EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Merger Agreement (the "Agreement"), entered into as of August 15,
2005 by and between USG&E, Inc., a Delaware Corporation ("Newco"), USG&E Well
Production, LLC, a Delaware limited liability corporation ("Newco Sub"), U.S.
Gas & Electric, Inc., a Delaware Corporation ("USG&E"), USG&E Gas Drilling I,
LLC ("Drilling 1"), a Delaware limited liability company, USG&E Drilling II, LLC
("Drilling 2"), a Delaware limited liability company, and USG&E /gas Drilling
III, LLC ("Drilling 3"), a Delaware limited liability company. Newco, Newco Sub,
USG&E, Drilling 1, Drilling 2, and Drilling 3 are hereinafter referred to
collectively as the "Parties."
Now, therefore, in consideration of the premises and mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
(a) "Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
(b) "Companies" means, collectively, USG&E, Drilling 1,
Drilling 2, and Drilling 3.
(c) "Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales order,
commitment, undertaking, obligation, whether written or oral, express
or implied.
(d) "Effective Date" means the date of the consummation of the
transactions contemplated by this Agreement.
(e) "Environmental Costs" shall mean any and all expenses,
costs, damages, liabilities, or obligations incurred by, under or
pursuant to any Environmental Laws.
(f) "Environmental Laws" means all federal, state, regional,
or local statutes, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings, and changes or ordinances or judicial or
administrative interpretations thereof, or similar laws of foreign
jurisdictions where the Companies conduct business, whether currently
in existence or hereafter enacted or promulgated, any of which govern
or relate to pollution, protection of the environment, public health
and safety, air emissions, water discharges, hazardous or toxic
substances, solid or hazardous waste or occupational health and safety,
as any of these terms are or may be defined in such statutes, laws,
rules, regulations, codes, orders, plans, injunctions, decrees, rulings
and changes or ordinances, or judicial or administrative
interpretations thereof, including, without limitation: the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendment and Reauthorization Act of
1
1986, 42 U.S.C. ss.9601, ET SEQ. (collectively "CERCLA"), the Solid
Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and subsequent Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C.ss.6901 ET SEQ. (collectively "RCRA"); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C.ss.1801,
ET SEQ.; the Clean Water Act, as amended, 33 U.S.C.ss.1311, ET SEQ.;
the Clean Air Act, as amended (42 U.S.C.ss.7401-7642); the Toxic
Substances Control Act, as amended, 15 U.S.C.ss.2601 ET SEQ.; the
Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7
U.S.C.ss.136-136y ("FIFRA"); the Emergency Planning and Community
Right-to-Know Xxx 0000 as amended, 42 U.S.C.ss.11001, ET SEQ. (Title
III of XXXX) ("EPCRA"); the Occupational Safety and Health Act of 1970,
as amended, 29 U.S.C.ss.651, ET SEQ. ("OSHA"); Chapters 376 and 403,
Florida Statutes; and Florida common law.
(g) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(h) "Family Member" means the parent, child, grandchild, or
spouse of a person.
(i) "GAAP" means generally accepted accounting principles in
effect in the United States of America at the Effective Date.
(j) "Governmental Authority" means any nation or government,
any state, regional, local or other political subdivision thereof, and
any entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
(k) "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, and all treasury regulations promulgated thereunder.
(l) "Material Adverse Change" means a change in the condition,
properties, assets, liabilities, rights, obligations, business, or
prospects which change individually or in the aggregate, is materially
adverse to such condition, properties, assets, liabilities, rights,
obligations, operations, or business.
(m) "Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or any other entity,
of whatever nature.
(n) "SEC" means the Securities and Exchange Commission.
(o) "Securities Act" means the Securities Act of 1933, as
amended.
(p) "Subsidiaries" means Drilling I, Drilling II and Drilling
III.
(q) "Tax Return" means any tax return, filing, or information
statement required to be filed in connection with or with respect to
any taxes, including any amendments to previously filed tax returns.
(r) "Taxes" means all taxes, fees, or other assessments,
including, but not limited to, income, excise, property, sales,
franchise, intangible, withholding, social security and unemployment
2
taxes imposed by any federal, state, local or foreign governmental
entity, and any interest or penalties related thereto.
