AGREEMENT AND PLAN OF MERGER
AGREEMENT
AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER
(this
“Agreement”)
is made
and entered into this 26th day of January, 2006, by and between Platinum
Energy Resources, Inc.,
a
Delaware corporation (“Parent”),
Tandem
Energy Holdings, Inc.,
a Nevada
corporation (“Target”),
and
PER
Acquisition Corp.,
a
Delaware corporation (“Acquisition
Sub”).
Background
The
respective Boards of Directors of the parties hereto desire that Acquisition
Sub, a wholly-owned Subsidiary of Parent, merge with and into Target upon the
terms and subject to the conditions hereinafter set forth (such transaction
being hereinafter called the “Merger”).
Terms
and Conditions
In
consideration of the mutual benefits to be derived from this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE
1
Plan
of Merger
1.01 Merger.
At the
Effective Time (as defined below), Acquisition Sub shall be merged with and
into
Target, which shall be and is hereby sometimes referred to as the “Surviving
Corporation.”
The
Surviving Corporation shall continue its corporate existence as a Nevada
corporation. As a result of the Merger, Acquisition Sub will cease to exist
as a
corporate body.
1.02 Effective
Time and Closing.
The
“Effective
Time”
shall
mean the date and time on which the Merger becomes effective under the laws
of
Nevada and Delaware by reason of the filing and acceptance by the Secretary
of
State of the States of Delaware and Nevada of necessary documentation in such
form as is required by the relevant provisions of the Nevada Revised Statutes
(“NRS”)
and the
Delaware General Corporation Law (“DGCL”)
and
duly executed and acknowledged by the appropriate parties hereto and thereafter
delivered to the Secretaries of State of the States of Delaware and Nevada
for
filing, as soon as practicable on the Closing Date. The closing shall be held
at
the offices of Xxxxx Xxxxx & Xxxxxxx, 0000 X. Xxxxxxx, Xxxxxx, Xxxxx, or
such other place as the parties may agree upon, immediately prior to the
Effective Time (the “Closing”).
The
date on which the Closing is held is called the “Closing
Date.”
1.03 Articles
of Incorporation of Target.
The
Articles of Incorporation of Target shall be amended effective at the Effective
Time of the Merger, by:
(a) Amending
Article 1 thereof to read as follows:
“The
name
of the corporation is “Platinum Energy Corporation.”
(b) Amending
Article 3 thereof to read as follows:
“The
total
number of shares of stock which the corporation is authorized to issue is 1,000
shares of Common Stock, par value One Dollar ($1.00) per share.”
In
all
other respects, the Restated Articles of Incorporation of Target shall remain
unchanged.
1.04 Directors
and Officers.
(a) From
and
after the Effective Time, the members of the Board of Directors of the Surviving
Corporation shall consist of Xxxx Xxxxxxxxx and Xxxxx Xxxxxxxx, each of such
persons to serve until his successor is elected and qualified or until his
earlier death, resignation or removal. If at or after the Effective Time a
vacancy shall exist in the Board of Directors of the Surviving Corporation,
such
vacancy may thereafter be filled in the manner provided by law and by the Bylaws
of the Surviving Corporation.
(b) From
and
after the Effective Time, the officers of the Surviving Corporation shall
consist of Xxxx Xxxxxxxxx, President and Chief Executive Officer and Xxxxx
Xxxxxxxx, Vice President; Treasurer and Secretary, each of such persons to
serve
until his successor is elected and qualified or until his earlier death,
resignation or removal.
ARTICLE
2
Shareholder
Approval
2.01 Parent.
Parent
will use its best efforts to take all steps reasonably necessary to hold a
meeting of its shareholders at the earliest practicable date for the purpose
of
submitting this Agreement to them for approval and requesting authorization
of
the Merger. In connection with such meeting of shareholders, Parent will solicit
proxies from its shareholders and Parent and Target will cooperate with each
other (including, without limitation, providing to each other appropriate
information) for the purpose of complying with the requirements of Regulation
14A under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)
in
connection with the proxy statement for such meeting. In its proxy statement,
Parent shall include a recommendation of its board of directors that its
shareholders approve the Merger.
2
2.02 Target.
Target
will use its best efforts to take all steps necessary to hold a meeting of
its
shareholders at the earliest practicable date for the purpose of submitting
this
Agreement to them for approval and requesting authorization of the Merger;
provided, however, Target may, if it so elects and otherwise meets the
requirements specified in Chapter 92A of the NRS, take action on this Agreement
and the Merger by written consent. If Target elects to take action on this
Agreement through a meeting of shareholders, Target will solicit proxies from
its shareholders and Parent and Target will cooperate with each other in
connection with the proxy statement for such meeting. In its proxy statement,
Target shall include a recommendation of its board of directors that its
shareholders approve the Merger.
2.03 Acquisition
Sub.
Parent,
as the sole shareholder of Acquisition Sub, shall take or cause to be taken
such
action as may be required to permit Acquisition Sub to consummate the
Merger.
ARTICLE
3
Conversion
of Shares
3.01 Conversion
of Shares.
At the
Effective Time, the manner and basis of converting the shares of stock of
Acquisition Sub and Target shall be as follows:
(a) Each
share
of common stock of Acquisition Sub outstanding immediately prior to the
Effective Time of the Merger shall, by virtue of the Merger and without any
action on the part of Parent, be exchanged for and converted into, and shall
become outstanding as, one share of the common stock of the Surviving
Corporation and Parent as holder of the common stock of Acquisition Sub at
the
Effective Time will, without further action, become the holder of record on
that
date of the same number of Target Common Shares (as defined
herein).
(b) Each
Target Common Share held immediately prior to the Effective Time of the Merger
as Target treasury stock, if any, shall by virtue of the Merger forthwith cease
to exist and be cancelled and retired without payment of any consideration
therefor.
(c) Each
Target Common Share issued and outstanding immediately prior to the Effective
Time (other than treasury shares) shall by virtue of the Merger be converted
into the right to receive Two and 53/100 Dollars ($2.53) in cash, without
interest thereon, from Parent in the manner provided in Section 3.02 hereof,
and
all other rights with respect thereto (subject, in the case of shares owned
by
dissenting Shareholders, to appraisal rights under Chapter 92A of the NRS)
shall
forthwith cease to exist and each such share shall be cancelled and retired
upon
receipt thereof. Notwithstanding the foregoing, the Major Shareholders and
certain other members of management of Target have waived or will waive their
right to receive forty cents ($.40) per share so that it can be allocated to
the
shareholders of Target who purchased their Target Common Shares directly from
Target or through brokers or dealers in open market transactions, thus giving
those Shareholders Four and 50/100 Dollars ($4.50) per share.
3
(d) Target
Common Shares held by Parent at the Effective Time of the Merger shall be
cancelled and retired, and no new shares of the Surviving Corporation or other
property shall be issuable with respect thereto.
3.02 Surrender
and Payment.
(a) Immediately
prior to the Effective Time, Parent shall deliver to a disbursing agent selected
by Target after consultation with Parent, all the costs of which will be paid
by
Parent (the “Agent”),
the
sum of One Hundred Two Million and No/100 Dollars ($102,000,000.00) less the
amount of the Performance Deposit (as such term is defined in Section 3.06
of
this Agreement) for purposes of paying in full the long-term indebtedness of
Target and its Subsidiaries and the consideration shareholders of Target are
entitled to receive as a result of the Merger.
(b) Except
as
provided in Section 3.01(d) above, at the Effective Time, each holder of a
certificate which immediately prior to the Effective Time of the Merger
represented issued and outstanding shares of Target Common Shares, shall be
entitled, upon surrender thereof to Agent, to receive payment therefor in cash
in the amount set forth in Section 3.01(c). Promptly, but in no event more
than
ten (10) days after the Effective Time, Parent shall cause to be mailed to
each
person who was, immediately prior to the Effective Time, a holder of record
of
issued and outstanding Target Common Shares, a letter of transmittal and
instructions for use in effecting the surrender of the certificates therefor
and
Target shall ensure that a list of holders of Target Common Shares as of the
Effective Time shall be delivered to Parent immediately after the Effective
Time.
(c) If
any
payment for Target Common Shares is to be made in a name other than that in
which the Certificate (as defined below) therefor is surrendered for exchange
as
registered, it shall be a condition of such payment that the Certificate so
surrendered be properly endorsed or otherwise in proper form for transfer and
that the person requesting such payment either pay to the Agent any transfer
or
other taxes required by reason of the payment to a person other than the
registered holder of the Certificate surrendered or establish to the
satisfaction of the Agent that such tax has been paid or is not
payable.
(d) After
the
Effective Time there shall be no transfers on the stock transfer books of Target
of Target Common Shares that were issued and outstanding immediately prior
to
the Effective Time, other than transfers of Target Common Shares by dissenting
shareholders pursuant to the applicable provisions of the NRS.
4
(e) Any
cash
in the hands of the Agent delivered pursuant to Section 3.02(a) above which
remains unclaimed following twelve (12) months after the Effective Time shall
be
returned to Parent, and thereafter the holders of Target Common Shares shall
look solely to Parent and not to the Agent as to any rights afforded to such
holders pursuant to this Agreement, subject to applicable state
laws.
(f) Agent,
on
behalf of each of Parent and the Surviving Corporation shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Target Common Shares such amounts as may be required
to be deducted and withheld with respect to the payment of taxes under the
Internal Revenue Code of 1986, as amended (the “Code”),
or any
provisions of state, local or foreign tax law. To the extent that amounts are
so
withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holders of Target Common Shares in respect
to the consideration due to such holders pursuant to this
Agreement.
(g) If
any
certificate representing Target Common Shares (a “Certificate”)
shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, unless otherwise waived by the Parent, the posting by such person of a
bond
in such reasonable amount as Parent may direct as indemnity against any claim
that may be made against the Surviving Corporation with respect to such
Certificate, Parent will issue in exchange for such lost, stolen or destroyed
Certificate the amounts to be paid hereunder.
3.03 Dissenting
Shares.
Notwithstanding anything in this Agreement to the contrary, except the last
sentence of this Section 3.03, Target Common Shares that are issued and
outstanding immediately prior to the Effective Time and which are held by
shareholders who shall not have voted such shares in favor of the Merger and
who
shall have timely filed with Target a written objection to the Merger and timely
delivered to Target a written demand for the payment of the fair value of such
Target Common Shares (“Dissenting
Shares”)
in the
manner provided in Chapter 92A of the NRS shall not be converted into the right
to receive, or be exchangeable for, the applicable consideration to be paid
to
the holders of such shares pursuant to Section 3.01 above, but the holders
thereof shall be entitled to payment of the fair value of such shares as
determined in accordance with the provisions of Chapter 92A of the NRS;
provided, however, that if (i) any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of such demand with the written
consent of Target, or (ii) the Merger shall be abandoned, terminated or
rescinded, or (iii) the shareholders of Target or Parent shall fail to approve
the Merger, or (iv) no demand or petition for the determination of fair value
by
a court shall have been made or filed within the time provided in Chapter 92A
of
the NRS, or (v) a court of competent jurisdiction shall determine that such
shareholder is not entitled to the relief provided by Chapter 92A of the NRS,
then the right of such shareholder to be paid the fair value of his shares
shall
cease and his status as a shareholder shall be restored retroactively without
prejudice to any corporate proceeding which may have been taken by Target during
the interim, and, in cases (i), (iv) or (v), such shares shall thereupon be
converted into the right to receive, and be exchangeable for, as of the
Effective Time, the consideration to be paid to the holders of such shares
pursuant to Section 3.01 above. Target agrees that, prior to the Effective
Time
and without the prior written consent of Parent, it will not make any payment
with respect to, or settle or offer to settle, any such objection by a holder
of
Dissenting Shares.
5
3.04 Major
Shareholder Agreements. Notwithstanding
anything in this Agreement to the contrary, each of the Major Shareholders
hereby consents to the Merger, agrees to vote his Target Common Shares in favor
of the Merger and agrees that he will not attempt to, and does not have the
right to, exercise any rights to dissent with respect to the
Merger.
