AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (herein, together with all
Exhibits, "Agreement") is entered in to as of November 6, 1996 by and
between Lakota Energy, Inc., a Colorado corporation, ("Lakota"): and
Chancellor Trading Group, Inc., a Colorado corporation ("Chancellor").
This Agreement sets forth the terms and conditions upon which Lakota will
merge with and into Chancellor (the "Merger"), pursuant to an Agreement and
Plan of Merger (the "Merger Agreement") in substantially the form attached
hereto as Exhibit A, which provides, among other things, for the conversion
and exchange of all Common Shares outstanding of Lakota ("Lakota Common
Shares") into 9,187,500 shares of voting, no par value common stock of
Chancellor ("Chancellor Common Stock").
In consideration of the mutual promises. and covenants contained herein,
Lakota and Chancellor agree as follows:
ARTICLE 1
Definitions
As used in this Agreement, the following terms (whether used in singular or
plural forms) shall have the following meanings:
"Contract" means any written contract, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant,
right, or other instrument, document or agreement, and any oral obligation,
right or agreement.
"GAAP" means generally accepted accounting principles, as that term is
defined by the American Institute of certified public accountants under the
first standard of reporting under its generallyaccepted accounting standards.
"Knowledge" of Lakota of or with respect to -any matter means that any of
the executive officers, directors or senior managers of Lakota has, or after
due inquiry and investigation would have, actual awareness or knowledge of
such matter, and "Knowledge" of Chancellor of or with respect to any matter
means that any of the executive officers, directors or senior managers of
Chancellor has, or after due inquiry and investigation would have, actual
awareness or knowledge of such matter.
"Legal Requirements" means applicable common law and any statute, ordinance,
code or other law, rule, regulation, order, technical or other standard,
requirement, judgment, or procedure enacted, adopted, promulgated, applied
or followed by any governmental authority, including judgments.
"Lien" means any security agreement, financing statement filed with any
governmental authority, conditional sale statement filed with any
governmental authority, conditional sale or other tide retention agreement,
any lease, consignment or bailment given for purposes of security, any lien,
mortgage, indenture, pledge, option, encumbrance, adverse interest,
constructive trust or other trust, claim, attachment, exception to or defect
in title or other ownership interest (including but not limited to
reservations, rights of entry, possibilities of reverter, encroachments,
easement, rights-ofway, restrictive covenants leases and licenses) of any
kind, which otherwise constitutes an interest in or claim against property,
whether arising pursuant to any Legal Requirement, Contract or otherwise.
"Transaction Document" means any Contract or other written report or record
required to be provided pursuant to this Agreement.
ARTICLE 2
Merger
Section 2.1 Merger. Subject to the terms and conditions contained in this
Agreement, Lakota will be merged by statutory merger with and into
Chancellor pursuant to the Merger Agreement at a Closing at the Effective
Tune of the Merger as defined in the Merger Agreement. In the Merger, the
shares of Lakota outstanding immediately prior to the effective time of the
merger (excluding shares as to which statutory dissenters' rights have been
exercise) will be converted into and exchanged for 9,187,500 shares of
Chancellor Common Stock, subject to adjustments as provided in Section 2.2.
Section 2.2 Mechanics for Closing Merger. Upon the approval of the
respective shareholders, the executed Articles of Merger shall be filed with
the Colorado Secretary of State.
Section 2.3 Further Assurances. At or after Closing, Lakota, at the request
of Chancellor, shall promptly execute and deliver, or cause to be executed
and delivered, to Chancellor all such documents and instruments, in form and
substance satisfactory to Chancellor, as Chancellor reasonably may request
in order to carry out or evidence the terms of this Agreement.
ARTICLE 3
Representations and Warranties of Lakota
Lakota represents and warrants to Chancellor, as of the date of this
Agreement and as of Closing, as follows:
Section 3. 1 Organization and Qualification of Lakota. Lakota is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado and has all requisite power to conduct its
activities as such activities are currently conducted.
Section 3.2 Authority. Lakota. has all requisite power and authority to
execute, deliver and perform this Agreement. The execution, delivery and
performance of this Agreement by Lakota have been duly and validly
authorized by all necessary action on the part of Lakota. This Agreement has
been duly and validly executed and delivered by Lakota, and is a valid and
binding obligation of Lakota, enforceable against Lakota in accordance with
its terms.
Section 3.3 Ownership and Number of Common Shares of Lakota. The
shareholders set forth on Exhibit 3.3 own the Lakota Common Shares shown
thereon, beneficially and of record, free and clear of all liens. The Lakota
Common Shares are not subject to, or bound or affected by, any proxies,
voting agreements, or other restrictions on the incidents of ownership
hereof. There are not, and will not at Closing, be more than 4,593,750
outstanding Lakota Common Shares.
Section 3.4 No Subsidiaries. Lakota does not control or hold direct or
indirect equity interests in, or hold rights to control or acquire direct or
indirect equity interests in, any corporation except that Lakota has the
option to purchase 399,999 Common Shares of West Bolt Energy, Inc., a Texas
Corporation.