(s) "Voting Requirements" shall have the meaning set forth in
Section 10(i).
2. BASIC TRANSACTION.
The Parties have agreed, subject to the terms and conditions set forth
in this agreement, that, on the Effective Date, Drilling 1, Drilling 2,
and Drilling 3 shall merge into Newco Sub ("Merger 1") and, immediately
thereafter, USG&E shall merge into Newco (Merger 2"), (together with
Merger 1, the "Merger"), with Newco and Newco Sub continuing as the
surviving corporations.
(a) THE CLOSING. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of
Akerman Senterfitt in Miami, Florida on the fifth day following the
satisfaction of all conditions or obligations by all parties related to
the Merger.
(b) FILING OF ARTICLES OF MERGER. At Closing, the Parties
shall cause the Merger to be consummated by filing duly executed
Articles of Merger, with the completed plan of merger attached hereto
(with respect to each of Merger 1 and Merger 2) with the Department of
State of the State of Florida (the "Effective Time") in such form as
Newco determines is required by and is in accordance with the relevant
provisions of the Florida Business Corporation Act.
(c) ISSUANCE OF NEWCO SHARES. As soon as practicable after the
Effective Date, the securityholders of the Companies shall deliver the
certificates representing their shares or interests in USG&E, Drilling
1, Drilling 2, or Drilling 3 to Newco, and Newco shall deliver
certificates representing the applicable shares of capital stock of
Newco, pursuant to the plan set forth below:
(i) HOLDERS OF USG&E COMMON STOCK. At the Effective
Time, each share of USG&E common stock will be converted into
Newco Class A common stock on the following basis:
(1) Persons who received their USG&E common
stock (i) in connection with the acquisition of the
assets of Utiligroup, Inc., (ii) in exchange for the
securities of Waterfalls, Inc. or Gibraltor, Inc., or
(iii) as a former principal of Harbortown
Corporation, will have their USG&E common stock
converted into Newco Class A common stock on a 1
share-for-1 share basis;
(2) Persons who purchased USG&E common stock
directly from USG&E will have their USG&E common
stock converted into Newco Class A common stock on a
1 share-for-2 shares basis; and
(3) USG&E common stock held by the MJL
Trust, Xxx Xxxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxx,
Xxxxx Xxxx, Xxx Xxxxxx and Xxxxx Xxxxxxx will be
3
divested of their common stock holdings in USG&E and
such USG&E shares of capital stock will be cancelled.
(ii) HOLDERS OF USG&E PREFERRED STOCK. At the
Effective Time, each share of USG&E preferred stock will be
converted into Newco Class IV preferred stock on a 1
share-for-1 share basis.
(iii) MEMBERS OF DRILLING 1. At the Effective Time,
each unit in Drilling 1 will be converted into 8,992.8 shares
of Newco Class I preferred stock. Drilling 1 investors will
also receive Newco Class A common stock at a ratio of 3,817.1
shares of Newco Class I common stock for each unit of Drilling
1 held. Interests in Drilling I held by Shafra, LLC will not
be converted into Class I preferred stock and will be
cancelled.
(iv) MEMBERS OF DRILLING 2. At the Effective Time,
each unit in Drilling 2 will be converted into 8,992.8 shares
of Newco Class II preferred stock. Drilling 2 investors will
also receive Newco Class A common stock at a ratio of 10,323.6
shares of Newco Class A common stock for each unit of Drilling
2 held.
(v) MEMBERS OF DRILLING 3. At the Effective Time,
each unit in Drilling 3 will be converted into 11,713.5 shares
of Newco Class III preferred stock. Drilling 3 investors will
also receive Newco common stock at a ratio of 28,827.8 shares
of Newco Class A common stock for each unit of Drilling 3
held.
(d) TAX TREATMENT. The Parties intend that Merger 2 will be
treated as a tax-free reorganization under Section 368 of the Internal
Revenue Code and that Merger 1 will be treated as a transaction
governed by Section 351 of the Internal Revenue Code.