3.05
Payment of Long Term Indebtedness. Simultaneously with the consummation
of the Merger, Parent shall instruct the Agent to pay in full the indebtedness
of Target or its Subsidiaries to Guaranty Bank, Xxx X. Xxxx, P. Xxxx Xxxx and
Xxxx X. Xxxxxxxx, provided that each holder of such indebtedness provides to
Target at the time of such payment a release, in form and substance reasonably
satisfactory to Parent, with respect to such indebtedness. The indebtedness
of
Target as of the date of this Agreement to foregoing persons is set forth in
Schedule 3.05 attached hereto. Payment in full of this indebtedness shall
constitute a non-waivable condition precedent to consummation of the
Merger.
3.06 Performance
Deposit.
Contemporaneously with the execution of this Agreement, Parent shall deposit
with Xxxxx Xxxxx & Xxxxxxx, as escrow agent (the “Escrow
Agent”)
the sum
of Five Hundred Thousand and No/100 Dollars ($500,000.00) as a deposit (the
“Performance
Deposit”)
to be
applied to the purchase of the Target Common Shares; provided, however, that
in
the event this Agreement is terminated for any reason other than a material
breach of this Agreement by Target, the Escrow Agent shall distribute the
Performance Deposit to the Target and Parent shall have no rights whatsoever
to
claim any portion of the Performance Deposit.
ARTICLE
4
Representations
and Warranties
4.01 Representations
and Warranties of Target.
Target
represents and warrants to Parent that the following are true and correct on
the
date of this Agreement and will be true and correct as of the Effective
Time:
(a) Organization
and Qualification.
(i) Target
is
a corporation duly organized, validly existing and, upon the filing of the
necessary reinstatement documents with the Secretary of State of Nevada will
be,
in good standing under the laws of the State of Nevada and has the requisite
corporate power to carry on its business as it is now being conducted,
and
to
own, operate or lease the properties and assets it currently owns, operates
or
holds under lease.
Target
is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or leased
or
the nature of its activities makes such qualification necessary, except where
the failure to be so qualified would not result in a Material Adverse Effect.
The copies of Target's Articles of Incorporation and Bylaws will be delivered
to
Parent and will be true, complete and correct as of the date hereof. Each
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
power to carry on its respective business as it is now being conducted,
and
to
own, operate or lease the properties and assets it currently owns, operates
or
holds under lease.
Each
Subsidiary is duly qualified as a foreign corporation to do business, and is
in
good standing, in each jurisdiction where the character of their respective
properties owned or leased or the nature of their activities makes such
qualification necessary, except where the failure to be so qualified would
not
result in a Material Adverse Effect. The copies of each Subsidiary’s formation
documents previously delivered to Parent are true, complete and correct as
of
the date hereof.
6
(ii) Target
owns 100% of the capital stock of Tandem Energy Corporation, a Colorado
corporation (“TEC”),
and
there are no rights of any third party to purchase or acquire any shares of
capital stock of TEC. Target owns 100% of the capital stock of Xxxxx Drilling,
Inc. (“Xxxxx”)
and
there are no rights of any third party to purchase or acquire any shares of
capital stock of Xxxxx. Target owns 33.33% of the limited partnership units
in
Spring Creek Limited Partnership (“SCLP”).
Target
has no other Subsidiaries, and does not own, directly or indirectly, any capital
stock or other ownership, participation or equity interest in any corporation,
partnership, limited liability company, association, joint venture or other
entity, and there are no outstanding contractual obligations or commitments
of
Target or any Subsidiary to acquire or make any investment in any shares of
capital stock or other ownership, participation, or equity interest in any
corporation, partnership, limited liability company, association, joint venture,
or other entity.
(b)
Capitalization. The authorized capital stock of Target consists of
100,000,000 Target Common Shares, 23,799,322 of which are currently issued
and
outstanding. All of the Target Common Shares have been duly authorized and
validly issued and are fully paid and nonassessable. Target does not hold
any
shares of its own capital. No Target Common Shares are subject to any pledges,
security interests, other liens, restrictions on transfer, encumbrances or
other
rights of any kind or nature (“Encumbrances”). All outstanding shares
of capital stock of the Subsidiaries of Target are fully owned by Target
or a
wholly-owned Subsidiary of Target, free and clear of any Encumbrances. Except
as
set forth in this Section 4.01(b), there are no outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments, convertible
securities, other equity securities of any kind or nature or any other
agreements of any kind or nature obligating Target or any shareholder of
Target
to issue, sell or otherwise transfer any additional Target Common Shares
or any
other shares of capital stock of Target or any other securities convertible
into
or evidencing the right to subscribe for any Target Common Shares. All of
the
outstanding securities of Target were issued in compliance with all applicable
federal and state securities and corporate laws, and none of the outstanding
securities has been issued in violation of any preemptive rights, rights
of
first refusal or similar rights. Neither Target nor, to Target’s knowledge, any
Shareholder is a party to any voting trust agreement or other contract,
agreement, arrangement, commitment, plan or understanding restricting or
otherwise relating to voting, dividend or other rights with respect to any
of
the capital stock of Target. No amounts attributed to the earnings or assets
of
Target have been distributed, or deemed distributed, by Target to any holder
of
the Target's capital stock. The number of Target Common Shares owned by each
of
the Major Shareholders is set forth in Schedule 4.01(b) attached
hereto.
7
(c) Authority
Relative to this Agreement.
Except
for the required approval by Target’s shareholders to be obtained pursuant to
this Agreement prior to the Effective Time, Target has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate
the
transactions contemplated hereby. The execution and delivery of this Agreement
by Target and the consummation by Target of the transactions contemplated
hereby
have been duly and validly authorized by the Board of Directors of Target
and,
except for the required approval of Target’s shareholders to be obtained
pursuant to this Agreement prior to the Effective Time, no other corporate
proceedings on the part of Target are necessary to authorize this Agreement
or
to consummate the transactions so contemplated. This Agreement has been duly
and
validly executed and delivered by Target, and, assuming this Agreement
constitutes a valid and binding obligation of Parent, this Agreement constitutes
a valid and binding agreement of Target, enforceable against Target in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
and by
general equitable principles.
(d)
Absence of Certain Changes. Since the Balance Sheet Date (as hereinafter
defined), no event has occurred that has had or could have a Material Adverse
Effect. Since the Balance Sheet Date, there has not been, directly or
indirectly, (i) any declaration, setting aside or payment of any dividend
or
other distribution in respect of the Target Common Shares, any return of
any
capital or other distribution of assets to shareholders, or any redemption
or
other acquisition by Target of Target Common Shares or other securities or
obligations of Target; (ii) any significant change by Target or any Subsidiary
in accounting methods, principles or practices except as required by a change
in
generally accepted accounting principles, (iii) any direct or indirect material
purchase or other acquisition of stock of any individual or entity of any
kind
or nature (collectively, “person” or “Person”), or any direct
or indirect loan, advance (other than advances to employees for travel or
entertainment expenses in the ordinary course of business) or capital
contribution to any person, (iv) a grant of any general increase in the
compensation of its officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or commitment) or any
increase in the compensation payable or to become payable to any such officer
or
employee; and (v) any agreement to take, whether in writing or otherwise,
any
action which would make or have made any representation or warranty in this
Article 4 untrue or incorrect. Since the Balance Sheet Date, Target and its
Subsidiaries have conducted their respective businesses only in the ordinary
and
usual course consistent with past practice. Since the Balance Sheet Date,
neither Target nor any of its Subsidiaries have (A) sold, assigned or
transferred any of its tangible assets except in the ordinary course of
business, or canceled any debt or claim, except for write-offs in the ordinary
course of business consistent with past practices, (B) suffered any loss
of
property or waived any right whether or not in the ordinary course of business,
except where such loss or waiver would not have a Material Adverse Effect,
(C)
(i) granted any severance or termination pay to any of its directors, officers,
employees or consultants, (ii) increased any benefits payable under any existing
severance or termination pay policies or employment agreements, or (iii)
increased the compensation, bonus or other benefits payable to any of its
directors, officers, consultants or employees, (D) made any material change
in
the manner of its business or operations, (E) entered into any transaction
except in the ordinary course of business or as otherwise contemplated hereby
or
(F) entered into any commitment (contingent or otherwise) to do any of the
foregoing.
8
(e) Financial
Statements.
Target
has provided to Parent, or will provide to Parent within thirty (30) days
of the
date of this Agreement, true and complete copies of (i) the audited consolidated
balance sheet of Target and its Subsidiaries as of December 31, 2004, and
the
related audited statements of operations and changes in stockholders' equity
for
the fiscal year then ended, and (ii) the unaudited consolidated balance sheet
of
Target and its Subsidiaries and the related unaudited statements of operations
for the period ended December 31, 2005 (collectively, the “Financial
Statements”).
The
Financial Statements (i) have been, or will be, prepared in accordance with
generally accepted accounting principles (“GAAP”)
on a
basis consistent throughout the periods covered thereby; (ii) present, or
will
present, fairly, in all material respects, the financial condition of Target
and
its Subsidiaries as of the dates thereof and the results of their operations
for
the periods then ended; and (iii) are, or will be, consistent with the books
and
records of Target and its Subsidiaries, which books and records are true,
correct and complete in all material respects. For purposes of this Agreement,
the “Balance
Sheet”
means
the consolidated balance sheet of Target and its Subsidiaries dated as of
December 31, 2005, and the “Balance
Sheet Date”
means
December 31, 2005. All
liabilities and obligations, whether absolute, accrued, contingent or otherwise,
whether direct or indirect, and whether due or to become due, which existed
at
the date of such Financial Statements and are required, under GAAP, to be
recorded or disclosed in the balance sheets included in the Financial Statements
or disclosed in notes to the Financial Statements are, or will be, so recorded
or disclosed.
Since
the
Balance Sheet Date there has been no change in the assets or liabilities, or
in
the business or condition, financial or otherwise, or in the results of
operations of Target or any of its Subsidiaries, which has had or is reasonably
likely to have a Material Adverse Effect. To Target’s knowledge, the accounts
receivable of Target and its Subsidiaries included in the Balance Sheet are
reasonably expected to be collectible substantially in full over a reasonable
period subject to reserves for bad debt established therefor and which are
reflected in the Financial Statements (by use of Target's or its Subsidiaries’
normal collection methods without resort to litigation or reference to a
collection agency), and to Target’s knowledge, (i) there do not exist any
defenses, counterclaims and set-offs which would materially adversely affect
such receivables, and (ii) all such receivables are actual and bona fide
receivables representing obligations for the total dollar amount thereof shown
on the books of Target and its Subsidiaries. Target and its Subsidiaries have
performed all obligations in all material respects with respect thereto which
they were obligated to perform to the date hereof.
9
(f) Consents
and Approvals; No Violation.
Neither
the execution and delivery of this Agreement by Target nor the consummation
of
the transactions contemplated hereby do or will,
so long
as the required approval of Target’s shareholders is obtained prior to the
Effective Time,
(i)
conflict with or result in any breach of any provision of the Articles of
Incorporation or Bylaws of Target or similar governing documents of any
Subsidiary of Target; (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, except the filing of the Articles of Merger (or similar document)
pursuant to the NRS and the DGCL or where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification,
would
not individually or in the aggregate result in a Material Adverse Effect; (iii)
conflict with or result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, license, agreement or other instrument or obligation to which
Target or any of its Subsidiaries is a party or by which Target, any of its
Subsidiaries or any assets of Target or any of its Subsidiaries may be bound,
except for such defaults (or rights of termination, cancellation or
acceleration) as to which requisite waivers or consents have been obtained;
or
(iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Target, any of its Subsidiaries or any of their respective assets
or
result
in any suspension, revocation, impairment, forfeiture or nonrenewal of any
license, or right to effect any such action, except where the failure to do
so
would have a Material Adverse Effect.
(g) Condition
of Properties.
