EXHIBIT 2(1)
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of April 21, 2005, by and among American Oil & Gas, Inc., a Nevada
corporation ("AOGI"), Tower Colombia Corporation, a Colorado corporation
("Tower"), Xx. Xxxxxxx X'Xxxxx, an individual ("Xx. X'Xxxxx"), Xx. Xxx Xxxxxxx,
an individual ("Xx. Xxxxxxx"), and Xx. Xxxxxxx Xxxxxxxxx, an individual ("Xx.
Xxxxxxxxx"). Messrs. O'Brien, Solomon and Tholstrom are collectively referred to
as the "Tower Shareholders."
RECITALS
WHEREAS, the respective Boards of Directors of each of Tower and AOGI
believe it is in the best interests of their respective companies and the
stockholders of their respective companies that Tower and AOGI combine into a
single company through the statutory merger of Tower with and into AOGI (the
"Merger") and, in furtherance thereof, have approved this Agreement and the
Merger;
WHERAS, Tower and AOGI desire to make certain representations and
warranties and other agreements in connection with the Merger;
WHEREAS, in order to induce AOGI to enter into this Agreement, and as
additional consideration therefor, the Tower Shareholders desire to make certain
agreements contained herein in connection with the Merger;
NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties,
intending to be legally bound agree as follows:
1. DEFINITIONS.
1.1 Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"AOGI" has the meaning set forth in the introductory paragraph.
"AOGI Common Stock" means the common stock of American Oil & Gas, Inc.,
$0.001 par value per share.
"AOGI Disclosure Schedule" means the disclosure schedule of AOGI attached
hereto as Schedule B.
"AOGI Indemnified Person" and "AOGI Indemnified Persons" have the meanings
set forth in Section 8.2(a).
"AOGI Material Contract" has the meaning set forth in Section 4.10(c).
"Agreement" has the meaning set forth in the introductory paragraph.
"Articles of Merger" means the Articles of Merger attached hereto as
Exhibit A.
"Cap" means the lesser of (i) an amount equal to the aggregate bid price of
the Merger Shares on the OTC Bulletin Board on the date of this Agreement or
(ii) an amount equal to the aggregate bid price of the Merger Shares on the OTC
Bulletin Board, or on such other national security exchange or registered
securities association the AOGI Common Stock is then traded, on the first day an
amount was due and payable to the Tower Shareholders pursuant to Section 8.2(b)
of this Agreement.
"Certificates" has the meaning set forth in Section 2.5.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Confidential Information" means all non-public information of any party to
this Agreement, in any format, whether of a technical, business or other nature,
including, without limitation, any trade secrets, finding, specifications,
processes, inventions, designs, pictures, programs, source codes, budgets,
business or marketing plans, financial information, work in progress, price
lists, product descriptions, customer lists, prospective customer lists, or
supplier lists. "Confidential Information" also includes all information
concerning the existence and progress of the parties' dealings.
"Code" means the Internal Revenue Code of 1986, as amended.
"Colorado Law" means the applicable provisions of the Colorado Business
Corporation Act.
"Effective Time" means 12:01 am, Denver, Colorado time, on January 1, 2005.
"Environmental Laws" means all Federal, state, local and foreign statutes
(civil and criminal), laws, ordinances, regulations, rules, notices, permits,
judgments, orders and decrees applicable to any of them or any of their
respective properties, assets, operations and businesses relating to
environmental protection.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means United States generally accepted accounting principles.
"Governmental Entity" means any federal, state, local or other
governmental, regulatory or administrative agency, commission, department, board
or other governmental subdivision, court, tribunal or arbitrating body.
"Indemnification Claim" has the meaning set forth in Section 8.4(a).
2
"Indemnified Person" means either the AOGI Indemnified Person or AOGI
Indemnified Persons, or the Tower Indemnified Person or Tower Indemnified
Persons making an Indemnification Claim pursuant to Section 8.4.
"Knowledge," means (i) with respect to an individual, an individual will be
deemed to have knowledge of a particular fact or other matter if that individual
is actually aware of the fact or matter, (ii) with respect to Tower, Tower will
be deemed to have knowledge of a particular fact or other matter if any Tower
Shareholder has, or at any time had, Knowledge of that fact or other matter, and
(iii) with respect to AOGI, AOGI will be deemed to have Knowledge of a
particular fact or other matter if Xxxxxx X. Xxxxxxxx has, or at any time had,
Knowledge of the fact or other matter.
"Material Adverse Effect" shall mean the occurrence of any event, change,
circumstance or effect that individually or in the aggregate (taking into
account all other such related events, changes, circumstances or effects), is,
or would reasonably be expected to (A) be materially adverse to the financial
condition, properties, assets (including intangible assets), liabilities,
business, operations or results of operations of an entity, or (B) materially
hinder or delay an entity's ability to consummate the transactions contemplated
herein.
"Material Contract" has the meaning set forth in Section 3.12(c).
"Merger" has the meaning set forth in the recitals.
"Merger Shares" has the meaning set forth in Section 2.5.
"Xx. X'Xxxxx" has the meaning set forth in the introductory paragraph.
"Xx. Xxxxxxx" has the meaning set forth in the introductory paragraph.
"Xx. Xxxxxxxxx" has the meaning set forth in the introductory paragraph.
"Nevada Law" means the applicable provisions of the Nevada Revised
Statutes.
"Notice of Claim" has the meaning set forth in Section 8.4(b).
"Permitted Encumbrances" has the meaning set forth in Section 3.15.
"Person" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization or a Governmental Entity.
"Returns" has the meaning set forth in Section 3.21(a).
"Securities Act" means the Securities Act of 1933, as amended.
"Statement of Merger" means the Statement of Merger attached hereto as
Exhibit B.
"Surviving Corporation" has the meaning set forth in Section 2.1.
"Tower" has the meaning set forth in the introductory paragraph.
3
"Tower Common Stock" means the common stock of Tower Colombia Corporation,
no par value per share.
"Tower Disclosure Schedule" means the disclosure schedule of Tower attached
hereto as Schedule A.
"Tower Employee Plans" has the meaning set forth in Section 3.18(a).
"Tower Financial Statements" means Tower's financial statements dated
December 31, 2004.
"Tower Indemnified Person" and "Tower Indemnified Persons" have the
meanings set forth in Section 8.2(b).
"Tower Shareholders" has the meaning set forth in the introductory
paragraph.
"Tax" and "Taxes" mean any and all federal, state and local taxes of any
country, assessments and other governmental charges, duties, impositions and
liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, stamp transfer,
franchise, withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under any agreements or arrangements with
any other Person with respect to such amounts and including any liability for
taxes of a predecessor entity;
2. TRANSACTION.
2.1 The Merger. Upon filing the Statement of Merger and the Articles
of Merger as set forth in Section 2.2 below, subject to and upon the terms and
conditions of this Agreement, the Statement of Merger, the Articles of Merger,
the Colorado Law, and the Nevada Law, Tower shall be merged, effective as of the
Effective Time, with and into AOGI, the separate corporate existence of Tower
shall cease and AOGI shall continue as the surviving corporation in the Merger
(the "Surviving Corporation").
2.2 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place as soon as practicable, but no later than five (5)
business days after the satisfaction or waiver of each of the conditions set
forth in Section 7 hereof, or at such other date and time as the parties hereto
agree (the "Closing Date"). The Closing shall take place at the offices of AOGI,
or at such other location as the parties hereto agree. On the Closing Date the
Tower Shareholders shall surrender to AOGI all of the Certificates, and AOGI
shall deliver to the Tower Shareholders shares of AOGI Common Stock, in
accordance with the terms of this Agreement. On or immediately after the Closing
Date, the parties hereto shall cause the Merger to be consummated by filing the
Statement of Merger, together with any required certificates, with the Secretary
of State of the State of Colorado in accordance with the relevant provisions of
Colorado Law, and the Articles of Merger, together with any required
certificates, with the Secretary of State of the State of Nevada in accordance
with the relevant provisions of Nevada Law.
