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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
XXXXX OIL AND GAS COMPANY
CPI ACQUISITION CORP.
and
CARPATSKY PETROLEUM INC.
August 11, 2000
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1
TABLE OF CONTENTS
ARTICLE I THE CONTINUANCE AND MERGER................................. 1
SECTION 1.01 The Continuance...................................... 1
SECTION 1.02 The Merger........................................... 2
SECTION 1.03 Closing; Closing Date; Effective Time................ 2
SECTION 1.04 Effect of the Continuance and Merger................. 3
SECTION 1.05 Certificate of Incorporation; Bylaws................. 3
SECTION 1.06 Directors and Officers............................... 3
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES......... 3
SECTION 2.01 Merger Consideration; Conversion and Cancellation of
Securities........................................... 3
SECTION 2.02 Exchange and Surrender of Certificates............... 5
SECTION 2.03 Lost Certificates.................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF XXXXX.................... 7
SECTION 3.01 Organization and Qualification; Subsidiaries......... 7
SECTION 3.02 Articles of Incorporation and Bylaws................. 8
SECTION 3.03 Capitalization....................................... 8
SECTION 3.04 Authority............................................ 10
SECTION 3.05 No Conflict; Required Filings and Consents........... 10
SECTION 3.06 Reports; Financial Statements........................ 11
SECTION 3.07 Absence of Litigation................................ 12
SECTION 3.08 Employee Benefit Plans; Labor Matters................ 12
SECTION 3.09 Taxes................................................ 15
SECTION 3.10 Certain Business Practices........................... 15
SECTION 3.11 Environmental Matters................................ 15
SECTION 3.12 Vote Required........................................ 17
SECTION 3.13 Brokers.............................................. 17
SECTION 3.14 Certain Contracts and Restrictions................... 17
SECTION 3.15 Futures Trading and Fixed Price Exposure............. 17
SECTION 3.16 Opinion of Financial Advisor......................... 17
SECTION 3.17 Information Supplied................................. 18
SECTION 3.18 Absence of Certain Changes or Events................. 18
SECTION 3.19 Permits; Compliance............18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CARPATSKY................ 19
SECTION 4.01 Organization and Qualifications; Subsidiaries........ 19
SECTION 4.02 Charter and Bylaws................................... 19
SECTION 4.03 Capitalization....................................... 19
SECTION 4.04 Authority............................................ 20
SECTION 4.05 No Conflict: Required Filings and Consents........... 21
SECTION 4.06 Permits; Compliance.................................. 22
SECTION 4.07 Financial Statements................................. 22
SECTION 4.08 Absence of Certain Changes or Events.................22
SECTION 4.09 Absence of Litigation................................ 23
SECTION 4.10 Tax Matters.......................................... 23
SECTION 4.11 Taxes...23
SECTION 4.12 Vote Required........................................ 23
SECTION 4.13 Brokers.24
SECTION 4.14 Information Supplied................................. 24
SECTION 4.15 Employee Benefit Plans; Labor Matters................ 24
SECTION 4.16 Certain Business Practices........................... 25
SECTION 4.17 Environmental Matters................................ 25
SECTION 4.18 Certain Contracts and Restrictions................... 26
SECTION 4.19 Futures Trading and Fixed Price Exposure............. 26
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ARTICLE V COVENANTS.................................................. 26
SECTION 5.01 Affirmative Covenants of Xxxxx....................... 26
SECTION 5.02 Negative Covenants of Xxxxx.......................... 27
SECTION 5.03 Affirmative Covenants of Carpatsky................... 30
SECTION 5.04 Negative Covenants of Carpatsky...................... 31
SECTION 5.05 Access and Information............................... 33
SECTION 5.06 The Exchange......................................... 34
SECTION 5.07 Further Assurances................................... 34
ARTICLE VI ADDITIONAL AGREEMENTS...................................... 34
SECTION 6.01 Meetings of Stockholders............................. 34