To the
knowledge of Target, except as may be limited by the ordinary course of business
occurring on a day-to-day basis, all properties and assets owned or utilized
by
Target or its Subsidiaries, specifically including, but not limited to, the
oil
and gas properties owned by Target or its Subsidiaries, are in good operating
condition and repair, free from any defects (except such minor defects as do
not
interfere with the use thereof in the conduct of the normal operations of Target
and its Subsidiaries), ordinary wear and tear excepted, and have been maintained
consistent with prudent industry practice. No other assets or properties are
needed to permit Target and its Subsidiaries to carry on its business as
conducted during the preceding 12 months and as proposed to be conducted. To
the
knowledge of Target, all buildings, plants and other structures owned or
otherwise utilized by Target and its Subsidiaries are in good condition and
repair, ordinary wear and tear excepted, and have no structural defects or
other
defects (except such minor defects as do not significantly interfere with the
use thereof in the conduct of the normal operations of Target and its
Subsidiaries) and are suitable and adequate for the purposes for which they
are
presently being used.
(h) Intellectual
Property.
Target
and its Subsidiaries own, or are licensed or otherwise have the right to use,
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, service marks, service xxxx rights, copyrights, technology,
know-how, processes and other proprietary intellectual property rights and
computer programs (“Intellectual
Property Rights”)
which
are material to the condition (financial or otherwise) or conduct of the
business and operations of Target and its Subsidiaries. To the knowledge of
Target, (i) the use of Intellectual Property Rights by Target does not infringe
on the Intellectual Property Rights of any person, subject to such claims and
infringements as do not, in the aggregate, give rise to any liability on the
part of Target or its Subsidiaries which could have a Material Adverse Effect;
and (ii) no one or more persons are, in any manner that in the aggregate could
have a Material Adverse Effect, infringing on any Intellectual Property Right
of
Target and its Subsidiaries. No claims are pending or, to the knowledge of
Target, threatened that Target or any Subsidiary is infringing or otherwise
adversely affecting the rights of any Person with regard to any Intellectual
Property Right.
10
(i)
No
Undisclosed Liabilities. Target and its Subsidiaries have no debt, liability
or obligation of any kind, whether accrued, absolute, contingent, inchoate,
determined, determinable, or otherwise, except for (i) liabilities or
obligations which, individually or in the aggregate, would not have a Material
Adverse Effect; (ii) liabilities or obligations under this Agreement or incurred
in connection with the transactions contemplated hereby; (iii) liabilities
or
obligations disclosed in the Balance Sheet or footnotes thereto; and (iv)
liabilities or obligations arising in the ordinary course of business after
the
Balance Sheet Date and which do not have a Material Adverse Effect.
(j) No
Litigation.
There is
no suit, action, proceeding, or investigation presently pending or, to the
knowledge of Target, threatened against or affecting Target or any of its
Subsidiaries that has had or could reasonably be expected to have a Material
Adverse Effect or prevent, hinder or materially delay the ability of Target
to
consummate the transactions contemplated by this Agreement, nor is there any
judgment, decree, injunction, rule or order of any governmental authority or
arbitrator outstanding against Target or any of its Subsidiaries which has
had,
or which, insofar as reasonably can be foreseen, in the future could have,
any
such effect.
(k) Compliance
with Laws and Permits.
Neither
Target nor any of its Subsidiaries is in violation of, or in default in any
material respect under, and no event has occurred that (with notice or the
lapse
of time or both) would constitute a violation of or default under (a) its
Articles of Incorporation, Bylaws or other organizational documents, or (b)
any
applicable law, rule, regulation, ordinance, order, writ, decree or judgment
of
any governmental authority. Target and its Subsidiaries have obtained and hold
all permits, licenses, variances, exemptions, orders, franchises, approvals
and
authorizations of all governmental authorities necessary for the lawful conduct
of its business and the lawful ownership, use and operation of its assets (the
“Target
Permits”),
except
for Target Permits which the failure to obtain or hold would not, individually
or in the aggregate, have a Material Adverse Effect. None of the Target Permits
will be adversely affected by the consummation of the transactions contemplated
hereunder or requires any filing or consent in connection therewith. Target
and
its Subsidiaries are in compliance with the terms of the Target Permits, except
where the failure to comply would not, individually or in the aggregate, have
a
Material Adverse Effect. All of the Target Permits are in full force and effect
and no action or claim is pending nor, to the knowledge of Target, is threatened
to revoke or terminate any Target Permit or declare any Target Permit invalid
in
any material respect. No investigation or review by any governmental authority
with respect to Target or any Subsidiary is pending or, to the knowledge of
Target, threatened, other than those the outcome of which would not,
individually or in the aggregate, have a Material Adverse Effect.
11
(l) Title
to Assets.
Target
and its Subsidiaries have Good, Marketable and Defensible Title to all of its
Oil and Gas Interests. All leases relating to the Oil and Gas Interests are
in
full force and effect, and neither Target nor any Subsidiary has received any
notice of default under any such lease. Target
or
its Subsidiaries own or lease all of the assets necessary to operate and conduct
the Business in a manner consistent with the past and own or lease,
respectively, all of the assets purported to be owned or leased by Target or
its
Subsidiaries, as applicable.
(m) Oil
and
Gas Operations.
To the
knowledge of Target, as to xxxxx not operated by Target or its Subsidiaries,
and
without qualification as to knowledge, as to xxxxx operated by Target or its
Subsidiaries:
(i) As
of the
date of this Agreement, (i) none of the xxxxx included in the Oil and Gas
Interests of Target and its Subsidiaries has been overproduced such that it
is
subject or liable to being shut-in or to any overproduction penalty, (ii)
neither Target nor any Subsidiary has received any deficiency payment under
any
gas contract for which any person has a right to take deficiency gas from Target
and/or any Subsidiary, and (iii) neither Target nor any Subsidiary has received
any payment for production which is subject to refund or recoupment out of
future production;
(ii) There
have
been no changes proposed in the production allowables for any xxxxx included
in
the Oil and Gas Interests of Target and its Subsidiaries that could reasonably
be expected to have a Material Adverse Effect;
(iii) All
xxxxx
included in the Oil and Gas Interests of Target and its Subsidiaries have been
drilled and (if completed) completed, operated, and produced in accordance
with
good oil and gas field practices and in compliance in all material respects
with
applicable oil and gas leases and applicable laws, rules, and regulations,
except where any failure or violation could not reasonably be expected to have
a
Material Adverse Effect;
(iv) Neither
Target nor its Subsidiaries have agreed to nor are they now obligated to abandon
any well operated by it and included in the Oil and Gas Interests of Target
and
its Subsidiaries that is or will not be abandoned and reclaimed in accordance
with applicable laws, rules, and regulations and good oil and gas industry
practices;
12
(v) Proceeds
from the sale of Hydrocarbons produced from and attributable to Target's and
its
Subsidiaries’ Oil and Gas Interests are being received by Target and/or its
Subsidiaries in a timely manner and are not being held in suspense for any
reason (except for amounts, individually or in the aggregate, not in excess
of
$5,000 and held in suspense in the ordinary course of business);
(vi) Subject
to
the terms of Section 4.01(n) below, no person has any call on, option to
purchase, or similar rights with respect to Target's or any Subsidiary’s Oil and
Gas Interests or to the production attributable thereto, and upon consummation
of the transactions contemplated by this Agreement, Parent will have the right
to market production from Target's and its Subsidiaries’ Oil and Gas Interests
on terms no less favorable than the terms upon which Target and its Subsidiaries
are currently marketing such production; and
(vii) All
royalties, overriding royalties, compensatory royalties and other payments
due
from or in respect of production with respect to Target's and its Subsidiaries’
Oil and Gas Interests, have been or will be, prior to the Effective Time,
properly and correctly paid or provided for in all material respects, except
for
those for which Target or any of its Subsidiaries has a valid right to suspend
and for which Target or any of its Subsidiaries has created appropriate suspense
accounts.
(n) Hydrocarbon
Sales and Purchase Agreements.
(i) None
of
the Hydrocarbon Sales Agreements of Target or its Subsidiaries or Hydrocarbon
Purchase Agreements of Target or its Subsidiaries has required, or will require
as of or after the Closing Date, Target, a Subsidiary or Parent (i) to have
sold
or delivered, or to sell or deliver, Hydrocarbons for a price materially less
than the market value price that would have been, or would be, received pursuant
to any arm's-length contract with an unaffiliated third-party purchaser or
(ii)
to have purchased or received, or to purchase or receive, Hydrocarbons for
a
price materially greater than the market value price that would have been,
or
would be, paid pursuant to an arm's-length contract with an unaffiliated
third-party seller;
(ii) Each
of
the Hydrocarbon Agreements of Target or any of its Subsidiaries is valid,
binding, and in full force and effect, and no party is in material breach or
default of any Hydrocarbon Agreement of Target or any of its Subsidiaries,
and
to the knowledge of Target, no event has occurred that with notice or lapse
of
time (or both) would constitute a material breach or default or permit
termination, modification, or acceleration under any Hydrocarbon Agreement
of
Target and its Subsidiaries;
13
(iii) There
have
been no claims from any third party for any price reduction or increase or
volume reduction or increase under any of the Hydrocarbon Agreements of Target
or any of its Subsidiaries, and neither Target nor its Subsidiaries have made
any claims for any price reduction or increase or volume reduction or increase
under any of the Hydrocarbon Agreements of Target and its
Subsidiaries;
(iv) Payments
for Hydrocarbons sold pursuant to each Hydrocarbon Sales Agreement of Target
or
any of its Subsidiaries have been made (subject to adjustment in accordance
with
such Hydrocarbon Sales Agreements) materially in accordance with prices or
price-setting mechanisms set forth in such Hydrocarbon Sales
Agreements;
(v) No
purchaser under any Hydrocarbon Sales Agreement of Target or any of its
Subsidiaries has notified Target or a Subsidiary (or, to the knowledge of
Target, the operator of any property) of its intent to cancel, terminate, or
renegotiate any Hydrocarbon Sales Agreement of Target or any of its Subsidiaries
or otherwise to fail and refuse to take and pay for Hydrocarbons in the
quantities and at the price set out in any hydrocarbon sales agreement, whether
such failure or refusal was pursuant to any force majeure, market out, or
similar provisions contained in such Hydrocarbon Sales Agreement or
otherwise;
(vi) Neither
Target nor any Subsidiary is obligated in any Hydrocarbon Sales Agreement by
virtue of any prepayment arrangement, a “take-or-pay” or similar provision, a
production payment, or any other arrangements to deliver Hydrocarbons produced
from an oil and gas interest of Target or any of its Subsidiaries at some future
time without then or thereafter receiving payment therefor;
(vii) The
information heretofore provided to Parent by Target contains a true and correct
calculation of Target's and its Subsidiaries’ gas balancing positions as of the
dates shown therein; and
(viii) The
Hydrocarbon Agreements of Target or any of its Subsidiaries are of the type
generally found in the oil and gas industry, do not, individually or in the
aggregate, contain unusual or unduly burdensome provisions that would,
individually or in the aggregate, have a Material Adverse Effect, and are in
form and substance considered normal within the oil and gas
industry.
14
(o) Environmental
Matters.