2.3 Effect of the Merger.
4
(a) At the Effective Time, the effect of the Merger shall be as
provided in this Agreement, the Statement of Merger, the Articles of Merger, the
applicable provisions of Colorado Law, and the applicable provisions of Nevada
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all of the property, rights, privileges, powers and
franchises of Tower and AOGI shall vest in the Surviving Corporation, and all
debts, liabilities and duties of Tower and AOGI shall become the debts,
liabilities and duties of the Surviving Corporation.
(b) Each share of AOGI common stock, $0.001 par value per share,
that is issued and outstanding immediately prior to Closing shall remain
outstanding, and shall have identical designations, preferences, limitations,
and relative rights immediately after the Closing and shall continue to evidence
ownership of such shares of common stock of AOGI, as the Surviving Corporation.
2.4 Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of AOGI, as in effect immediately prior to the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended as provided by law and such Articles of Incorporation.
2.5 Merger Consideration. The total consideration to be received by
the Tower Shareholders pursuant to the Merger shall be 5,800,000 shares (the
"Merger Shares"). Schedule 2.5 sets forth the names and addresses of the Tower
Shareholders, together with the number of shares of Tower Common Stock owned by
each of the Tower Shareholders. At Closing, and upon delivery to AOGI of the
certificates and agreements which represent the Tower Common Stock (the
"Certificates"), AOGI shall deliver to the Tower Shareholders the number of
shares of AOGI Common Stock set forth opposite their respective names in
Schedule 2.5. Tower and each of the Tower Shareholders acknowledge and agree
that the allocation of the Merger Shares as set forth in Schedule 2.5 has been
determined solely by Tower and the Tower Shareholders, and no other party to
this Agreement has any responsibility or obligation with respect to such
allocation.
2.6 Surrender of Certificates.
(a) Exchange Procedures. Upon the surrender to AOGI of the Tower
Shareholders' Certificates for cancellation at the Closing, the respective owner
of each such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of Merger Shares which that owner has the
right to receive pursuant to this Agreement, and the Certificate so surrendered
shall forthwith be cancelled. Until surrendered as contemplated by this Section
2.7, each Certificate shall, at and after the Closing Date, be deemed to
represent only the right to receive, upon surrender of such Certificate, the
certificate representing the appropriate number of Merger Shares and any
adjustments to the Merger Shares as contemplated by Section 2.9.
(b) Dividends and Distributions. No dividends or other
distributions that are declared on or after the Effective Time on AOGI Common
Stock or are payable to the holders of record thereof on or after the Effective
Time will be paid to persons entitled by reason of the Merger to receive
certificates representing AOGI Common Stock until such persons surrender their
Certificates, as provided in this Section 2.7. Subject to the effect of
5
applicable law, there shall be paid to the record holder of the certificates
representing such AOGI Common Stock: (i) at the time of such surrender or as
promptly as practicable thereafter, the amount of any dividends or other
distributions theretofore paid with respect to whole shares of such AOGI Common
Stock, provided that such dividends or other distributions have a record date on
or after the Effective Time and a payment date prior to such surrender; and (ii)
at the appropriate payment date or as promptly as practicable thereafter, the
amounts of dividends or other distributions payable with respect to whole shares
of AOGI Common Stock and having a record date on or after the Effective Time but
prior to surrender and a payment date subsequent to surrender. In no event shall
the person entitled to receive such dividends or other distributions be entitled
to receive interest on such dividends or other distributions.
(c) No Further Ownership Rights in Tower Common Stock. The Tower
Shareholders acknowledge and agree that all shares of AOGI Common Stock issued
upon the surrender of Certificates in accordance with the terms hereof are, and
shall be deemed to have been, issued in full satisfaction of all rights
pertaining to the Tower Common Stock.
2.7 Fractional Shares. No certificates or scrip representing
fractional shares of AOGI Common Stock shall be issued upon the surrender for
exchange of Certificates. In lieu of any such fractional securities, the number
of shares of AOGI Common Stock to be received by each holder of Tower Common
Stock who would otherwise be entitled to a fraction of a share of AOGI Common
Stock (after aggregating all fractional shares of AOGI Common Stock to be
received by such holder) shall be rounded up or down to the nearest whole share.
2.8 Adjustments. The Merger Shares shall be equitably adjusted to
reflect fully the effect of any stock split, reverse split, stock combination,
stock dividend, recapitalization or other like change with respect to AOGI
Common Stock occurring after the date hereof and prior to Closing.
2.9 Taking of Necessary Action; Further Action. Each of AOGI and Tower
shall take all such reasonable and lawful action as may be necessary or
desirable in order to effectuate the Merger in accordance with this Agreement as
promptly as possible. If, at any time after the Closing, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession to all, as
applicable, assets, property, rights, privileges, powers and franchises of Tower
and AOGI, the officers and directors of the Surviving Corporation are fully
authorized to take, and will take, all such lawful and necessary action, so long
as such action is not inconsistent with this Agreement.
2.10 Restricted Securities. The Merger Shares will be issued in a
transaction exempt from registration under the Securities Act, and applicable
state law pursuant to Section 4(2) of the Securities Act and Rule 506 of
Regulation D promulgated under the Securities Act, and as such will constitute
"restricted securities" within the meaning of the Securities Act. Each
certificate issued representing the shares of AOGI Common Stock to be issued in
connection with the Merger shall be imprinted with a legend that sets forth a
description of the restrictions on transferability of those securities, which
legend will read substantially as follows:
6
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND ARE `RESTRICTED
SECURITIES' AS THAT TERM IS DEFINED IN RULE 144 UNDER THE
SECURITIES ACT. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT,
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT. THE ISSUER OF THE SECURITIES MAY REQUEST THE
HOLDER TO PROVIDE AN OPINION OF HOLDER'S LEGAL COUNSEL IN
ORDER TO ESTABLISH THE VALIDITY OF AN EXEMPTION FROM
REGISTRATION CLAIMED BY THE HOLDER."
3. REPRESENTATIONS AND WARRANTIES OF TOWER.
Tower represents and warrants to AOGI that the statements contained in this
Section 3 are true and correct, except as set forth in the Tower Disclosure, and
that the statements contained in this Section 3 are correct and complete as of
the date hereof and shall be correct and complete as of the Closing Date.
3.1 Organization, Standing and Power. Tower is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Colorado. Tower has the corporate power to own its properties and to carry on
its business as now being conducted and as proposed to be conducted. Tower is
duly qualified to do business and is in good standing in each of the
jurisdictions in which the failure to be so qualified and in good standing could
reasonably be expected to have a Material Adverse Effect. Tower has delivered to
AOGI a true and correct copy of the articles of incorporation and bylaws of
Tower, each as amended to date. Tower is not in violation of any of the
provisions of its articles of incorporation or bylaws.
3.2 Authority; Enforceability. Tower has all requisite corporate power
and authority to execute and deliver this Agreement and all agreements and
documents contemplated hereby. Subject only to the approval of this Agreement
and the transactions contemplated hereby by the shareholders of Tower as
required by Colorado Law, the consummation by Tower of the transactions
contemplated hereby has been duly authorized by all requisite corporate action
of Tower. This Agreement has been duly executed and delivered by Tower and,
assuming due authorization, execution and delivery of this Agreement by AOGI,
constitutes, and all agreements and documents contemplated hereby (when executed
and delivered pursuant hereto) will constitute, valid and legally binding
obligations of Tower, enforceable against Tower in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting enforcement of
creditors' rights or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
7
3.3 Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any Governmental Entity to
which Tower is subject, or any provision of its articles of incorporation or
bylaws, (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which Tower is a
party or by which it is bound or to which any of its assets is subject, (iii)
result in the imposition or creation of any Lien upon or with respect to the
Tower Common Stock (other than in connection with the Merger), or (iv) require
the consent, authorization or approval of a third party (other than the
shareholders of Tower) or Governmental Entity (other than the filing of the
Statement of Merger and the Articles of Merger as provided in Section 2.2).