Section 3.12 Absence of Certain Changes or Events. Since the date of the
balance sheet there has not occurred:
(a) any material and adverse change in the financial condition or
operations of Lakota,
(b) any damage, destruction or loss to or of any of the material
assets or properties owned or leased by Lakota;
(c) the creation or attachment of any Lien against the Common Shares
of Lakota,
(d) any waiver, release, discharge, transfer, or cancellation by
Lakota of any rights or claims of material value;
(e) any issuance by Lakota of any Common Shares, or any merger or
consolidation of Lakota with any other Person, or any acquisition by Lakota
of the business of any other Person;
(f) any incurrence, assumption or guarantee by Lakota of any
indebtedness or liability;
(g) any declaration, setting aside or payment by Lakota of any dividends on,
or any other distribution with respect to, any Common Shares of Lakota or
any repurchase, redemption, or other acquisition of any Common Shares of
Lakota;
(h) (A) any payment of any bonus, profit sharing, pension or similar payment
or arrangement or special compensation to any employee of Lakota, except in
the ordinary course of the administration of Lakota, or (B) any increase in
the compensation payable or to become payable to any employee of Lakota; or
(i) the entry by Lakota into any Contract to do any of the foregoing.
Section 3.13 Material Lakota Contracts. As of the date of this Plan of
Reorganization, Lakota does not have except as discussed in Exhibit 3.13,
(i) contracts evidence or evidencing or relating to any liabilities or
obligations of Lakota, whether absolute, accrued, contingent or otherwise,
or granting any Person a Lien or against any properties or assets owned or
leased by Lakota; (ii) joint venture or partnership Contracts between Lakota
and any other person; (iii) Contracts limiting the freedom of Lakota to
engage in or to compete in any activity, or to use or disclose any
information in its possession; and (iv) any other Contracts to which Lakota
is a party or by which it or the assets or properties owned or leased by it
are bound or affected that are not set forth on other Exhibits hereto, which
in the aggregate contemplate payments to or by Lakota exceeding $50,000 in
any twelvemonth period (collectively herein as the "Material Lakota
Contract"). Lakota has delivered to Chancellor true and complete copies of
each of the Material Lakota Contracts, including any amendments thereto (or,
in the case of oral Material Lakota Contracts is valid, in full force and
effect and enforceable in accordance with its terms against the parties
thereto other than Lakota, and Lakota has fulfilled when due, or has taken
all action necessary to enable it to fulfill. when due, all. of its
obligations thereunder; (ii) there has not occurred any default (without
regard to lapse of time, the giving of notice, or the election of any person
other than Lakota, or any combination thereof) by Lakota, nor, to the
knowledge of Lakota, has there occurred any default (without regard to lapse
of time, the giving of notice, or the election of Lakota, or any combination
thereof) by any other person, under any of the Material Lakota Contracts;
and (iii) neither Lakota nor, to the knowledge of Lakota, any other person
is in arrears in the performance or satisfaction of its obligations under
any of the Material Lakota Contracts, and no waiver has been granted by any
of the parties thereto.
Section 3.14 Real Property. As of the date of this Plan of Reorganization,
Lakota does not own any real property.
Section 4.2 Authority. Chancellor has all requisite corporate power and
authority to execute, deliver and perform this Agreement. The execution,
delivery, and performance of this Agreement by Chancellor have been duly and
validly authorized by all necessary action on the part of Chancellor. This
Agreement has been duly and validly executed and delivered by Chancellor,
and is the valid and binding obligation of Chancellor, enforceable against
Chancellor in accordance with its terms.
Section 4.3 Validity and Ownership of Chancellor Common Stock. The
Chancellor Common Stock received by the shareholders of Lakota at Closing
will be validly issued and outstanding, fully paid and nonassessable. The
Chancellor Common Stock will not be subject to, nor bound or affected by,
any proxies, voting agreements, or other restrictions on the ownership thereof.
Section 4.4 No Subsidiaries. Chancellor does not control or hold direct or
indirect equity interests in, or hold rights to control or acquire direct or
indirect equity interests in, any corporation.
Section 4.5 Capitalization of Chancellor. The authorized capital stock of
Chancellor consists of 50,000,000 duly authorized shares of common stock, no
par value, of which 1,801,000 are validly issued and outstanding, fully paid
and nonassessable. There are 5,000,000 shares of non-voting preferred stock,
no par value per share authorized, of which there are no preferred shares
issued and outstanding. There are no other authorized or outstanding
subscriptions, options, convertible securities, warrants, calls or other
rights of any kind issued or granted by, or binding upon, Chancellor to
purchase or otherwise acquire any securities of or equity interest in
Chancellor.