(e) TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any
time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the
surviving Corporations with full right, title, and possession to all
assets, rights, privileges, and powers of the Companies, the officers
and directors of all Parties are fully authorized in the name of their
respective corporations or otherwise to take, and will take, all lawful
and necessary action, provided such action is consistent with this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF NEWCO AND NEWCO SUB. As a material
inducement to the Companies to enter into this Agreement and to consummate the
transactions contemplated herein, Newco and Newco Sub make the following
warranties and representations to the Companies:
(a) CORPORATE STATUS. Newco is a corporation existing and in
good standing under the laws of the State of Delaware. Newco Sub is a
limited liability company existing and in good standing under the laws
of the State of Delaware. Newco Sub is a wholly owned subsidiary of
Newco.
(b) CORPORATE POWER AND AUTHORITY. Newco has the corporate
power and authority to execute and deliver this agreement, to perform
its respective obligations and to consummate the transactions
4
contemplated herein. Newco and Newco Sub have taken all action
necessary to authorize the execution of this document and the
performance of all actions required of it by this document.
(c) ENFORCEABILITY. This agreement constitutes a legal, valid,
and binding agreement on Newco and Newco Sub.
(d) CAPITALIZATION. The total number of shares of capital
stock which Newco has the authority to issue is thirty-two million
(32,000,000) shares, of which (i) twenty-seven million (27,000,000)
shares shall be common stock, par value $0.001 per share, comprised of:
twenty-five million eight hundred thousand (25,800,000) shares of Class
A common stock and (b) one million two hundred thousand (1,200,000)
shares of Class B common stock, and (ii) five million (5,000,000)
shares shall be preferred stock, par value $0.001 per share, of which:
(a) four hundred thousand (400,000) shares shall be designated Class I
preferred stock, (b) four hundred thousand (400,000) shares shall be
designated Class II preferred stock, (c) eight hundred thousand
(800,000) shares shall be designated Class III preferred stock, (d)
eight hundred thousand (800,000) shares shall be designated Class IV
preferred stock and (e) two million six hundred thousand (2,600,000)
shares shall remain available for designation by the board of directors
of Newco.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANIES. As a material
inducement for Newco and Newco Sub to enter into this Agreement and to
consummate the transactions contemplated herein, the Companies make the
following warranties and representations to Newco and Newco Sub:
(a) CORPORATE STATUS. USG&E is a corporation existing and in
good standing under the laws of the State of Delaware. The Subsidiaries
are limited liability companies existing and in good standing under the
laws of the State of Delaware. USG&E and the Subsidiaries has the
requisite power and authority to carry out all obligations of the
respective organizations. There is no pending or threatened proceeding
for the dissolution, liquidation, insolvency, or rehabilitation of the
Companies.
(b) POWER AND AUTHORITY. Each of the Companies have the power
and authority to perform all obligations hereunder and consummate the
transactions contemplated herein. The Companies have taken all action
necessary to authorize the execution of this Agreement, and the
performance of all obligations hereunder.
(c) ENFORCEABILITY. This Agreement has been duly executed by
USG&E and each of the Subsidiaries and constitutes a legal, valid, and
binding agreement upon each of them in accordance with its terms,
except as may be limited by applicable laws affecting the enforcement
of creditor's rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding
at law or equity.
(d) CAPITALIZATION.
(i) USG&E has (i) 120,000,000 shares of capital stock
authorized, (ii) of which 21,233,329 shares of common stock
are issued and outstanding, (iii) of which 708,891 shares of
preferred stock are issued and outstanding and (iv) 2,924,994
5
shares of capital stock held in treasury. In addition, USG&E
has 2,126,673 common stock purchase warrants outstanding. No
preemptive rights or rights of first refusal exist with
respect to any shares of USG&E common or preferred stock.
Except as set forth herein, there are no obligations that
could require USG&E to issue shares of its capital stock.
Except as set forth herein, there are no proxies, voting
rights, or other agreements or understandings open with
respect to such shares of USG&E common or preferred stock.
(ii) Drilling 1 has 41 member units issued and
outstanding which represents an eighty percent (80%) ownership
interest in Drilling 1. The remaining twenty percent (20%)
interest in Drilling 1 is owned by USG&E.
(iii) Drilling 2 has 39 3/4 member units issued and
outstanding which represents a seventy-five percent (75%)
ownership interest in Drilling 2. Shafra, LLC owns a five
percent (5%) ownership interest in Drilling 2 and USG&E owns
the remaining twenty percent (20%) interest in Drilling 2.