3.4 Capitalization; Shares; Shareholder Information.
(a) Capitalization. The authorized capital stock of Tower
consists of 50,000 shares of Tower Common Stock, of which 1,000 shares are
issued and outstanding. All outstanding shares of Tower Common Stock are duly
authorized, validly issued, fully paid and non-assessable, are free and clear of
all mortgages, pledges, security interests, liens, charges, claims,
restrictions, easements or other encumbrances of any nature, and are not subject
to preemptive rights or rights of first refusal created by statute, the articles
of incorporation or bylaws of Tower or by any agreement to which Tower is a
party or by which it is bound. Schedule 2.5 sets forth a true and complete list
of the Tower Shareholders, and there are no holders of record of Tower Common
Stock other than the Tower Shareholders. Except for the rights created pursuant
to this Agreement, there are no options, warrants, calls, rights, commitments or
agreements of any character to which Tower is a party or by which it is bound,
obligating Tower to issue, deliver, sell, repurchase or redeem or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of Tower Common
Stock or obligating Tower to grant, extend, accelerate the vesting of, change
the price of, or otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. There are no other contracts, commitments or
agreements relating to voting, purchase or sale of Tower Common Stock (i)
between or among Tower and any of its shareholders; and (ii) between or among
any of the Tower Shareholders. All shares of outstanding Tower Common Stock were
issued in compliance with all applicable federal and state securities laws. At
the Effective Time, there will be no accrued but unpaid dividends on shares of
Tower Common Stock.
(b) Subsidiaries. Tower does not own, directly or indirectly,
beneficially or otherwise, any capital stock in any other corporation, limited
liability company or like entity. Tower is not a partner in any partnership.
(c) Approval of Agreement. The Board of Directors of Tower
unanimously (a) approved this Agreement and the Merger; (b) determined that in
its opinion the Merger is in the best interests of the shareholders of Tower and
is on terms that are fair to such shareholders; and (c) recommended that the
shareholders of Tower approve this Agreement and the Merger. All of the
necessary Tower Shareholders' consents have been obtained approving this
Agreement, the Merger and the transactions contemplated hereby, each of which is
fully effective under applicable Colorado Law.
8
3.5 Financial Statements. Tower has delivered to AOGI the Tower
Financial Statements. The Tower Financial Statements were compiled from the
books and records of Tower regularly maintained by management, were prepared in
accordance with GAAP, and fairly present in all material respects the
consolidated financial condition and operating results of Tower as of the dates,
and for the periods, indicated therein.
3.6 Absence of Certain Changes. Except as set forth in Section 3.6 of
the Tower Disclosure Schedule, since December 31, 2004 through the date hereof,
other than in connection with the transactions contemplated by this Agreement,
Tower has conducted its business in the ordinary course consistent with past
practice and has not:
(a) incurred a Material Adverse Effect;
(b) sold, leased, or otherwise disposed of any material asset of
Tower;
(c) made any declaration, setting aside, or payment of a dividend
or other distribution with respect to the shares of Tower, or any direct or
indirect redemption, purchase or other acquisition by Tower of any of its shares
of Tower Common Stock;
(d) incurred any indebtedness for borrowed money or made any
capital expenditures, or otherwise materially impaired Tower, or its assets,
operations, or financial condition;
(e) entered into any Material Contract, or any material amendment
or termination of, or default under, any Material Contract to which Tower is a
party or by which it is bound;
(f) amended, restated, or otherwise changed or superseded its
articles of incorporation or bylaws;
(g) other than paying each of the three Tower Shareholders a
salary of $95,000 per year, made any increase in or modification of the
compensation or benefits payable or to become payable by Tower to any of its
directors or employees; and
(h) entered into any negotiation or agreement to take any of the
actions described in (a) through (g) (other than negotiations with AOGI and its
representatives regarding the transactions contemplated by this Agreement).
3.7 Absence of Undisclosed Liabilities. Except for liabilities
reflected or reserved against in the Tower Financial Statements (including the
notes, if any, thereto), and liabilities set forth in Section 3.7 of the Tower
Disclosure Schedule, Tower has no liabilities other than liabilities incurred in
the ordinary course of business since the date of the Tower Financial
Statements.
9
3.8 Governmental Authorization; Compliance with Laws. Tower has
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
every applicable Governmental Entity, except as would not have a Material
Adverse Effect on Tower, or its assets, operations, or financial condition.
Tower has not received any written notice of any material violation of any law,
ordinance, regulation, or order applicable to Tower or the business conducted by
it. Except as set forth in Section 3.8 of the Tower Disclosure Schedule, Tower
holds all permits, licenses, consents, and authorizations that are necessary for
the conduct of its business, except where any failure to hold such authorization
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Tower. This Section 3.8 does not relate to tax
matters related to Tower, which are instead the subject of Section 3.17, to
employee benefits matters related to Tower, which are instead the subject of
Section 3.18, or to environmental matters related to Tower, which are instead
the subject of Section 3.16.
3.9 Litigation. Except as set forth in Section 3.9 of the Tower
Disclosure Schedule, there are no legal claims pending, or to Tower's Knowledge
threatened, against Tower or any of Tower's assets or properties. Except as set
forth in Section 3.9 of the Tower Disclosure Schedule, there are no existing
orders, judgments, settlements, injunctions, or decrees of any Governmental
Entity to which Tower, or any of Tower's assets, properties, business, or
operations are subject. Nothing disclosed in Section 3.9 of the Tower Disclosure
Schedule has, or could reasonably be expected to have, the effect of prohibiting
or materially impairing any current or future business practice of Tower, any
acquisition of property by Tower, or the conduct of business by Tower as
currently conducted or as proposed to be conducted by Tower.
3.10 Intellectual Property. Section 3.10 of the Tower Disclosure
Schedule identifies each patent, trademark, or registration that has been issued
to Tower with respect to any of its intellectual property, identifies each
pending application which Tower has made with respect to any of its intellectual
property, and identifies each material license, agreement or other permission
that Tower has granted to any third party with respect to its intellectual
property.
3.11 Books and Records. All of the books and records of Tower have
been made available to AOGI and have been prepared and maintained in accordance
with good business practices and, to the best of Tower's Knowledge, in
compliance with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) and
requirements of every applicable Governmental Entity.
3.12 Material Contracts.
(a) Section 3.12(a) of the Tower Disclosure Schedule lists each
Material Contract of Tower, with a designation of those Material Contracts to
which AOGI is a party. Other than those Material Contracts of Tower to which
AOGI is a party, Tower has delivered to AOGI a complete and accurate copy of
each written Material Contract and all amendments or modifications thereto.
Except as set forth in Section 3.12(a) of the Tower Disclosure Schedule, each
Material Contract, to Tower's Knowledge, that was oral when entered into by
Tower has been reduced to writing.
10
(b) With respect to each Material Contract: (i) the Material
Contract is legal, valid, binding and enforceable and in full force and effect
with respect to Tower, and to Tower's Knowledge, with respect to each other
party thereto; (ii) the Material Contract will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Effective Time in accordance with its terms as in effect prior to the Effective
Time; and (iii) neither Tower, nor to Tower's Knowledge, any other party, is in
breach or default, and no event has occurred that, with notice or lapse of time
or both, would constitute a breach or default by Tower or, to Tower's Knowledge,
by any such other party, or permit termination, modification or acceleration,
under such Material Contract, and no notice of any such alleged breach or
default has been served on or received by Tower. No prior consent of any party
to a Material Contract is required for the consummation by Tower of the
transactions contemplated hereby to be in compliance with the provisions of such
Material Contract.
(c) "Material Contract" means any contract, agreement, lease
(other than oil and gas leases), promissory note, evidence of indebtedness,
purchase order, letter of credit, license or other legally binding agreement of
any nature, whether written or oral, to which Tower is a party, and (i) the
performance of which will involve either consideration in any one year in excess
of $10,000 or total consideration over the life of that agreement in excess of
$50,000, (ii) which evidence indebtedness of at least $25,000, (iii) creates or
relates to the creation of any partnership, joint venture or any sharing of
revenues, profits, losses, costs or liabilities, or (iv) that could reasonably
be expected to cause a Material Adverse Effect on Tower if breached by Tower in
such a manner as would (A) permit any other party to cancel or terminate the
same (with or without notice of passage of time); (B) provide a basis for any
other party to claim money damages (either individually or in the aggregate with
all other such claims under that contract) from Tower; or (C) give rise to a
right of acceleration of any material obligation or loss of any material benefit
under such Material Contract.
