AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND REORGANIZATION by and among: PACIFIC EAST ADVISORS, INC. a Delaware corporation; DRILLCO ACQUISITION, LLC., a Delaware limited liability company; and ADVANCED DRILLING SERVICES, LLC, a Delaware...
Exhibit 10.15
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by and among:
PACIFIC EAST ADVISORS, INC.
a Delaware corporation;
a Delaware corporation;
DRILLCO ACQUISITION, LLC.,
a Delaware limited liability company;
a Delaware limited liability company;
and
ADVANCED DRILLING SERVICES, LLC,
a Delaware limited liability company
a Delaware limited liability company
Dated as of December 11, 2006
Amended and Restated as of February 12, 2007
Amended and Restated as of February 12, 2007
AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
OF MERGER AND REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the
“Agreement”) is made and entered into as of December 11, 2006 (the “Execution
Date”), as amended and restated on February 12, 2007, by and among: Pacific East Advisors,
Inc., a Delaware corporation (“Parent”); DRILLCO ACQUISITION, LLC., a Delaware limited
liability company and a wholly owned subsidiary of Parent (“Merger Sub”); and ADVANCED
DRILLING SERVICES, LLC, a Delaware limited liability company (the “Company”).
A. The Boards of Directors of Parent, and the Manager of Merger Sub and the Company, deem it
advisable and in the best interest of each entity and its respective stockholders or interest
holders, that Parent and the Company combine in order to advance the long-term business interests
of Parent and the Company.
B. The strategic combination of Parent and the Company (the “Merger”) shall be
effected in accordance with the Delaware General Corporation Law (the “DGCL”) and the terms
of this Agreement through a transaction in which (i) the Company will merge with and into Merger
Sub (the “LLC Merger”), (ii) Merger Sub will be the surviving entity in the LLC Merger and
will remain a wholly owned limited liability company subsidiary of Parent and will continue to
carry on the business of the Company, and (iii) the interest holders of the Company will become
stockholders of Parent (the Merger and the LLC Merger being herein referred to as the
“Combination”).
C. The Manager of the Company (i) has determined that the Combination is advisable, fair to,
and in the best interests of the Company and its interest holders, (ii) has determined that this
Agreement is advisable and has approved this Agreement, the Combination and the other transactions
contemplated by this Agreement, and (iii) has determined to recommend that the interest holders of
the Company adopt this Agreement.
D. The Board of Directors of Parent (i) has unanimously determined that the Combination is
advisable and consistent with and in furtherance of the long-term business strategy of Parent and
is fair to, and in the best interests of, Parent and its stockholders, (ii) has unanimously
approved this Agreement, the Combination and the other transactions contemplated by this Agreement,
and (iii) to the extent required by applicable law, has unanimously determined to recommend that
the stockholders of Parent adopt this Agreement and approve the Combination and the other
transactions contemplated by this Agreement.
E. Immediately prior to the closing of the Merger, the Company will issue Class B Membership
Units to the accredited investors who subscribe for Class B Membership Interests of the Company
(the “Class B Interests”) being offered to accredited investors in a private placement by
the Company. All of the foregoing Class B Interests will be issued and will be outstanding prior
to the Merger, and will be exchanged for Parent Series A Preferred Stock in the Merger as set
forth herein.
F. Concurrent with the closing of the Merger, Parent shall consummate closing of the merger of
Inner Mongolia Production Company LLC (“IMPCO”), a New York limited liability company, with
and into IMPCO Acquisition, LLC, a New York limited liability company and wholly owned subsidiary
of Parent (the “IMPCO Merger”), pursuant to that certain Amended and Restated Agreement and
Plan of Merger and Reorganization, made and entered into on or about the Execution Date, as amended
and restated on even date herewith, by and among Parent, IMPCO Acquisition, LLC, a New York limited
liability company and wholly owned subsidiary of Parent, and Inner Mongolia Production Company LLC,
a New York limited liability company (the “IMPCO Merger Agreement”).
G. Parent, Merger Sub and Company have entered into an Agreement and Plan of Merger and
Reorganization on the Effective Date (the “Existing Agreement”), and desire to amend and
restate the Existing Agreement in full as set forth herein.
1. Integrated Transaction. For U.S. Federal income tax purposes, it is intended that
the transactions contemplated by this Agreement and the IMPCO Merger Agreement constitute part of a
single integrated transaction and are pursuant to a single integrated plan intended to qualify as a
tax-free transaction under Section 351 of the Internal Revenue Code of 1986, as amended (the
“Code”).
2. Terms of Merger. Immediately following the Effective Time (as defined below),
without condition, Parent shall cause Merger Sub to file with the Secretary of State of the State
of Delaware a properly executed certificate of merger for the LLC Merger (the “LLC Certificate
of Merger”) conforming to the requirements of the DGCL, in a form mutually agreeable to the
parties. The LLC Merger shall become effective at the time the LLC Certificate of Merger is filed
with the Secretary of State of the State of Delaware.
(a) Effects of the LLC Merger
(1) At the time at which the LLC Merger is filed with the Secretary of State of Delaware, as
described above (the “Effective Time”), (i) the separate existence of the Merger Sub shall
cease and the Merger Sub shall be merged with and into the Company, with the Company as the
surviving entity in the LLC Merger (Merger Sub and the Company are
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sometimes referred to below as the “LLC Constituent Entities” and the Company
following the LLC Merger is sometimes referred to below as the “Continuing LLC”), and (ii)
the Certificate of Formation and the Amended and Restated Operating Agreement of the Company as in
effect immediately prior to the Effective Time shall be unchanged by the LLC Merger.
(2) At and after the Effective Time, the Continuing LLC shall possess all the rights,
privileges, powers, and franchises of a public as well as of a private nature, and be subject to
all the restrictions, disabilities, and duties of each of the LLC Constituent Entities; and all
singular rights, privileges, powers, and franchises of each of the LLC Constituent Entities, and
all property, real, personal, and mixed, and all debts due to either of the LLC Constituent
Entities on whatever account, and all other things in action or belonging to each of the LLC
Constituent Entities, shall be vested in the Continuing LLC, and all property, rights, privileges,
powers, and franchises, and all and every other interest shall be thereafter as effectually the
property of the Continuing LLC as they were of the LLC Constituent Entities, and the title to any
real estate vested by deed or otherwise, in either of the LLC Constituent Entities, shall not
revert or be in any way impaired; but all rights of creditors and all liens upon any property of
either of the LLC Constituent Entities shall be preserved unimpaired, and all debts, liabilities,
and duties of the LLC Constituent Entities shall thereafter attach to the Continuing LLC, and may
be enforced against it to the same extent as if such debts and liabilities had been incurred by it.
(3) At the Effective Time, the Certificate of Incorporation of Parent (the “Parent
Certificate”) shall be amended and restated in its entirety as set forth on Exhibit A
attached hereto.
(4) At the Effective Time, (i) the Amended and Restated Operating Agreement of the Company, as
existing immediately prior to the Effective Time, shall be and remain the Amended and Restated
Operating Agreement of the Continuing LLC; (ii) the members of the Board of Managers of the Company
holding office immediately prior to the Effective Time shall remain as the members of the Board of
Managers of the Continuing LLC (if on or after the Effective Time a vacancy exists on the Board of
Managers of the Company, such vacancy may thereafter be filled in a manner provided by applicable
law and the Amended and Restated Operating Agreement); and (iii) until the Board of Managers of the
Company shall otherwise determine, all persons who hold offices of the Company at the Effective
Time shall continue to hold the same offices of the Continuing LLC.
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(5) Upon the terms and subject to the conditions of this Agreement, the Closing (as defined
below) of the Merger will take place (a) at the offices of The Xxxxxxx Group, LLP, 0000 Xx Xxxxx
Xxxxxxxxx, Xx Xxxxx, Xxxxxxxxxx 00000, at 7:00 a.m., California time, on the date that is the
second Business Day after the satisfaction or waiver of the conditions set forth in Sections 7 and
8 hereof, other than conditions which by their terms are to be satisfied at the Closing, or (b)
such other location, date or time as the parties may mutually agree (the “Closing Date”).