(i) With
respect to environmental matters, (A) the properties and Assets of Target and
its Subsidiaries have not violated and do not violate any order or requirement
of any governmental authority or any Environmental Law, nor are there any
conditions existing on, in, at, under, or about or resulting from the past
or
present operations of the Target’s and its Subsidiaries’ properties and Assets
that may give rise to any on-site or off-site investigation or remedial
obligations under any Environmental Laws, and to Target's knowledge the
ownership and/or operation of Target’s and its Subsidiaries’ properties and
Assets have been in compliance with Environmental Laws; (B) Target’s and its
Subsidiaries’ properties and Assets are not subject to any existing, pending or
threatened notice of violation, action, suit, investigation, inquiry or
proceeding by or before any court, any applicable tribal authority or any other
governmental authority or arbitrator with respect to environmental matters,
nor
has any such notice been issued that has not been fully satisfied and complied
with in a timely manner so as to bring Target’s or its Subsidiaries’ properties
and Assets into full compliance with Environmental Law; (C) no lien, deed notice
or use restriction has been recorded pursuant to any Environmental Law with
respect to Target’s or its Subsidiaries’ properties or Assets; (D) to Target's
knowledge, all notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed in connection with Target’s and its
Subsidiaries’ operations, properties and Assets, including, without limitation,
those relating to the past or present treatment, storage, disposal or release
of
a hazardous substance or solid waste into the environment have been duly
obtained or filed, and Target and its Subsidiaries has been and are in
compliance with the terms and conditions of all such notices, permits, licenses
and, similar authorizations; (E) to Target’s knowledge, all hazardous substances
or solid waste generated at or as a result of Target’s and its Subsidiaries’
operations, properties and Assets have, since the effective date of the relevant
requirements of RCRA, been transported, treated and disposed of only by carriers
maintaining valid authorizations under RCRA and any other Environmental Law
and
only at treatment storage and disposal facilities maintaining valid
authorizations under RCRA and any other Environmental Law, which carriers and
facilities have been and are operating in compliance with such authorizations
and are not the subject of any existing, pending or overtly threatened action,
investigation or inquiry by any governmental authority in connection with any
Environmental Law; (F) neither the Target or its Subsidiaries currently own
or
operate, nor in the past have owned or operated, any property that is on the
United States Environmental Protection Agency’s National Priorities or CERCLIS
list, or any similar list; (G) to Target’s knowledge, no hazardous substance or
solid waste has been disposed of or otherwise released (including without
limitation discharges or releases into pits) and there has been no threatened
release of any hazardous substances or solid waste, on, to, from or as a result
of Target’s and its Subsidiaries’ operations, properties or Assets except in
compliance with Environmental Law, and there are no storage tanks or other
containers on or under any of Target’s and its Subsidiaries’ properties and
assets from which hazardous substances, petroleum products or other contaminants
may be released into the surrounding environment; (H) neither Target nor its
Subsidiaries has owned, operated or leased any real property other than the
properties currently owned, leased or operated; and (I) to Target’s knowledge,
there is no liability (contingent or otherwise) in connection with any release
or threatened release of any hazardous substance or solid waste into the
environment as a result of or with respect to the Assets.
15
(ii) As
used
herein, the term “Environmental
Law”
shall
mean any and all laws, statutes, ordinances, rules, regulations, notices, orders
or determinations of any tribal authority or other governmental authority
pertaining to health or the environment, including, without limitation, the
Clean Air Act, as amended: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”),
as
amended; the Federal Water Pollution Control Act, as amended; the Occupational
Safety and Health Act of 1970, as amended; the Resource Conservation, and
Recovery Act of 1976 (“RCRA”),
as
amended; the Safe Drinking Water Act, as amended; the Toxic Substances Control
Act, as amended; the Hazardous & Solid Waste Amendments Act of 1984, as
amended; the Superfund Amendments and Reauthorization Act of 1986, as amended;
the Hazardous Materials Transportation Act, as amended; any state laws
pertaining to the handling of oil and gas exploration or production wastes
or
the use, maintenance and closure of pits and impoundments; and any other
environmental conservation or protection laws. For purposes of this Agreement,
the terms “hazardous
substance”
and
“release”
(or
“threatened
release”)
have
the meanings specified in CERCLA, and the terms “solid
waste”
and
“disposal”
(or
“disposed”)
have
the meanings specified in RCRA; provided, however, that (A) to the extent the
laws of the jurisdiction wherein any assets are located establish a meaning
for
“hazardous
substance,”
“release,”
“solid
waste”
or
“disposal”
that
is
broader than that specified in either CERCLA or RCRA, such broader meaning
shall
apply and (B) the terms “hazardous
substance”and
“solid
waste”
shall
include all oil and gas exploration and production wastes that may present
an
endangerment to public health or welfare or the environment, even if such wastes
are specifically exempt from classification as hazardous substances or solid
wastes pursuant to CERCLA or RCRA or the state analogues to those statutes.
For
purposes of this Agreement, the term “governmental
authority”
includes
the United States, the state, county, city, tribal and political subdivisions
in
which the Assets are located or which exercises jurisdiction over any of
Target’s and its Subsidiaries’ operations, properties and Assets, and any
agency, department, commission, board, bureau or instrumentality, or any of
them, that exercises jurisdiction over any of the Target’s and its Subsidiaries’
operations, properties and Assets.
(p) Taxes.
(i) Target
and
its Subsidiaries have duly filed all Federal, state, local and other Tax Returns
(as defined below) required to be filed by them, except for Tax Returns for
local or state sales, use or income taxes in respect of which Target and its
Subsidiaries have not been notified of an obligation to file and which,
individually and in the aggregate, the failure to file at the time required
to
be filed will not have a Material Adverse Effect, and have duly paid or made
adequate provision for the payment of all Taxes (as defined below) shown to
be
due thereon. All such Tax Returns are true, correct and, to Target's knowledge,
complete. All assertions of deficiencies or assessments of Taxes due and payable
by Target or any Subsidiary have been paid or provided for or are being
contested in good faith by appropriate proceedings except for deficiencies
or
assertions the non-payment of which would not have a Material Adverse Effect.
To
Target's knowledge, no issue has been raised by the Internal Revenue Service
or
any foreign, state or local taxing authority in any such examination which,
by
application of the same or similar principles, resulted in assessments or
deficiencies for the period so examined or could reasonably be expected to
result in a proposed deficiency for any period not so examined. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal, foreign, state or local income tax return for any
period. The liabilities and reserves for Taxes reflected in the Balance Sheet
were adequate as of the Balance Sheet Date and to Target's knowledge, there
are
no material liens for Taxes upon any property or assets of Target or any
Subsidiary except liens for Taxes not yet due or the validity of which is being
contested in good faith by appropriate proceedings. All Taxes that Target or
any
Subsidiary is required by law to withhold or collect have been duly withheld
or
collected and, to the extent required by law, have been paid to the appropriate
governmental authorities or properly deposited. Neither Target nor any
Subsidiary has, with regard to any assets or property held, acquired or to
be
acquired by any of them, filed a consent to the application of Section 341(f)(2)
of the Code.
(ii) No
foreign, federal, state or local Tax audits or administrative or judicial Tax
proceedings are pending or being conducted with respect to Target or any of
its
Subsidiaries. Neither Target nor any of its Subsidiaries has been a United
States real property holding corporation within the meaning of Code Section
897(c)(2) during the applicable period specified in Code Section
897(c)(1)(A)(ii). Neither Target nor any of its Subsidiaries is a party to
or
bound by any tax allocation or sharing agreement. Neither Target nor any of
its
Subsidiaries (A) has been a member of an affiliated group filing a consolidated
federal income tax return other than a group the common parent of which was
Target or (B) has any liability for the Taxes of any person other than Target
or
its Subsidiaries. Neither Target nor any of its Subsidiaries will be required
to
include any item of income in, or exclude any item of deduction from, taxable
income for any period or portion thereof ending after the Closing Date as a
result of any (1) change in method of accounting, (2) intercompany transaction
or excess loss account or (3) installment sale.
16
(iii) As
used
herein “Taxes”
shall
mean all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales, occupation, use,
service, service use, license, payroll, franchise, transfer and recording taxes,
fees and charges, imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest, liabilities, additional amounts, penalties and additions to
tax.
(iv) The
term
“Tax Return” shall mean any report, return, information return or other document
(including related or supporting Information) filed or required to be filed
by
Target or any of its Subsidiaries with any governmental authority or other
authority in connection with the determination, assessment or collection of
any
Tax (whether or not such Tax is imposed on Target or its Subsidiaries) or the
administration of any law, regulation or administrative requirements relating
to
any Tax.
(q)
Insurance. Each insurance policy maintained by Target and its
Subsidiaries covering Target, the Subsidiaries and their respective business,
employees, agents and assets, copies of which have been provided to Parent,
is
in full force and effect and is reasonable in coverage and amount in relation
to
the risks to which Target, its Subsidiaries and their respective employees,
businesses, properties and other assets may be exposed in the operation of
its
business prior to the Closing. None of such policies shall, pursuant to their
terms, in any way be affected by or terminate or lapse by reason of this
Agreement or the Merger. No notice of cancellation or termination has been
received with respect to any such policy.
(r)
Brokerage Fees and Commissions. No person is entitled to receive from
Target or its Subsidiaries any investment banking, brokerage or finder's
fee in
connection with this Agreement or the transactions contemplated
hereby.
(s)
Contracts. All of Target’s and its Subsidiaries’ Contracts are valid and
binding obligations of Target and its Subsidiaries and, to the knowledge
of
Target, of the other respective parties thereto. Target and its Subsidiaries
have duly performed their respective obligations under all Contracts and,
to the
knowledge of Target, each other party thereto has performed its obligations
thereunder. Neither Target, its Subsidiaries nor any other party is in breach
of
any term or provision of any Contract.
17
(t)
SEC
Registration Status. Target and its Subsidiaries are not required to file
and do not file any periodic or other reports under the Securities Act of
1933,
as amended (the “Securities Act”), or the Exchange Act.
(u)
Affiliated Transactions. There are no Contracts or other material
transactions or agreements between Target or any of its Subsidiaries, on
the one
hand, and any (a) officer or director of Target or of any of its Subsidiaries;
(b) Major Shareholder; or (c) affiliate of any such officer, director or
Major
Shareholder.
(v) Internal
Controls.
Target
and its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (a) transactions are executed
in
accordance with management's general or specific authorizations; (b)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability; (c)
access to assets is permitted only in accordance with management's general
or
specific authorization; and (d) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(w)
Employee Matters. Target and its Subsidiaries (i) are in compliance with
all applicable federal, state and foreign laws, rules, and regulations
respecting employment, employment practices, terms and conditions of employment,
and wages and hours, in each case, with respect to employees of any of them;
(ii) have withheld all amounts required by law or by agreement to be withheld
from the wages, salaries, and other payments to employees of any of them; (iii)
are not liable for any arrears of wages or any taxes or any penalty for failure
to comply with any of the foregoing; and (iv) other than routine payments to
be
made in the normal course of business and consistent with past practice, are
not
liable for any payment to any trust or other fund or to any governmental or
administrative authority, with respect to unemployment compensation benefits,
Social Security, or other benefits for employees of any of them. Neither Target
nor its Subsidiaries have any employment agreement or similar agreement with
any
employee or consultant of Target or a Subsidiary; provided, however, Xxxxx
has
an agreement with one of its employees to pay that employee ten percent (10%)
of
the annual net profits of Xxxxx. Neither Target nor any of its Subsidiaries
is a
party to any collective bargaining or other union contract. There is no pending
nor, to the knowledge of Target, any threatened, grievance, or litigation
relating to labor, safety, or discrimination matters involving any employee
of
Target or any of its Subsidiaries which would reasonably be likely to have
a
Material Adverse Effect. Neither the execution and delivery of this Agreement
or
the Merger nor the consummation of the transactions contemplated hereby or
thereby will constitute a “change of control” or similar event under
any employment or severance plan, program, agreement or other arrangement with
Target or any of its Subsidiaries. No employee of Target or any of its
Subsidiaries, to Target’s knowledge, is in violation of any term of any
non-competition agreement, or any restrictive covenant to a former employer
relating to the right of any such employee to be employed by Target or any
of
its Subsidiaries because of the nature of the business conducted or presently
proposed to be conducted by Target or any of its Subsidiaries or relating to
the
use of trade secrets or proprietary information of others.
18
(x)
Employee Plans. Neither Target nor any of its Subsidiaries maintains any
plans which would be considered an “employee benefit plan” under the Employee
Retirement Income Security Act of 1974, as amended. Target and its Subsidiaries
maintain a medical insurance plan and a term life insurance plan for its
employees (the “Employee Plans”). Each Employee Plan has been
maintained and operated in all material respects in accordance with its terms
and with the provisions of applicable law. All insurance premiums and other
payments required to be made to or under each Employee Plan with respect to
all
periods prior to the Closing have been made or provided for. Each Employee
Plan
may be unilaterally terminated or amended by Target or a Subsidiary at any
time.
