third party if at any time prior to the Effective Time (x) the
Company receives a written Acquisition Proposal from such third party (and such
Acquisition Proposal was not initiated, solicited, knowingly encouraged or
facilitated by the Company or any of its Subsidiaries or any of their
respective officers, directors, investment bankers, attorneys, accountants,
financial advisors, agents or other representatives) and (y) such proposal
constitutes, or the Company’s board of directors determines in good faith
(after consultation with its financial advisors and outside legal counsel) that
such proposal could reasonably be expected to lead to, a Superior Proposal,
provided that the Company shall not deliver any information to such third party
without entering into an Acceptable Confidentiality Agreement.  Notwithstanding the foregoing, the Company
shall be entitled to waive any “standstill” or similar provision in any
Acceptable Confidentiality Agreement which would preclude such Person from
making an Acquisition Proposal to the Company, provided that such waiver is for
the limited purpose of enabling such Person to make an Acquisition Proposal to
the Company during the 45-day period following execution of such Acceptable
Confidentiality Agreement, and any such waiver shall not constitute a breach of
this Section 6.2. Nothing contained in this Section 6.2 shall
prohibit the Company or its board of directors from taking and disclosing to
the Company’s shareholders a position with respect to an Acquisition Proposal
to the extent required by Applicable Law.

 

(b)                                 Neither (i) the Company’s board
of directors nor any committee thereof shall directly or indirectly (A) withdraw
(or amend or modify in a manner adverse to Purchaser or Merger Sub), or
publicly propose to withdraw (or amend or modify in a manner adverse to
Purchaser or Merger Sub), the approval, recommendation or declaration of
advisability by the Company’s board of directors or any such committee thereof
of this Agreement, the merger or the other transactions contemplated by this
Agreement or (B) recommend, adopt or approve, or propose publicly to
recommend, adopt or approve, any Acquisition Proposal (any action described in
this clause (i) being referred to as a “Company Adverse Recommendation
Change”) nor (ii) shall the Company or any of its Subsidiaries execute or
enter into an Acquisition

 

35

 

Agreement.
Notwithstanding the foregoing, at any time prior to the Effective Time, and
subject to the Company’s compliance at all times with the provisions of this Section 6.2
and Section 2.6, in response to a Superior Proposal, the Company Board may
make a Company Adverse Recommendation Change; provided, however, that the
Company shall not be entitled to exercise its right to make a Company Adverse
Recommendation Change in response to a Superior Proposal (X) until three
Business Days after the Company provides written notice to Purchaser (a “Company
Notice”) advising Purchaser that the Company’s board of directors or a
committee thereof has received a Superior Proposal, specifying the material
terms and conditions of such Superior Proposal, and identifying the Person or
group making such Superior Proposal and (Y) if during such three Business Day period,
Purchaser proposes any alternative transaction (including any modifications to
the terms of this Agreement), unless the Company’s board of directors
determines in good faith (after consultation with its financial advisors and
outside legal counsel, and taking into account all financial, legal, and
regulatory terms and conditions of such alternative transaction proposal) that
such alternative transaction proposal is not at least as favorable to the
Company and its shareholders from a financial point of view as the Superior
Proposal (it being understood that any change in the financial or other
material terms of a Superior Proposal shall require a new Company Notice and a
new three Business Day period under this Section 6.2(b)).

 

(c)                                  In addition to the obligations of
the Company set forth in paragraphs (a) and (b) of this Section 6.2,
as promptly as practicable after receipt thereof, the Company shall advise
Purchaser in writing of any request for information or any Acquisition Proposal
received from any Person, or any inquiry, discussions or negotiations with
respect to any Acquisition Proposal, and the terms and conditions of such
request, Acquisition Proposal, inquiry, discussions or negotiations, and the
Company shall promptly provide to Purchaser copies of any written materials
received by the Company in connection with any of the foregoing, and the
identity of the Person or group making any such request, Acquisition Proposal
or inquiry or with whom any discussions or negotiations are taking place. The
Company agrees that it shall simultaneously provide to Purchaser any non-public
information concerning the Company or its Subsidiaries provided to any other
Person or group in connection with any Acquisition Proposal which was not
previously provided to Purchaser. The Company and shall keep Purchaser fully
informed of the status of any Acquisition Proposals (including the identity of
the parties and price involved and any changes to any material terms and
conditions thereof). The Company agrees not to release any third party from, or
waive any provisions of, any confidentiality or standstill agreement to which
it is a party.

 

(d)                                 Immediately after the execution and
delivery of this Agreement, the Company will, and will cause its Subsidiaries
and their respective officers, directors, employees, investment bankers,
attorneys, accountants and other agents to, cease and terminate any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any possible Acquisition Proposal. The Company agrees that it
shall (i) take the necessary steps to promptly inform its officers,
directors, investments bankers, attorneys, accountants, financial advisors,
agents or other representatives involved in the transactions contemplated by
this Agreement of the obligations undertaken in this Section 6.2 and (ii) request
each Person who has heretofore

 

36

 

executed a
confidentiality agreement in connection with such Person’s consideration of acquiring
the Company or any portion thereof to return or destroy (which destruction
shall be certified in writing by an executive officer of such Person) all
confidential information heretofore furnished to such Person by or on the
Company’s behalf.

 

(e)                                  For purposes of this Section 6.2:

 

(i)             For purposes of this Agreement, “Acquisition
Proposal” shall mean any bona fide proposal, whether or not in writing, for the
(i) direct or indirect acquisition or purchase of a business or assets
that constitutes 10% or more of the net revenues, net income or the assets
(based on the fair market value thereof) of the Company and its Subsidiaries,
taken as a whole, (ii) direct or indirect acquisition or purchase of 10%
or more of any class of equity securities or capital stock of the Company or
any of its Subsidiaries whose business constitutes 10% or more of the net
revenues, net income or assets of the Company and its Subsidiaries, taken as a
whole, or (iii) merger, consolidation, restructuring, transfer of assets
or other business combination, sale of shares of capital stock, tender offer,
exchange offer, recapitalization, stock repurchase program or other similar
transaction that if consummated would result in any Person or Persons
beneficially owning 10% or more of any class of equity securities of the
Company or any of its Subsidiaries whose business constitutes 10% or more of
the net revenues, net income or assets of the Company and its Subsidiaries,
taken as a whole, other than the transactions contemplated by this Agreement.