Section 4.6 No Conflicts; Required Consents. The execution, delivery and
performance by Chancellor of this Agreement does not and win not: (i)
conflict with or violate any provisions of the articles or certificate of
incorporation or bylaws of Chancellor; (ii) violate any provision of any
Legal Requirements; or (iii) conflict with, violate, result in a breach of,
constitute a default under (without regard to requirements of notice, lapse
of time, or elections of other persons, or any combination thereof) or
accelerate or pen-nit the acceleration of the performance required by, any
Contract or Lien to which Chancellor is a party or by which Chancellor or
the assets or properties owned or leased by it are bound or affected.
Section 4.7 Resignation of Directors and Officers. Chancellor shall deliver
to Lakota the resignation of the directors and officers of Chancellor.
Section 4.8 Litigation. Other than disclosed in Exhibit 4.8, there is no
litigation pending or, to Chancellor's knowledge, threatened, by or before
any governmental authority or private arbitration tribunal, against
Chancellor or its operations, nor, to Chancellor's knowledge, is there any
basis for any such litigation.
Section 4.9 Compliance with Applicable Legal Requirements. Conduct by
Chancellor of its activities as currently conducted does not violate or
infringe upon any Legal Requirements currently in effect, or, to the
knowledge of Chancellor, proposed to become effective; and Chancellor has
received no notice of any violation by Chancellor of any Legal Requirements
applicable to Chancellor or its activities as currently conducted; and
Chancellor knows of no basis for the allegation of any such violation.
Section 4.10 Financial Statements. Chancellor is a development stage
corporation with no assets and shareholder equity. Chancellor has delivered
to Lakota the audited financial statements for the period July 14, 1995
(inception) through February 22, 1996 and the unaudited balance sheet and
statement of operations of Chancellor as of September 30, 1996. The
unaudited financial statements were prepared in accordance with GAAP and
present fairly the financial position of Chancellor as of the date indicated
and the results of operations of Chancellor for the period ended September
30, 1996.
Section 4. 11 Liabilities. Chancellor has no liabilities or obligations,
whether absolute, accrued, contingent or otherwise, that are not reflected
in the balance sheet or nondelinquent obligations for ordinary and recurring
expenses, including in the ordinary course of business of Chancellor since
the date of the balance sheet.
Section 4.12 Tax Returns and Payments. Chancellor has filed all federal,
state, local and foreign tax returns required to be filed, and has timely
paid all taxes that have become due and payable, whether or not so shown on
any such tax returns. Chancellor has not received any notice of, nor does
Chancellor have any knowledge of, any deficiency or assessment of proposed
any knowledge of, any deficiency or assessment of proposed deficiency or
assessment from any taxing governmental authority. There are no tax audits
pending with respect to Chancellor, and there are no outstanding agreements
or waivers by or with respect to Chancellor that extend the statutory period
of limitations applicable to any federal, state, local or foreign tax
returns for any period.
Section 4.13 Absence of Certain Changes or Events. Since the date of the
Balance Sheet there has not occurred:
(a) any material and adverse chance in the financial condition or
operations of Chancellor;
(b) any damage, destruction or loss to or of any of the material
assets or properties owned or leased by Chancellor;
(c) the creation or attachment of any Lien against the Common Stock of
Chancellor;
(d) any waiver, release, discharge, transfer, or cancellation by
Chancellor of any rights or claims of material value;
(e) any issuance by Chancellor of any securities, or any merger or
consolidation of Chancellor with any other Person, or any acquisition by
Chancellor of the business of any other Person;
(f) any incurrence, assumption or guarantee by Chancellor of any
indebtedness or liability;
(g) any declaration, setting aside or payment by Chancellor of any dividends
on, or any other distribution with respect to, any capital stock of
Chancellor or any repurchase, redemption, or other acquisition of any
capital stock of Chancellor;
(h) (A) any payment of any bonus, profit sharing, pension or similar payment
or arrangement or special compensation to any employee of Chancellor, except
in the ordinary course of the administration of Chancellor, or (B) any
increase in the compensation payable or to become payable to any employee of
Chancellor; or
(i) the entry by Chancellor into any Contract to do any of the foregoing.
Section 4.14 Material Chancellor Contracts. As of the date of this Plan of
Reorganization, Chancellor does not have (i) contracts evidence or
evidencing or relating to any liabilities or obligations of Chancellor,
whether absolute, accrued, contingent or otherwise, or granting any Person a
Lien or against any properties or assets owned or leased by Chancellor; (ii)
joint venture or partnership Contracts between Chancellor and any other
person; (iii) Contracts limiting the freedom of Chancellor to engage in or to
compete in any activity, or to use or disclose any information in its
possession; and (iv) any other Contracts to which Chancellor is a party or
by which it or the assets or properties owned or leased by it are bound or
affected that are not set forth on other Exhibits hereto, which in the
aggregate contemplate payments to or by Chancellor exceeding $50,000 in any
twelve-month period (collectively herein as the "Material Chancellor
Contract"). Chancellor has delivered to Lakota true and complete copies of
each of the Material Chancellor Contracts, including any amendments thereto
(or, in the case of oral Material Chancellor Contracts is valid, in full
force and effect and enforceable in accordance with its terms against the
parties thereto other than Chancellor, and Chancellor has fulfilled when
due, or has taken all action necessary to enable it to fulfill when due, all
of its obligations thereunder; (ii) there has not occurred any default
(without regard to lapse of time, the giving of notice, or the election of
any person other than Chancellor, or any combination thereof) by Chancellor,
nor, to the knowledge of Chancellor, has there occurred any default (without
regard to lapse of time, the giving of notice, or the election of
Chancellor, or any combination thereof) by any other person, under any of
the Material Chancellor Contracts; and (iii) neither Chancellor nor, to the
knowledge of Chancellor, any other person is in arrears in the performance
or satisfaction of its obligations under any of the Material Chancellor
Contracts, and no waiver has been granted by any of the parties thereto.