The consummation of the transactions contemplated by this Agreement will not
(either alone or in conjunction with another event, such as a termination of
employment or other services) entitle any employee or other person to receive
severance or other compensation which would not otherwise be payable absent
the
consummation of the transactions contemplated by this
Agreement.
(y) Bank
Accounts.
Schedule
4.01(y) contains a true, correct and complete list of the names and locations
of
all banks, trust companies, savings and loan associations and other financial
institutions at which Target and its Subsidiaries maintain safe deposit boxes
or
accounts of any nature and the names of all Persons authorized to draw thereon,
make withdrawals therefrom or have access thereto.
(z) Accuracy
of Information.
All of
the information, reports and other data furnished to Parent by or on behalf
of
Target or its Subsidiaries in connection with the transactions contemplated
by
this Agreement is and will be accurate and complete in all material respects
at
the time so furnished, and none of such information contains or will contain
any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements contained therein, under the circumstances in which
they
are made, not misleading. The information supplied by Target for inclusion
in
the proxy statement to be supplied by Parent to its shareholders shall not
at
the time the proxy statement is mailed to Parent’s shareholders contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the proxy statement or necessary in order to make statements
in
the proxy statement, in light of the circumstances under which they were made,
not misleading, and the information included or supplied by on or behalf of
Target for inclusion in any filing pursuant to Rule 165 and Rule 425 under
the
Securities Act or Rule 14a-12 under the Exchange Act (each a “Regulation
M-A Filing”),
shall
not, on the date the proxy statement is first mailed to shareholders of Parent,
at the time such Regulation M-A Filing is filed with the SEC, at the time of
the
Parent shareholders’ meeting and at the Effective Time contain any statement
that, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or omit to
state
any material fact necessary in order to make the statements made in the proxy
statement not false or misleading, or omit to state any material fact necessary
to correct any a statement in any earlier communications with respect to the
solicitation for proxies for the Parent shareholders’ meeting that has become
false or misleading.
19
4.02 Representations
and Warranties of Parent.
Parent
represents and warrants to Target that the following are true and correct on
the
date of this Agreement and will be true and correct as of the Effective
Time:
(a) Organization
and Qualification.
Parent
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Delaware and has the requisite corporate power to carry
on
its business as it is now being conducted. The copies of the Certificate of
Incorporation and Bylaws of Parent previously delivered to Target are true,
complete and correct as of the date hereof.
(b) Authority
Relative to this Agreement.
Except
for the required approval of Parent’s shareholders to be obtained pursuant to
this Agreement prior to the Effective Time, Parent has all requisite corporate
power and authority to execute and deliver this Agreement and to consummate
the
transactions contemplated hereby. The execution and delivery by Parent of this
Agreement and the consummation by Parent of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of Parent,
and
except for the required approval of Parent’s shareholders, no other corporate
proceedings on the part of Parent is necessary to authorize this Agreement
or to
consummate the transactions so contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by Parent and, assuming this
Agreement constitutes a valid and binding obligation of Target, this Agreement
constitutes a valid and binding agreement of Parent, enforceable against Parent
in accordance with its terms, except as limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights and
by
general equitable principles.
(c) Shareholder
Materials.
None of
the information supplied by Parent and its affiliates specifically for inclusion
in the letter to shareholders, notice of meeting (if applicable), proxy or
information statement or proxy (if applicable) sent by Target to its
Shareholders shall, at the time such materials are mailed, at the time of the
meeting (if applicable) or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied by Parent and its affiliates specifically in connection
with the Merger shall, at the respective time such documents are supplied,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d)
Consents and Approvals; No Violation. Neither the execution and delivery
of this Agreement by Parent nor the consummation of the transactions
contemplated hereby will, so long as the required approval of Parent’s
shareholders is obtained, (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of Parent, or any other
similar governing documents of any subsidiary of Parent; (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, except the filing of the Articles
of Merger pursuant to the NRS and the DGCL or where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or
notification, would not prevent or delay consummation of the Merger or would
not
otherwise prevent Parent from performing its obligations under this Agreement;
(iii) result in a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, license, agreement or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or any of their respective assets may be bound, except for such
defaults (or rights of termination, cancellation or acceleration) as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not result in a material adverse effect on Parent; or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any of its subsidiaries or any of their respective assets, except for
violations which would not result in a material adverse effect on
Parent.
20
(e) Financing.
Parent
has, and at the Effective Time will have, the funds necessary to consummate
the
Merger and the transactions contemplated thereby, and to pay related fees and
expenses. Obtaining financing is not a condition to Parent’s obligation under
this Agreement.
(f) Prior
Activities.
Neither
Parent nor any subsidiary of Parent has incurred, or will incur, directly or
through any subsidiary, any material liabilities or obligations, except those
incurred in connection with their respective organization or with the
negotiation of this Agreement or the performance hereof, and the financing
of
the Merger and the consummation of the transactions contemplated hereby and
thereby and obligations to brokers. Except as contemplated by the foregoing,
neither Parent nor any subsidiary of Parent has engaged directly or through
any
subsidiary, in any business activities of any type or kind whatsoever, or
entered into any agreements or arrangements with any person, or is subject
to or
bound by any obligation or undertaking.
21
ARTICLE
5
Covenants
5.01
Conduct of Business of Target. Except as contemplated by this Agreement,
during the period from the date of this Agreement to the Effective Time,
Target
and its Subsidiaries shall each (a) conduct its operations according to its
ordinary and usual course of business and consistent with past practice,
including, without limitation, continue its current drilling and workover
program without cost xxxx-up or promotion charges being added to capital
or
workover related costs, or for additional reserves resulting from the drilling
or workover operations; (b) use its best efforts to preserve intact its business
organization and assets in all material respects, and maintain satisfactory
relationships with suppliers, distributors, customers, banks and others having
business relationships with them; (c) confer on a regular and frequent basis
with one or more representatives of Parent to report operational matters
of a
material nature and the general status of ongoing operations; and (d) notify
Parent of any emergency or other change in the normal course of its business
or
its Subsidiaries' businesses or in the operation of its properties or its
Subsidiaries' properties and of any governmental complaints, investigations
or
hearings (or communications indicating that the same may be contemplated).
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement, neither Target nor any of its
Subsidiaries, as the case may be, shall, without the prior written consent
of
Parent, (i) issue, sell or pledge, or commit, authorize or propose the issuance,
sale or pledge of (A) additional shares of capital stock of any class (including
the Shares), or securities convertible into any such shares, or any rights,
warrants or options to acquire any such shares or other convertible securities,
or grant or accelerate any right to convert or exchange any securities of
Target
for Shares, or (B) any other securities in respect of, in lieu of or in
substitution for Shares outstanding on the date thereof; (ii) purchase or
otherwise acquire, or propose to purchase or otherwise acquire, any of its
outstanding securities (including the Shares); (iii) split, combine or
reclassify any shares of its capital stock, or redeem or otherwise acquire
any
of its securities; (iv) declare or pay any dividend or distribution on any
shares of capital stock of Target; (v) make any acquisition of a material
amount
of assets or securities, any disposition of a material amount of assets or
securities or any material change in its capitalization, or enter into a
material contract or release or relinquish any material contract rights not
in
the ordinary course of business; (vi) incur any long-term debt for borrowed
money or short-term debt for borrowed money; (vii) assume, guarantee, endorse
or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person; (viii) make any loans,
advances (other than advances to employees for travel and entertainment in
the
ordinary course of business) or capital contributions to, or investments
in, any
other person; (ix) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, contingent or otherwise), other than when
due;
(x) waive, release, grant or transfer any rights of value or modify or change
in
any material respect any existing material license, lease, contract or other
agreement or arrangement; (xi) other than in the ordinary course of business
and
consistent with past practice and not in an amount in excess of $50,000 or
other
than capital expenditures budgeted for the current period, make any capital
expenditures or commitments for capital expenditures; (xii) acquire, sell,
lease
or dispose of (directly or by merger, consolidation or other business
combination) any assets outside the ordinary course of business or any material
assets, or enter into any commitment or transaction outside the ordinary
course
of business or adopt a plan of liquidation or resolutions providing for its
liquidation, dissolution, merger, consolidation or other reorganization;
(xiii)
propose or adopt any amendments to its Articles of Incorporation or Bylaws;
(xiv) enter into any new employment agreement with any officer, director
or
employee or grant any material increase in the compensation or benefits to
any
officer, director or employee; (xv) take any action to terminate any of its
employee benefit plans; (xvi) take any action with respect to the grant of
any
severance or termination pay (otherwise than pursuant to written policies
or
consistent with written practices in effect prior to the date hereof) or
with
respect to any increase of benefits payable under its written severance or
termination pay practices in effect on the date hereof; (xvii) adopt or amend
any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund, plan or arrangement for the benefit or welfare of any employee
or
pay any benefit not required by any existing plan or arrangement (including,
without limitation, the granting of stock options, stock appreciation rights,
shares of restricted stock or performance units); (xviii) file any consolidated
Federal Tax Return relating to Taxes or income other than a Federal Tax Return
to be filed by Target on or before January 15, 2007, in respect of federal
income taxes for the fiscal year ended April 30, 2006; (xix) materially change
accounting policies or procedures or any of its methods of reporting income,
deductions or other material items for income tax purposes, except as required
by GAAP or applicable law; or (xx) agree in writing or otherwise to take
any of
the foregoing actions or any action which would make any representation or
warranty in this Agreement untrue or incorrect.
22
5.02 Section
338 Election.
Parent
accepts the tax basis in the assets of Target and its Subsidiaries, and neither
Parent nor any affiliate or successor thereof shall at any time following the
Effective Time make an election to take a “step-up” in basis pursuant to Section
338 of the Code.
5.03 Reimbursement
of Capital and Workover-Related Expenditures.
At
Closing, Parent shall reimburse Target for all capital and workover-related
costs and expenditures incurred by Target, not to exceed an average of Seven
Hundred Thousand and No/100 Dollars ($700,000.00) per month for the period
from
January 1, 2006, to the Effective Time. The request for reimbursement made
by
Target to Parent shall be accompanied by an itemized list of the expenditures
for which the request for reimbursement is being made.
5.04 Working
Capital Requirement.
As of
the Effective Time, Target and its Subsidiaries shall have at least Five Million
and No/100 Dollars ($5,000,000.00) of working capital that shall include, but
is
not limited to, rights to unpaid reimbursements pursuant to Section 5.03 of
this
Agreement (the “Working
Capital Requirement”).
In the
event that Target and its Subsidiaries have less than the Working Capital
Requirement at the Effective Time, the Major Shareholders shall be severally,
in
the proportions set forth in Annex “A” attached to this Agreement and made a
part hereof for all purposes, responsible to Parent for payment of the
shortfall, but in the event that, at the Effective Time, Target and its
Subsidiaries have more than the Working Capital Requirement, Parent shall be
responsible to the Major Shareholders for payment of the excess. Working capital
is defined as current assets less current liabilities determined in accordance
with GAAP.
5.05
No
Solicitation. Target and its Subsidiaries shall not, and shall cause their
officers, directors, employees, investment bankers, representatives, agents
and
affiliates not to, directly or indirectly, (a) encourage, solicit, initiate
or
participate in any way in any discussions or negotiations with, or encourage
any
inquiry or proposal from, any person (other than Parent or any affiliate of
Parent) concerning or in respect of any merger, sale of substantial assets,
sale
of shares of capital stock or similar transactions involving Target or any
Subsidiary or division of Target; (b) disclose, directly or indirectly, any
information not customarily disclosed to any person concerning its business
or
properties, afford to any other person access to their properties, books or
records or otherwise assist or knowingly encourage any person in connection
with
any of the foregoing; or (c) amend or waive compliance with any confidentiality
agreement between Target and any other person; provided, however, that nothing
contained in this Section 5.05 shall prohibit Target or its Board of Directors
from taking and disclosing to Target's shareholders a position with respect
to a
tender offer by a third party or from making such disclosure to Target's
shareholders which, in the judgment of the Board of Directors with the advice
of
counsel, may be required under applicable law. Target will promptly communicate
to Parent the terms of (including delivery of copies thereof) (i) any proposal
or inquiry which it may receive in respect of any such transaction, (ii) any
such information requested from it or (iii) any such negotiations or discussions
being sought to be initiated with Target.