(iv) Drilling 3 has 58.9 member units issued and
outstanding which represents a seventy-five percent (75%)
ownership interest in Drilling 3. Shafra, LLC owns a five
percent (5%) ownership interest in Drilling 3 and USG&E owns
the remaining twenty percent (20%) interest in Drilling 3.
(e) NON-CONTRAVENTION. The execution and delivery of this
agreement by USG&E and the Subsidiaries will not:
(i) Contravene any provision of the organizational
documents of USG&E or the Subsidiaries;
(ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction judgment
or order of any Governmental authority applicable to USG&E or
the Subsidiaries;
(iii) conflict with any contract which is applicable
to, or binding upon USG&E or the Subsidiaries or their
respective securityholders; or
(iv) result in or require the creation or imposition
of any lien upon or with respect to the property or assets of
the Companies.
(f) ENVIRONMENTAL MATTERS.
(i) USG&E and the Subsidiaries have each obtained all
licenses, permits, and authorizations under Environmental Laws
required for the conduct and operation of its business and is
in compliance with the terms and conditions contained therein
with respect to other provisions of applicable Environmental
Laws, except where the failure to obtain such licenses,
permits, and other authorizations or the non-compliance with
the terms and conditions contained therein or the
non-compliance with other provisions of applicable
Environmental Laws would not singly or in the aggregate create
a Material Adverse Effect.
6
(ii) To the knowledge of USG&E and its Subsidiaries,
there is no condition on any property currently or formerly
owned by either of the aforementioned Parties or formerly
owned or leased by the same that would create a liability for
the aforementioned Parties under Environmental laws, except
for liability that would not singly or in the aggregate create
a Material Adverse Effect.
(iii) To the knowledge of any of the Parties, there
is no condition or any other property owned by any third party
that would create liability for any of the Parties under
Environmental Laws, except for liability that would not singly
or in the aggregate create a Material Adverse Effect.
(iv) There are no non-compliance orders or notices of
violation, claims, suits, actions, judgments, penalties,
fines, or administrative or judicial investigations or
proceeds pending, or, to the knowledge of the Companies,
threatened against or involving the Companies, its business,
operations, properties or assets, issued by any Governmental
Authority with respect to Environmental Laws issued to the
Companies thereunder in connection with, related to, or
arising out of the ownership by the Companies of their
properties or assets or the operation of their respective
businesses which have not been resolved in a manner that would
not impose any material obligation, burden or continuing
material liability on Newco or the Companies in the event that
the transactions contemplated by this Agreement are
consummated, or which could have a Material Adverse Effect on
the Companies.
(g) GOOD TITLE TO AND CONDITION OF ASSETS; REAL PROPERTY. The
Companies have good and marketable title to all of their assets, free
and clear of any liens or other restrictions on use. For purposes of
this Agreement, the term "Assets" refers to all of the properties and
assets of the Companies, whether personal or mixed, tangible or
intangible, wherever located. The Company does not own any real
property
(h) COMPLIANCE WITH LAWS. The Companies represent that they
are in compliant with all laws relating to their operations in all
material respects.
(i) TAX MATTERS. All Tax Returns of the Companies required to
have been filed prior to the date hereof by any of the Parties with
respect to their income, properties, or other operations have been
timely filed, such Tax Returns have been prepared in compliance with
all applicable laws and regulations, and all such Tax Returns are
accurate in all material respects. All Taxes due and payable with
respect to the Companies have been paid or are reflected on the current
Balance Sheet. With respect to each taxable period of the Companies,
(i) no deficiency or proposed adjustment has been asserted or assessed
against any Company by any taxing authority, (ii) no Company has
consented to an extension of time to pay by any taxing authority, (iii)
no Company has requested any extension of time to file by any taxing
authority, (iv) there is no action, suit, taxing authority proceeding,
or audit or claim against any of the Companies, and none has been
threatened, and (v) there are no liens for Taxes upon the assets of the
Companies.
7
(j) LICENSES AND PERMITS. The Companies posses all licenses
and required governmental or official approvals, permits, or
authorizations for its business and operations. All permits are in full
force and effect, the Companies are in full compliance, and no
proceeding is pending or threatened to revoke or amend such permits.