For purposes of this Agreement, a “Business Day” shall mean any day that is not a Saturday,
a Sunday or other day on which the office of the California Secretary of State is closed.
(1) It is currently contemplated that prior to the Merger becoming effective under Delaware
law, the Company shall close a private offering under Regulation D, Rule 506, as promulgated by the
Securities and Exchange Commission (“SEC”) under the Securities Act, pursuant to which it
will issue up to 11,200,000 Class B Interests (excluding warrants issuable to the Company’s
placement agents) (the “Maximum Offering”) at $1.25 per Class B Interest (the “Private
Placement”). All of the Class B Interests issued as part of the Private Placement shall be
included in the membership interests of the Company that are outstanding at the time of the Merger
and will be converted/exchanged in the Merger in accordance with Section 2(c)(1) below.
(2) Immediately prior to the Merger becoming effective, on the day of such effectiveness, the
Company shall consummate the Merger under Section 251 of the Delaware General Corporation Law by
filing a Delaware Certificate of Merger with the Delaware Secretary of State.
(1) By virtue of the LLC Merger and without any further action on the part of the Company or
the Merger Sub or the holders of interests of the Company: (i) each Class A Interest of the Company
then outstanding shall be converted into one (1) fully paid share of Common Stock of the Parent for
a total aggregate of 9,850,000 fully paid and nonassessable shares of Common Stock, par value
$0.001; AND (ii) each Class B Interest of the Company then issued and outstanding in connection
with the Private Placement shall be converted into one (1) fully paid share of Series A Preferred
Stock of the Parent for a maximum total aggregate of 11,200,000 fully paid and nonassessable shares
of Series A Preferred Stock, par value $0.001 (excluding warrants issuable to the Company’s
placement agents) (assuming the Maximum Offering is achieved).
(2) On or prior to the Closing Date, Parent shall make available to its transfer agent (the
“Exchange Agent”) for the benefit of the holders of Class A Interests and Class B Interests
of the Company, a sufficient number of certificates representing Common Stock of Parent and Series
A Preferred Stock of the Parent required to effect the delivery of the aggregate consideration in
Common Stock of Parent and Series A Preferred Stock of the Parent and cash for the payment of
fractional shares set forth below (collectively, the “Share Consideration” and the certificates
representing such aggregate Share Consideration being referred to hereinafter as the “Stock
Merger Exchange Fund”). The Exchange Agent shall,
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pursuant to irrevocable instructions, deliver the Share Consideration out of the Stock Merger
Exchange Fund. The Stock Merger Exchange Fund shall not be used for any other purpose than as set
forth herein.
(3) No fractional Parent securities shall be issued in the Merger. Each holder of Class A
Interests and Class B Interests of the Company shall be entitled to receive in lieu of any
fractional Parent securities to which such holder otherwise would have been entitled pursuant to
Section 2(c)(1) a cash payment in an amount equal to the product of (i) the fractional interest of
a Parent securities to which such holder otherwise would have been entitled and (ii) the fair
market value of one (1) Parent securities as determined by Parent’s Board of Directors in good
faith.
(d) Other Matters.
(1) Upon the effectiveness of the LLC Merger, each outstanding option or warrant to purchase
the Company Class B Interests, whether or not then exercisable, shall be converted into an option
or warrant to purchase (in substitution for each share of the Company Class B Interest subject to
the Company option or warrant) one (1) share of Parent Series A Preferred Stock at a price equal to
the exercise price in effect immediately prior to the LLC Merger. All other terms and conditions
of each the Company option or warrant shall remain the same.
(2) At the Closing, the number of directors of Parent will be set at three (3). The then
existing sole director of Parent shall then nominate and elect to the Board of Directors of Parent
Xxxxx Xxxxxxxxxx, Xxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx, or such other persons designated by the
Company, and all of the persons serving as directors and officers of Parent immediately prior to
the Closing shall thereafter resign from all of their positions with Parent, effective immediately
after the Closing.
(3) Upon the effectiveness of the Merger, Parent shall assume and will be bound by the
registration rights agreements previously entered into, or hereafter entered into, between the
Company and the accredited investors who purchase shares of the Company Class B Interests in the
Private Placement that is currently scheduled to close prior to the Closing. The terms of the
registration rights are set forth as an exhibit to the subscription agreements entered into by each
of the foregoing purchasers of shares of the Company Class B Interests. Parent agrees to execute
any agreement or other instrument the Company deems necessary to confirm its agreement to comply
with the registration rights granted by the Company to the purchasers of its Class B Interests.
(4) All stock of the Parent issued in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of Parent Stock, and there
shall be no further registration of transfers on the records of the Parent of shares of Company
membership interests that were outstanding immediately prior to the Effective Time.
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3. Representations of the Company. The Company hereby represents and warrants as
follows, which warranties and representations shall also be true as of the Execution Date:
(a) Organization, Standing and Authority of the Company. The Company is a duly
organized, validly existing and in good standing under the laws of the State of Delaware with full
corporate power and authority to carry on its business as now conducted and is duly qualified to do
business in any jurisdiction where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to have such corporate power and
authority or to so qualify would not have a Material Adverse Effect on the Company.
(1) The Company has all requisite corporate power and authority to enter into and perform all
of its obligations under this Agreement. The execution, delivery and performance of this Agreement
by the Company and the consummation of the Merger and the other transactions contemplated hereby
have been duly authorized by the Manager of the Company, which authorization constitutes all
necessary corporate action in respect thereof and which have not been rescinded, revoked or
otherwise adversely modified.
(2) This Agreement constitutes the legal, valid and binding obligations of the Company,
enforceable against it in accordance with its terms subject, as to enforceability, to bankruptcy,
insolvency and other legal requirements of general applicability relating to or affecting
creditors’ rights and to general equity principles.
(3) Neither the execution and delivery of this Agreement, nor consummation of the Merger and
the other transactions contemplated hereby, nor compliance by the Company with any of the
provisions hereof shall (i) conflict with or result in a breach of any provision of the Certificate
of Formation or Amended and Restated Operating Agreement (the “Operating Agreement”) of the
Company or (ii) violate any legal requirements applicable to the Company.
(4) Other than the filing of the LLC Certificate of Merger with the Delaware Secretary of
State and consent of the holders of Class A and Class B Interests of the Company, no consent,
approval or authorization of, or declaration, notice, filing or registration with, any Government
Entity, or any other Person, is required to be made or obtained by the Company on or prior to the
Effective Time in connection with the execution, delivery and performance of this Agreement and the
LLC Merger or the consummation of the transactions contemplated hereby or thereby.
(c) Capital Structure of the Company. The issued and outstanding limited liability
company interests of the Company consist of 9,850,000 Class A Interests and no Class B Interests as
of the Execution Date. In connection with the Private Placement, the Company may issue up to
11,200,000 additional Class B Interests prior to the Closing (excluding warrants issuable to the
Company’s placement agents). As of the Execution Date, all the outstanding limited liability
company interests of the Company are held by the members free and clear of all
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encumbrances. As of the Execution Date and as of the Closing, other than the warrants
issuable to the Company’s placement agents in connection with the Private Placement (the
“Placement Agent Warrants”) and as otherwise set forth herein, there are and will be no
options, warrants, convertible securities or other rights, agreements, arrangements or commitments
relating to the limited liability company interests of the Company.
(d) Material Adverse Change. Except as set forth in the Company Disclosure Documents,
there has not been any change in the financial condition, results of operations, prospects or
business which would individually or in the aggregate with any other such changes, of the Company
except changes arising in the ordinary course of business, which changes would have a Material
Adverse Effect with respect to the Company.
(e) Litigation. There are no actions, suits or proceedings instituted, pending or, to
its Knowledge, any governmental investigation or proceeding, and, to its Knowledge, no material
litigation, claims, assessments or any governmental proceedings are threatened against the Company.
(f) Absence of Undisclosed Liabilities. Except as disclosed by the Company to Parent
in its financial statements provided to Parent prior to the Execution Date, the Company does not
have any liability (contingent or otherwise) or Indebtedness that is material to the Company, or
that, when combined with all similar undisclosed liabilities, would be material to the Company,
except for liabilities incurred in the ordinary course of business subsequent to the Execution
Date.