3.13 Accounts Receivable. Subject to any reserves set forth therein,
the accounts receivable shown on the Tower Financial Statements or on the
accounting records of Tower as of the Closing Date are valid and genuine, have
arisen solely out of bona fide sales and deliveries of goods, performance of
services, and other business transactions in the ordinary course of business
consistent with past practices, are not subject to any prior assignment, lien or
security interest, and are not subject to valid defenses, set-offs or counter
claims. Unless paid prior to the Closing Date, such accounts receivable are or
will be as of the Closing Date current, on a 45-day basis, and collectible net
of the respective reserve shown on the Tower Financial Statements or on the
accounting records of Tower as of the Closing Date (which reserves are adequate
and calculated consistently with past practice).
3.14 Employees and Consultants. Section 3.14 of the Tower Disclosure
Schedule contains a list of the names of all current employees (including
without limitation part-time employees and temporary employees), leased
employees, and consultants of Tower, together with their respective salaries or
wages, other compensation, dates of employment and positions and identifies all
agreements between Tower and such individuals or entities.
3.15 Title to Property. Tower has not permitted any encumbrances on
its oil and gas leasehold interests, except (i) with respect to those oil and
gas leasehold interests in which AOGI also has an interest, encumbrances that
were permitted by AOGI on an equal proportional basis, and (ii) with respect to
those oil and gas leasehold interests in which AOGI has no interest,
encumbrances that are disclosed on Section 3.15 of the Tower Disclosure
Schedule.
11
3.16 Environmental Matters.
(a) Except as disclosed on Section 3.16(a) of the Tower
Disclosure Schedule, Tower and its affiliates have been and are currently in
compliance with all applicable Environmental Laws, except for noncompliance as
would not have a Material Adverse Effect on Tower or its assets, operations, or
financial condition. Such compliance includes the possession of permits and
governmental authorizations required under applicable Environmental Laws and
compliance with the terms and conditions thereof and there are no conditions on
or relating to any of Tower's properties or assets (including conditions on or
relating to properties or assets previously owned by Tower to the extent that
Tower has or would have responsibility for those conditions) that might lead to
a claim under Environmental Laws, whether actual or contingent, arising out of
actions, occurrences or contamination on or before the Effective Time (under
Environmental Laws existing on that date), whether or not any claim with respect
to such actions, occurrences or contamination are brought before or after the
Effective Time, except for such noncompliance as would not have a Material
Adverse Effect on Tower or its assets, operations, or financial condition.
(b) Except as disclosed on Section 3.16(b) of the Tower
Disclosure Schedule, there are no claims related to Environmental Laws pending
or, to the Knowledge of Tower, threatened, against Tower or its affiliates or
any person or entity whose liability for any such claim Tower or its affiliates
has or may have assumed either contractually or by operation of law. Tower has
not received any demand or notice issued with respect to the breach of any
Environmental Laws applicable to Towers properties or assets, which demand or
notice remains outstanding on the date of this Agreement.
(c) Except as set forth on Section 3.16(c) of the Tower
Disclosure Schedule, Tower and its affiliates are not subject to any remedial
obligations required under Environmental Laws and, to the Knowledge of Tower, no
environmental investigations or reviews have been undertaken by or are pending
with any Governmental Entity.
(d) Except as disclosed on Section 3.16(d) of the Tower
Disclosure Schedule, Tower has not entered into, directly or indirectly, any
indemnities or undertakings with any third party, including their Affiliates,
relating to the environmental condition of, or any liabilities arising from or
relating to, Tower's assets and properties.
(e) AOGI acknowledges that the representations and warranties
contained in this Section 3.16 are the only representations and warranties being
made by Tower with respect to compliance with, or liability or claims under,
Environmental Laws or with respect to permits issued or required under
Environmental Laws or with respect to any claims made against Tower with respect
to any Environmental Laws.
3.17 Taxes.
12
(a) Tower has prepared and timely filed all returns, estimates,
information statements and reports required to be filed with any taxing
authority ("Returns") relating to any and all Taxes concerning or attributable
to Tower or its operations with respect to Taxes for which Returns were required
by applicable law to be filed by Tower, and such Returns are true and correct
and have been completed in accordance with applicable law. All Taxes due and
owing (whether or not shown on any Return) have been paid when due. Tower has
made available to AOGI copies of all Returns filed for all periods since
inception;
(b) Tower has, and as of the Closing Date Tower will have, (i)
timely withheld from its employees, independent contractors, customers,
shareholders, and other Persons from whom it is required to withhold Taxes in
compliance with all applicable law, and (ii) timely paid all amounts so withheld
to the appropriate Governmental Entity or taxing authority;
(c) During the period of all unexpired applicable statutes of
limitations, Tower has not been delinquent in the payment of any Tax. There is
no Tax deficiency or liability outstanding or assessed or proposed against Tower
that is not reflected as a liability on Tower's Financial Statements, nor has
Tower executed any agreements or waivers extending any statute of limitations on
or extending the period for the assessment or collection of any Tax;
(d) Tower is not a party to any tax-sharing agreement or similar
arrangement with any other party, and Tower has not assumed any obligation to
pay any Tax obligations of, or with respect to any transaction relating to, any
other Person or agreed to indemnify any other Person with respect to any Tax;
(e) Tower has never been a member of an affiliated group of
corporations filing a consolidated federal income tax return;
(f) Tower has not filed any consent agreement under Section
341(f) of the Code or agreed to have Section 341(f)(4) of the Code apply to any
disposition of assets owned by Tower;
(g) Tower is not a party to any contract, agreement, plan or
arrangement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of Tower that, individually or
collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 464 or 162(m) of the Code as an expense
under applicable law;
(h) Tower has complied with applicable information reporting and
record maintenance requirements of Sections 6038, 6038A and 6038B of the Code
and the regulations thereunder;
(i) There are (and immediately following the Closing there will
be) no liens or encumbrances, to Tower's Knowledge, on the assets of Tower
relating to or attributable to Taxes, other than liens for Taxes not yet due and
payable;
13
(j) Tower has neither requested nor received any private letter
ruling from the Internal Revenue Service or comparable rulings from any other
government or taxing agency (domestic or foreign);
(k) No power of attorney with respect to Taxes has been granted
with respect to Tower;
(l) Tower's Returns have never been subject to a Code Section 482
adjustment or corresponding provision of state, local or foreign law;
(m) No claim, to Tower's Knowledge, has been made by a taxing
authority (domestic or foreign) in a jurisdiction where Tower does not file
Returns to the effect that Tower may be subject to Tax by that jurisdiction;
(n) Tower will not be required to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any: (A) "closing
agreement" as described in Section 7121 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law) executed on or
prior to the Closing Date; (B) intercompany transactions or any excess loss
account described in Treasury Regulations under Section 1502 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law);
(C) installment sale or open transaction disposition made on or prior to the
Closing Date; or (D) prepaid amount received on or prior to the Closing Date;
and
(o) None of the tax attributes (including net operating loss
carryforwards and general business tax credits) of Tower is limited by Section
382 or 383 of the Code for any period ending on or prior to the Closing Date.
The amount, if any, of the net operating loss carryforwards and general business
tax credits as of December 31, 2004 and the corresponding expiration date of
such carryforwards, are set forth in Section 3.18(o) of the Tower Disclosure
Schedule.
3.18 Employee Benefit Plans.
(a) Tower Employee Plans. Section 3.18 of the Tower Disclosure
Schedule contains an accurate and complete list, with respect to Tower of each
plan, program, policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay, deferred compensation,
performance awards, employee pension benefit plans, stock or stock-related
awards, welfare benefits, fringe benefits or other employee benefits or
remuneration of any kind, whether written, unwritten or otherwise, funded or
unfunded, including each "employee benefit plan," within the meaning of Section
3(3) of ERISA which is or has been maintained, contributed to, or required to be
contributed to, by Tower, any of its subsidiaries or any for the benefit of any
employee (collectively, the "Tower Employee Plans"). Tower has not made any plan
or commitment to establish any new Tower Employee Plans, to modify any Tower
Employee Plans (except to the extent required by law or to conform any such
Tower Employee Plan to the requirements of any applicable law, in each case as
previously disclosed to AOGI in writing, or as required by this Agreement).