 

(ii)          The term “Superior Proposal” shall
mean any bona fide written Acquisition Proposal made by a third party to
acquire (which term shall include a parent to parent merger or other business
combination with a similar result), directly or indirectly, pursuant to a
tender offer, exchange offer, merger, share exchange, consolidation or other
business combination, (A) 50% or more of the assets of the Company and its
Subsidiaries, taken as a whole, or (B) 50% or more of the equity
securities of the Company, in each case on terms which the Company’s board of
directors determines in good faith (after consultation with its financial
advisors and outside legal counsel, and taking into account all financial,
legal and regulatory terms and conditions of the Acquisition Proposal and this
Agreement, including any alternative transaction (including any modifications
to the terms of this Agreement) proposed by Purchaser in response to such
Superior Proposal, including any conditions to and expected timing of consummation,
and any risks of non-consummation, of such Acquisition Proposal) to be superior
to the Company and its shareholders (in their capacity as shareholders) from a
financial point of view as compared to the transactions contemplated hereby and
to any alternative transaction (including any modifications to the terms of
this Agreement) proposed by Purchaser hereto pursuant to this Section 6.2.

 

37

 

(f)                                    Any references to the “Board” or the
“Board of Directors of the Company” in this Section 6.2 shall mean the
Independent Directors, acting in good faith and in accordance with their
fiduciary obligations under Applicable Law.

 

6.3                                 Access to Information.

 

From the date of this Agreement until the Effective Time, the Company
shall, and shall cause each of its Subsidiaries to, afford to Purchaser and to
its officers, employees, accountants, counsel and its authorized
representatives (including environmental consultants) reasonable access during
normal business hours upon reasonable prior notice all of its properties,
contracts, books, commitments, records, data and books and personnel and,
during such period, the Company shall furnish to Purchaser upon request (a) a
copy of each report, letter, registration statement and other document filed or
received by it during such period pursuant to the requirements of the Exchange
Act and (b) such other information used in the operation of its business
as Purchaser may reasonably request and the provision of which is not inconsistent
with Applicable Laws or would represent a material breach of any
agreements.  Purchaser and its authorized
representatives will conduct all such inspections in a manner which will
minimize any disruptions of the business and operations of the Company and its
Subsidiaries.  Until the Effective Time,
Purchaser will hold any such information in accordance with the provisions of
the Confidentiality Agreement and will cause such information to be so held by
their Representatives (as defined in the Confidentiality Agreement).  Upon a termination of this Agreement pursuant
to Section 8.1, Purchaser and its Representatives shall return (and hold
confidential) all information provided pursuant to this Section 6.3 and
all other Information (as defined in the Confidentiality Agreement) pursuant to
the procedures set forth in the Confidentiality Agreement.

 

6.4                                 Further Action; Reasonable Best
Efforts.

 

(a)                                  Upon the terms and subject to the
conditions herein provided, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under Applicable
Laws to consummate and make effective the transactions contemplated by this
Agreement, including using reasonable best efforts to satisfy the conditions
precedent to the obligations of any of the parties hereto, to obtain all
necessary authorizations, consents and approvals, and to effect all necessary
registrations and filings.  Each of the
parties hereto will furnish to the other parties such necessary information and
reasonable assistance as such other parties may reasonably request in
connection with the foregoing and will provide the other parties with copies of
all filings made by such party with any Governmental Entity or any other
information supplied by such party to a Governmental Entity in connection with
this Agreement and the transactions contemplated hereby.

 

(b)                                 The Company shall (i) take all
actions necessary to ensure that no Applicable Law relating to state takeover
or business combination matters or any similar Applicable Law is or becomes
applicable to this Agreement, the merger or any of the other transactions
contemplated by this Agreement and (ii) if any such Applicable

 

38

 

Law or similar
Applicable Law becomes applicable to this Agreement, the merger or any of the
other transactions contemplated by this Agreement, take all action necessary to
ensure that the merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
Applicable Law on this Agreement, the Merger and the other transactions contemplated
by this Agreement.

 

(c)                                  In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and/or directors of the
Surviving Corporation shall take or cause to be taken all such necessary
action.

 

(d)                                 Each of the parties hereto shall use
reasonable best efforts to prevent the entry of, and to cause to be discharged
or vacated, any order or injunction of a Governmental Entity precluding,
restraining, enjoining or prohibiting consummation of the Merger or any of the
other transactions contemplated by this Agreement.

 

6.5                                 Directors’ and Officers’ Insurance
and Indemnification.

 

(a)                                  For six years after the Effective
Time, Purchaser shall cause the Surviving Corporation to indemnify and hold
harmless, to the greatest extent permitted by law as of the date of this
Agreement, the individuals who on or prior to the Effective Time were officers,
directors and employees of the Company or its Subsidiaries (collectively, the “Indemnitees”)
with respect to all acts or omissions by them in their capacities as such or
taken at the request of the Company or any of its Subsidiaries at any time
prior to the Effective Time. Purchaser shall cause the Surviving Corporation to
honor all indemnification agreements with Indemnitees (including under the
Company’s by-laws) in effect as of the date hereof in accordance with the terms
thereof. The Company has disclosed to Purchaser all such indemnification
agreements prior to the date of this Agreement.

 

(b)                                 For six years after the Effective
Time, Purchaser shall procure the provision of officers’ and directors’
liability insurance in respect of acts or omissions occurring prior to the
Effective Time covering each such Person currently covered by the Company’s
officers’ and directors’ liability insurance policy on terms with respect to
coverage and in amounts no less favorable than those of such policy in effect
on the date hereof; provided, however, that if the annual aggregate premiums
for such insurance at any time during such period shall exceed 200% of the per
annum rate of premium paid by the Company and its Subsidiaries as of the date
hereof for such insurance, then the Purchaser shall solely be obligated to
provide such officers’ and directors’ liability insurance as may be obtained
for 200% of such per annum rate of premium.