(g) Tax Matters. The Company has, or by the Closing will have, filed all material
federal tax, governmental and/or related forms and reports (or extensions thereof) due or required
to be filed in the ordinary course of business and has (or will have) paid or made adequate
provisions for all taxes or assessments which have become due as of the Closing.
(h) Material Contracts. As part of the Company Disclosure Documents, the Company has
previously given Parent copies of or access to all material contracts, commitments and/or
agreements to which the Company is a party, including all contracts covering relationships or
dealings with related parties or affiliates. The Company is not in material breach of, or material
default under any material contract.
(i) Subsidiary Corporations. The Company has no Subsidiaries, other than Sunrise
Energy Asia LLC (“Sunrise”), a Delaware limited liability company and wholly owned
subsidiary of the Company.
(j) Minute Books, Financial Records. The Company has made its corporate financial
records, minute books, and other corporate documents and records available for review to present
management of Parent prior to the Closing, during reasonable business hours and on reasonable
notice.
(k) Disclosure. The Company Disclosure Documents which have been delivered by the
Company to Parent for use in connection with the Merger are true and accurate in all material
respects.
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4. Representations of Parent and Merger Sub. Parent and Merger Sub hereby jointly and
severally represent and warrant to the Company as follows, each of which representations and
warranties shall continue to be true as of the Effective Time:
(a) Organization, Standing and Authority of Parent. Parent is duly organized, validly
existing and in good standing under the laws of the State of Delaware, with the full corporate
power to own, lease and operate its property and to carry on its business as now being conducted
and is duly qualified to do business and in good standing to do business in any jurisdiction where
the ownership or leasing of the property or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a Material Adverse Effect. As
of the Execution Date, Parent is not required to be qualified to do business in any state other
than Delaware. Merger Sub is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware, and has all necessary limited liability
company power and authority to enter into this Agreement and to carry out its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and thereby.
(1) As of the Execution Date, Parent’s authorized capital stock consists of (i) 100,000,000
shares of Parent Common Stock, $0.001 par value, of which approximately 468,068 shares are issued
and outstanding, and (ii) and 5,000,000 authorized shares of Preferred Stock, par value $0.001, of
which no shares of Preferred Stock are issued or outstanding. The Merger Sub is a single member
LLC wholly-owned by Parent.
(2) All outstanding shares of Parent stock are, and shall be at Closing, validly issued, fully
paid and nonassessable. At the Execution Date and at the Closing, there are and there will be no
existing options, convertible or exchangeable securities, calls, claims, warrants, preemptive
rights, registration rights or commitments of any character relating to the issued or unissued
capital stock or other securities of Parent, other than pursuant to the IMPCO Merger Agreement.
There are no voting trusts, proxies or other agreements, commitments or understandings of any
character to which Parent is a party or by which Parent is bound with respect to the voting of any
capital stock of Parent. There are no outstanding stock appreciation, phantom stock or similar
rights with respect to any capital stock of Parent. There are no outstanding obligations to
repurchase, redeem or otherwise acquire any shares of capital stock of Parent.
(3) As of the Closing, the shares of Parent Common and Preferred Stock to be issued and
delivered to the holders of Class A and Class B Interests of the Company hereunder and in
connection herewith will, when so issued and delivered, constitute duly authorized, validly and
legally issued, fully-paid, nonassessable shares of Parent capital stock, will not be issued in
violation of any preemptive or similar rights and will be issued free and clear of all liens and
encumbrances.
(c) Authorized and Effective Agreement. Parent and Merger Sub have full corporate
power and corporate authority to execute and deliver this Agreement and, subject to receipt of the
Parent Required Vote (as hereinafter defined) (to the extent such Parent Required
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Vote is required by applicable law), to consummate the transactions contemplated hereby. The
Board of Directors of Parent by written consent has (i) determined that this Agreement and the
Merger are in the best interests of Parent and its stockholders and declared this Agreement and the
Merger to be advisable, (ii) approved the Merger, the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby and (iii) recommended that stockholders of
Parent adopt this Agreement and, if required by applicable law, directed that such matter be
submitted for consideration and approval by Parent’s stockholders. Except for the adoption of this
Agreement by the affirmative vote of a majority of the outstanding shares of Parent Common Stock
entitled to vote in accordance with applicable law, if required (the “Parent Required
Vote”), no other corporate proceedings on the part of Parent are necessary to approve this
Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and (assuming due authorization, execution
and delivery by the Company) constitutes a valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms, except as enforcement may
be limited by general principles of equity whether applied in a court of law or a court of equity
and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally
(the “Bankruptcy and Equity Exceptions”).
(d) Taxes. Parent has filed all federal, state, county and local income, excise,
property and other tax, governmental and/or other returns, forms, filings, or reports, which are
due or required to be filed by it prior to the date hereof and have paid or made adequate provision
in the Parent financial statements for the payment of all taxes, fees, or assessments which have or
may become due pursuant to such returns, filings or reports or pursuant to any assessments
received. Parent is not delinquent or obligated for any tax, penalty, interest, delinquency or
charge and there are no tax liens or encumbrances applicable to either corporation.
(e) Consents and Approvals, No Violation. Neither the execution and delivery of this
Agreement nor the consummation by Parent or Merger Sub of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provision of its Articles of Incorporation (or
other similar documents) or By-Laws (or other similar documents); (ii) require any consent,
approval, authorization or permit of, or registration or filing with or notification to, any
governmental or regulatory authority, except (A) pursuant to the applicable requirements of the
Securities Act of 1933, and the rules and regulations promulgated thereunder, (B) the filing of
appropriate documents with the relevant authorities of other states in which Parent or Merger Sub
is authorized to do business, (C) as may be required by any applicable state securities or takeover
laws, (D) such filings and consents as may be required under any environmental, health or safety
law or regulation pertaining to any notification, disclosure or required approval triggered by the
Merger or the transactions contemplated by this Agreement, or (E) where the failure to obtain such
consent, approval, authorization or permit, or to make such filing or notification, would not in
the aggregate have a Material Adverse Effect or adversely affect the ability of Parent or Merger
Sub to consummate the transactions contemplated hereby; (iii) result in a violation or breach of,
or constitute (with or without notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration or lien or other charge or encumbrance) under
any of the terms, conditions or provisions of any indenture, note, license, lease, agreement or
other instrument or obligation to
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which Parent or Merger Sub or any of its assets may be bound, except for such violations,
breaches and defaults (or rights of termination, cancellation or acceleration or lien or other
charge or encumbrance) as to which requisite waivers or consents have been obtained or which, in
the aggregate, would not have a Material Adverse Effect or adversely affect the ability of Parent
or Merger Sub to consummate the transactions contemplated hereby; (iv) cause the suspension or
revocation of any authorizations, consents, approvals or licenses currently in effect which would
have a Material Adverse Effect; or (v) assuming the consents, approvals, authorizations or permits
and filings or notifications referred to in this Section 4(e) are duly and timely obtained or made
and the approval of the Merger and the approval of this Agreement by Parent’s stockholders has been
obtained, violate any order, writ, injunction, decree, statute, rule or regulation applicable to
Parent or Merger Sub or to any of its assets, except for violations which would not in the
aggregate have a Material Adverse Effect or adversely affect the ability of Parent or Merger Sub to
consummate the transactions contemplated hereby.
(f) No Subsidiaries. Other than the Merger Sub, Parent has no Subsidiaries or
affiliates or has no direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or other business.
(g) Material Adverse Change. Other than as disclosed in the Parent Disclosure
Documents, there have not been any changes in the financial condition, results of operations, or
financial condition of Parent or Merger Sub which would individually or in the aggregate with any
other such changes, except changes arising in the ordinary course of business, which changes would
have a Material Adverse Effect with respect to Parent. Parent has (and at the Closing it will
have) disclosed in the Parent Disclosure Documents all events, conditions, and facts materially
affecting, the business, financial condition (including liabilities, contingent or otherwise) or
results of operations of Parent.