None of these permits is or will be impaired in any way
5. CONDUCT OF BUSINESS PENDING THE CLOSING.
(a) CONDUCT OF BUSINESS BY THE PARTIES PENDING THE CLOSING. The
Companies each covenant and agree that, except as otherwise expressly required
or permitted by the terms of this Agreement or except as expressly approved or
directed by Newco, between the date of this Agreement and closing, the business
of the Companies shall be conducted only in, and the Company shall not take any
action except in the ordinary course of business consistent with past practice.
USG&E and each of the Subsidiaries shall use their best efforts to preserve
intact their business organization and to preserve their present relationships
with customers and suppliers. Neither USG&E nor the Subsidiaries shall, directly
or indirectly, do or agree to do any of the following, except as otherwise
provided in this document or with permission from Newco:
(i) Amend or otherwise change its articles of incorporation or
bylaws or equivalent organizational documents;
(ii) Issue, sell, pledge, dispose of, or encumber any shares
of its capital stock of any class, except for the cancelled shares
previously indicated;
(iii) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock;
(iv) Reclassify, combine, split, subdivide, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(v) Acquire any interest in any corporation, partnership, or
other business organization thereof, or make investment either by
purchase of stock or securities or contributions of capital;
(vi) Incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee, endorse or otherwise become
responsible for the debts of any other person;
(vii) Sell, dispose, or encumber any of its assets, tangible
or intangible;
(viii) Enter into any contract outside of the ordinary course
of business;
(ix) Increase the compensation payable or to become payable to
its officers or employees, or, except as presently required to do,
xxxxx xxxxxxxxx or termination pay to any of its directors, officers,
or employees;
8
(x) Take any action not described above that is
outside of the ordinary course of business and in a matter
inconsistent with past practice;
(xi) Increase or decrease prices charged to
customers, except for previously announced price changes, or
take any other action which might reasonably result in any
increase in the loss of customers; or
(xii) Agree, in writing or otherwise, to take any
action which would make any representation or warranty in
Section 4 untrue or incorrect.
(b) INVESTOR MEETINGS. Each of the Companies will take all
action necessary in accordance with applicable law and their respective
organizational documents and will meet as promptly as practicable to
vote upon and consider the approval of the Merger, this Agreement and
the transactions contemplated herein.
(c) EXPENSES. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated herein shall be paid by the Party incurring
such expenses, except as otherwise provided herein.
(d) TAX TREATMENT OF MERGER. No Party shall:
(i) Knowingly take any action, or knowingly fail to
take any action, that would jeopardize the qualification of
Merger 2 as a reorganization within the meaning of Section 368
of the Internal Revenue Code and the qualification of Merger 1
as a transaction governed by Section 351 of the Internal
Revenue Code; or
(ii) Enter into any contract, agreement, commitment
or arrangement that would result in jeopardizing the
qualification of Merger 2 as a reorganization within the
meaning of Section 368 of the Internal Revenue Code and the
qualification of Merger 1 as a transaction governed by Section
351 of the Internal Revenue Code.
(e) ACTIONS BY NEWCO SUB. In its capacity as sole shareholder
of Newco Sub, Newco shall cause Newco Sub to approve and adopt Merger 1
and to take all corporate action necessary on its part to consummate
Merger 1 and the transactions contemplated herein.
6. ADDITIONAL AGREEMENTS
(a) FURTHER ASSURANCES; COMPLIANCE WITH COVENANTS. Each party
shall execute and deliver such additional instruments and other
documents and shall take such further actions as may be necessary to
comply with the respective covenants as indicated in Section 3 and
Section 4 of this document.
(b) COOPERATION. Each of the Parties agrees to cooperate with
the other in the preparation and filing of all forms, notifications,
reports and information required or reasonably deemed advisable
pursuant to any law, rule, or regulation in connection with the merger.
and to use their best efforts to agree on a method to overcome
governmental objections thereto.
9
(c) OTHER ACTIONS. Each of the Parties shall take all
appropriate actions to ensure that all things necessary and proper
under applicable laws, regulations, and Contracts to make effective the
transaction contemplated herein, including obtaining all licenses,
permits, consents, approvals, authorizations, qualifications, or orders
of any governmental authority.