Section 4.15 Real Property. As of the date of this Plan of Reorganization,
Chancellor does not own any real property.
Section 4.16 Employees. As of the date of this Plan of Reorganization,
Chancellor does not have any employees.
Section 4.17 Books and Records. All of the books, records and accounts of
Chancellor are in all material respects true and complete, are maintained in
accordance with good business practice and all applicable Legal
Requirements, accurately present and reflect in all material respects all of
the transactions therein described, and are reflected accurately in the
Financial Statements. Chancellor has previously delivered to Lakota the
complete stock record book of Chancellor and true and complete copies of all
of the minutes of meetings and all other corporate actions of the
stockholders, Board of Directors and committees of the Board of Directors of
Chancellor since the date of its incorporation.
Section 4.18 Certain Interests. None of Chancellor or its officers,
directors, or holders of 10% or more of Chancellor Common Stock, directly or
indirectly is, or owns any interest in, or controls, or is an employee,
officer, director or partner of or participant in, or consultant to, any
person which is a competitor, supplier or customer of Chancellor.
Section 4.19 Bank Accounts. Exhibit 4.19 sets forth all bank accounts,
brokerage accounts, and safe deposit boxes of any kind maintained by
Chancellor and, in each case, identifies the persons that are authorized
signatories for, or which are authorized to have access to, each of them.
Section 4.20 Changes in Circumstances. Chancellor has no knowledge of (i)
any current or future condition or state of facts or circumstances which
could reasonably be expected to result in a material and adverse change in
the financial condition of operations of Chancellor, or (ii) any Legal
Requirements currently in effect from which Chancellor currently is, or any
currently proposed Legal Requirements from which Chancellor would be, exempt
by reason of any "grandfather" clauses or provisions contained therein, but
which would be applicable to Lakota following closing.
SECTION 4.21 ACCURACY of Information. None of the written information and
documents which have been or will be furnished by Chancellor or any
representatives of Chancellor to Lakota or any of the representatives of
Chancellor in connection with the transactions contemplated by this
Agreement contains or will contain, as the case may be, any untrue statement
of a material fact, or omits or will omit to state a material fact necessary
in order to make the statements therein not misleading in light of the
circumstances in which made. To the knowledge of Chancellor, Chancellor has
disclosed to Lakota all material information relating to Chancellor and its
activities as currently conducted.
ARTICLE 5
Covenants of Lakota and Chancellor
Section 5. 1 Affirmative Covenants of Lakota. Except as Chancellor may
otherwise consent in writing, between the date of this Agreement and
Closing, Lakota shall:
(a) conduct its business only in the usual, regular, and ordinary
course and in accordance with past practices;
(b) (1) duly comply with all applicable Legal Requirements; (2) perform all
of its obligations under all Lakota Contracts without default; and (3)
maintain its books, records, and accounts on a basis consistent with past
practices;
(c) (1) give to Chancellor and its counsel, accountants and other
representatives reasonable access, dcuring a normal business hours to the
premises of Lakota, all of the assets and properties owned or leased by
Lakota, Lakota'ds books and records, and Lakota's personnel; (2) furnish to
Chancellor and such representatives all such additional documents (certified
by an officer of Lakota, if requested), financial information and other
information as Lakota may from time to time reasonably request, and (3)
cause Lakota's accountants to permit Chancellor and its accountants to
examine the records and working papers pertaining to Lakota's financial
statements' provided that no investigation by Chancellor or its
representatives will affect or limit the scope of any of the representations
and warranties of Lakota herein or in any Exhibit or other related document;
(d) use its best efforts to obtain in writing as promptly as possible all
approvals and consents required to be obtained by Lakota in order to
consummate the transactions contemplated hereby and deliver to Chancellor
copies, satisfactory in form and substance to Chancellor, of such approvals
and consents;
(e) promptly deliver to Chancellor true and complete copies of all monthly
and quarterly financial statements of Lakota and any reports with respect to
the activities of Lakota which are prepared by or for Lakota at any time
from the date hereof until Closing; and
(f) promptly notify Chancellor of any circumstance, event or action, by
Lakota or otherwise, (A) which, if known at the date of this Agreement,
would have been required to be disclosed in or pursuant to this Agreement,
or (B) the existence, occurrence or taking of which would result in any of
the representations and warranties of Lakota in this Agreement or in any
Transaction Document not being true and correct in all material respects.