(1) Other than listed on Schedule 4(h) attached hereto, at the Closing, Parent and
Merger Sub shall have no material assets and will not have any liabilities or Indebtedness of any
kind other than the costs incurred in connection with the Merger or costs incurred in connection
with Parent’s regulatory compliance.
(2) There is no basis for any assertion against Parent or Merger Sub of any material
liabilities or obligations of any nature, whether absolute, accrued, contingent or otherwise and
whether due or to become due, known or unknown, including, without limitation, any liability for
taxes (including e-commerce sales or other taxes), interest, penalties and other charges payable
with respect thereto. Neither the execution and delivery of this Agreement nor the consummation of
the transactions contemplated hereby will (a) result in any payment (whether severance pay,
unemployment compensation or otherwise) becoming due from Parent or Merger Sub to any Person or
entity, including without limitation any employee, director, officer or affiliate or former
employee, director, officer or affiliate of Parent or Merger Sub, (b) increase any benefits
otherwise payable to any Person or entity, including without limitation any employee, director,
officer or affiliate or former employee, director, officer or affiliate of Parent or Merger Sub, or
(c) result in the acceleration of the time of payment or vesting of any such benefits.
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(i) Litigation. Neither Parent nor Merger Sub is a party to, or the subject of, any
pending litigation, claims, or governmental investigation or proceeding not reflected in the Parent
financial statements, and to the Knowledge of Parent, there are no lawsuits, claims, assessments,
investigations, or similar matters, threatened or contemplated against or affecting Parent or the
management or properties of Parent.
(j) Minute Books and Records. Except as otherwise indicated in the Parent Disclosure
Documents, the Parent minute books and other corporate records made available to the Company prior
to the date of this Agreement, are complete and accurate in all material respects.
(k) Material Contracts.
(1) Parent has not breached, nor is there any pending, existing or threatened claim that
Parent has breached, any of the material terms or conditions of any agreements, contracts,
commitments or other documents to which it is a party or by which it is, or its properties are
bound. The execution and performance of this Agreement will not violate any provisions of
applicable law or any agreement to which Parent is subject. Merger Sub has no contracts other than
this Agreement.
(2) Parent hereby represents and warrants that, except for the IMPCO Merger Agreement and as
otherwise provided in the Parent Disclosure, it is not a party to any material contract or
commitment other than appointment documents with Parent’s transfer agent, and that it has disclosed
to the Company all previous or existing relationships or dealings with related or controlling
parties or affiliates of Parent
(3) Except for the IMPCO Merger Agreement and as otherwise provided in the Parent Disclosure
Documents, Parent has no material contracts, commitments, arrangements, or understandings relating
to its business, operations, financial condition, prospects or otherwise. For purposes of this
Section 4, “material” means payment or performance of a contract, commitment, arrangement or
understanding which is expected to involve payments in excess of $20,000.
(4) Except for the IMPCO Merger Agreement, this Agreement and the transactions contemplated
thereby, there are no outstanding contracts, commitments or bids, or services, development, sales
or other proposals of Parent.
(5) There are no outstanding lease commitments that cannot be terminated without penalty upon
30-days notice, or any purchase commitments of Parent.
(1) There are no outstanding, pending or threatened stop orders or other actions or
investigations relating thereto involving federal and state Securities Laws. To Parent’s
Knowledge, all issued and outstanding shares of Parent’s capital stock were offered and sold in
compliance with federal and state Securities Laws and were not offered, sold or issued in violation
of any preemptive right, right of first refusal or right of first offer and are not subject to any
right of rescission.
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(2) All information regarding Parent and any entity for whose conduct Parent is legally held
responsible which has been provided to the Company in the Parent Disclosure Documents relating to
any document or other communication, disseminated to any former, existing or potential stockholders
of Parent or to the public or filed with The National Association of Securities Dealers, Inc.
(“NASD”) or the SEC or any state securities regulators or authorities is true, complete,
accurate in all material respects, not misleading, and was and is in full compliance with all
Securities Laws and regulations.
(3) Parent has timely filed all required documents, reports and schedules with the NASD and
the SEC, and any applicable state or regional securities regulators or authorities. As of their
respective dates, the Parent Disclosure Documents complied in all material respects with the
requirements of the Securities Act, the Exchange Act, the NASD rules and regulations and state and
regional Securities Laws and regulations, as the case may be, and, at the respective times they
were filed. None of the Parent Disclosure Documents contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(1) Up to the Closing, Parent is currently in compliance with, and has complied with, and
Parent has conducted any business previously owned or operated by it in compliance with, all
applicable laws, orders, rules and regulations of all Governmental Entities, including applicable
Securities Laws and regulations and environmental laws and regulations, except where such
noncompliance has and will have, in the aggregate, no Material Adverse Effect on Parent.
(2) Up to the Closing, Parent has not received notice of any noncompliance with the foregoing,
nor to its Knowledge are there any claims or threatened claims in connection therewith.
(3) Assuming all corporate consents and approvals have been obtained and assuming all
applicable appropriate filings and mailings are made by Parent under the Securities Act, the
Exchange Act, with the NASD, and with the Secretary of State of Delaware, the execution and
delivery by Parent of this Agreement and the closing documents and the consummation by Parent of
the transactions contemplated hereby do not and will not (i) require the consent, approval or
action of, or any filing or notice to, any corporation, firm, Person or other entity or any public,
Governmental Entity or judicial authority (except for such consents, approvals, actions, filing or
notices the failure of which to make or obtain will not in the aggregate have a Material Adverse
Effect on Parent); or (ii) violate any order, writ, injunction, decree, judgment, ruling, law, rule
or regulation of any federal, state, county, municipal, or foreign court or Governmental Entity or
authority applicable to Parent, or its business or assets. Parent is not subject to, or a party
to, any mortgage, lien, lease, agreement, contract, instrument, order, judgment or decree or any
other material restriction of any kind or character which would prevent, hinder, restrict or impair
the continued operation of the business of Parent (or to the Knowledge of Parent, the continued
operation of the business of the Company) after the Closing.
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(n) Ongoing Business. No aspect of Parent’s past or present business, operations or
assets is of such a character as would restrict or otherwise hinder or impair Parent from carrying
on the business of Parent as it is presently being conducted by Parent.
(o) Required Government Consents, Filings, etc. Except as have been or, prior to the
Closing, will be obtained, no approval, authorization, certification, consent, variance,
permission, license, or permit to or from, or notice, filing, or recording to or with, any U.S.
Federal, state, or local governmental authorities is necessary for the execution and delivery of
this Agreement and the other agreements and instruments to be executed and delivered by Parent in
connection with the transactions contemplated hereby, or the consummation by Parent of the
transactions contemplated hereby.
(p) Other Required Consents, Filings, etc. Except as have been or, prior to the
Closing, will be obtained, no approval, authorization, consent, permission, or waiver to or from,
or notice, filing, or recording to or with, any person is necessary for the execution and delivery
of this Agreement and the other agreements and instruments to be executed and delivered in
connection with the transactions contemplated hereby by Parent, or the consummation by Parent of
the transactions contemplated hereby.
(q) Title to Assets. Parent has good and marketable title to all of its assets, free
and clear of any claims or Encumbrances. “Encumbrance” means any mortgage, charge (whether fixed or
floating), security interest, pledge, right of first refusal, lien (including any unpaid vendor’s
lien), option, hypothecation, title retention or conditional sale agreement, lease, option,
restriction as to transfer or possession, or subordination to any right of any other person.
(r) Intellectual Property. Parent has no Intellectual Property. The term
“Intellectual Property” includes all patents and patent applications, trademarks, service marks,
and trademark or service xxxx registrations and applications, trade names, logos, designs, domain
names, web sites, slogans and general intangibles of like nature, together with all goodwill
relating to the foregoing, copyrights, copyright registrations, renewals and applications,
software, databases, technology, trade secrets and other confidential information, know-how,
proprietary processes, formulae, algorithms, models and methodologies, drawings, specifications,
plans, proposals, financing and marketing plans, advertiser, customer and supplier lists and all
other information relating to advertisers, customers and suppliers (whether or not reduced to
writing), licenses, agreements and all other proprietary rights, which relate to Parent or Merger
Sub’s business.