 

(c)                                  The obligations of Purchaser under
this Section 6.5 shall not be terminated or modified in such a manner as
to adversely affect any Indemnitee to whom this Section 6.5 applies
without the consent of such affected Indemnitee (it being

 

39

 

expressly agreed that
the Indemnitees to whom this Section 6.5 applies shall be third party
beneficiaries of this Section 6.5).

 

(d)                                 The provisions of this Section 6.5
are intended to be for the benefit of, and shall be enforceable by, each
Indemnitee and his or her heirs and representatives.

 

6.6                                 Publicity.

 

Neither the Company, Purchaser, Merger Sub nor any of their respective
affiliates shall issue or cause the publication of any press release or other
announcement with respect to the Merger, this Agreement or the other
transactions contemplated by this Agreement without the prior consultation of
the other party, except as may be required by law or by any listing agreement
with a national securities exchange if all reasonable efforts have been made to
consult with the other party.

 

6.7                                 Merger Sub.

 

Purchaser will
take all action necessary (a) to cause Merger Sub to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement and, to the extent permitted by the
TBCA, in accordance with Article 5.16 of the TBCA, as soon as reasonably
practicable following the completion of the Shareholders’ Meeting and (b) to
ensure that, prior to the Effective Time, Merger Sub shall not conduct any
business or make any investments other than as specifically contemplated by
this Agreement.  Purchaser shall not, and
shall not permit Merger Sub to take, any action that would result in the breach
of any representation of Purchaser hereunder (except for representations and
warranties made as of a specific date) such that the Company would have the
right to terminate this Agreement pursuant to Section 8.1.

 

6.8                                 Employee Benefits.

 

(a)                                  Purchaser hereby agrees to, and
agrees to cause the Surviving Corporation to, honor, and to make required
payments when due under, all contracts, agreements, arrangements, policies,
plans and commitments of the Company and its Subsidiaries in effect as of the
date hereof that are applicable with respect to any employee, officer, director
or executive or former employee, officer, director or executive of the Company
or any Subsidiary thereof, including the Plans in existence as of the date
hereof, and that are disclosed in Section 4.9 of the Company Disclosure
Letter.  Nothing herein shall be
construed to prohibit the Surviving Corporation from amending or terminating
such contracts, agreements, arrangements, policies, plans and commitments in
accordance with the terms thereof and with Applicable Law.

 

(b)                                 In addition to the foregoing,
Purchaser hereby agrees that, for a period of six months after the Effective
Time, it shall continue to maintain benefits for the employees and former
employees of the Company and its Subsidiaries which in the aggregate are no
less favorable taken as a whole (on a value or cost basis) than those provided
to them under the Plans on the date hereof.

 

40

 

(c)                                  For purposes of all employee benefit
plans, programs and arrangements maintained by or contributed to by Surviving
Corporation and its Subsidiaries, Purchaser shall cause the Surviving
Corporation to cause each such plan, program or arrangement to treat the prior
service with the Company and its Affiliates of each person who is an employee
or former employee of the Company or its Subsidiaries immediately prior to the
Effective Time (a “Company Employee”) (to the same extent such service is recognized
under analogous plans, programs or arrangements of the Company or its
Affiliates prior to the Effective Time) as service rendered to the Surviving
Corporation, for purposes of eligibility to participate and vesting (and only
for purposes of benefit accrual and determination of benefit levels solely with
respect to service awards, vacation and severance); provided, however, that any
benefits provided by the Surviving Corporation under any (i) ERISA Plans, (ii) nonqualified
employee benefit or deferred compensation plans, stock option, bonus or
incentive plans or (iii) other employee benefit or fringe benefit
programs, that may be in effect generally for employees of the Surviving
Corporation or its Subsidiaries from time to time, shall be reduced by benefits
in respect of the same years of service under analogous plans, programs and
arrangements maintained by or contributed to by the Company, the Surviving
Corporation or their Subsidiaries. Surviving Corporation shall (x) waive all
limitations as to preexisting conditions exclusions and waiting periods with
respect to participation and coverage requirements applicable to the Company
Employees under any welfare benefit plans that such Company Employees may be
eligible to participate in after the Effective Time, other than limitations or
waiting periods that are already in effect with respect to such employees and
that have not been satisfied as of the Effective Time under any welfare benefit
plan maintained for the Company Employees immediately prior to the Effective
Time and (y) provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
employees are eligible to participate in after the Effective Time.

 

(d)                                 Nothing in this Agreement shall be
construed as requiring Purchaser or any of its Affiliates to employ any Company
Employee for any length of time following the Effective Time. Nothing in this
Agreement, express or implied, shall be construed to prevent Purchaser or its
Affiliates from (i) terminating, or modifying the terms of employment of,
any Company Employee following the Effective Time or (ii) terminating or
modifying to any extent in accordance with its terms any Company benefit plan
or any other employee benefit plan, program, agreement or arrangement that
Purchaser or its Affiliates may establish or maintain; provided, however, that
to the extent that, and for so long as, a Company Employee remains employed by
Purchaser or any of its Subsidiaries during the six month period following the
Effective Time, the compensation and benefits payable to such employee during
such period shall be subject to Section 6.8(b).

 

6.9                                 Other Covenants of Purchaser and
Merger Sub.

 

(a)                                  Other than with respect to the
transactions contemplated specifically by the IPA, prior to the earlier to
occur of the Effective Time or the date that is one year after the Shareholders
Meeting, none of Purchaser, Merger Sub or their

 

41

 

respective affiliates
(which, for this purpose, shall include the Company and its Subsidiaries)
shall, except as may be required by currently existing contractual requirements
(whether contingent or otherwise) of the Company and its Subsidiaries,
purchase, redeem or otherwise acquire any shares of the capital stock of the
Company (other than Dissenting Shares) or any securities convertible into or
exercisable for any shares of the capital stock of the Company (or enter into
any agreement or tender offer therefor) for an effective price per share (on a
Company Common Stock equivalent basis) that is less than the Merger
Consideration.