(d) TAX TREATMENT. All Parties to this Agreement shall take
all appropriate steps to cause Merger 2 to qualify as a tax-free
reorganization under the provisions of Section 368(a) of the Internal
Revenue Code and to cause Merger 1 to qualify as a transaction governed
by Section 351 of the Internal Revenue Code. No party to this action
nor their shareholders shall take any action which could cause Merger 2
and the Merger to fail to so qualify. All Parties agree to comply with
all applicable federal, state and local reporting requirements with
respect to such treatment.
(e) CONFIDENTIALITY; PUBLICITY. Except as may be required by
law, no Party to this agreement shall disclose to any third party this
agreement or the subject matter hereof without the prior consent of all
Parties hereto. No press release shall be issued or contemplated
without the express permission of all Parties.
7. CONDITIONS TO THE OBLIGATIONS OF NEWCO AND NEWCO SUB. The
obligations of Newco and Newco Sub to effect the transactions contemplated
herein shall be subject to the fulfillment at or prior to in the closing of the
following conditions, any or all of which may be waived by Newco and Newco Sub:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES The
representations and warranties of USG&E, Drilling 1, Drilling 2, and
Drilling 3 contained in this agreement shall be true and correct,
except for:
(i) Changes specifically permitted by or disclosed on
any part or schedule of this Agreement; or
(ii) Those representations and warranties that
address matters only as of a particular date.
(b) COMPLIANCE WITH OBLIGATIONS. At the time designated by
this Agreement, the Companies shall have delivered to Newco a
certificate, dated as of the Effective Date, certifying that such
representations and warranties are true and correct and such that all
such obligations have been complied with and performed. No such
certificate shall be required in the event that the Effective Date is
the same date as the Agreement.
(c) NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY.
Between the Effective Date and the Closing:
10
(i) There shall have been no Material Adverse Change
to USG&E; and
(ii) There shall have been no adverse federal, state,
or local legislative or regulatory change that could cause
damage to the products or services of USG&E.
(d) ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding any action or proceeding before any
court or governmental body which shall seek to restrain, prohibit,
invalidate or collect damages arising out of the transaction
contemplated herein.
8. CONDITIONS TO THE OBLIGATIONS OF USG&E, DRILLING 1, DRILLING 2,
DRILLING 3. The obligations of USG&E, Drilling 1, Drilling 2, Drilling 3 to
effect the transactions contemplated herein shall be subject to the fulfillment
of the following obligations, any of which may be waived in whole or in part by
the aforementioned companies and their respective shareholders and members.
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES; COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of Newco contained
in this agreement shall be true and correct at and as of the Closing
with the same force and effect as though made and as of that time.
Newco shall have performed and complied with all of its obligations
required by this agreement to be performed or complied at or with prior
to closing.
(b) NO ORDER OR INJUNCTION. No court of competent jurisdiction
shall have issued or entered any order or injunction restraining or
prohibiting the transactions contemplated herein, which remains in
effect at the time of closing.
(c) VOTING REQUIREMENTS. The Voting Requirements shall have
been fulfilled.
9. TERMINATION.
(a) This Agreement may be TERMINATED at any time prior to the
Closing Date: (i) by mutual written consent of the Parties hereto at
any time prior to the Closing; or (ii) by either Newco or the
Companies, if regulatory approval is denied; (iii) by either Newco or
the Companies, if any governmental entity of competent jurisdiction has
issued a final nonappealable order enjoining or otherwise prohibiting
the Merger; (iv) by either Newco or the Companies, if any of the
approvals of the Investors required for completion of the Merger are
not obtained at the Meeting; or (v) by any of the Parties if the
Closing has not occurred prior to June 30, 2006.
(b) EXTENSION. At any time prior to the Effective Time, any
party hereto, by action of its Board of Directors, may, to the extent
allowed by law, extend the time for the performance of any obligations
or other acts of the other Parties hereto, waive any inaccuracies in
the representations and warranties made herein to such Parties, or
waive compliance with any of the agreements or conditions for the
benefit of such party contained herein.