(1) Parent at all times has been and is currently in compliance with all Rules applicable to
Parent and/or its business, except where such failure to comply would not have a material adverse
effect on Parent or its operations. “Rule” means any law, statute, rule, regulation, order,
court decision, judgment or decree of any U.S. Federal, state, territorial, provincial or municipal
authority.
(2) Parent is in material compliance with, and have obtained all Permits and other
authorizations relating to Parent or Merger Sub which are required by any
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Rule, which has been enacted to the date of this Agreement, except as would not have a
material adverse effect on Parent or Merger Sub or its operations. No governmental proceeding is
pending or threatened to cancel, amend, modify or fail to renew any such Permit. “Permit”
includes any approval, authorization, concession, grant, certificate of convenience and necessity,
qualification, consent, franchise, license, security clearance, easement, order or other permit
issued or granted by any governmental entity.
(t) Disclosures. No representation or warranty by Parent contained in this Agreement
or the Parent Disclosure Documents and no statement contained in any certificate, schedule or other
communication furnished pursuant to or in connection with the provisions hereof contains or shall
contain any untrue statement of a material fact or omits to state a material fact necessary in
order to make the statements therein not misleading. There is no current or prior event or
condition of any kind or character pertaining to Parent that may reasonably be expected to have a
Material Adverse Effect on Parent. Except as specifically indicated elsewhere in this Agreement,
all documents delivered by Parent in connection herewith have been and will be complete originals,
or exact copies thereof.
(u) Employees. Parent currently has no employees, consultants or independent
contractors. No amounts are due or owed to any previous or current Parent employee, consultant or
independent contractor. There are no oral employment agreements, consulting agreements or other
compensation agreements currently in effect between Parent and any person.
(v) Broker’s or Finder’s Fees. Parent has not authorized any person to act as broker
or finder or in any other similar capacity in connection with the transactions contemplated by this
Agreement.
(w) Environmental Matters. Parent, including any corporation to which Parent is a
successor, is in material compliance with all Environmental Laws. Neither Parent nor, to the
Knowledge of Parent, any other Person for whose conduct Parent is or may be held responsible, has
any Environmental Liabilities, or, to the Knowledge of Parent, with respect to any properties and
assets (whether real, personal or mixed) in which Parent (or any predecessor) has or had an
interest, or at any property geologically or hydrologically adjoining any such property or assets.
5. Closing. The Closing of the transactions contemplated herein shall take place on
such date (the “Closing”) as soon as reasonably practicable following the execution of this
Agreement, subject to the conditions precedent set forth in Sections 7 and 8 hereto, unless
accelerated or extended by the affirmative agreement by all parties.
(a) Prior to the Closing, the Company on the one hand, and Parent and Merger Sub on the other
hand, shall be entitled to make such investigations of the assets, properties, business and
operations of the other party, and to examine the books, records, tax returns, financial statements
and other materials of the other party as such investigating party deems necessary in connection
with this Agreement and the transactions contemplated hereby. Any such investigation and
examination shall be conducted at reasonable times and under reasonable circumstances, and the
parties hereto shall cooperate fully therein. Until the Closing, and if the
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Closing shall not occur, hereafter, each party shall keep confidential and shall not use in
any manner inconsistent with the transactions contemplated by this Agreement, and shall not
disclose, nor use for their own benefit, any information or documents obtained from the other party
concerning the assets, properties, business and operations of such party, unless such information
(i) is readily ascertainable from public or published information, (ii) is received from a third
party not under any obligation to keep such information confidential, or (iii) is required to be
disclosed by any law or order (in which case the disclosing party shall promptly provide notice
thereof to the other party in order to enable the other party to seek a protective order or to
otherwise prevent such disclosure). If this transaction is not consummated for any reason, each
party shall return to the other all such confidential information, including notes and compilations
thereof, promptly after the date of such termination. The representations and warranties contained
in this Agreement shall not be affected or deemed waived by reason of the fact that either party
hereto discovered or should have discovered any representation or warranty is or might be
inaccurate in any respect.
(b) Prior to the Closing, the Company, Parent and Merger Sub agree not to issue any statement
or communications to the public or the press regarding the transactions contemplated by this
Agreement without the prior written consent of the other parties. In the event that Parent is
required under federal Securities Law to either (i) file any document with the SEC that discloses
this Agreement or the transactions contemplated hereby, or (ii) to make a public announcement
regarding this Agreement or the transactions contemplated hereby, Parent shall provide the Company
with a copy of the proposed disclosure no less than 48 hours before such disclosure is made and
shall incorporate into such disclosure any reasonable comments or changes that the Company may
request. The parties hereto agree to the issuance of a press release in a form to be agreed upon
by the parties following the Execution Date.
(c) There shall be no stock dividend, stock split, recapitalization, or exchange of shares
with respect to or rights, options or warrants issued in respect of Parent’s Common or Preferred
Stock after the date hereof and there shall be no dividends or other distributions paid on Parent’s
Common Stock, or shares of Parent capital stock issued, after the date hereof, in each case through
and including the Effective Time. The Company, Parent and Merger Sub shall conduct no business,
prior to the Closing, other than in the ordinary course of business or as may be necessary in order
to consummate the transactions contemplated hereby.
(d) Prior to the Closing, if requested by the Managers of IMPCO and the Company, Parent shall
adopt a new stock option plan or amend its existing stock option plan in the manner requested by
the Managers of IMPCO and the Company.
(e) Prior to the Closing, the Board of Directors of the Parent and the Manager of Merger Sub
shall approve the Merger, this Agreement, and the transactions contemplated hereby, and shall
approve the resignations of the officers and directors of Parent and Merger Sub, effective as of
the Closing, and take such action as is necessary to appoint the Company nominees to the Parent
Board of Directors and offices effective as of the Closing.
7. Conditions Precedent to the Obligations of the Company. All obligations of the
Company under this Agreement are subject to the fulfillment, prior to or as of the Closing and/or
the Effective Time, as indicated below, of each of the following conditions:
15
(a) The representations and warranties by or on behalf of Parent and Merger Sub contained in
this Agreement or in any certificate or document delivered pursuant to the provisions hereof or in
connection herewith shall be true and correct in all material respects at and as of the Closing and
Effective Time as though such representations and warranties were made at and as of such time.
(b) Parent and Merger Sub shall have performed and complied with all covenants, agreements,
and conditions set forth or otherwise contemplated in, and shall have executed and delivered all
documents required by, this Agreement to be performed or complied with or executed and delivered by
them prior to or at the Closing.
(c) On or before the Closing, the directors of Parent and the Manager of Merger Sub, and
Parent as interest holder of Merger Sub, and the stockholders of Parent (to the extent the Parent
Required Vote is required by applicable law), shall have approved in accordance with applicable
state corporation law the execution and delivery of this Agreement and the consummation of the
transactions contemplated herein.
(d) On or before the Closing Date, Parent and Merger Sub shall have delivered certified copies
of resolutions of the sole interest holder and Manager of Merger Sub and of the directors of Parent
approving and authorizing the execution, delivery and performance of this Agreement and authorizing
all of the necessary and proper action to enable Parent and Merger Sub to comply with the terms of
this Agreement, including the election of the Company’s nominees to the Board of Directors of
Parent and all matters outlined or contemplated herein.
(e) The Merger shall be permitted by applicable state law and otherwise and Parent shall have
sufficient shares of its capital stock authorized to complete the Merger and the transactions
contemplated hereby.
(f) At the Closing, the number of directors of Parent will be set at three (3), and (A) Xxxxx
Xxxxxxxxxx, Xxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx, or such other persons designated by the Company,
shall be elected to the Board of Directors of Parent, (B) Xxxxx Xxxxxxxxxx shall be elected the
President and Chief Executive Officer of Parent, (C) Xxxxx Xxxxx shall be elected as the Executive
Vice President of Parent, (D) Xxxxxxx X. Xxxxx shall be elected Vice President, Chief Financial
Officer and Secretary of Parent, and (E) all of the former directors and officers of Parent shall
resign in writing from their positions as directors and officers of Parent.