23
5.06 Access
to Information.
(a) Target
will (i) give Parent and its authorized representatives access during regular
business hours upon reasonable notice to all of the Assets
and
books and records of Target and its Subsidiaries, (ii) permit Parent to make
such inspections as it may require and (iii) cause its officers and those of
its
Subsidiaries to furnish Parent with such financial and operating data and other
information with respect to the Business and the Assets of Target and its
Subsidiaries as Parent may from time to time request.
(b) If
Parent
discovers anything in connection with its due diligence examination of the
Business, the Assets or the liabilities of Target or its Subsidiaries that,
if
not cured, would cause Parent to terminate this Agreement, Parent shall advise
Target of such matter and give Target a reasonable opportunity to cure the
matter before exercising any termination rights Parent may have under this
Agreement.
(c) No
investigation by Parent shall affect, add to or subtract from any
representations or warranties or the conditions to the obligations of the
parties hereto.
5.07 Reasonable
Best Efforts; Proxy Statements; Board Recommendations.
Subject
to the terms and conditions herein, each of the parties hereto agrees to use
its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including, if required, properly
holding shareholder meetings in accordance with applicable law and filing any
and all proxy statements and related materials with the United States Securities
and Exchange Commission (“SEC”).
In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers
and
directors of each party to this Agreement shall take all such necessary action.
In addition, as promptly as practicable after the execution of this Agreement,
Target and Parent shall each prepare and, if required, file with the SEC a
proxy
statement to be sent to their respective shareholders in connection with the
each shareholder meeting.
5.08 Public
Announcements.
From the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, no party will issue or cause the publication
of
any press release or other public announcement with respect to this Agreement
or
the agreements ancillary hereto or the transactions contemplated hereby or
thereby without the prior consent of Parent (in the case of Target and the
Major
Shareholders) or Target (in the case of Parent); provided, however, that (i)
nothing herein will prohibit any party from issuing or causing publication
of
any such press release or public announcement to the extent that such party's
counsel determines such action to be required by or reasonably prudent in order
to comply with, applicable law (including the Securities Act and the Exchange
Act), or the regulations of any government agency or self-regulating
organization in which case the party making such determination will, if
practicable in the circumstances, use reasonable efforts to allow the other
parties reasonable time to comment on such release or announcement in advance
of
its issuance; and (ii) any party may disclose this Agreement and the agreements
ancillary hereto and the transactions contemplated hereby or thereby to third
parties in connection with securing consents of such third parties and in
connection with any permits, approvals, filings or consents required by law
to
be obtained. To the extent feasible, prior to the Closing, all press releases
or
other announcements or notices regarding the transactions contemplated by this
Agreement or the agreements ancillary hereto shall be made jointly by Target
and
Parent.
24
5.09 Other
Actions.
No party
shall knowingly take any action, except in every case as may be required by
applicable law, that would or is intended to result in (i) any of its
representations and warranties set forth in this Agreement that are qualified
as
to materiality being or becoming untrue, (ii) any of such representations and
warranties that are not so qualified becoming untrue in any manner having a
material adverse effect, (iii) any of the conditions set forth in this Agreement
not being satisfied or in a violation of any provision of this Agreement, (iv)
adversely affect the ability of any party to perform its covenants and
agreements under this Agreement, or (v) adversely affecting the ability of
any
of them to obtain any of the consents or approvals required from any
governmental authorities as a condition to Closing.
5.10 Proxy
Statement.
Target
and its Subsidiaries shall supply such information as is reasonably requested
by
Parent for inclusion in Parent’s proxy statement to be filed with the SEC.
Target shall take such action as may be necessary to ensure that (i) the
information supplied by Target for inclusion in the proxy statement shall not
at
the time the proxy statement is mailed to Parent’s shareholders contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the proxy statement or necessary in order to make statements
in
the proxy statement, in light of the circumstances under which they were made,
not misleading, (ii) the information included or supplied by on or behalf of
Target for inclusion in any Regulation M-A Filing shall not, on the date the
proxy statement is first mailed to shareholders of Parent, at the time such
Regulation M-A Filing is filed with the SEC, at the time of the Parent
shareholders’ meeting and at the Effective Time contain any statement that, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the proxy
statement not false or misleading, or omit to state any material fact necessary
to correct any a statement in any earlier communications with respect to the
solicitation for proxies for the Parent shareholders’ meeting that has become
false or misleading. If at any time prior to the Effective Time any event
relating to Target or any of its affiliates, officers, or directors is
discovered by Target that should be set forth in an amendment or a supplement
to
the proxy statement, Target shall promptly so inform Parent.
25
5.11 Standstill
Agreement.
In
recognition and consideration of the fact that the Target and its management
and
its Major Shareholders have and will invest substantial time and effort in
connection with the transactions contemplated by this Agreement and, in
addition, will be foregoing other opportunities to dispose of Target or its
Oil
and Gas Interests, Parent agrees that it will not, for so long as this Agreement
is in effect, enter into any agreements or permit its representatives to enter
into any agreements with any other person or entity for the acquisition of
other
Oil and Gas Interests or any equity in any entity which owns Oil and Gas
Interests which requires a closing earlier than the Closing Date of this
Agreement.
ARTICLE
6
Conditions
to Consummation of the Merger
6.01 Conditions
to Each Party's Obligation to Effect the Merger.
The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of
the
following conditions:
(a)
No
statute, rule, regulation, executive order, decree or injunction or other
legal
restraint shall have been enacted, entered, promulgated or enforced by any
court
or other governmental authority which is in effect and has the effect of
prohibiting the consummation of the Merger;
(b) All
approvals (including permits) of, and consents by, all federal, state, local
and
foreign governmental agencies and authorities and all filings with and
submissions to all such agencies and authorities as may be required for the
consummation of the Merger shall have been obtained or made (including any
filings required by the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976,
as
amended, and any waiting period relating thereto shall have expired or been
terminated); and
(c) In
connection with the Merger and the other transactions contemplated hereby
and
without limiting the foregoing, each of the parties hereto shall have taken
all
action necessary to ensure that (i) no Takeover Statute or similar law is
or
becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby, or (ii) if any Takeover Statute or similar
law
becomes applicable to the Merger, this Agreement or any of the other
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated by this Agreement and otherwise to minimize the
effect
of such law on the Merger and the other transactions contemplated by this
Agreement.
6.02 Conditions
to Obligations of Parent to Effect the Merger.
The
obligation of
Parent
to effect the Merger is further subject to the satisfaction on or prior to
the
Effective Time, of the conditions that:
26
(a)
All
representations and warranties of Target contained in this Agreement (including
the Disclosure Schedule hereto) shall be true and correct as of the date
when
made and on and as of the Closing Date;
(b)
Target
and the Major Shareholders, respectively, shall have performed and complied
with
all agreements, covenants and conditions required by this Agreement to be
performed and complied with by Target or any Major Shareholder prior to or
on
the Closing Date;
(c)
Any
consent from any Party that under any Contract could terminate by reason
of the
transactions contemplated hereby shall have been delivered to Parent and
shall
be in form and substance reasonably satisfactory to Parent;
(d)
Parent
shall have received the opinion of counsel to Target, dated as of the Closing
Date, in substantially the form of Annex “B” attached hereto and made a part
hereof for all purposes;
(e)
All
corporate and other proceedings taken or required to be taken in connection
with
the transactions contemplated hereby and all documents incident thereto shall
be
reasonably satisfactory in form and substance to Parent and its counsel,
and
counsel to Parent shall have received all such information and such counterpart
originals or certified or other copies of such documents as Parent or its
counsel may reasonably request. Parent shall have received such other
instruments, approvals and other documents as it may reasonably request to
make
effective the transactions contemplated hereby;
(f)
Subject to Section 5.06(b) of this Agreement, Parent shall be satisfied in
its
sole discretion, with its legal, financial, geological and business
investigations of the Business, the Assets and the liabilities (other than
liabilities of Target [and not its Subsidiaries] arising from breaches of
(i)
Sections 4.01(b); (ii) and 4.01(i) hereof involving matters occurring prior
to
March 22, 2005) of Target and its Subsidiaries;
(g)
Since
the Balance Sheet Date, there shall have been no change in the Business,
operations, Assets, results of operations or condition (financial or otherwise)
of Target and its Subsidiaries that has had or could reasonably be expected
to
have a Material Adverse Effect;
(h)
Parent
shall have received audited financial statements for the periods ended December
31, 2005, together with such other financial statements and data as shall
be
reasonably requested in order to enable Parent to satisfy its financial
reporting obligations under the Federal securities laws, which financial
statements shall comply with Regulation S-X under the Securities Act;
(i)
The
Merger shall have been duly approved by the requisite vote under applicable
law
and Parent’s certificate of incorporation by the shareholders of Parent at a
duly held meeting and the shareholders of Parent owning twenty percent (20%)
or
more of the shares sold in Parent’s initial public offering shall not have
exercised their conversion rights as described in the Parent’s Prospectus dated
October 24, 2005;
27
(j)
Parent
shall have filed its proxy statement relating to the Merger with and had
same
cleared by the SEC, and such proxy statement shall have been properly mailed
to
Parent’s shareholders; and
(k) Parent
and
its counsel shall have received a certificate of the President and Treasurer
of
Target dated the Closing Date and certifying that the conditions set forth
in
Sections 6.02(a) and 6.02(b) hereof have been satisfied. Such certificate
shall
be in form and substance reasonably satisfactory to Parent.
6.03 Conditions
to Obligation of Target to Effect the Merger.
The
obligation of
Target
to effect the Merger is further subject to the satisfaction on or prior to
the
Effective Time, of the conditions that:
(a) All
representations and warranties of Parent contained in this Agreement shall
be
true as of the date when made and on and as of the Closing Date;
(b) Parent
shall have performed and complied with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by it prior to
or
on the Closing Date;
(c) All
corporate and other proceedings taken or required to be taken in connection
with
the transactions contemplated hereby and all documents incident thereto shall
be
reasonably satisfactory in form and substance to Target and its counsel, and
counsel to Target shall have received all such information and such counterpart
originals or certified or other copies of such documents as Target or its
counsel may reasonably request. Target shall have received such other
instruments, approvals and other documents as it may reasonably request to
make
effective the transactions contemplated hereby;
(d) Target
shall have received a certificate of the President and Treasurer of Parent
dated
the Closing Date and certifying that the conditions set forth in Sections
6.03(a) and 6.03(b) hereof have been satisfied. Such certificate shall be in
form and substance reasonably satisfactory to Target; and
(e) The
Merger
shall have been duly approved by the requisite vote under applicable law and
Parent’s certificate of incorporation by the shareholders of Parent at
a duly
held meeting or by written consent.
28
ARTICLE
7
Termination;
Amendment; Waiver
7.01 Termination.
This
Agreement may be terminated and the Merger contemplated hereby may be abandoned
at any time notwithstanding approval thereof by the shareholders of Target,
but
prior to the Effective Time:
(a) By
mutual
written consent duly authorized by the Boards of Directors of Target and Parent;
or
(b) By
Parent
or Target if any court of competent jurisdiction or other government body shall
have issued an order, decree or ruling, or taken any other action, restraining,
enjoining or otherwise prohibiting the Merger and such order, decree, ruling
or
other action shall have become final and nonappealable; or
(c) By
Parent
or Target if the Merger has been submitted to a vote and not approved by the
requisite vote of the respective shareholders of Target or Parent;
or
(d) By
either
of
Parent or Target if the Effective Date has not occurred by July 1, 2006;
or
(e) By
Parent,
at any time prior to the Closing Date, if (i) it has complied with Section
5.06(b) of this Agreement and if it then believes, in its sole judgment, that
the conditions set forth in Section 6.02(f) shall not have been or will not
be
able to be fulfilled; or (ii) any credible claim of liability made against
Target [and not its Subsidiaries] in excess of Fifteen Million and No/100
Dollars ($15,000,000.00) that arises from breaches of (A) Sections 4.01(b)
hereof; or (B) 4.01(i) hereof involving matters occurring prior to March 22,
2005.