Section 5.2 Negative Covenants of Lakota. Except as Chancellor may otherwise
consent in writing, between the date of this Agreement and Closing, Lakota
shall not:
(a) change the character of its business;
(b) incur any liability or obligation or enter into any Contract except, in
each case, in the ordinary course of business consistent with prior
practices and not prohibited by any other provision hereof;
(c) incur, assume or guarantee any indebtedness or liability in
respect of borrowed money;
(d) make any capital expenditure or commitment for capital expenditure,
whether or not in the ordinary course of business, other than transaction
contemplated with Xxxxxxx Xxxxxxxx as described in Exhibit 5.2(d);
(e) create, modify, terminate, or abrogate any Material Lakota Contract
other than in the ordinary course of business, or waive, lease, discharge,
transfer or cancel any rights or claims of material value;
(f) create or permit the creation or attachment of any Lien against
any of the assets or properties owned or leased by it;
(g) except as otherwise required by this Agreement, prepay any
material liabilities or obligations;
(h) issue any securities, or merge or consolidate with any other person, or
acquire any of the securities, partnership or joint venture interests, or
business of any other person;
(i) declare, set aside or pay any dividends on, or make any other
distribution with respect to, any of its capital stock, or repurchase,
redeem or otherwise acquire any of its capital stock; and
(j) enter into any transaction or permit the taking of any action that would
result in any of the representations and warranties in this Agreement not
being true and correct in all material respects at Closing.
Section 5.3 Affirmative Covenants of Chancellor. Except as Lakota may
otherwise agree in writing, between the date of this Agreement and Closing,
Chancellor shall:
(a) conduct its business only in the usual, regular, and ordinary
course and in accordance with past practices;
(b) (1) duly comply with all applicable Legal Requirements; (2) perform all
of its obligations under all Chancellor Contracts without default; and (3)
maintain its books, records, and accounts on a basis consistent with past
practices;
(c) (1) give to Lakota and its counsel, accountants and other
representatives reasonable access during normal business hours to the
premises of Chancellor, all of the assets and properties owned or leased by
Chancellor, Chancellor's books and records, and Chancellor's personnel; (2)
furnish to Lakota and such representatives all such additional documents
(certified by an officer of Chancellor, if requested), financial information
and other information as Chancellor may from time to time reasonably
request; and (3) cause
Chancellor's accountants to permit Lakota and its accountants to examine the
records and working papers pertaining to Chancellor's financial statements'
provided that no investigation by Lakota or its representatives will affect
or limit the scope of any of the representations and warranties arising
herein or in any exhibit or other related document;
(d) use its best efforts to obtain in writing as promptly as possible all
approvals and consents required to be obtained by Chancellor in order to
consummate the transactions contemplated hereby and deliver to Lakota
copies, satisfactory in form and substance to Lakota, of such approvals and
consents;
(e) promptly deliver to Lakota true and complete copies of all monthly and
quarterly financial statements of Chancellor and any reports with respect to
the activities of Chancellor which are prepared by or for Chancellor at any
time from the date hereof until Closing; and
(f) promptly notify Lakota of any circumstance, event or action, by
Chancellor or otherwise, (A) which, if known at the date of this Agreement,
would have been required to be disclosed in or pursuant to this Agreement,
or (B) the existence, occurrence or taking of which would result in any of
the representations and warranties of Chancellor in this Agreement or in any
Transaction Document not being true and correct in all material respects.
Section 5.4 Negative Covenants of Chancellor. Except as Lakota may otherwise
consent in writing, between the date of this Agreement and Closing,
Chancellor shall not:
(a) change the character of its business;
(b) incur any liability or obligation or enter into any Contract in
excess of $1,000;
(c) incur, assume or guarantee any indebtedness or liability in
respect of borrowed money;
(d) make any capital expenditure or commitment for capital expenditure
whether or not in the ordinary course of business;
(e) create, modify, terminate, or abrogate any Material Chancellor Contract
other than in the ordinary course of business, or waive, lease, discharge,
transfer or cancel any rights or claims of material value;
(f) create or permit the creation or attachment of any Lien against
any of the assets or properties owned or leased by it;
(g) except as otherwise required by this Agreement, prepay any
material liabilities or obligations;
(h) issue any securities, or merge or consolidate with any other person, or
acquire any of the securities, partnership or joint venture interests, or
business of any other person;
(i) declare, set aside or pay any dividends on, or make any other
distribution with respect to, any of its capital stock, or repurchase,
redeem or otherwise acquire any of its capital stock; and
(j) enter into any transaction or permit the taking of any action that would
result in any of the representations and warranties in this Agreement not
being true and correct in all material respects at Closing.
Section 5.5 Joint Undertakings. Each of Chancellor and Lakota shall
cooperate and exercise commercially reasonable efforts to facilitate the
consummation of the transactions contemplated by this Agreement so as to
permit Closing to take place on the date provided herein and to cause the
satisfaction of conditions to Closing set forth in Article 6.