(g) At the Closing, all instruments and documents delivered by Parent or Merger Sub, including
to the Company holders of Series A and Series B Interests pursuant to the provisions hereof shall
be reasonably satisfactory to legal counsel for the Company.
(h) The Company shall have received the reasonable assurance of its certified public
accountants, to the extent it deems necessary, that its financial audit shall be concluded at the
proper time in order to be in full compliance will applicable SEC reporting requirements in
connection with the Merger and the Closing of this transaction.
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(i) The Company shall have raised a minimum of $8,000,000 of capital in connection with its
Private Placement under terms and conditions acceptable to the Company.
(j) The shares of restricted Parent capital stock to be issued to the holders of Company
Series A and Series B Interests at Closing will be validly issued, nonassessable and fully paid
under Delaware corporation law and will be issued in a nonpublic offering in compliance with all
federal, state and applicable Securities Laws.
(k) The Company shall have received the advice of its tax advisor, to the extent it deems
necessary, that this transaction is a tax free reorganization as to the Company and all of the
holders of Company Series A and Series B Interests.
(l) The Company shall have received all necessary and required approvals and consents from
required parties and from its holders of Company Series A and Series B Interests in connection with
the Closing of this Agreement, including stockholder approval to change the name of Parent to
“Pacific Asia Petroleum, Inc.,” in the State of Delaware and thereafter change the trading symbol
of Parent.
(m) At the Closing, Parent and Merger Sub shall have delivered to the Company an opinion of
Parent’s legal counsel dated as of the Closing to the effect that:
(1) Parent is a corporation duly organized, validly existing and in good standing under the
laws of the Delaware, and Merger Sub is a limited liability company validly existing and in good
standing under the laws of Delaware;
(2) This Agreement has been duly authorized, executed and delivered by Parent and Merger Sub
and is a valid and binding obligation of Parent and Merger Sub enforceable in accordance with its
terms;
(3) Parent and Merger Sub each through its Board of Directors and stockholders, and interest
holders and Manager, respectively, have taken all corporate action necessary for performance under
this Agreement;
(4) The documents executed and delivered to the Company and the holders of Company Series A
and Series B Interests hereunder are valid and binding in accordance with their terms and vest in
the holders of Company Series A and Series B Interests all right, title and interest in and to the
shares of Parent’s Common Stock and Preferred Stock to be issued pursuant to Section 2 hereof, and
the shares of Parent capital stock when issued will be duly and validly issued, fully paid and
nonassessable; and
(5) Parent and Merger Sub each has the corporate power to execute, deliver and perform under
this Agreement.
(n) The “Closing” as defined in the IMPCO Merger Agreement of that certain merger transaction
contemplated by the IMPCO Merger Agreement shall close simultaneously with the Closing of the
Merger under this Agreement.
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8. Conditions Precedent to the Obligations of Parent and Merger Sub. All obligations
of Parent and Merger Sub under this Agreement are subject to the fulfillment, prior to or at the
Closing and/or the Effective Time, of each of the following conditions:
(a) The representations and warranties by the Company contained in this Agreement or in any
certificate or document delivered pursuant to the provisions hereof shall be true and correct in
all material respects at and as of the Closing and the Effective Time as though such
representations and warranties were made at and as of such times.
(b) The Company shall have performed and complied with, in all material respects, all
covenants, agreements, and conditions required by this Agreement to be performed or complied with
by it prior to or at the Closing.
(c) The Company shall have raised a minimum of $8,000,000 of capital in connection with its
Private Placement.
(d) The Company shall deliver an opinion of its legal counsel to the effect that:
(1) The Company is a limited liability company duly organized, validly existing and in good
standing under the laws of the state of its organization;
(2) This Agreement has been duly authorized, executed and delivered by the Company;
(3) The Manager and holders of Company Series A and Series B Interests have taken all
corporate action necessary for performance under this Agreement; and
(4) The Company has the corporate power to execute, deliver and perform under this Agreement.
9. Survival and Indemnification. Notwithstanding any investigation conducted by any
Party hereto or any information any party may receive, all representations, warranties, covenants
and agreements contained in this Agreement (or in any schedule, certificate, document or statement
delivered pursuant hereto) shall survive only until the Closing.
10. Nature of Representations. All of the parties hereto are executing and carrying
out the provisions of this Agreement in reliance solely on the representations, warranties and
covenants and agreements contained in this Agreement and the other documents delivered at the
Closing and not upon any representation, warranty, agreement, promise or information, written or
oral, made by the other party or any other Person other than as specifically set forth herein.
11. Documents at Closing. At the Closing, the following documents shall be delivered:
(a) The Company will deliver, or will cause to be delivered, to Parent the following:
18
(1) a certificate executed by the President of the Company to the effect that all
representations and warranties made by the Company under this Agreement are true and correct as of
the Closing and as of the Effective Time, the same as though originally given to Parent or Merger
Sub on said date;
(2) a certificate from the state of the Company’s organization dated within five business days
of the Closing to the effect that the Company is in good standing under the laws of said state;
(3) such other instruments, documents and certificates, if any, as are required to be
delivered pursuant to the provisions of this Agreement;
(4) an executed copy of the LLC Certificate of Merger for filing in Delaware;
(5) certified copies of resolutions adopted by the members and Manager of the Company
authorizing the Merger;
(6) all other items, the delivery of which is a condition precedent to the obligations of
Parent and Merger Sub, as set forth herein; and
(7) the legal opinion required by Section 8(d) hereof.
(b) Parent and Merger Sub will deliver or cause to be delivered to the Company:
(1) stock certificates representing those securities of Parent to be issued as a part of the
Merger as described in Section 2 hereof;
(2) a certificate of the President of Parent and Merger Sub, respectively, to the effect that
all representations and warranties of Parent and Merger Sub made under this Agreement are true and
correct as of the Closing, the same as though originally given to the Company on said date;
(3) certified copies of resolutions adopted by Parent’s Board of Directors and, if applicable,
stockholders, and the Manager of Merger Sub and its members, if applicable, authorizing the Merger
and all related matters;
(4) certificates from the jurisdiction of incorporation of Parent and organization of Merger
Sub dated within five business days of the Closing Date that each of said corporations is in good
standing under the laws of said state;
(5) opinion of Parent’s counsel as described in Section 7(m) above;
(6) such other instruments and documents as are required to be delivered pursuant to the
provisions of this Agreement;
19
(7) written resignation of all of the officers and directors of Parent and Merger Sub and
written appointment of the Company nominees as directors and officers; and
(8) all other items, the delivery of which is a condition precedent to the obligations of the
Company, as set forth in Section 7 hereof.
12. Consultants’ Fees. Parent and Merger Sub, jointly and severally, represent and
warrant to the Company, and the Company represents and warrants to each of the Parent and Merger
Sub, that none of them, or any party acting on their behalf, has incurred any liabilities, either
express or implied, to any “consultant” “broker” or “finder” or similar Person in connection with
this Agreement or any of the transactions contemplated hereby.
(a) Standard and Poor’s. If required for the trading of Parent Common Stock, Parent
shall use its commercially reasonable efforts to apply for listing with Standard and Poor’s
Information Service and Blue Sky filings.
(b) Stock Listing. As soon as Parent meets the company listing requirements, Parent
shall use all commercially reasonable efforts to cause Parent Common Stock to be listed for trading
on the Over-The-Counter Bulletin Board.
(c) Confidentiality. Parent hereby agrees that, after the Execution Date and prior to
Effective Time, it shall not publicly disclose any confidential information of Parent or the
Company, and that they shall not make any public statement or announcement regarding the Merger or
the business, financial condition, prospects or operations of Parent or the Company, without the
prior written consent of the Company.
14. Miscellaneous.
(a) Further Assurances. At any time, and from time to time, after the Effective Time,
each party will execute such additional instruments and take such action as may be reasonably
requested by the other party to confirm or perfect title to any property transferred hereunder or
otherwise to carry out the intent and purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with any of its
obligations, agreements or conditions hereunder may be waived in writing by the party (in its sole
discretion) to whom such compliance is owed.
(c) Termination.