 

(b)                                 Prior to the Form 15 Date, none
of Purchaser, Merger Sub or their respective affiliates shall cause or permit
the Company to file a Form 15 (or successor form) with the SEC to
de-register the Company with respect to its reporting obligations regarding the
Company Common Stock.  “Form 15 Date”
means the earliest to occur of (i) the Effective Date, (ii) the two
year anniversary of the Shareholders Meeting, or (iii) the date that
Purchaser, Merger Sub and/or their respective affiliates own at least 90% of
the then-outstanding shares of Company Common Stock.

 

(c)                                  Prior to the date of the
Shareholders Meeting, none of Purchaser, Merger Sub or their current affiliates
(as in existence prior to taking into effect the transactions contemplated by
this Agreement and the Interest Purchase Agreement) shall, other than entering
into this Agreement and the Interest Purchase Agreement or consummating the
transactions contemplated hereby (including, without limitation, any
alternative transaction by Purchaser in accordance with Section 6.2(e) hereof)
and thereby, enter into any transaction with the Company or its affiliates (as
in existence prior to taking into effect the transactions contemplated by this
Agreement and the Interest Purchase Agreement) unless such transaction is
approved by a majority of the Independent Directors.

 

ARTICLE VII

 

CONDITIONS TO MERGER

 

7.1                                 Conditions to Each
Party’s Obligation To Effect the Merger The respective obligation of
each party to effect the Merger shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions (any or all of
which may be waived by the parties hereto in writing, in whole or in part, to
the extent permitted by Applicable Law):

 

(a)                                  This Agreement and the Merger shall
have been adopted and approved by the Required Vote;

 

(b)                                 No statute, rule, order, decree or
regulation shall have been enacted or promulgated, and no action shall have
been taken, by any Governmental Entity of competent jurisdiction which
temporarily, preliminarily or permanently restrains, precludes, enjoins or
otherwise prohibits the consummation of the Merger or makes the Merger illegal;
and

 

42

 

(c)                                  Other than filing the Articles of
Merger in accordance with the TBCA, all authorizations, consents and approvals
of all Governmental Entities required to be obtained prior to consummation of
the Merger shall have been obtained, except for such authorizations, consents,
and approvals the failure of which to be obtained individually or in the
aggregate has not had, and would not be reasonably likely to have or result in,
a Material Adverse Effect on any party to this Agreement.

 

(d)                                 All material consents and approvals
of any Person that the Company or any of its Subsidiaries are required to
obtain in connection with the consummation of the Merger, including consents
and approvals from parties to loans, contracts, leases or other agreements,
shall have been obtained, and a copy of each such consent and approval shall
have been provided to Purchaser at or prior to the Closing, except for such
consents and approvals the failure of which to be obtained individually or in
the aggregate would not be reasonably likely to have or result in a Material
Adverse Effect on the Company; provided, however, that with respect to any
required consent that is not obtained, this condition will be deemed to be
satisfied unless Purchaser and Merger Sub shall have used their respective best
efforts to have caused the Company to have obtained such consent.

 

(e)                                  All of the closing conditions under
the Interest Purchase Agreement, dated as of the date hereof, by and among the
Purchaser and Slough Estates plc (the “IPA”) (other than those conditions which
relate to actions to be taken at the closing of the Transfer (as defined in the
IPA) and the other transactions contemplated by the IPA) have been satisfied or
waived (subject to Applicable Law and in accordance with the terms of the IPA)
and the consummation of the Transfer and the other transactions contemplated by
the IPA shall have occurred; provided that this condition shall be deemed
satisfied if the Effective Time occurs simultaneously with the closing of the
Transfer and the other transaction contemplated by the IPA.

 

ARTICLE VIII

 

TERMINATION

 

8.1                                 Termination.

 

Notwithstanding anything herein to the contrary, this Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after shareholder adoption of this Agreement:

 

(a)                                  By the mutual consent of Purchaser
and the Company in a written instrument.

 

(b)                                 By either the Company or Purchaser
upon written notice to the other, if:

 

43

 

(i)             the Effective Time shall not have
been occurred on or before December 31, 2005 (the “Outside Date”); provided that the right to terminate this
Agreement pursuant to this Section 8.1(b)(i) shall not be available
to a party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Effective Time to have
occurred on or before such date;

 

(ii)          any Governmental Entity shall have
issued a statute, rule, order, decree or regulation or taken any other action
(which statute, rule, order, decree, regulation or other action the parties
hereto shall have used their reasonable best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting consummation of the
Merger or making the Merger illegal and such statute, rule, order, decree,
regulation or other action shall have become final and nonappealable (provided
that the terminating party is not then in breach of Section 6.4); or

 

(iii)       the IPA terminates in accordance
with its terms.

 

(c)                                  By Purchaser:

 

(i)             at any time prior to the Effective
Time upon written notice to the Company, if there shall have been a material
breach by the Company of any representations, warranty, covenant or agreement
set forth in this Agreement, which breach would reasonably be expected to
result in any condition set forth in Section 7.1 not being satisfied and
such breach is not reasonably capable of being cured and such condition is not
reasonably capable of being satisfied within 30 days following the receipt by
the Company of written notice of such breach from Purchaser (provided that
Purchaser is not then in material breach of any representation, warranty,
covenant or other agreement contained herein and provided further that with
respect to any uncured breach, Purchaser and Merger Sub shall have used their
respective best efforts to have caused the Company to cure such breach within such
timeframe); or

 

(ii)          if, prior to the Effective Time upon
written notice to the Company, the Board shall have withdrawn, modified or
changed in a manner adverse to Purchaser or Merger Sub its approval or
recommendation of this Agreement or the Merger or shall have recommended an
Acquisition Proposal or shall have executed a definitive agreement relating to
an Acquisition Proposal with a Person other than Purchaser or Merger Sub.

 

8.2                                 Effect of Termination.

 

In the event of the termination of this Agreement as provided in Section 8.1,
written notice thereof shall forthwith be given by the terminating party to the
other parties specifying the provision of this Agreement pursuant to which such
termination is made, and except as provided in this Section 8.2, this
Agreement shall forthwith become null and void after the expiration of any
applicable period following such notice. 
In the

 

44

 

event of such termination, there shall be no
liability on the part of Parent, Purchaser, Merger Sub or the Company, except (a) as
set forth in Section 9.1 of this Agreement and (b) with respect to
the requirement to comply with the Confidentiality Agreement; provided that
nothing herein shall relieve any party from any liability or obligation with
respect to any willful breach of this Agreement.