The
termination of this Agreement pursuant to this Section 7.01 shall become
effective on the date (the “Termination
Date”)
the
consent is executed in the case of a termination pursuant to Section 7.01(a)
or
notice is given by the terminating party to the other parties hereto in the
case
of a termination pursuant to Section 7.01(b), (c), (d) or (e).
7.02 Effect
of Termination.
In the
event of the termination and abandonment of this Agreement pursuant to Section
7.01 hereof, this Agreement, except for the provisions of Section 5.05 and
Section 9.09, shall forthwith become void and have no effect, without any
liability on the part of any party or its directors, officers or shareholders.
Nothing in this Section 7.02 shall relieve any party to this Agreement of
liability for breach of this Agreement.
7.03 Amendment.
This
Agreement may be amended by an instrument in writing executed by or on behalf
of
each party hereto which has been duly approved by the Boards of Directors of
Target and Parent at any time before or after approval of this Agreement by
the
respective shareholders of Parent and Target. This Agreement may not be amended
except by an instrument in writing signed by or on behalf of all the
parties.
29
7.04 Extension;
Waiver.
At any
time prior to the Effective Time, the parties hereto, by written action
taken by or on behalf of the respective Boards of Directors, may (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 contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable party;
or (iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of any party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf
of
such party.
ARTICLE
8
Indemnification
8.01
Indemnification
by Major Shareholders.
(a) Subject
to
the terms and conditions of this Section 8.01, the Major Shareholders (the
“Indemnifying
Parties”)
agree
to indemnify, defend, and hold harmless Parent and Acquisition Sub and their
respective officers, directors, employees , agents and representatives (the
“Indemnified
Parties”)
with
respect to any and all demands, claims, actions, suits, proceedings,
assessments, judgments, costs, losses, damages, obligations, liabilities,
recoveries, deficiencies, and expenses (including interest, penalties and
reasonable attor-neys' fees) of every kind and description (collectively,
“Damages”)
relating to or arising out of (i) any inaccurate representation made by Target
in this Agreement, (ii) any breach of any warranties made by Target in this
Agreement; or (iii) conversion of Target Common Shares contemplated under
Section 3.01 of this Agreement.
(b) For
purposes of administering the indemnification provisions set forth in this
Section 8.01, the following procedure shall apply:
(i) Whenever
a
claim for Damages for or in respect of which indemnification is sought (a
“Claim”)
shall
arise under this Section 8.01, the Indemnified Parties shall promptly and in
no
event later than ten (10) days after becoming aware of such a Claim, give
written notice to the Indemnifying Parties setting forth in reasonable detail,
to the extent then available, the facts concerning the nature of such Claim
and
the basis upon which the Indemnified Parties believes that it is entitled to
indemnification hereunder, provided that the Indemnified Parties’ failure to do
so shall not preclude it from seeking indemnification hereunder unless such
failure has materially prejudiced the Indemnifying Parties’ ability to defend
such Claim.
(ii) In
the
event of any Claim hereunder resulting from or in connection with any Claim
brought by a third party, the Indemnifying Parties shall be entitled, at its
sole expense, either:
30
(A) to
participate therein, or
(B) to
assume
the entire defense thereof with counsel who is selected by it and who is
reasonably satis-fac-tory to the Indemnified Parties, provided that the
Indemnifying Parties agree in writing that they do not and will not contest
their responsibility for indemnifying the Indemnified Parties in respect of
such
Claim, and no settlement shall be made without the prior written consent of
the
Indemnified Parties which shall not be unreasonably withheld (except that no
such consent shall be required if the claimant is entitled under the settlement
to only monetary damages to be paid solely by the Indemnifying Parties). If,
however, the Claim would, if successful, result in the imposition of Damages
for
which the Indemnifying Parties would not be solely responsible hereunder, or
representation of both parties by the same counsel would otherwise be
inappropriate due to actual or potential differing interests between them,
then
the Indemnify--ing Parties shall not be entitled to assume the entire defense
and each party shall be entitled to retain counsel (at their own expense) who
shall cooperate with one another in defending against such Claim.
(iii) If
the
Indemnifying Parties do not choose to defend against a Claim by a third party,
the Indemnified Parties may defend against such Claim in such manner as it
deems
appropriate or settle such Claim (after giving notice thereof to the
Indemnifying Parties) on such terms as the Indemnified Parties may deem
appropriate, and the Indemnified Parties shall be entitled to periodic
reimbursement of expenses incurred in connection therewith and prompt
indemnification from the Indemnifying Parties, including without limitation
reasonable attorneys' fees, in accordance with this Section 8.01.
(iv) The
Indemnifying Parties will not, without the Indemnified Parties’ written consent,
settle or compromise any Claim or consent to any entry of judgment which does
not include, as an unconditional term thereof, the giving by the claimant to
the
Indemnified Parties of a release from all liability with respect to such Claim.
The Indemnifying Parties shall not be deemed to have notice of any Claim by
reason of any knowledge acquired on or prior to the Closing Date unless express
evidence is available establishing actual notice to one or more of the
Indemnifying Parties.
(c) Except
with respect to a Claim relating to (i) conversion of Target Common Shares
contemplated under Section 3.01 hereof; or (ii) liabilities of Target (and
not
its Subsidiaries) arising from breaches of (A) Section 4.01(b) hereof; or (B)
Section 4.01(i) hereof involving matters occurring prior to March 22, 2005
(which shall not be subject to the financial limitations set forth in
subsections (i) and (ii) below), the indemnification obligations of Indemnifying
Parties pursuant to this Section 8.01 shall be subject to the following
limitations and provisions:
31
(i) No
indemnification shall be required to be made by Indemnifying Party pursuant
to
Section 8.01(a) with respect to any Claim, unless and until the aggregate amount
of Damages incurred by the Indemnified Parties with respect to all of its Claims
(whether asserted, resulting, arising, imposed or incurred before, on or after
the Closing Date) exceed Five Million and No/100 Dollars ($5,000,000.00) (the
“Threshold”),
it
being agreed and understood that, if such amount is exceeded, the Indemnifying
Parties shall be liable only to the extent such aggregate Damages exceed Five
Million and No/100 Dollars ($5,000,000.00), subject to the limitations set
forth
in this Section 8.01(c).
(ii) The
Indemnifying Parties shall not be required to indemnify Parent, or be otherwise
liable in any way whatsoever to the Indemnified Parties, for any Damages that
are subject to indemnification by the Indemnifying Parties under this Section
8.01 in excess of Ten Million and No/100 Dollars ($10,000,000.00) in total
amount.
(iii) The
indemnification obligations of the Indemnifying Parties pursuant to Section
8.01
shall be limited to actual damages and shall not include incidental,
consequential, indirect, punitive or exemplary damages or investigative
costs.
(iv) As
a
material inducement to the Indemnifying Parties to provide this indemnification,
Parent hereby agrees and acknowledges, on behalf of itself and the other
Indemnified Parties, that in relation to any breach of any representation or
warranty made by Target pursuant to this Agreement the sole and exclusive relief
and remedy available to the Indemnified Parties, in respect of said breach
shall
be to seek indemnification from the Indemnifying Parties for Damages to the
extent properly claimable and as limited pursuant to the provisions of this
Section 8.01.
(v) Each
Indemnifying Party shall be liable to the Indemnified Parties in accordance
with
the provisions of this Section 8.01 severally in the proportions set forth
in
Annex “A.”
(d) Except
with respect to inaccurate representations or breaches of warranties set forth
in Sections 4.01(b) and 4.01(i) hereof relating to Target (and not its
Subsidiaries) involving matters occurring prior to March 17, 2005 (which shall
survive indefinitely), the representations and warranties of Target contained
in
this Agreement and the related indemnity obligations of the Indemnifying Parties
contained in this Section 8.01 shall terminate on, and no action or claim with
respect thereto may be brought after, the first anniversary of the Closing
Date.
8.02 Indemnification
by Parent.
Parent
agrees to indemnify, defend, and hold harmless Target, its Subsidiaries and
the
Major Shareholders with respect to any and all Damages relating to or arising
out of its transactions and agreement with Xxxxx Xxxxxx and his affiliates.
For
purposes of this Section 8.02, the indemnification procedures described in
Section 8.01(b) shall apply. The indemnification obligation of Parent described
in this Section 8.02 shall terminate on, and no action or claim with respect
thereto may be brought after, the first anniversary of the Closing Date.
32
ARTICLE
9
Miscellaneous
9.01 Survival
of Representations and Warranties.
Unless
otherwise specifically provided to the contrary or unless the text of this
Agreement clearly indicates otherwise, the representations, warranties,
covenants and agreements made by any party to this Agreement shall not survive
after the Effective Time. This Section 9.01 shall not (a) limit any covenant
or
agreement of the parties hereto which by its terms contemplates performance
after the Effective Time, or (b) relieve a party from liability in the event
such party fails to perform, or breaches, any of its obligations under this
Agreement.
9.02 Entire
Agreement; Assignment.
This
Agreement (a) constitutes the entire agreement among the parties with respect
to
the subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, among the parties or any of them with
respect to the subject matter hereof; and (b) shall not be assigned by operation
of law or otherwise, provided that Parent may assign any of their rights and
obligations to any wholly-owned Subsidiary of Parent, but no such assignment
shall relieve Parent of its obligations hereunder.
9.03 Enforcement
of the Agreement.
The
parties hereto agree that irreparable damage would occur in the event that
any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of
this Agreement and to enforce specifically the terms and provisions hereof
in
any federal or state court located in the State of Texas (as to which the
parties agree to submit to jurisdiction for the purposes of such action), this
being in addition to any other remedy to which they are entitled at law or
in
equity.
9.04 Validity.
If any
provision of this Agreement is held to be illegal, invalid or unenforceable
under any present or future applicable state or federal laws or rules or
regulations adopted thereunder by any governmental agency, body or
instrumentality, such provision shall be fully severable; this Agreement shall
be construed and enforced as if such illegal, invalid or unenforceable provision
had never constituted a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore,
in
lieu of such illegal, invalid or unenforceable provision, there shall be added
as a part of this Agreement a provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
33
9.05 Notices.
All
notices, requests, demands, claims and other communications required or
permitted to be given hereunder shall be in writing and shall be given by (a)
personal delivery (effective upon delivery); (b) facsimile (effective on the
next day after transmission); (c) recognized overnight delivery service
(effective on the next day after delivery to the service); or (d) registered
or
certified mail, return receipt requested and postage prepaid (effective on
the
third day after being so mailed), in each case addressed to the intended
recipient as set forth below:
|
If
to Parent or Acquisition Sub:
|
|
|
Platinum
Energy Resources, Inc.
000
Xxxx 00xx
Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxxxx
Facsimile:
000-000-0000
|
|
|
With
a copy to:
|
|
|
Xxxxx
Cummis Xxxxxxx & Xxxxx P.C.
Xxx
Xxxxxxxxxx Xxxxx
Xxxxxx,
Xxx Xxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxxxx
Facsimile:
000-000-0000
|
|
|
If
to Target:
|
|
|
Tandem
Energy Holdings, Inc.