Section 5.6 Confidentiality.
(a) Any non-public information that Chancellor may obtain from Lakota in
connection with this Agreement including but not limited to information
concerning trade secrets, licenses, research projects, costs, profits,
markets, sales, customer lists, strategies, plans for future development and
any other information of a similar nature, shall be deemed confidential and,
unless and until Closing shall occur, Chancellor shall not disclose
any such information to any third party (other than its directors, officers
and employees,and persons whose knowledge thereof is necessary to facilitate
the consummation of the transactions contemplated hereby) or use such
information to the detriment of Lakota; provided that (i) Chancellor may use
and disclose any such information once it has been publicly disclosed
(other than by Chancellor in breach of its obligations under this Section)
or which rightfully has come into the possession of Lakota (other than from
Lakota), and (ii) to the extent that Chancellor may become compelled by Legal
Requirements to disclose any of such information, Chancellor may disclose
such information if it shall have used all reasonable efforts, and shall have
afforded Lakota the opportunity, to obtain an appropriate protective order,
or other satisfactory assurance of confidential treatment, for the
information compelled to be disclosed. In the event of termination of this
Agreement, Chancellor shall use all reasonable efforts to cause to be delivered
to Lakota, and retain no copies of, any documents, work papers and other
materials obtained by Chancellor or on its behalf from Lakota, whether so
obtained before or after the execution hereof.
(b) Any non-public information that Lakota may obtain from
Chancellor in connection with this Agreement, including but not limited to
information concerning trade secrets, licenses, research projects, costs,
profits, markets, sales, customer lists, strategies, plans for future
development and any other information of a similar nature, shall
be deemed confidential and, unless and until Closing shall occur, Lakota
shall not disclose any such information to any third party (other than its
directors, officers and employees, and persons whose knowledge thereof is
necessary to facilitate the consummation of the transactions contemplated
hereby) or use such information to the detriment of Lakota; provided that
(i) Lakota may use and disclose any such information once it has been
publicly disclosed (other than by Lakota in breach of its obligations under
this Section) or which rightfully has come into the possession of Chancellor
(other than from Chancellor), and (ii) to the extent that Lakota may become
compelled by Legal Requirements to disclose any of such information, Lakota
may disclose such information if it shall have used all reasonable efforts,
and shall have afforded Chancellor the opportunity, to obtain an
appropriate protective order, or other satisfactory assurance of confidential
treatment, for the information compelled to be disclosed. In the event of
termination of this Agreement, Lakota shall use all reasonable efforts to
cause to be delivered to Chancellor, and retain no copies of, any documents,
work papers and other materials obtained by Lakota or on its behalf from
Lakota, whether so obtained before or after the execution hereof.
Section 5.6 Publicity. Chancellor and Lakota shall each consult with and
obtain the consent of the other before issuing any press release or making
any other public disclosure concerning THIS Agreement or the transactions
contemplated hereby unless, in the reasonable judgment of the disclosing
party, a release or disclosure is required to discharge its disclosure
obligations under applicable legal requirements, in which case it shall in
good faith consult with the other party about the form, content and timing
of such release or disclosure prior to its release or disclosure.
ARTICLE 6
Conditions Precedent
Section 6.1 Conditions to Lakota's Obligations. The obligations of Lakota
to consummate the transactions contemplated by this Agreement are subject to
the following conditions:
(a) Accuracy of Representations. The representations of Chancellor in Us
Agreement or in any Transaction Document shall be true and accurate in all
material respects at and as of Closing with the same effect as if made at
and as of Closing, except as affected by the transactions contemplated hereby.
(b) Performance of Agreements. Chancellor shall have performed all
obligations and agreements and complied with all covenants in this Agreement
to be performed and complied with by it at or before Closing.
(c) Officer's Certificate. Lakota shall, have received a certificate
executed by an executive officer of Chancellor, dated as of Closing,
reasonably satisfactory in form and substance to Lakota certifying that the
conditions stated in subparagraphs (a), (b), (d) and (e) of this Section have
been satisfied.
(d) Legal Proceedings. There shall be no Legal Requirement, and no judgment
shall have been entered and not vacated by any governmental authority of
competent jurisdiction and no litigation shall be pending' which restrains,
makes illegal or prohibits consummation of the transactions contemplated
hereby.
(e) Consents. Lakota shall have obtained evidence, in form and substance
satisfactory to it, that there have been obtained all consents, approvals
and authorizations required by this Agreement.
(f) Resignation of Officers and Directors. Each of the officers and
directors of Chancellor whose resignation Lakota shall have requested
pursuant to Section 4.5 shall have been delivered to Lakota effective as of
Closing.
(g) Legal Matters Satisfactory to Lakota's Counsel. All actions,
proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and all
related legal matters shall be reasonably satisfactory to and approved by
Lakota's counsel, and such counsel shall have been furnished with such
certified copies of actions and proceedings and such other instruments and
documents as it shall have reasonably requested.