 

ARTICLE IX

 

MISCELLANEOUS

 

9.1                                 Fees and Expenses.

 

(a)                                  All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs or expenses, except as provided in
Sections 9.1(b) and 9.1(c).

 

(b)                                 If this Agreement is terminated by
Purchaser pursuant to Section 8.1(c)(ii), then the Company shall pay to
Purchaser in immediately available funds a termination fee in an amount equal
to U.S.$12.0 million (the “Termination Fee”).

 

(c)                                  If (i) this Agreement is
terminated by Purchaser or the Company pursuant to Section 8.1(b)(i) or
8.1(b)(iii) and (ii)(A) an Acquisition Proposal has been made and
publicly announced or communicated to the Company’s shareholders after the date
of this Agreement and prior to the effective date of such termination and (B) concurrently
with or within 9 months of the date of such termination a Third Party
Acquisition Event occurs, then the Company shall within one Business Day of the
occurrence of such a Third Party Acquisition Event (including any revisions or
amendments thereto), if any, pay to Purchaser the Termination Fee.

 

(d)                                 Any payment of the Termination Fee
pursuant to this Section 9.1 shall be made within one Business Day after
termination of this Agreement (or as otherwise expressly set forth in this
Agreement) by wire transfer of immediately available funds.  If the Company fails to pay to Purchaser the
Termination Fee when due hereunder, the Company shall pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee and/or expense
at the publicly announced prime rate for leading money center banks as
published in The Wall Street Journal from the date such fee was required to be
paid to the date it is paid.

 

9.2                                 Amendment; No Waiver.

 

(a)                                  Any provision of this Agreement may
be amended or waived prior to the Effective Time if, and only if, such
amendment or waiver is in writing and signed, in the case of an amendment, by
the Company, Purchaser and Merger Sub or, in the case of a waiver, by the party
against whom the waiver is to be effective; provided that (i) any waiver
or amendment shall be effective against a party only if the board of directors
of such party approves such waiver or amendment and (ii) after the
adoption of this Agreement by the shareholders of the Company, no such
amendment or waiver shall,

 

45

 

without the further
approval of such shareholders and each party’s board of directors, alter or
change (x) the amount or kind of consideration to be received in exchange for
any shares of capital stock of the Company, (y) prior to the Effective Time,
any term of the Company Articles or (z) any of the terms or conditions of this
Agreement if such alteration or change would adversely affect the holders of
any shares of capital stock of the Company.

 

(b)                                 No failure or delay by any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by Applicable Law.

 

9.3                                 Survival.

 

The representations and warranties contained in this Agreement or in
any certificates or other documents delivered prior to or as of the Effective
Time shall survive until (but not beyond) the Effective Time.  The
covenants and agreements of the parties hereto (including the Surviving
Corporation after the Merger) shall survive the Effective Time without
limitation (except for those which, by their terms, contemplate a shorter
survival period).

 

9.4                                 Notices.

 

All notices and other communications hereunder shall be in writing and
shall be deemed given upon (a) transmitter’s confirmation of a receipt of
a facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand, (c) the expiration of five Business
Days after the day when mailed in the United States by certified or registered
mail, postage prepaid, or (d) delivery in Person, addressed at the
following addresses (or at such other address for a party as shall be specified
by like notice):

 

(a)                                  if to the Company, to:

 

	
  Tipperary Corporation

  
	
  633 17th St.

  
	
  Suite 1800

  
	
  Denver, CO 80202

  
	
  Telephone: 303-293-9379

  
	
  Facsimile: 303-293-3428

  
	
  Attention: David Bradshaw

  
	
   

  	
   

  	
   

  
	
  with copies to:

  

 

46

 

	
  Jones & Keller, P.C.

  
	
  1625 Broadway

  
	
  16th Floor

  
	
  Denver, CO 80202

  
	
  Telephone:

  	
   

  	
  303-573-1600

  
	
  Facsimile:

  	
   

  	
  303-573-8133

  
	
  Attention:

  	
   

  	
  Reid Godbolt

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Eugene I. Davis

  
	
   

  	
   

  	
   

  
	
  c/o PIRINATE Consulting Group, LLC

  
	
  5 Canoe Brook Drive

  
	
  Livingston, NJ 07039

  
	
  Telephone:

  	
   

  	
  973-533-9027

  
	
  Facsimile:

  	
   

  	
  973-535-1843

  

 

(b)                                 if to Purchaser or Merger Sub, to:

 

	
  Santos International Holdings Pty Ltd.

  
	
  Ground Floor Santos House

  
	
  91 King William Street

  
	
  Adelaide 5000

  
	
  South Australia

  
	
  Telephone:

  	
   

  	
  61 8 8218 5111

  
	
  Facsimile:

  	
   

  	
  61 8 8218 5287

  
	
  Attention:

  	
   

  	
  Company Secretary

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
  Chamberlain, Hrdlicka, White, Williams &
  Martin

  
	
  1200 Smith Street, Suite 1400

  
	
  Houston, Texas 77002

  
	
  Telephone:

  	
   

  	
  713 658-1818

  
	
  Facsimile:

  	
   

  	
  713 658-2553

  
	
  Attention:

  	
   

  	
  Ralph K. Miller, Jr.

  

 

9.5                                 Interpretation; Definitions.

 

When a reference is made in this Agreement to Sections, such reference
shall be to a Section of this Agreement unless otherwise indicated.
Whenever the words “include”, “includes” or “including” are used in this
Agreement they shall be deemed to be followed by the words “without limitation”.  The phrase “made available” when used in this
Agreement shall mean that the information referred to has been made available
to the party to whom such information is to be made available.  The word “affiliates” when

 

47

 

used in this Agreement shall have the
respective meanings ascribed to them in Rule 12b-2 under the Exchange
Act.  The phrase “beneficial ownership”
and words of similar import when used in this Agreement shall have the meaning
ascribed to it in Rule 13d-3 under the Exchange Act.