14
(b) No Self-Insured Tower Employee Plan. Tower has never
maintained, established, sponsored, participated in or contributed to any
self-insured "group health plan" (within the meaning of Section 5000(b)(1) of
the Code) that provides benefits to employees (other than a medical flexible
spending account, health reimbursement arrangement or other similar program,
including any such plan pursuant to which a stop-loss policy or contract
applies).
(c) Collectively Bargained, Multiemployer and Multiple-Employer
Plan. At no time has Tower contributed to or been obligated to contribute to any
multiemployer plan (as defined in Section 3(37) of ERISA). Tower has never
maintained, established, sponsored, participated in or contributed to any
multiple employer plan or to any plan described in Section 413 of the Code.
(d) No Post-Employment Obligations. No Tower Employee Plan
provides, or reflects or represents any liability to provide, post-termination
or retiree life insurance, health or other employee welfare benefits to any
Person for any reason, except as may be required by COBRA or other applicable
statute, and Tower has not represented, promised or contracted (whether in oral
or written form) to any employee (either individually or to employees as a
group) or any other Person that such employee(s) or other Person would be
provided with life insurance, health or other employee welfare benefits, except
to the extent required by statute.
(e) Effect of Transaction. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby or
any termination of employment or service in connection therewith will, as
applicable, (i) result in any payment (including severance, golden parachute,
bonus or otherwise), becoming due to any employee, (ii) result in any
forgiveness of indebtedness, (iii) materially increase any benefits otherwise
payable by Tower or (iv) result in the acceleration of the time of payment or
vesting of any such benefits except as required under Section 411(d)(3) of the
Code.
3.19 Brokers' and Finders' Fee. Other than the fee being paid by AOGI
for a fairness opinion, no broker, finder or investment banker is entitled to
brokerage or finders' fees or agents' commissions or investment bankers' fees or
any similar charges in connection with the Merger, this Agreement or any
transaction contemplated hereby.
3.20 Bank Accounts. Section 3. 20 of the Tower Disclosure Schedule
provides information with respect to each account maintained by or for the
benefit of Tower at any bank or other financial institution including the name
of the bank or financial institution, the account number and the names of all
individuals authorized to draw on or make withdrawals from such accounts.
3.21 Representations Complete. Tower has, to its Knowledge, provided
AOGI with all information that AOGI has requested and with all information
material to the business, operations, assets and liabilities of AOGI.
4. REPRESENTATIONS AND WARRANTIES OF AOGI.
AOGI represents and warrants to Tower that the statements contained in
this Section 4 are true and correct, except as set forth in the AOGI Disclosure
Schedule, and that the statements contained in this Section 4 are correct and
complete as of the date hereof and shall be correct and complete as of the
Closing Date.
15
4.1 Organization, Standing and Power. AOGI is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Nevada. AOGI has the corporate power to own its properties and to carry on its
business as now being conducted and as proposed to be conducted. AOGI is duly
qualified to do business and is in good standing in each of the jurisdictions in
which the failure to be so qualified and in good standing could reasonably be
expected to have a Material Adverse Effect. AOGI has delivered to Tower a true
and correct copy of the articles of incorporation and bylaws of AOGI, each as
amended to date. AOGI is not in violation of any of the provisions of its
articles of incorporation or bylaws.
4.2 Authority; Enforceability. AOGI has all requisite corporate power
and authority to execute and deliver this Agreement and all agreements and
documents contemplated hereby. The consummation by AOGI of the transactions
contemplated hereby has been duly authorized by all requisite corporate action
of AOGI. This Agreement has been duly executed and delivered by AOGI and,
assuming due authorization, execution and delivery of this Agreement by Tower,
constitutes, and all agreements and documents contemplated hereby (when executed
and delivered pursuant hereto) will constitute, valid and legally binding
obligations of AOGI, enforceable against AOGI in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting enforcement of
creditors' rights or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
4.3 Noncontravention. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any Governmental Entity to
which AOGI is subject, or any provision of its articles of incorporation or
bylaws, (ii) conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice under any agreement,
contract, lease, license, instrument or other arrangement to which AOGI is a
party or by which it is bound or to which any of its assets is subject, or (iii)
require the consent, authorization or approval of a third party or Governmental
Entity (other than the filing of the Statement of Merger and the Articles of
Merger as provided in Section 2.2).
4.4 Litigation. There is no action, claim, suite or proceeding pending
or threatened against AOGI, whether before a Governmental Entity or otherwise,
that would reasonably be expected to have a Material Adverse Effect on the
ability of AOGI to consummate the transactions contemplated by this Agreement.
4.5 Brokers' and Finders' Fee. Other than the fee being paid by AOGI
for a fairness opinion, no broker, finder or investment banker is entitled to
brokerage or finders' fees or agents' commissions or investment bankers' fees or
any similar charges in connection with the Merger, this Agreement or any
transaction contemplated hereby.
16
4.6 Environmental Matters.
(a) Except as disclosed in Section 4.6(a) of the AOGI Disclosure
Schedule, AOGI and its affiliates have been and are currently in compliance with
all applicable Environmental Laws, except for noncompliance as would not have a
Material Adverse Effect on AOGI or its assets, operations, or financial
condition. Such compliance includes the possession of permits and governmental
authorizations required under applicable Environmental Laws and compliance with
the terms and conditions thereof and there are no conditions on or relating to
any of AOGI's properties or assets that might lead to a claim under
Environmental Laws, whether actual or contingent, arising out of actions,
occurrences or contamination on or before the Effective Time (under
Environmental Laws existing on that date), whether or not any claim with respect
to such actions, occurrences or contamination are brought before or after the
Effective Time, except for such noncompliance as would not have a Material
Adverse Effect on AOGI or its assets, operations, or financial condition.
(b) Except as disclosed in Section 4.6(b) of the AOGI Disclosure
Schedule, there are no claims related to Environmental Laws pending or, to the
Knowledge of AOGI, threatened, against AOGI or its affiliates or any person or
entity whose liability for any such claim AOGI or its affiliates has or may have
assumed either contractually or by operation of law. AOGI has not received any
demand or notice issued with respect to the breach of any Environmental Laws
applicable to AOGI's properties or assets, which demand or notice remains
outstanding on the date of this Agreement.
(c) Except as set forth in Section 4.6(c) of the AOGI Disclosure
Schedule, AOGI and its affiliates are not subject to any remedial obligations
required under Environmental Laws and no environmental investigations or reviews
have been undertaken by or are pending with any Governmental Entity.
(d) Except as disclosed in Section 4.6(d) of the AOGI Disclosure
Schedule, AOGI has not entered into, directly or indirectly, any indemnities or
undertakings with any third party, including their Affiliates, relating to the
environmental condition of, or any liabilities arising from or relating to,
AOGI's assets and properties.
(e) Tower acknowledges that the representations and warranties
contained in this Section 4.6 are the only representations and warranties being
made by AOGI with respect to compliance with, or liability or claims under,
Environmental Laws or with respect to permits issued or required under
Environmental Laws or with respect to any claims made against AOGI with respect
to any Environmental Laws.
4.7 Title to Property. AOGI has not permitted any encumbrances on its
oil and gas leasehold interests, except with respect to those oil and gas
leasehold interests in which Tower also has an interest, encumbrances that were
permitted by Tower on an equal proportional basis.
4.8 Absence of Undisclosed Liabilities. Except for liabilities
reflected or reserved against in the financial statements included in the Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2004 (including the
notes, if any, thereto), and liabilities set forth in Section 4.8 of the AOGI
Disclosure Schedule, AOGI has no liabilities other than liabilities incurred in
the ordinary course of business since December 31, 2004.
17
4.9 Governmental Authorization; Compliance with Laws. AOGI has
complied with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges thereunder) of
every applicable Governmental Entity, except as would not have a Material
Adverse Effect on AOGI, or its assets, operations, or financial condition. AOGI
has not received any written notice of any material violation of any law,
ordinance, regulation, or order applicable to AOGI or the business conducted by
it. Except as set forth in Section 4.9 of the AOGI Disclosure Schedule, AOGI
holds all permits, licenses, consents, and authorizations that are necessary for
the conduct of its business, except where any failure to hold such authorization
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on AOGI.