SECTION 6.02 Registration Statement............................... 35
SECTION 6.03 Appropriate Action; Consents; Filings................ 36
SECTION 6.04 Tax Treatment........................................ 38
SECTION 6.05 Public Announcements................................. 38
SECTION 6.06 Amendment............................................ 38
SECTION 6.07 Stock Resale Agreement............................... 38
SECTION 6.08 SEC Reports and Registration Statements.............. 38
ARTICLE VII CLOSING CONDITIONS......................................... 39
SECTION 7.01 Conditions to Obligations of Each Party Under
This Agreement....................................... 39
SECTION 7.02 Additional Conditions to Obligations of Carpatsky.... 39
SECTION 7.03 Additional Conditions to Obligations of Xxxxx........ 40
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.......................... 42
SECTION 8.01 Termination.......................................... 42
SECTION 8.02 Effect of Termination................................ 43
SECTION 8.03 Amendment............................................ 44
SECTION 8.04 Waiver............................................... 44
SECTION 8.05 Fees, Expenses and Other Payments.................... 44
ARTICLE IX GENERAL PROVISIONS......................................... 46
SECTION 9.01 Effectiveness of Representations, Warranties
and Agreements....................................... 46
SECTION 9.02 Notices.47
SECTION 9.03 Certain Definitions.................................. 48
SECTION 9.04 Headings49
SECTION 9.05 Severability......................................... 49
SECTION 9.06 Entire Agreement; Effect of Amendment................ 49
SECTION 9.07 Assignment........................................... 49
SECTION 9.08 Parties in Interest.................................. 49
SECTION 9.09 Specific Performance................................. 49
SECTION 9.10 Failure or Indulgence Not Waiver; Remedies
Cumulative........................................... 50
SECTION 9.11 Governing Law........................................ 50
SECTION 9.12 Counterparts......................................... 50
SCHEDULES
Schedule 1.06 Officers and Directors of Xxxxx and the
Surviving Corporation
Xxxxx Disclosure Schedule
Schedule 3.01 Subsidiaries
Schedule 3.03(a) Reservation of Xxxxx Common Stock
Schedule 3.03(b)(i) Options, Warrants and Rights
Schedule 3.03(b)(ii) Repurchase and Redemption Obligations, etc.
Schedule 3.03(b)(iii) Investments
Schedule 3.03(b)(iv) Revenue Sharing Agreements
ii
Schedule 3.03(c) Outstanding Stock Awards
Schedule 3.05 Conflicts
Schedule 3.07 Litigation
Schedule 3.08(a) Employee Benefit Plans
Schedule 3.08(b) Exceptions to Benefit Plan Compliance
Schedule 3.08(c) Collective Bargaining Agreements
Schedule 3.08(d) Severance Agreements
Schedule 3.08(e) Retiree Benefits
Schedule 3.08(f) Multiemployer Contributions
Schedule 3.08(g) Amendments to Employee Benefit Plans
Schedule 3.13 Brokers
Schedule 3.14 Material Contracts
Schedule 3.18 Certain Changes
Schedule 3.19 Notifications from Governmental Authorities
Schedule 5.02(e) Asset Dispositions
Schedule 5.02(o) Exceptions to Negative Covenants
Carpatsky Disclosure Schedule
Schedule 4.01 Subsidiaries
Schedule 4.03(a) Reservation of Xxxxx Common Stock
Schedule 4.03(b)(i) Options, Warrants and Rights
Schedule 4.03(b)(ii) Repurchase and Redemption Obligations, etc.
Schedule 4.03(b)(iii) Investments
Schedule 4.03(b)(iv) Revenue Sharing Agreements
Schedule 4.03(b)(v) Voting Trusts, Proxies
Schedule 4.03(c) Outstanding Stock Awards
Schedule 4.05 Conflicts
Schedule 4.06 Notifications from Governmental Authorities
Schedule 4.07(ii) Financial Statement Exceptions
Schedule 4.08 Certain Changes
Schedule 4.09 Litigation
Schedule 4.13 Brokers
Schedule 4.15(a) Employee Benefit Plans
Schedule 4.15(c) Multiemployer Plans
Schedule 4.15(f) Ukraine Employee Benefits
Schedule 4.18 Material Contracts
Schedule 5.04(m) Affiliate Transactions
EXHIBITS
Exhibit A Xxxxx Preferred Stockholder Agreement
Exhibit B-1 Certificate of Domestication
Exhibit B-2 Certificate of Incorporation of New Carpatsky
Exhibit B-3 Certificate of Merger
Exhibit B-4 Amended and Restated Articles of Xxxxx
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of August
11, 2000 (this "Agreement"), is by and among Xxxxx Oil and Gas Company, a Nevada
corporation ("Xxxxx"), its wholly owned Delaware subsidiary CPI Acquisition
Corp. ("Acquisition Corp.") and Carpatsky Petroleum Inc., a corporation
organized under the laws of the Province of Alberta, Canada ("Carpatsky").