 

The following terms have the following definitions:

 

(a)                                  “Acceptable Confidentiality
Agreement” means an agreement that imposes obligations and restrictions on the
counterparty thereto which are substantially similar to the terms that are
binding on the other party to this Agreement, as applicable, under the
Confidentiality Agreement.

 

(b)                                 “Business Day” means any day other
than Saturday and Sunday and any day on which banks are not required or
authorized to close in the State of New York.

 

(c)                                  “Code” means the Internal Revenue
Code of 1986, as amended.

 

(d)                                 “Comet Ridge Joint Venture” means
each of the unincorporated joint ventures between:  (i) the current parties to the Model Form Operating
Agreement dated 15 May 1992 between Tri-Star Petroleum Company, Bert
Wallace, Tipperary Oil and Gas Corporation, Piper Petroleum Company, Amerind
Oil Co. Ltd, Nations Bank of Texas NA (Trustee for Trust #1190, 1191, 1362,
1363 and 1364), Byron L. Keil and Mary Ann Keil (Co-Trustees of the Byron L.
Keil and Mary Ann Keil Revocable Trust Agreement dated 3/18/88), Curbstone Ltd,
John H. Davis and Clovelly Oil Company, Inc; (ii) the current parties to the Model Form Operating Agreement dated 17
December 2002 between Tipperary Oil & Gas (Australia) Pty Ltd,
Craig Ltd, the Estate of W.D. Kennedy, Origin Energy CSG Limited, Oil Company
of Australia (Moura) Pty Ltd, OCA (CSG) Pty Limited, Tipperary CSG Inc,
Tipperary Corporation, Tipperary Queensland Inc and Wilbanks Pecos County
Production Company Inc; and (iii) the current parties to the Model Form Operating Agreement dated 25
November 2003 between Tipperary Oil & Gas (Australia) Pty Ltd (as
Operator) and Craig Ltd, The Estate of W.D. Kennedy, Origin Energy CSG Limited,
Oil Company of Australia (Moura) Pty Ltd, OCA (CSG) Pty Limited, Tipperary CSG
Inc, Tipperary Corporation, Tipperary Queensland Inc and Wilbanks Pecos County
Production Company Inc.

 

(e)                                  “Company Assets” means all of the
properties and assets (real, personal or mixed, tangible or intangible) of the
Company and its Subsidiaries.

 

(f)                                    “Confidentiality Agreement” means
that certain confidentiality agreement, dated April 11, 2005, by and among
the Company, TOGA, Purchaser and Slough Estates plc.

 

(g)                                 “Derivative Transaction” means any
swap transaction, option, warrant, forward purchase or sale transaction,
futures transaction, cap transaction, floor transaction or collar transaction
relating to one or more currencies, commodities, bonds, equity securities,
loans, interest rates, catastrophe events, weather-related events, credit-

 

48

 

related events or
conditions or any indexes, or any other similar transaction (including any
option with respect to any of these transactions) or combination of any of
these transactions, including collateralized mortgage obligations or other
similar instruments or any debt or equity instruments evidencing or embedding
any such types of transactions, and any related credit support, collateral or
other similar arrangements related to such transactions; provided, however,
that no Australian gas sales contract entered into in the ordinary course of
business consistent with past practice shall constitute a “Derivative
Transaction.”

 

(h)                                 “Environmental Claim” means any
claim, lien, action, demand, proceeding, investigation or written notice to the
Company or its Subsidiaries by any Person or entity alleging non-compliance
with or potential liability (including potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resource damages,
personal injuries or penalties) arising out of, based on, or resulting from (a) the
presence, or release into the environment, of any Hazardous Substance at any
location, whether or not owned, leased, operated or used by the Company or its
Subsidiaries or (b) circumstances forming the basis of any violation, or
alleged violation of any applicable Environmental Law.

 

(i)                                     “Environmental Laws” means all
Applicable Laws, including common law, relating to pollution, cleanup,
restoration or protection of the environment (including ambient air, surface
water, groundwater, land surface or subsurface strata and natural resources) or
to the protection of flora or fauna or their habitat or to human or public health
or safety, including (i) Applicable Laws relating to emissions,
discharges, Releases or threatened Releases of Hazardous Substances, or
otherwise relating to the manufacture, generation, processing, distribution,
use, sale, treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances, including the Comprehensive Environmental Response,
Compensation, and Liability Act and the Resource Conservation and Recovery Act,
and (ii) the Occupational Safety and Health Act.

 

(j)                                     “Hazardous Substance” means (i) chemicals,
pollutants, contaminants, wastes, toxic and hazardous substances, and oil and
petroleum products, (ii) any substance that is or contains asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum or petroleum-derived
substances or wastes, radon gas or related materials or lead or lead-based
paint or materials, (iii) any substance, material or waste that requires
investigation, removal or remediation under any Environmental Law, or is
defined, listed or identified as hazardous, toxic or otherwise dangerous under
any Environmental Laws or (iv) any substance that is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous.

 

(k)                                  “Knowledge” means, with respect to
the Company, the actual knowledge of the individuals listed in Section 9.5(j)
of the Company Disclosure Letter, after due inquiry.

 

(l)                                     “Litigation” means any action,
claim, suit, proceeding, citation, summons, subpoena, inquiry or investigation
of any nature, civil, criminal or

 

49

 

regulatory, in law or
in equity, by or before any Governmental Entity or arbitrator (including worker’s
compensation claims).

 

(m)                               “Material Adverse Effect” means with
respect to the Company (i) a material adverse effect on the business,
results of operations or financial condition of the Company and its
Subsidiaries taken as a whole; provided, that none of the following shall be
deemed, either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether there has been or
will be, a Material Adverse Effect: (A) changes and effects attributable
to changes in Laws of general applicability or interpretations thereof by courts
or governmental authorities, (B) any change in GAAP, (C) changes and
effects attributable to or resulting from changes in general industry
conditions or general economic conditions, including changes in commodity
prices, (D) national or international political conditions, including any
engagement in hostilities, whether or not pursuant to the declaration of a
national emergency or war, or the occurrence of any military or terrorist
attack occurring prior to, on or after the date of this Agreement, (E) any
action or omission of the Company or Purchaser or any Subsidiary of any of them
taken with the prior written consent of the other party hereto, and (F) with
respect to Purchaser or Merger Sub, any circumstance, change, event or effect
which materially impairs the ability of Purchaser or Merger Sub to consummate
the transactions contemplated hereby, and (G) changes and effects
attributable to the announcement or pendency of this Agreement or the Merger;
or (ii) any change or effect that prevents or materially impedes or delays
the consummation by the Company of the Merger and the other transactions
contemplated hereby.