4.10 Material Contracts.
(a) Section 4.10 of the AOGI Disclosure Schedule lists each AOGI
Material Contract, with a designation of those AOGI Material Contracts to which
Tower is a party. Other than those AOGI Material Contracts of AOGI to which
Tower is a party, AOGI has delivered to Tower a complete and accurate copy of
each written Material Contract and all amendments or modifications thereto.
Except as set forth in Section 4.10 of the AOGI Disclosure Schedule, each AOGI
Material Contract, to AOGI's Knowledge, that was oral when entered into by AOGI
has been reduced to writing.
(b) With respect to each AOGI Material Contract: (i) the AOGI
Material Contract is legal, valid, binding and enforceable and in full force and
effect with respect to AOGI, and to AOGI's Knowledge, with respect to each other
party thereto; (ii) the AOGI Material Contract will continue to be legal, valid,
binding and enforceable and in full force and effect immediately following the
Effective Time in accordance with its terms as in effect prior to the Effective
Time; and (iii) neither AOGI, nor to AOGI's Knowledge, any other party, is in
breach or default, and no event has occurred that, with notice or lapse of time
or both, would constitute a breach or default by AOGI or, to AOGI's Knowledge,
by any such other party, or permit termination, modification or acceleration,
under such AOGI Material Contract, and no notice of any such alleged breach or
default has been served on or received by AOGI. No prior consent of any party to
a AOGI Material Contract is required for the consummation by AOGI of the
transactions contemplated hereby to be in compliance with the provisions of such
AOGI Material Contract.
(c) "AOGI Material Contract" means any contract, agreement, lease
(other than oil and gas leases), promissory note, evidence of indebtedness,
purchase order, letter of credit, license or other legally binding agreement of
any nature, whether written or oral, to which AOGI is a party, and (i) the
performance of which will involve either consideration in any one year in excess
of $10,000 or total consideration over the life of that agreement in excess of
$50,000, (ii) which evidence indebtedness of at least $25,000, (iii) creates or
relates to the creation of any partnership, joint venture or any sharing of
revenues, profits, losses, costs or liabilities, or (iv) that could reasonably
be expected to cause a Material Adverse Effect on AOGI if breached by AOGI in
such a manner as would (A) permit any other party to cancel or terminate the
same (with or without notice of passage of time); (B) provide a basis for any
other party to claim money damages (either individually or in the aggregate with
all other such claims under that contract) from AOGI; or (C) give rise to a
right of acceleration of any material obligation or loss of any material benefit
under such Material Contract.
18
5. COVENANTS.
5.1 Conduct of Business of Tower. From the date of this Agreement to
the Closing, except for (a) entering into and performing this Agreement, (b) for
the effect of the transactions contemplated by this Agreement, (c) as required
by law or a Material Contract, or (d) as otherwise consented to by AOGI in
writing, such consent not to be unreasonably withheld or delayed, Tower shall
conduct its business in the ordinary course, consistent with past custom and
practice (including quantity and frequency) and shall not take any action that
would have resulted in a breach of Section 3.6 had such action been taken prior
to the date of this Agreement.
5.2 No Solicitation. From and after the date of this Agreement until
the Effective Time, Tower and the Tower Shareholders shall not, directly or
indirectly through any officer, director, employee, representative or agent of
Tower or otherwise, (i) solicit, initiate, or encourage any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, share exchange, business
combination, sale of all or a substantial portion of the assets, sale of shares
of capital stock or similar transactions involving Tower other than the
transactions contemplated by this Agreement, or engage or participate in
negotiations or discussions concerning, or provide any non-public information to
any Person or entity relating to, any such proposal or offer.
5.3 Access to Information. Tower shall afford AOGI and its
representatives, access, during normal business hours and upon reasonable
notice, to (i) all of Tower's properties, personnel, books, contracts,
commitments and records; and (ii) all other information concerning the business,
properties and personnel of Tower as AOGI may reasonably request.
5.4 Confidentiality.
(a) Each party to this Agreement receiving or acquiring
Confidential Information ("Receiving Party") of another party to this Agreement
("Disclosing Party") pursuant to the transactions contemplated by this Agreement
must take all reasonable measures to avoid disclosure or unauthorized use of the
Confidential Information, including, at a minimum, those measures it takes to
protect its own Confidential Information, and Receiving Party must: (a) hold all
Confidential Information in strict confidence, and not use or disclose this
information, or help another to do so, except for the limited purpose of
advancing the mutually beneficial objectives of the Transaction; (b) limit
disclosure of the Confidential Information to its employees and agents to a
"need to know" basis to further the parties' mutual interest, and inform all of
these people of the obligations under this Agreement; and (c) immediately return
to the Disclosing Party all Confidential Information obtained and all copies and
excerpts thereof within 3 days of the earlier of (i) the Disclosing Party's
request, or (ii) termination of all discussions and Transactions between the
parties, or (iii) termination of all discussions and Transactions between the
parties, or (iv) completion of the review of the Confidential Information.
19
(b) The provisions of Section 5.4(a) of this Agreement do not
apply to any information that: (i) can be shown by documentation to have been
either in the rightful possession of the Receiving Party prior to receipt of the
Confidential Information from the Disclosing Party, or to have been
independently developed by the Receiving Party without knowledge or use of the
Confidential Information; (ii) is now or later becomes part of the public domain
through no wrongful act or breach of this Agreement; (iii) was rightfully
received from a third party who was rightfully in possession of it; (iv) must be
disclosed because of any applicable governmental or judicial law, rule,
regulation, directive, or order, as long as the Receiving Party uses its
reasonable best efforts to give the Disclosing Party written notice sufficient
to allow it to contest disclosure of the information and uses it reasonable best
efforts to obtain confidential treatment for any Confidential Information that
is disclosed; or (v) the Disclosing Party expressly agrees, in writing, that the
Receiving Party can be free to disclose the information in the manner specified
without violating the obligation to treat the information confidential.
5.5 Public Disclosure. Unless otherwise permitted by this Agreement,
AOGI and Tower shall consult with each other before issuing any press release or
otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither shall issue any such press release or make any such statement or
disclosure without the prior approval of the other (which approval shall not be
unreasonably withheld), except as may be required by law, by rules and
regulations promulgated by the Securities and Exchange Commission, or by
obligations pursuant to any listing requirements for AOGI's listing on the OTC
Bulletin Board.
5.6 Further Assurances. Both before and after the Closing Date, AOGI
and Tower shall use all commercially reasonable efforts to take, or cause to be
taken, all actions necessary to effectuate the Merger and make effective the
other transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, each party to this Agreement shall (i) make any
filings and give any notices required to be made and given by such party in
connection with the Merger and the other transactions contemplated by this
Agreement; (ii) use all reasonable efforts to obtain any consent required to be
obtained (pursuant to any applicable legal requirement or contract, or
otherwise) by such party in connection with the Merger or any of the other
transactions contemplated by this Agreement; (iii) use all reasonable efforts to
lift any restraint, injunction or other legal bar to the Merger; and (iv) use
all reasonable efforts to satisfy or cause to be satisfied all of the conditions
precedent to the Closing hereunder. Each party shall promptly deliver to the
other a copy of each such filing made, each such notice given and each such
consent obtained by such party. Each party, at the reasonable request of the
other party, shall execute and deliver such other instruments and do and perform
such other acts and things as may be necessary or desirable for effecting
completely the consummation of this Agreement and the transactions contemplated
hereby.
5.7 Expenses. All fees and expenses incurred in connection with this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such expenses, whether or not the Merger is consummated.
20
6. CONDITIONS TO THE MERGER.
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to consummate and effect
this Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:
(a) Tower Shareholder Approval. The shareholders of Tower shall
have, by unanimous consent, approved the transactions contemplated in this
Agreement.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition, to the extent the foregoing is in Tower's control, preventing the
consummation of the Merger shall be and remain in effect, nor shall any
proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, to the extent
that the foregoing is in Tower's control, seeking any of the foregoing be
pending, which could reasonably be expected to have a Material Adverse Effect,
either individually or combined with the Surviving Corporation after the
Effective Time, nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Merger, which makes the consummation of the Merger illegal.