20
after gaining requisite stockholder approval, by the mutual written consent of Parent and the
Company.
a. any representation or warranty of the Company contained in this Agreement shall not be true
in all material respects when made or, if a representation or warranty relates to a particular
date, shall not be true in all material respects as of such date (provided such breach is capable
of being cured and has not been cured within five (5) business days following receipt by the
breaching Party of notice of the breach) or on and as of the Effective Time as if made on and as of
the Effective Time; or
b. the Merger is not approved by the Company’s members contemplated by this Agreement.
a. any representation or warranty of Parent or Merger Sub contained in this Agreement shall
not be true in all material respects when made or, if a representation or warranty relates to a
particular date, shall not be true in all material respects as of such date (provided such breach
is capable of being cured and has not been cured within five (5) business days following receipt by
the breaching Party of notice of the breach) or on and as of the Effective Time as if made on and
as of the Effective Time; or
b. the Merger is not submitted to Parent’s stockholders as contemplated by this Agreement
(provided that the Company is not in material breach of the terms of this Agreement and this
Agreement has not otherwise been terminated pursuant to this Section 14(c)).
(d) Amendment. This Agreement may be amended only in writing as agreed to by all
parties hereto.
21
(e) Notices. All notices, requests, demands, claims, and other communications
required or permitted hereunder shall be in writing and shall be deemed given upon receipt if
delivered personally or by recognized commercial delivery service, or mailed by registered or
certified mail (return receipt requested), or sent via facsimile (with acknowledgment of complete
transmission and confirmed in writing by mail simultaneously dispatched) to the parties at the
following addresses (or at such other address for a party as shall be specified by like notice):
(1) | if to Parent or Merger Sub, to: Pacific East Advisors, Inc. 00000 X. Xx Xxxx Xxxx., Xxxxx 000 Xxxxxxxxx, Xxxxxxxxxx 00000 Attention: Xxxxx X. Xxxxx Telephone No.: (000) 000-0000 Facsimile No.: (000) 000-0000 |
||
with a copy (which shall not constitute notice) to: Xxxxxxx Group, LLP 0000 Xx Xxxxx Xxxxxxxxx Xx Xxxxx, Xxxxxxxxxx 00000 Attention: Xxxxx Xxxxxxx Telephone No.: (000) 000-0000 Facsimile No.: (000) 000-0000 |
(2) | if to Company, to: Advanced Drilling Services, LLC 00000 X. Xx Xxxx Xxxx., Xxxxx 000 Xxxxxxxxx, Xxxxxxxxxx 00000 Attention: Xxxxx X. Xxxxx Telephone No.: (000) 000-0000 Facsimile No.: (000) 000-0000 |
(f) Headings. The section and subsection headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(h) Binding Effect. This Agreement shall be binding upon the parties hereto and inure
to the benefit of the parties, their respective heirs, administrators, executors, successors and
assigns.
(i) Entire Agreement. This Agreement and the attached Exhibits, is the entire
agreement of the parties covering everything agreed upon or understood in the transaction.
22
There are no oral promises, conditions, representations, understandings, interpretations or
terms of any kind as conditions or inducements to the execution hereof.
(j) Time. Time is of the essence.
(k) Severability. If any part of this Agreement is deemed to be unenforceable, the
balance of the Agreement shall remain in full force and effect.
(l) Responsibility and Costs. If the Merger is not consummated, all fees, expenses
and out-of-pocket costs, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred by the parties hereto (collectively the
“Transaction Expenses”) shall be borne solely and entirely by the party that has incurred
such costs and expenses, unless the failure to consummate the Merger constitutes a breach of the
terms hereof, in which event the breaching party shall be responsible for all costs of all parties
hereto. If the Merger is consummated, the Company shall be responsible for payment of all
Transaction Expenses incurred by the Company, the Parent and the Merger Sub.
(m) Applicable Law. This Agreement shall be construed and governed by the internal
laws of the State of Delaware, without reference to principles of conflicts of law.
(n) Jurisdiction and Venue. Each party hereto irrevocably consents to the
jurisdiction and venue of the state or federal courts located in Santa Xxxxx County, State of
California, in connection with any action, suit, proceeding or claim to enforce the provisions of
this Agreement, to recover damages for breach of or default under this Agreement, or otherwise
arising under or by reason of this Agreement.
(o) Definitions. As used in this Agreement, the following terms shall have the
meanings set forth below:
(1) “Company Disclosure Documents” means that certain Confidential Private Placement
Memorandum of the Company, to be provided by the Company prior to the Closing, and other documents
provided to Parent by the Company prior to the Effective Time. Any information with respect to a
matter that is disclosed by the Company to the Parent for any purpose in the Company Disclosure
Documents shall be deemed to be disclosed for all purposes hereunder provided that such information
sufficiently identifies the matter in question in all material respects.
(2) “Parent Disclosure Documents” means all available documents filed by Parent with
the NASD, the SEC or documents otherwise provided by Parent to the Company prior to the Effective
Time.
(3) “Encumbrance” means, with respect to any Person, any mortgage, deed of trust,
pledge, lien, security interest, charge, claim or other security arrangement of any nature
whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the
effect of, security and any filed financing statement or other notice of any of the foregoing
(whether or not an Encumbrance is created or exists at the time of the filing).
23
(4) “Environmental Law” means any and all applicable Legal Requirements, and without
limiting the foregoing, any regulations, orders, decrees, judgments or injunctions promulgated or
entered into by any Governmental Entity, relating to the preservation or reclamation of natural
resources, or to the management, Release (as hereinafter defined) or threatened Release of
Hazardous Material (as hereinafter defined), including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq.
(“CERCLA”), the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq., the Clean
Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2701 et seq., the
Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. § 11001 et. seq., the Safe Drinking Water Act, 42 U.S.C. §
300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §§ 1801 et seq., and any
similar or implementing state or local law, and all amendments or regulations promulgated
thereunder.
(5) “Environmental Liabilities” means all claims, demands, causes of action,
liabilities, investigations, judgments, damages, costs and expenses (including, without limitation,
costs of suit, reasonable attorneys’ fees, costs of negotiation, consulting fees and expert fees,
Remedial Action costs, penalties, fines and punitive damages, whether in respect of death, personal
injury, property damage, cleanup and removal expense, cost recovery contribution or compensation),
under Environmental Laws in effect prior to or as of the Closing, which arise from (i) the Release
of Hazardous Materials prior to the Closing at, on, in or under any facilities of the Company, (ii)
any violation by the Company of any Environmental Law in effect at the time of the Closing Date,
due to conditions existing or events occurring prior to the Closing, or (iii) the off-site
treatment, storage or disposal of Hazardous Materials from any of the facilities of the Company at
any time prior to the Closing.
(6) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(7) “GAAP” means generally accepted accounting principles in the United States.
(8) “Governmental Authorization” means any permit, license, franchise, approval,
consent, permission, confirmation, endorsement, waiver, certification, registration, qualification,
clearance or other authorization issued, granted, given or otherwise made available by or under the
authority of any Governmental Entity or pursuant to any Legal Requirement.
(9) “Governmental Entity” means any nation, state, municipality and any federal,
state, local, foreign, provincial or supranational court or governmental agency, authority,
instrumentality or regulatory body.
(10) “Hazardous Material” means all explosive or regulated radioactive materials or
substances; petroleum and petroleum products (including crude oil or any fraction thereof);
asbestos or asbestos-containing materials; and any hazardous or toxic materials, wastes or
chemicals designated, defined, listed or regulated as such pursuant to any Environmental Law.
24
(11) “Indebtedness” means indebtedness for borrowed money or the equivalent or
represented by notes, bonds or other similar instruments or letters of credit (or reimbursement
agreements in respect thereof) or representing the balance deferred and unpaid of the purchase
price of any property (other than trade payables constituting current liabilities and Personal
property leases), and including without limitation capital lease obligations, including all accrued
and unpaid interest thereon, and applicable prepayment, breakage or other premiums, fees or
penalties and the costs of discharging such indebtedness, all as determined in accordance with
GAAP.
(12) “Legal Requirement” shall mean any federal, state, local, provincial, foreign,
international, multinational or other statute, law, treaty, rule, regulation, guideline,
administrative order, directives, ordinance, constitution or principle of common law (or any
interpretation thereof by a Governmental Entity).