 

(n)                                 “Oil and Gas Properties” means all
of the Company’s or any of its Subsidiaries’ right, title and interest in, to
and under, or derived from oil and gas leases, licenses, authorities to
prospect and rights, Wells and Units, including all land, facilities, personal
property and equipment, contracts and information pertaining or relating
thereto.

 

(o)                                 “Permitted Exceptions” means (i) statutory
Liens for current taxes, assessments or other governmental charges not yet
delinquent (or that may subsequently be paid without penalty) or the amount or
validity of which is being contested in good faith; (ii) mechanics’,
carriers’, workers’, repairers’ and similar Liens arising or incurred in the
ordinary course of business; (iii) zoning, entitlement and other land use
and environmental regulations by any Governmental Entity; (iv) Liens
relating to purchase money security interests entered into in the ordinary
course of business consistent with past practice; (v) Liens relating to
lessors’ interests in leased tangible personal property; (vi) with respect
to real property, the standard exceptions to title which appear as part of
Chicago Title Insurance Company’s printed form of title insurance policy; (vii) any
other covenants, conditions, restrictions, reservations, rights, claims,
rights-of-ways, easements and other encumbrances or matters of record affecting
title which do not, individually or in the aggregate, have a material adverse
effect on the value or current use of the assets of the party subject to such
Lien, taken as a whole; (ix) Liens incurred in the ordinary course of
business to secure the performance of bids, tenders, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance and

 

50

 

repayment bonds and
other similar obligations; and (x) Liens securing obligations reflected on the
Company Balance Sheet.

 

(p)                                 “Person” means any natural Person,
firm, individual, partnership, joint venture, business trust, trust,
association, corporation, company, unincorporated entity or Governmental
Entity.

 

(q)                                 “Release” means any release, spill,
emission, migration, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, or leaching into the environment.

 

(r)                                    “Return” means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes or any amendment thereto, and including any schedule or
attachment thereto.

 

(s)                                  “Subsidiary” means with respect to
any Person, any other Person of which 50% or more of the securities or other
interests having by their terms ordinary voting power for the election of
directors or others performing similar functions are directly or indirectly
owned by such Person; and in addition, with respect to any representation and
warranty of the Company, the term Subsidiary shall mean any such other Persons
of which 50% or more of such securities or other interests are or were at any
time directly or indirectly owned by the Company, provided that the Company’s
representation and warranty with respect to such Subsidiary shall only relate
to the period during which the Company directly or indirectly owned such Subsidiary.

 

(t)                                    “Tax” or “Taxes” mean all federal,
state, local or foreign taxes, assessments, duties, levies or similar charges
of any kind including, without limitation, all income, payroll, withholding,
unemployment insurance, social security, sales, use, service, leasing, excise,
goods and services, franchise, gross receipts, value added, alternative or
add-on minimum, estimates, occupation, real and personal property, stamp, duty,
transfer, workers’ compensation, severance, windfall profits, or other Tax, charge,
fee, levy or assessment of the same or of a similar nature, including any
interest, penalty or addition thereto, whether disputed or not.

 

(u)                                 “Third Party Acquisition Event”
means the consummation of an Acquisition Proposal involving the purchase of at
least 2/3rds of the equity securities of the Company or all or substantially
all of the consolidated assets of the Company and its Subsidiaries, taken as a
whole.

 

(v)                                 “TOGA” means Tipperary Oil and Gas
Australia Pty Ltd.

 

(w)                               “TOGA Credit Facility” means that
certain senior credit facility of AUS$150,000,000 with the Australia and New
Zealand Banking Group Ltd. and BOS International (Australia), Ltd.

 

(x)                                   “Unit” means the area covered by a
unitization, communitization or pooling agreement or order applicable to Wells,
but only as to those

 

51

 

formations in which a
Well or Wells are currently completed and producing Hydrocarbons.

 

(y)                                 “Well” means a well for the purpose
of producing Hydrocarbons or disposing of fluids produced in connection with
the production of Hydrocarbons.

 

9.6                                 Headings; Schedules.

 

The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.  Disclosure of any matter
pursuant to any Section of the Company Disclosure Letter, the Slough
Disclosure Letter or Merger Sub Disclosure Letter shall not be deemed to be an
admission or representation as to the materiality of the item so disclosed.

 

9.7                                 Counterparts.

 

This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.

 

9.8                                 Entire Agreement.

 

This Agreement and the Confidentiality Agreement constitute the entire
agreement, and supersede all prior agreements and understandings (written and
oral), among the parties with respect to the subject matter of this Agreement.

 

9.9                                 Severability.

 

If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, unenforceable or against its regulatory policy, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

 

9.10                           Governing Law.

 

This Agreement shall be governed, construed and enforced in accordance
with the laws of the State of Texas without giving effect to the principles of
conflicts of law thereof.

 

9.11                           Assignment.

 

Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties.  Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors and assigns.

 

52

 

9.12                           Parties in Interest.

 

This Agreement shall be binding upon and inure solely to the benefit of
each party to this Agreement and their permitted assignees, and (other than
Sections 6.5 and 9.11) nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.  Without limiting the foregoing, no direct or
indirect holder of any equity interests or securities of any party to this
Agreement (whether such holder is a limited or general partner, member,
shareholder or otherwise), nor any affiliate of any party to this Agreement,
nor any director, officer, employee, representative, agent or other controlling
Person of each of the parties to this Agreement and their respective affiliates
shall have any liability or obligation arising under this Agreement or the
transactions contemplated hereby.

 

******

 

53

 

IN WITNESS WHEREOF, Purchaser, Merger Sub and
the Company have caused this Agreement to be signed by their respective
officers thereunto duly authorized as of the date first written above.