11
10. GENERAL PROVISIONS.
(a) NOTICE. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, or facsimile transmission if such transmission is
confirmed by delivery by certified or registered mail (first class
postage pre-paid), or guaranteed overnight delivery, to the following
addresses and telecopy numbers:
If to any of the Parties:
000 XX 000xx Xxxxxx
Penthouse 5
North Xxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Fax: (000) 000-0000
With Copy to:
Xxxxxx X. Xxxxxxxx
Akerman Senterfitt
Xxx Xxxxxxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Fax: (000) 000-0000
Notice shall be deemed received on the date sent (if sent via
facsimile) or the date delivered (if sent via overnight delivery or
certified or registered mail).
(b) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including all Exhibits and Schedules attached hereto) and
other documents delivered at Closing pursuant hereto, contains the
entire understanding of the Parties in respect of its subject matter
and supersedes all prior agreements and understandings (oral and
written) between or among the Parties with respect to such subject
matter. The Parties agree that prior drafts of this Agreement shall not
be deemed to provide any evidence as to the meaning of any provision
hereof or the intent of the Parties with respect thereto. The Exhibits
and Schedules constitute a part hereof as though set forth in full
above. This Agreement is not intended to confer upon any Person, other
than the Parties hereto, any rights or remedies hereunder.
(c) AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, cancelled or discharged, except by written
instrument executed by all Parties. No failure to exercise, and no
delay in exercising, any right, power, or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude the
exercise of any other right, power, or privilege. No waiver of any
12
breach of any provision shall be deemed to be a waiver of any preceding
or succeeding breach of the same or any other provision, nor shall any
waiver be implied from any course of dealing between the Parties. No
extension of time for performance of any obligation of any acts
hereunder or under any other agreement shall be deemed to be an
extension for the time of performance of any other obligation or other
acts. The rights and remedies of the Parties under this Agreement are
in addition to all other rights and remedies, at law or equity, that
they may have against each other.
(d) BINDING EFFECT. The rights and obligations of this
Agreement shall bind and inure to the effect of the Parties and their
respective successors or assigns. Nothing expressed or implied herein
shall be construed to give any other person any legal or equitable
rights hereunder.
(e) COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original but all of which
together shall constitute one and the same document. A telecopy
signature of any party shall be considered to have the same legal
status as an original signature.
(f) INTERPRETATION. When a reference is made in this Agreement
to an article, section, paragraph, clause, schedule or exhibit, such
reference shall be deemed to be to this agreement unless otherwise
indicated. The headings contained herein and on the schedules are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement or the schedules. Whenever the words
"include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". Time
shall be of the essence in this agreement.
(g) GOVERNING LAW. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State
of Delaware.
(h) SPECIAL VOTING REQUIREMENTS. Approval of the Merger
requires that the following special voting requirements (the "Voting
Requirements") be met:
(i) Approval of Merger 2 is required by more than 50%
of the interest holders in each of Drilling 1, Drilling 2, and
Drilling 3 and approval of Merger 1 is required by holders of
50% of the common stock of USG&E (on an as-converted basis),
with the holders of USG&E common stock and preferred stock
voting as a single group on a post-conversion basis; and
(ii) Approval of the Merger by 80% or more of the
"Investor Interests." For purposes of this Agreement, the
Investor Interests shall be defined as the total dollars
contributed to the Companies by the holders of the interests
in Drilling 1, Drilling 2, and Drilling 3 and the stockholders
of USG&E. In that regard, USG&E raised $1,973,010 from holders
of its preferred stock and $1,194,962 from holders of its
common stock, Drilling 1 received $1,000,000 from investors,
Drilling 2 received $993,750 from investors, Drilling III
received $1,918,004 from investors, and the Company received
$1,973,010 from the holders of the preferred stock and
$1,056,207 from the holders of the common stock. In total, the
Companies received from investors an aggregate of $7,079,736
requiring investors contributing in excess of $5,663,769 to
approve the Merger.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
13
IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed
by their respective duly authorized officers as of the date first above written.
USG&E, INC.
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
USG&E WELL PRODUCTION, LLC
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
U.S. GAS & ELECTRIC, INC.
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
USG&E GAS DRILLING I, LLC
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
USG&E GAS DRILLING II, LLC
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
USG&E GAS DRILLING III, LLC
By: /s/
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
14