(h) Bank Account. The bank account of Chancellor shall contain cash in the
amount of $138 as of Closing and there shall be no outstanding checks which
have not cleared the banking system.
Section 6.2 Conditions to Chancellor's Obligations. The obligations of
Chancellor to consummate the transactions contemplated by this Agreement are
subject to the following conditions:
(a) Accuracy of Representations. The representations of Lakota in this
Agreement or in any Transaction Document shall be true and accurate (in all
material respects) at and as of Closing with the same effect as if they were
made at and as of Closing, except as affected by the transactions
contemplated hereby.
(b) Performance of Agreements. Lakota shall have performed an obligations
and agreements and complied with all covenants in this Agreement or in any
Transaction Document to which it is a party to be performed and complied
with by it at or before Closing.
(c) Officer's Certificate. Chancellor shall have received a certificate
executed by a manager of Lakota, dated as of Closing, reasonably
satisfactory in form and substance to Chancellor, certifying that the
conditions stated in subparagraphs (a) and (b) of this Section have been
satisfied.
(d) Legal Proceedings. There shall be no Legal Requirement, and no judgment
shall have been entered and not created by any governmental authority of
competent jurisdiction and no litigation shall be pending which (i)
restrains, make illegal or prohibits consummation of the transactions
contemplated hereby or (ii) could have a material adverse effect upon the
operations or financial condition of Lakota.
(e) Consents. Chancellor shall have received evidence, in form and substance
satisfactory to it, that there have been obtained all consents, approvals,
and authorizations required by this Agreement.
(f) Legal Matters Satisfactory to Chancellor and its Representatives. All
actions, proceedings, instruments and documents required to carry out the
transactions contemplated by this Agreement or incidental thereto and all
related legal matters shall be reasonably satisfactory to and approved by
Chancellor's counsel, and such counsel shall have been furnished with such
certified copies of actions and proceedings and such other instruments and
documents as it shall have reasonably requested.
ARTICLE 7
Indemnification
Section 7.1 Indemnification by Lakota. From and after Closing, Lakota shall
indemnify and hold harmless Chancellor, its officers and directors, agents
and representatives, and any person claiming by or through any of them, as
the case may be, form and against any and all losses and related expenses
arising out of or resulting from:
(a) any representations and warranties of Lakota in this Agreement not being
true and accurate when made or when required by this Agreement to be true
and accurate; or
(b) any failure by Lakota to perform any of its covenants, agreements
or obligations in this Agreement.
(c) all undisclosed abilities and obligations relating to, or arising
out of activities of Lakota during periods prior to Closing.
Section 7.2 Indemnification by Chancellor. From and after Closing,
Chancellor shall indemnify and hold harmless Lakota, its officers and
directors, agents and representatives, and any person claiming by or through
any of them, as the case may be, form and against any and all losses and
related expenses of Chancellor out of or resulting from:
(a) any representations and warranties of Chancellor in this Agreement not
being true and accurate when made or when required by this Agreement or any
Transaction Document to be true and accurate; or
(b) any failure by Chancellor to perform any of its covenants, agreements or
obligations in this Agreement.
(c) all undisclosed abilities and obligations relating to, or arising
out of activities of Chancellor during periods prior to Closing.
Section 7.3. Indemnification Against Third Party Claims. Promptly after
receipt by a person entitled to indemnification hereunder (the "Indemnitee")
of written notice of the assertion of any claim or the commencement of any
Litigation with respect to any matter referred to in Sections 7.1 or 7.2,
the Indemnitee shall give written notice thereof to the party from whom
indemnification is sought pursuant hereto (the "Indemnitor") and thereafter
shall keep the Indemnitor reasonably informed with respect thereto, provided
that failure of the Indemnitee to give the Indemnitor notice as provided
herein shall not relieve the Indemnitor of its obligations hereunder. In
case any litigation is brought against any Indemnitee, the Indemnitor shall
be entitled to participate in (and at the request of the Indemnitee shall
assume) the defense thereof with counsel satisfactory to the Indemnitee at
the Indemnitor's expense. If the Indemnitor, at the Indemnitee's request,
shall assume the defense of any settlement shall include as an unconditional
term thereof the giving by the claimant or the plaintiff of a release of the
Indemnitee, satisfactory to the Indemnitee, from all liability with respect
to such litigation.
Section 7.4. Time and Manner of Certain Claims. The representations and
warranties of Chancellor and the Principal Shareholders in this Agreement
shall survive Closing; provided, however, that neither Chancellor nor the
Principal Shareholders shall have any liability under Sections 7.1 or 7.2,
respectively unless a claim is asserted by the party seeking indemnification
thereunder by written notice to the party from whom indemnification is
sought within three years after Closing, sand such party commences
litigation seeking such indemnification within 180 days following the date
of such notice.