6.2 Additional Conditions to the Obligations of AOGI. The obligations
of AOGI to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by AOGI:
(a) Representations, Warranties and Covenants. The
representations and warranties of Tower in this Agreement shall be true and
correct in all material respects without regard to any qualification as to
materiality contained in such representation or warranty on and as of the date
of this Agreement and on and as of the Closing as though such representations
and warranties were made on and as of such time (except for such representations
and warranties that speak specifically as of the date hereof or as of another
date, which shall be true and correct as of such date).
(b) Performance of Obligations. Tower shall have reasonably
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement reasonably required, in writing, to be
performed and complied with by it as of the Closing.
(c) Certificate of Officers; Good Standing. Tower shall have
delivered to AOGI (i) a certificate executed on behalf of Tower certifying that
the conditions set forth in Section 6.2(a) and Section 6.2(b) have been
satisfied; (ii) a certificate of the Secretary of State of the State of Colorado
as to the legal existence and good standing of Tower, dated no more than five
(5) days prior to the Closing Date; and (iii) a certificate of Tower certifying
as to (A) its organizational documents, (B) the incumbency of its officers, and
(C) resolutions of both the Board of Directors and shareholders of Tower
authorizing the transactions described herein;
21
(d) Third-Party Consents. All requested, in writing, consents or
approvals required to be obtained (whether by law or contract) in connection
with the Merger and the other transactions contemplated by this Agreement, if
any, shall have been obtained, where possible, and shall be in full force and
effect.
(e) Employment Agreements. Xx. X'Xxxxx, Xx. Xxxxxxx, and Xx.
Xxxxxxxxx, each individually, shall have entered into employment agreements with
AOGI substantially in accordance with the employment agreements set forth on
Schedules 6.2(f)-1, 6.2(f)-2, and 6.2(f)-3, attached hereto and incorporated
herein by reference.
(f) Tower Material Adverse Effect. Tower shall not have incurred
a Material Adverse Effect, and, to Tower's Knowledge, Tower is not reasonably
likely to incur a Material Adverse Effect.
(g) Stock Certificates. The holders of Tower Common Stock shall
have delivered to AOGI all certificates representing any such shares of Tower
Common Stock, together with executed stock assignments.
6.3 Additional Conditions to Obligations of Tower. The obligations of
Tower to consummate and effect this Agreement and the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Effective Time of
each of the following conditions, any of which may be waived, in writing, by
Tower:
(a) Representations, Warranties and Covenants. The
representations and warranties of AOGI in this Agreement shall be true and
correct in all material respects without regard to any qualification as to
materiality contained in such representation or warranty on and as of the date
of this Agreement and on and as of the Closing Date as though such
representations and warranties were made on and as of such time (except for such
representations and warranties that speak specifically as of the date hereof or
as of another date, which shall be true and correct as of such date).
(b) Performance of Obligations. AOGI shall have reasonably
performed and complied in all material respects with all covenants, obligations
and conditions of this Agreement reasonably required to be performed and
complied with by them as of the Closing.
(c) AOGI Certificate of Officers; Good Standing. AOGI shall have
delivered to Tower (i) a certificate executed on behalf of AOGI certifying that
the conditions set forth in Section 6.3(a) and Section 6.3(b) have been
satisfied; (ii) a certificate of the Secretary of State of the State of Nevada
as to the legal existence and good standing of AOGI, dated no more than five (5)
days prior to the Closing Date; and (iii) a certificate of AOGI certifying as to
(A) its organizational documents, (B) the incumbency of its officers, and (C)
resolutions of the Board of Directors of AOGI authorizing the transactions
described herein;
22
(d) AOGI Material Adverse Effect. AOGI shall not have incurred a
Material Adverse Effect, and, to AOGI's Knowledge, AOGI is not reasonably likely
to incur a Material Adverse Effect.
7. TERMINATION, EXTENSION AND WAIVER.
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time (with respect to Section 7.1(b) through Section 7.1(g), by
written notice by the terminating party to the other party):
(a) by the mutual written consent of AOGI and Tower;
(b) by either AOGI or Tower if the Merger shall not have been
consummated by April 30, 2005; provided, however, that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose failure to materially fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before such
date;
(c) by either AOGI or Tower if a court of competent jurisdiction
or other Governmental Entity shall have issued a nonappealable final order,
decree or ruling or taken any other action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger;
(d) by AOGI if (i) any of Tower's or the Tower Shareholders'
representations and warranties contained in this Agreement are materially
inaccurate as of the date of this Agreement, or shall have become materially
inaccurate as of a date subsequent to the date of this Agreement (as if made on
such subsequent date), or (ii) any of Tower's or Tower Shareholders' covenants
contained in this Agreement shall have been materially breached; provided,
however, that if a material inaccuracy in Tower's or Towers Shareholders'
representations and warranties or a material breach of a covenant by Tower or
the Tower Shareholders can be and is cured by Tower or the Tower Shareholders,
as appropriate, within ten (10) calendar days of its occurrence, then AOGI may
not terminate this Agreement under this subsection (d) on account of such
material inaccuracy or breach;
(e) by AOGI if, since the date of this Agreement, Tower shall
have incurred any Material Adverse Effect, or there shall have occurred any
event or circumstance that, in combination with any other events or
circumstances, could reasonably be expected to result in a Material Adverse
Effect;
(f) by Tower if (i) any of AOGI's representations and warranties
contained in this Agreement are materially inaccurate as of the date of this
Agreement, or shall have become materially inaccurate as of a date subsequent to
the date of this Agreement (as if made on such subsequent date), or (ii) any of
AOGI's covenants contained in this Agreement shall have been materially
breached; provided, however, that if a material inaccuracy in AOGI's
representations and warranties or a material breach of a covenant by AOGI can be
and is cured by AOGI, as appropriate, within ten (10) calendar days of its
occurrence, then Tower may not terminate this Agreement under this subsection
(d) on account of such material inaccuracy or breach;
23
(g) by Tower if, since the date of this Agreement, AOGI shall
have incurred any Material Adverse Effect, or there shall have occurred any
event or circumstance that, in combination with any other events or
circumstances, could reasonably be expected to result in a Material Adverse
Effect;
7.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect; provided, however, that (i) the provisions of Sections 5.4,
5.7, and 8 shall remain in full force and effect and survive any termination of
this Agreement and (ii) the termination of this Agreement shall not relieve any
party from liability for damages incurred by the other party for any material
breach of any representation, warranty or covenant contained in this Agreement.
7.3 Extension; Waiver. At any time prior to the Closing Date, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto;
(ii) waive any inaccuracies in the representations and warranties of another
party contained herein or in any document delivered pursuant hereto; and (iii)
waive another party's compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
foregoing extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party.
8. INDEMNIFICATION.
8.1 Survival of Warranties. All representations, warranties,
covenants, and agreements made in this Agreement, the schedules, exhibits or
certificates delivered pursuant hereto or as provided herein and therein shall
survive until the date that is twenty-four (24) months after the Closing Date
(and thereafter until resolved if a claim in respect thereof has been made prior
to such date); provided, however, that the representations and warranties made
in this Agreement, the schedules, exhibits or certificates shall terminate
immediately upon one of the following: (a) the acquisition of the beneficial
ownership of 60% or more of AOGI's then outstanding common stock by any person
or group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended), other than those providing the indemnification described in Section
8.2; (b) the consummation of a merger between AOGI and one other entity in which
AOGI is not the surviving entity and the shareholders of AOGI immediately
preceding the consummation of such merger do not, immediately after the
consummation of such merger, beneficially own at least 40% of the then
outstanding common stock of the surviving entity; and (c) the consummation of a
merger among AOGI and more than one other entity in which (i) AOGI is not the
surviving entity, (ii) the shareholders of AOGI immediately preceding the
consummation of such merger do not, immediately after the consummation of such
merger, beneficially own at least 40% of the then outstanding common stock of
the surviving entity, and (iii) the shareholders of AOGI immediately preceding
the consummation of such merger do not, immediately after the consummation of
such merger, beneficially own, as a group, more shares of common stock of the
surviving entity than any of the groups of shareholders of the other entities
party to the merger.