 

 

	
   

  	
  Signed for and on behalf of SANTOS

  INTERNATIONAL

  
	
   

  	
  HOLDINGS PTY LTD.

  
	
   

  	
  A.B.N. 57 057 585 869 by its duly

  
	
   

  	
  appointed Attorney in the presence of:

  
	
   

  	
   

  
	
   

  	
  /s/ Christian J. Paech

  	
   

  
	
   

  	
  Witness

  	
   

  	
   

  
	
   

  	
  Printed Name: 

  	
  Christian J. Paech

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Andrew L. Winter

  	
   

  
	
   

  	
  Attorney

  	
   

  
	
   

  	
  Printed Name:

  	
  Andrew L. Winter

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SANTOS ACQUISITION CO.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Andrew L. Winter

  	
   

  
	
   

  	
  Name: 

  	
    Andrew L. Winter

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TIPPERARY CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ David L. Bradshaw

  	
   

  
	
   

  	
  Name: 

  	
    David L. Bradshaw

  	
   

  
	
   

  	
  Title: 

  	
    Chief Executive Officer

  	
   

  
								

 

 

Santos Ltd. joins in the execution and delivery of this Amended and
Restated Agreement and Plan of Merger dated July 4, 2005 by and among
Santos International Holdings Pty Ltd, Santos Acquisition Co. and Tipperary
Corporation for the limited purpose of evidencing the agreement of Santos Ltd.
to be bound by and subject to the provisions of Sections 2.1, 3.2(a), 5.1, 5.2,
5.3, 5.4, 5.6 and 5.9 of said Agreement.

 

	
   

  	
  Signed for and on behalf of SANTOS LTD.

  
	
   

  	
  A.B.N. 80 007 550 923 by its duly

  
	
   

  	
  appointed Attorney in the presence of:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Christian J. Paech

  	
   

  
	
   

  	
  Witness

  	
   

  
	
   

  	
  Printed Name:

  	
  Christian J. Paech

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Andrew L. Winter

  	
   

  
	
   

  	
  Attorney

  	
   

  
	
   

  	
  Printed Name:

  	
  Andrew L. Winter

  	
   

  
					

 

 

SCHEDULE 2.3(a)

 

WARRANTS

 

	
  Holder

  	
   

  	
  Date of

  Grant

  	
   

  	
  Exercise

  Price

  	
   

  	
  Number of

  Shares

  	
   

  
	
  Andrew Mayers

  	
   

  	
  06/03/03

  	
   

  	
  $

  	
  2.13

  	
   

  	
  25,000

  	
   

  
	
  Anthony Speed

  	
   

  	
  07/08/02

  	
   

  	
  $

  	
  1.65

  	
   

  	
  25,000

  	
   

  
	
  Anthony Speed

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  15,000

  	
   

  
	
  Charles T Maxwell

  	
   

  	
  05/03/00

  	
   

  	
  $

  	
  2.63

  	
   

  	
  50,000

  	
   

  
	
  Charles T Maxwell

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  D. Leroy Sample

  	
   

  	
  11/30/00

  	
   

  	
  $

  	
  3.00

  	
   

  	
  50,000

  	
   

  
	
  D. Leroy Sample

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  10/01/90

  	
   

  	
  $

  	
  2.00

  	
   

  	
  201,900

  	
   

  
	
  David L Bradshaw

  	
   

  	
  04/01/96

  	
   

  	
  $

  	
  4.63

  	
   

  	
  50,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  50,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  09/24/99

  	
   

  	
  $

  	
  1.50

  	
   

  	
  50,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  01/03/00

  	
   

  	
  $

  	
  1.50

  	
   

  	
  100,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  02/03/03

  	
   

  	
  $

  	
  1.81

  	
   

  	
  40,000

  	
   

  
	
  David L Bradshaw

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  200,000

  	
   

  
	
  Douglas Kramer

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  Eugene I Davis

  	
   

  	
  01/25/94

  	
   

  	
  $

  	
  2.75

  	
   

  	
  50,000

  	
   

  
	
  Eugene I Davis

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  15,000

  	
   

  
	
  Eugene I Davis

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  James F Knott

  	
   

  	
  02/09/00

  	
   

  	
  $

  	
  2.00

  	
   

  	
  144,000

  	
   

  
	
  James H Marshall

  	
   

  	
  02/09/00

  	
   

  	
  $

  	
  2.00

  	
   

  	
  144,000

  	
   

  
	
  Jeff T Obourn

  	
   

  	
  01/30/01

  	
   

  	
  $

  	
  3.75

  	
   

  	
  50,000

  	
   

  
	
  Jeff T Obourn

  	
   

  	
  02/03/03

  	
   

  	
  $

  	
  1.81

  	
   

  	
  20,000

  	
   

  
	
  Jeff T Obourn

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  07/11/96

  	
   

  	
  $

  	
  4.31

  	
   

  	
  50,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  15,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  09/24/99

  	
   

  	
  $

  	
  1.50

  	
   

  	
  200,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  02/03/03

  	
   

  	
  $

  	
  1.81

  	
   

  	
  10,000

  	
   

  
	
  Kenneth L Ancell

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  50,000

  	
   

  
	
  Marshall D Lees

  	
   

  	
  08/26/97

  	
   

  	
  $

  	
  4.25

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  01/01/99

  	
   

  	
  $

  	
  2.00

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  06/29/00

  	
   

  	
  $

  	
  3.44

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  01/01/02

  	
   

  	
  $

  	
  1.65

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  02/08/04

  	
   

  	
  $

  	
  3.92

  	
   

  	
  25,000

  	
   

  
	
  Richard A Barber

  	
   

  	
  01/10/05

  	
   

  	
  $

  	
  4.95

  	
   

  	
  25,000

  	
   

  
	
  Slough Estates USA, Inc.

  	
   

  	
  12/22/98

  	
   

  	
  $

  	
  3.00

  	
   

  	
  500,000

  	
   

  
	
  Slough Estates USA, Inc.

  	
   

  	
  12/23/99

  	
   

  	
  $

  	
  2.00

  	
   

  	
  1,200,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  3,579,900

  	
   

  

 

Schedule 2.3(a)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]