Section 7.5 Tax Effect. In calculating amounts payable to an Indemnitee
hereunder, (i) the amount of the indemnified losses shall be reduced by the
amount of any reduction in the Indemnitee's liability for taxes resulting
from the facts or occurrence giving rise to the indemnified losses; and (ii)
the amount of the indemnified losses shall be grossed up by the amount of
any increase in liability for taxes resulting from indemnification with
respect thereto.
ARTICLE 8
Termination
Section 8.1 Termination Events. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned:
(a) at any time, by the mutual agreement of Chancellor and Lakota;
(b) by either Chancellor or Lakota, if the other is in material breach or
default of its respective covenants, agreements or other obligations
hereunder or if any of its representations and warranties herein are not
true and accurate in all material respects when made or when otherwise
required by this Agreement to be true and accurate.
(c) by Lakota, if any of the conditions to its obligations set forth in
Section 6.1 shall not have been satisfied as of Closing, unless satisfaction
shall have been frustrated or made impossible by an act or failure to act of
Lakota; or
(d) by Chancellor, if any of the conditions to its obligations set forth in
Section 6.2 shall not have been satisfied as of Closing, unless satisfaction
shall have been frustrate or made impossible by an act or failure to act of
Chancellor; or
(e) by either Chancellor or Lakota upon written notice to the other, if the
transactions contemplated by this Agreement are not consummated on or prior
to December 31, 1996, for any reason other than material breach or default
by such party of its respective representations, warranties, covenants,
agreements or other obligations hereunder.
Section 8.2 Effect of Termination. If this Agreement shall be terminated,
all obligations .of the parties hereunder shall terminate, except for the
obligations set forth in Section 5.5, 5.6 and 9.3.
ARTICLE 9
Miscellaneous
Section 9.1 Expenses. Lakota shall pay the legal, accounting and any other
expenses incurred as a result of this transaction up to a maximum of $5,000.
If this transaction is not consummated, each party shall bear its own costs.
Section 9.2 Waiver and Modifications. Any of the provisions of this
Agreement may be waived at any time by the party entitled to the benefit
thereof, upon the authority of the Board of Directors of such party;
provided, however, that no waiver by Chancellor shall be authorized after
the last vote of the stockholders of Chancellor if such waiver shall, in the
judgment of the Board of Directors of Chancellor, affect materially and
adversely the benefits of the Chancellor stockholders under this Agreement
or the Agreement of Merger. Any of the provisions of this Agreement
(including the exhibits and the Agreement of Merger) may be modified at any
time prior to and after the vote of the stockholders of Chancellor by
agreement in writing approved by the Board of Directors of each party and
executed in the same manner (but necessarily by the same persons) as this
Agreement, provided that such modification, after the last vote of the
stockholders of Chancellor shall not, in the judgment of the Board of
Directors of Chancellor, materially and adversely affect the benefits of
Chancellor's stockholders under this Agreement or the Agreement of Merger.
To the extent permitted by law, the powers of the Board of Directors may be
delegated by the Board of the Executive Committee of such Board or by such
Board (or by the Executive Committee to the extent any matter has been
delegated to such Committee by the Board) to any officer or officers of such
party, and any notices, consents or other action referred to in this
Agreement may be given or taken by any officer so authorized.
Section 9.3 Finder commissions. Chancellor and Lakota each represents and
warrants that no broker or finder is entitled to any brokerage or finder's fee
or other commission based on agreements, arrangements or understandings made by
it with respect to the transactions contemplated by this Agreement or by the
Agreement of Merger, other than set forth in Exhibit 9.3.
Section 9.4 Notices. Any notice, request, instruction or other document to
be given hereunder or under the Agreement of Merger by any part to another
shall be in writing and delivered personally or sent by registered or
certified mail, postage prepaid,
if to Chancellor, addressed to:
Chancellor Trading Group, Inc.
00000 00xx Xxxxxx
Xxxxx 000
Xxxxx Xxxx, XX X0X 0X0
if to Lakota, addressed to:
Lakota Energy, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Section 9.5 Abandonment. At any time before the effective date, this Merger
Agreement may be terminated and the Merger may be abandoned by the Board of
Directors of either Chancellor or Lakota or both, notwithstanding approval
of this Agreement by the shareholders of Chancellor or the members of Lakota
or both.
Section 9.5 Entire Agreement. This Agreement and Plan of Merger represents
the entire agreement between the parties. Any and all other oral or written
agreements concerning this merger shall be deemed null and void.
Section 9.6 Governing Law. This Agreement shall, be governed by, construed,
and enforced in accordance with the laws of the State of Colorado.
Section 9.7 Counterparts. In order to facilitate the filing and recording of
this Merger Agreement the same may be executed in any number of
counterparts, each of which shall be deemed to be an original.
IN WITNESS WHEREOF, Chancellor and Lakota, by their duly authorized
officers, have executed and delivered this Agreement effective as of the
date first above written.
Lakota Energy. Inc.
By: /s/ R.Xxxx Xxxxxxxx
Name: R. Xxxx Xxxxxxxx
Title: President
Chancellor Trading Group, Inc.
By: /s/Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Secretary