(13) “Material Adverse Effect” means:
(a) with respect to the Company, an effect that would be materially adverse: (i) to the
business, results of operation or financial condition of the Company; (ii) to the Company’s ability
to perform any of its material obligations under this Agreement or to consummate the Merger; or
(iii) to the ability of the Continuing LLC or Parent to conduct the business of the Company
following the Effective Time or the ability of the Company to exercise full rights of ownership of
the Company or its assets or business; or
(b) with respect to Parent, an effect that would be materially adverse: (i) to the business,
results of operation, or financial conditions of Parent and its Subsidiaries, considered as a
whole; or (ii) to Parent’s ability to perform any of its material obligations under this Agreement
or to consummate the Merger; or (iii) to the ability of the Continuing LLC or Parent to conduct the
business of the Company following the Effective Time or the ability of Parent to exercise full
rights of ownership of the Company or its assets or business;
provided, however, that in determining whether a Material Adverse Effect has
occurred there shall be excluded any action or omission of the Company or Parent taken with the
prior written consent of Parent or the Company, as applicable, in contemplation of the Merger.
(14) “Party” or “Parties” means either, or collectively, Parent, Merger Sub or
the Company.
(15) “Person” means any individual and any corporation, partnership, limited liability
company, firm, trust, or other business entity and any Governmental Entity.
(16) “Remedial Action” shall mean (a) “remedial action” as such term is defined in
CERCLA and (b) all other action required by any Governmental Entity to respond to a release or
threatened release of Hazardous Material.
(17) “Securities Act” means the Securities Act of 1933, as amended.
(18) “Securities Laws” means the Securities Act; the Exchange Act; the Investment
Company Act of 1940, as amended; the Investment Advisers Act of 1940, as
25
amended; the Trust Indenture Act of 1939, as amended; the rules and regulations of the
Securities and Exchange Commission promulgated thereunder; and the blue sky and other Legal
Requirements of any state that are applicable to the purchase and sale of securities generally.
(19) “Subsidiary” or “Subsidiaries” means with respect to any party, any
corporation, company, partnership or other organization, whether incorporated or unincorporated,
which is consolidated with such party for financial reporting purposes.
(20) In addition, the following terms shall be interpreted as set forth below:
a. The words “hereof,” “herein,” “hereby” and “hereunder” and/or words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any particular
provisions of this Agreement.
b. Terms defined in the singular shall have a comparable meaning when used in the plural, and
vice-versa.
c. References to the “Knowledge” of an entity shall refer to the actual personal knowledge of
the directors and officers of the entity, and the knowledge of any fact or matter which any Person
would have following inquiries of those employees and directors or former employees and directors
of the entity of whom such persons would reasonably believe would have actual knowledge of such
matters presented.
d. References to an “Exhibit” or to a “Schedule” are, unless otherwise specified, to one of
the Exhibits or Schedules attached to or referenced in this Agreement. The reference to an
“Article” or “Section” is, unless otherwise specified, to one of the Articles or Sections of this
Agreement.
26
PACIFIC EAST ADVISORS, INC., | DRILLCO ACQUISITION, LLC, | |||||||||
a Delaware corporation | a Delaware limited liability company | |||||||||
By:
|
/s/ Xxxx Xxxxxx
|
By: | /s/ Xxxx Xxxxxx
|
|||||||
Chairman, President and Chief Executive | President and Chief Executive Officer | |||||||||
Officer | ||||||||||
ADVANCED DRILLING SERVICES, LLC., | ||||||||||
a Delaware limited liability company | ||||||||||
By: | /s/ Xxxxx X. Xxxxx | |||||||||
Xxxxx X. Xxxxx, | ||||||||||
Manager, President and Chief Executive Officer |
27
EXHIBIT A
PARENT CERTIFICATE
Intentionally Omitted
28
Amendment No 1. to the Amended and Restated Plan of Merger and Reorganization
ADVANCED DRILLING SERVICES, LLC
ADVANCED DRILLING SERVICES, LLC
This Amendment No. 1 to Amended and Restated Plan of Merger and Reorganization (“Amendment”)
is executed as of the 20th day of April, 2007, by and among: Pacific East Advisors, Inc., a
Delaware corporation (“Parent”), DRILLCO ACQUISITION, LLC., a Delaware limited liability company
and a wholly-owned subsidiary of Parent (“Merger Sub”) and ADVANCED DRILLING SERVICES, LLC, a
Delaware limited liability company (the “Company”).
WHEREAS, Parent, Merger Sub and the Company entered into that certain Agreement and Plan of
Merger and Reorganization (the “Merger Agreement”) dated December 5, 2006, and as amended and
restated on February 12, 2007, concerning the merger of the Company with and into Merger Sub. (such
agreement, as so amended and restated, is hereinafter referred to as the “Agreement”); and
1. | Section 2(b)(1) of the Merger Agreement is amended and restated in its entirety, effective as of the date hereof, to provide as follows: |
“(1) It is currently contemplated that prior to the Merger becoming effective
under Delaware law, the Company shall close a private offering under Regulation D,
Rule 506, as promulgated by the Securities and Exchange Commission (“SEC”)
under the Securities Act, pursuant to which it will issue up to 13,600,000 Class B
Interests (excluding warrants issuable to the Company’s placement agents) (the
“Maximum Offering”) at $1.25 per Class B Interest (the “Private
Placement”). All of the Class B Interests issued as part of the Private
Placement shall be included in the membership interests of the Company that are
outstanding at the time of the Merger and will be converted/exchanged in the Merger
in accordance with Section 2(c)(1) below.”
2. | Section 2(c)(1) of the Merger Agreement is amended and restated in its entirety, effective as of the date hereof, to provide as follows: |
“(1) By virtue of the LLC Merger and without any further action on the part of
the Company or the Merger Sub or the holders of interests of the Company: (i) each
Class A Interest of the Company then outstanding shall be converted into one (1)
fully paid share of Common Stock of the Parent for a total aggregate of 9,850,000
fully paid and nonassessable shares of Common Stock, par value $0.001; AND (ii) each
Class B Interest of the Company then issued and
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outstanding in connection with the
Private Placement shall be converted into one (1) fully paid share of Series A
Preferred Stock of the Parent for a maximum total aggregate of 13,600,000 fully paid
and nonassessable shares of Series A Preferred Stock, par value $0.001 (excluding
warrants issuable to the Company’s placement agents) (assuming the Maximum Offering
is achieved).”
3. | Section 3(c) of the Merger Agreement is amended and restated in its entirety, effective as of the date hereof, to provide as follows: |
“(c) Capital Structure of the Company. The issued and outstanding
limited liability company interests of the Company consist of 9,850,000 Class A
Interests and no Class B Interests as of the Execution Date. In connection with the
Private Placement, the Company may issue up to 13,600,000 additional Class B
Interests prior to the Closing (excluding warrants issuable to the Company’s
placement agents). As of the Execution Date, all the outstanding limited liability
company interests of the Company are held by the members free and clear of all
encumbrances. As of the Execution Date and as of the Closing, other than the
warrants issuable to the Company’s placement agents in connection with the Private
Placement (the “Placement Agent Warrants”) and as otherwise set forth
herein, there are and will be no options, warrants, convertible securities or other
rights, agreements, arrangements or commitments relating to the limited liability
company interests of the Company.”
4. | Except to the extent modified hereby, the Merger Agreement shall remain in full force and effect. |
[The remainder of this page is intentionally left blank.]
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PACIFIC EAST ADVISORS, INC. | DRILLCO ACQUISITION, LLC | |||||||||
a Delaware corporation | a New York limited liability company | |||||||||
By:
|
/s/ Xxxx Xxxxxx
|
By: | /s/ Xxxx Xxxxxx
|
|||||||
Chairman, President and Chief Executive Officer | President and Chief Executive Officer | |||||||||
ADVANCED DRILLING SERVICES LLC, | ||||||||||
a Delaware limited liability company | ||||||||||
By: | /s/ Xxxxx X. Xxxxx | |||||||||
Xxxxx X. Xxxxx, | ||||||||||
Manager, President and Chief Executive Officer |
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