8.2 Indemnification.
24
(a) In the event that either Tower or the Tower Shareholders
breach any representation, warranty, covenant, or agreement contained herein,
and, provided that AOGI makes a written claim for indemnification against the
Tower Shareholders pursuant to Section 9.1 within the survival period set forth
in Section 8.1, then the Tower Shareholders shall indemnify and hold harmless
and satisfy and defend AOGI and its affiliates, officers, directors, employees,
representatives, attorneys, consultants and agents (each an "AOGI Indemnified
Person" and collectively, "AOGI Indemnified Persons") against and in respect of
any and all claims, obligations, liabilities, losses, damages, deficiencies,
penalties, fines, costs or expenses (including, without limitation, reasonable
legal fees and expenses) arising out of or resulting from any such breach.
(b) In the event that AOGI breaches any representation, warranty,
covenant, or agreement contained herein, and, provided that a Tower Shareholder
makes a written claim for indemnification against the AOGI pursuant to Section
9.1 within the survival period set forth in Section 8.1, then AOGI shall
indemnify and hold harmless and satisfy and defend the Tower Shareholders and
their affiliates, representatives, attorneys, consultants and agents (each a
"Tower Indemnified Person" and collectively, "Tower Indemnified Persons")
against and in respect of any and all claims, obligations, liabilities, losses,
damages, deficiencies, penalties, fines, costs or expenses (including, without
limitation, reasonable legal fees and expenses) arising out of or resulting from
any such breach, provided, however that AOGI shall not have any obligation to
indemnify the Tower Shareholders to the extent the claims, obligations,
liabilities, losses, damages, deficiencies, penalties, fines, costs or expenses
from all breaches exceed the Cap (after which point AOGI will have no further
obligation to indemnify the Tower Indemnified Persons).
8.3 Limitation on Tower Indemnification. Notwithstanding anything to
the contrary herein, the sole source of indemnification by the Tower
Shareholders to the AOGI Indemnified Persons pursuant to Section 8.2(a) above
shall be the Merger Shares or any proceeds from the sale of the Merger Shares by
the Tower Shareholders.
8.4 Procedures for Indemnification.
(a) Claim for Damages. Any Indemnified Person seeking
indemnification for any claim shall give written notice to the indemnifying
party in accordance with Section 9.1 of this Agreement (an "Indemnification
Claim"), promptly after discovery of the potential claim; provided, however,
that an Indemnified Person shall not be foreclosed from seeking indemnification
by any failure to provide timely notice of the existence of an Indemnification
Claim, provided that the amount of any such claim will be reduced by the amount
that the indemnifying party actually have been materially damaged or prejudiced
as a result of such delay. All Indemnification Claims submitted shall be paid
within thirty (30) calendar days after the later of written demand for such
Indemnification Claim or final determination of the amount of the
Indemnification Claim.
(b) Defense of Third-Party Claims. Promptly after the receipt by
an Indemnified Person of notice of any claim of any third party, that is subject
to indemnification hereunder, the Indemnified Person shall give written notice
of such claim (a "Notice of Claim") to the indemnifying party in accordance with
Section 9.1, stating the nature and basis of such claim and the amount thereof,
to the extent known; provided, however, that failure of an Indemnified Person to
give such notice promptly shall not relieve the indemnifying party from any
liability which it may have on account of this indemnification or otherwise,
25
except to the extent that the indemnifying party is materially prejudiced
thereby. The indemnifying party shall be entitled to participate in the defense
or settlement of such matter and the parties agree to cooperate in any such
defense or settlement and to give each other full access to all information
relevant thereto and the indemnifying party shall not be obligated to indemnify
the Indemnified Person hereunder for any settlement entered into without the
indemnifying party's prior written consent, which consent shall not be
unreasonably withheld, conditioned, or delayed. If any Notice of Claim relates
to a claim by a Person or Persons other than AOGI, and the amount of such claim
is fully covered by the foregoing indemnity, as limited herein, the Tower
Shareholders may elect to defend against such claim at their expense, in lieu of
AOGI assuming such defense; provided, AOGI shall be entitled to participate in
or monitor such defense at its expense and the Tower Shareholders will fully
cooperate with AOGI and its counsel with respect thereto and the Tower
Shareholders shall not settle any such claims without the prior written consent
of AOGI, which consent shall not unreasonably be withheld, conditioned, or
delayed. The parties shall act in good faith in responding to, defending
against, settling or otherwise dealing with such claims.
9. GENERAL PROVISIONS.
9.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly delivered (i) upon receipt if delivered
personally; (ii) three (3) business days after being mailed by registered or
certified mail, postage prepaid, return receipt requested; (iii) one (1)
business day after it is sent by commercial overnight courier service; or (iv)
upon transmission if sent via facsimile with confirmation of receipt to the
parties at the following address (or at such other address for a party as shall
be specified upon like notice:
(a) if to AOGI or Surviving Corporation to:
Xxxxxx X. Xxxxxxxx
American Oil & Gas, Inc.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxx X. Xxxxxxxxx, Esq.
Xxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
(b) if to Tower or the Tower Shareholders to:
Xxxxxxx X. X'Xxxxx
Tower Colombia Corporation
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxx, Esq.
Xxxx Xxxxxxx Xxxxxx Xxxxx & Feijer PC
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
26
9.2 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.3 Entire Agreement; Nonassignability, Parties in Interest. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the exhibits and
schedules hereto, (a) together constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; and (b) are not intended to confer upon
any other Person any rights or remedies hereunder, and shall not be assigned by
operation of law or otherwise without the written consent of the other party.
9.4 Severability. In the event that any provision of this Agreement,
or the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other Persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
9.5 Remedies Cumulative. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.
9.6 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado, without regard to
applicable provisions of conflicts of law. Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of any court located within
Denver County, Colorado in connection with any matter based upon or arising out
of this Agreement or the matters contemplated hereby and it agrees that process
may be served upon it in any manner authorized by the laws of the State of
Colorado for such Persons and waives and covenants not to assert or plead any
objection which it might otherwise have to such jurisdiction and such process.
27
9.7 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation, preparation and execution of
this Agreement and, therefore, waive the application of any law, regulation,
holding or rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such agreement or
document.
9.8 Specific Performance. Tower and the Tower Shareholders acknowledge
and agree that AOGI would be irreparably harmed and AOGI would not have any
adequate remedy at law in the event that any of the material provisions of this
Agreement were not reasonably performed by Tower or the Tower Shareholders in
accordance with their specific terms or were otherwise breached. Accordingly
Tower and the Tower Shareholders agree that AOGI shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which AOGI is entitled at law or in equity.
9.9 Amendment; Waiver. Any amendment or waiver of any of the terms or
conditions of this Agreement must be in writing and must be duly executed by or
on behalf of the party to be charged with such waiver. The failure of a party to
exercise any of its rights hereunder or to insist upon strict adherence to any
term or condition hereof on any one occasion shall not be construed as a waiver
or deprive that party of the right thereafter to insist upon strict adherence to
the terms and conditions of this Agreement at a later date. Further, no waiver
of any of the terms and conditions of this Agreement shall be deemed to or shall
constitute a waiver of any other term of condition hereof (whether or not
similar).
[remainder of page intentionally left blank]
28
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed and delivered by each of them or their respective
officers thereunto duly authorized, all as of the date first written above.
AMERICAN OIL & GAS, INC.
By: /s/ Xxxxxx Xxxxxxxx
-----------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
TOWER COLOMBIA CORPORATION
By: /s/ Xxxxxxx X'Xxxxx
-----------------------
Name: Xxxxxxx X'Xxxxx
Title: President
XX. XXXXXXX X'XXXXX:
/s/ Xxxxxxx X'Xxxxx
-------------------
XX. XXX XXXXXXX:
/s/ Xxx Xxxxxxx
---------------
XX. XXXXXXX XXXXXXXXX:
/s/ Xxxxxxx Xxxxxxxxx
---------------------
29