Xxxxxxx,
Xxxxx 00000-0000
Attention:
Xxx X. Xxxx
Facsimile:
000-000-0000
|
|
|
With
a copy to:
|
|
|
Xxxxx
Xxxxx & Xxxxxxx
0000
Xxxxx Xxxxxxx
Xxxxx
0000
Xxxxxx,
Xxxxx 00000
Attention:
Xxxxxxx X. Xxxxx
Facsimile:
214-691-2501
|
|
Any party may change his or its address for receiving notices by giving written notice of such change to the other parties in accordance with this Section 9.04.
34
9.06 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the substantive
laws of the State of Delaware regardless of the laws that might otherwise govern
under principles of conflicts of laws applicable thereto.
9.07 Descriptive
Headings.
The
descriptive headings herein are inserted for convenience of reference only
and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
9.08 Parties
in Interest.
This
Agreement shall be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is intended to confer
upon any other person any rights or remedies of any nature whatsoever under
or
by reason of this Agreement.
9.09 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed to be an original, but all of which shall constitute one and the same
agreement.
9.10 Expenses.
Parent
and Target shall be responsible for the payment of their respective costs and
expenses incurred in connection with the transactions contemplated by this
Agreement.
9.11 Certain
Definitions.
For
purposes of this Agreement, the following terms shall have the meanings ascribed
to them below:
(e) “Affiliate”
of
a
person shall mean (i) a person that directly or indirectly, through one or
more
intermediaries, controls, is controlled by, or is under common control with,
the
first-mentioned person and (ii) an "associate," as that term is defined in
Rule
12b-2 promulgated under the Exchange Act.
(f) “Assets”
shall
mean the assets, tangible and intangible, of the Business.
(g) “Business”
shall
mean the oil and gas exploration, development and production business of the
Target and its Subsidiaries.
(h) “Contract”
shall
mean written
or
oral agreements, commitments or arrangements of Target or a Subsidiary (i)
involving $50,000 or more, individually or in the aggregate; (ii) relating
to
the borrowing of money, or the guarantee of any obligation of any officer,
shareholder or other third party; (iii) providing for any covenant not to
compete by Target or a Subsidiary or otherwise restricting in any way Target's
or Subsidiary’s engaging in any business activity (including a description of
the businesses to which the covenant not to compete applies); (iv) requiring
Target or a Subsidiary to indemnify or hold harmless any Person; or (v) which
could individually or together, to the extent they are one of a series of
matters or related to one another, reasonably be considered material to the
Business.
35
(i)
“Control” (including the terms “controlling,” “controlled
by” and “under common control with”) shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through ownership of voting
securities, by contract, or otherwise.
(j) “Good,
Marketable and Defensible Title”
shall
mean title in and to the Oil and Gas Interests that, except for any permitted
Encumbrances, and that to Target’s knowledge:
(i)
Is
free and clear of all defects, burdens and liens;
(ii)
In
the case of each Oil and Gas Interest, (A) is filed, recorded or otherwise
referenced of record in the records of the applicable county in a manner
which
under applicable local law constitutes imputed notice of such Oil and Gas
Interest to third parties acquiring an interest in or an encumbrance against
such Oil and Gas Interest, or (1) in the case of federal leases, in the records
of the applicable office of the Bureau of Land Management, (2) in the case
of
Indian leases and mineral development agreements, in the applicable office
of
the Bureau of Indian Affairs or applicable tribal records, or (3) in the
case of
state leases, in the records of the applicable state land office, but only
to
the extent the records referenced in (1), (2) and (3) above constitute imputed
notice under applicable local law to third parties acquiring an interest
in or
an encumbrance against such leases, or (B) is assignable to Target or a
Subsidiary out of an interest of record (as provided in clause (A) above),
but
only to the extent that all conditions required to earn an enforceable right
to
such assignment have been satisfied and the record owner of such interest
is
ready, willing and able to make such assignment;
(iii)
In
the case of each Oil and Gas Interest set forth in the reserve reports of
Target
or a Subsidiary that entitles Target or its Subsidiaries to receive and retain,
without reduction, suspension or termination and after deduction of all
applicable royalties, overriding royalties, production payments or other
burdens
payable out of production, not less than the percentage set forth in the
reserve
reports as Target's or its Subsidiaries’ “Net Revenue Interest” of all
Hydrocarbons produced, saved and marketed from such Oil and Gas Interest,
through the productive life of such Oil and Gas Interest, except for changes
or
adjustments in such “Net Revenue Interest” after the date hereof and in
compliance with Target’s and its Subsidiaries’ covenants and agreement under
this Agreement that result from the establishment of new units, changes in
existing units (or the participating areas therein), the entry into of new
pooling or unitization agreements, or an election not to participate in an
operation under a joint operating agreement or a unit agreement;
(iv)
In
the case of each Oil and Gas Interest set forth in the reserve report of
Target
or its Subsidiaries that obligates Target or its Subsidiaries to bear not
greater than the percentage set forth in the reserve report as Target's or
its
Subsidiaries’ “Working Interest” of the costs and expenses relating to the
maintenance, development and operation of such Oil and Gas Interest (including
the plugging and abandonment and site restoration with respect to all existing
and future xxxxx located thereon or attributable thereto), through plugging,
abandonment and salvage of all xxxxx and related lease facilities located
on
such Oil and Gas Interest or lands pooled, unitized or otherwise combined
therewith, except for changes or adjustments in such “Working Interest”
after the date hereof and in compliance with Target’s and its Subsidiaries’
covenants and agreement under this Agreement that result from the
establishment
of new units, changes in existing units (or the participating areas therein),
the entry into of new pooling or unitization agreements, or an election by
a
third party not to participate in an operation under a joint operating agreement
or a unit agreement;
36
(v)
In the
case of each Oil and Gas Interest, reflects that all royalties, rentals,
Xxxx
clause payments, shut in gas payments and other payments due with respect
to
such Oil and Gas Interest have been properly and timely paid, except for
payments held in suspense for title or other reasons which are customary
in the
industry and which will not result in grounds for cancellation of Target’s or
its Subsidiaries’ rights in such Oil and Gas Interest; and
(vi) Reflects
that all consents to assignment, notices of assignment or preferential purchase
rights which are applicable to or must be complied with in connection with
the
transaction contemplated by this Agreement, have been obtained and complied
with
to the extent the failure to obtain or comply with the same could render
this
transaction or any such prior sale, assignment or transfer (or any right
or
interest affected thereby) void or voidable or could result in Parent or
its
Subsidiaries incurring any liability or loss of title.
(k) “Hydrocarbons”
shall
mean oil, condensate, gas, casinghead gas and other liquid or gaseous
Hydrocarbons.
(l) “Hydrocarbon
Agreement”
shall
mean any of the Hydrocarbon Sales Agreements and Hydrocarbon Purchase
Agreements.
(m) “Hydrocarbon
Purchase Agreement”
shall
mean any material sales agreement, purchase contract, or marketing agreement
that is currently in effect and under which Target or a Subsidiary is a buyer
of
Hydrocarbons for resale (other than purchase agreements entered into in the
ordinary course of business with a term of three months or less, terminable
without penalty on 30 days' notice or less, which provide for a price not
greater than the market value price that would be paid pursuant to an
arm's-length contract for the same term with an unaffiliated third-party seller,
and which do not obligate the Parent to take any specified quantity of
Hydrocarbons or to pay for any deficiencies in quantities of Hydrocarbons not
taken).
37
(n) “Hydrocarbon
Sales Agreement”
shall
mean any material sales agreement, purchase contract, or marketing agreement
that is currently in effect and under which Target or a Subsidiary is a seller
of Hydrocarbons (other than “spot” sales agreements entered into in the ordinary
course of business with a term of three months or less, terminable without
penalty on 30 days` notice or less, and which provide for a price not less
than
the market value price that would be received pursuant to an arm's- length
contract for the same term with an unaffiliated third party
purchaser).
(o) “Major
Shareholders”
shall
mean Xxx X. Xxxx, Xxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxxxx and Xxxx X.
Xxxxxx.
(p)
“Material Adverse Effect” shall mean, when used in connection with
Target and its Subsidiaries, any change, development, effect, condition or
occurrence that has had or could reasonably be expected to be material and
adverse to the Business, assets, properties, condition (financial or otherwise)
or results of operations of Target and its Subsidiaries, taken as a whole,
or to
prevent or materially impede or delay the consummation of the Merger or the
other transactions contemplated by this Agreement, other than, in any case,
any
change, development, event, effect, condition or occurrence (i) resulting from
changes in the United States economy or the United States securities markets
in
general (including prevailing interest rate and stock market levels); or (ii)
resulting solely from changes in the industries in which Target and its
Subsidiaries operate and not specifically relating to Target or its Subsidiaries
or solely from any decrease in the trading price or trading volume of Target
Common Shares.
(q) “Oil
and Gas Interests”
shall
mean: (i) direct and indirect interests in and rights with respect to oil,
gas,
mineral and related properties and assets of any kind and nature, direct or
indirect, including, without limitation, working, royalty and overriding royalty
interests, mineral interests, leasehold interests, production payments,
operating rights, net profits interests, other non-working interests and
non-operating interests; (ii) interests in and rights with respect to
Hydrocarbons and other minerals or revenues therefrom and contracts in
connection therewith and claims and rights thereto (including oil and gas
leases, operating agreements, unitization and pooling agreements and orders,
division orders, transfer orders, mineral deeds, royalty deeds, oil and gas
sales, exchange and processing contracts and agreements and, in each case,
interests thereunder), surface interests, fee interests, reversionary interests,
reservations and concessions; (iii) easements, rights of way, licenses, permits,
leases, and other interests associated with, appurtenant to, or necessary for
the operation of any of the foregoing; and (iv) interests in equipment and
machinery (including well equipment and machinery), oil and gas production,
gathering, transmission, compression, treating, processing and storage
facilities (including tanks, tank batteries, pipelines and gathering systems),
pumps, water plants, electric plants, gasoline and gas processing plants,
refineries and other tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the
foregoing
38
(r) “Person”
shall
mean a natural person, company, corporation, partnership, association, trust
or
any unincorporated organization.
(s) “Shareholder”
shall
mean a holder of Target Common Shares.
(t) “Subsidiary”
shall
mean an entity in which fifty percent (50%) or more of its outstanding equity
securities are owned by Target.
(u) “Takeover
Statute”
shall
mean any “business combination,” “fair price,” “moratorium,” “control share
acquisition” or other similar anti-takeover status or regulation under the laws
of the State of Delaware or the State of Nevada or other applicable
law.
(v) “Target
Common Shares”
shall
mean the shares of common stock, $.001 par value, of Target.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
39
Signatures
To
evidence the binding effect of the foregoing terms and condition, the parties
have caused their respective duly authorized representative to execute and
deliver this Agreement on the date first above written.
| Parent: | ||
| PLATINUM ENERGY RESOURCES, INC. | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxxxxx | |
|
Xxxx Xxxxxxxxx, |
||
| Chairman | ||
| Target: | ||
| TANDEM ENERGY HOLDINGS, INC. | ||
| |
|
|
| By: | /s/ Xxx X. Xxxx | |
|
Xxx X. Xxxx |
||
| President | ||
| Acquisition Sub: | ||
| PER ACQUISITION CORP. | ||
| |
|
|
| By: | /s/ Xxxx Xxxxxxxxx | |
|
Xxxx Xxxxxxxxx |
||
| President | ||
40
The
following persons hereby acknowledge that (i) they are the Major Shareholders
defined in the foregoing Agreement, and (ii) they are executing and delivering
this Agreement in their individual capacities to evidence their agreement to
be
bound by the provisions of Sections 3.01, 3.04, 5.04 and 8.01 of this Agreement,
but not otherwise.
| /s/ Xxx X. Xxxx | |||
|
Xxx X. Xxxx |
|||
| /s/ Xxxx X. Xxxxxxxx | |||
|
Xxxx X. Xxxxxxxx |
|||
| /s/ Xxxxxxx X. Xxxxxxxxxx | |||
|
Xxxxxxx X. Xxxxxxxxxx |
|||
| /s/ Xxxx X. Xxxxxx | |||
|
Xxxx X. Xxxxxx |
|||
41