RECITALS
WHEREAS, The Board of Directors of Xxxxx has determined that the
combination of the business of Xxxxx and Carpatsky are consistent with and in
furtherance of the long-term business strategy of Xxxxx and are fair to, and in
the best interests of, Xxxxx and its stockholders and has approved and adopted
this Agreement, including the issuance of Xxxxx Common Stock and Xxxxx Preferred
Stock, and the other transactions contemplated hereby;
WHEREAS, The Board of Directors of Carpatsky has determined that the
combination of the business of Xxxxx and Carpatsky are consistent with and in
furtherance of the long-term business strategy of Carpatsky and are fair to, and
in the best interests of, Carpatsky and its shareholders and has approved and
adopted this Agreement and the transactions contemplated hereby; and
WHEREAS, the parties had previously entered into a merger agreement, dated
August 31, 1999 that was amended on January 3, 2000 (the "Original Agreement"),
which the parties are amending and restating in its entirety by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confirmed, the parties hereto
agree as follows:
ARTICLE I
THE CONTINUANCE AND MERGER
SECTION 1.01 The Continuance. Upon the terms and subject to the conditions
set forth in this Agreement, in accordance with Alberta Law and Delaware Law, on
the Closing Date, Carpatsky will be continued (the "Continuance") as a
corporation in the State of Delaware pursuant to Section 388 Alberta Business
Corporations Act (the "ABCA"). Pursuant to the Continuance, Carpatsky will
become a Delaware corporation, and the shareholders of Carpatsky will become
shareholders in the continued Delaware corporation, as if such shareholders had
been shareholders of a Delaware corporation since the date Carpatsky was
initially formed. As used herein, "Carpatsky" refers to the Alberta corporation
prior to the Continuance and to the Delaware corporation thereafter.
SECTION 1.02 The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Delaware Law, immediately
following the Continuance, Acquisition Corp. shall be merged (the "Merger") with
and into Carpatsky (Carpatsky and Acquisition Corp. are each referred to herein
as a "Constituent Corporation"). As a result of the Merger, the separate
corporate existence of Carpatsky and Acquisition Corp. shall cease and Carpatsky
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation"). Certain terms used in this Agreement are defined in Section 9.03
hereof.
SECTION 1.03 Closing; Closing Date; Effective Time. Unless this Agreement
shall have been terminated pursuant to Section 8.01, and subject to the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VII, the consummation of the Continuance and Merger and the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Xxxxxx and Xxxxx, LLP, 0000 Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000 as soon as practicable (but in any event within two business days) after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, or at such other date, time and place as Carpatsky and Xxxxx may
agree. The date on which the Closing takes place is referred to herein as the
"Closing Date." On the Closing Date, the parties hereto shall file the
Certificate of Continuance, Certificate of Incorporation of Carpatsky, the
Certificate of Merger and the Amended and Restated Articles of Xxxxx, in the
respective forms of Exhibits X-0, X-0, X-0 and B-4 attached hereto, with the
Delaware Secretary of State and Nevada Secretary of State (the date and time of
filing the Certificate of Merger, or such later date or time agreed upon by
Carpatsky and Xxxxx and set forth therein, being the "Effective Time") and by
filing a notice contemplated by Section 182(6) of the ABCA with the Commissioner
of Corporations of the Province of Alberta. The parties hereto shall file the
various certificates and articles with the Governmental Entities to cause the
Continuance, stockholders' meetings and Merger to occur in the following order:
(i) The Carpatsky Shareholders Agreement to approve the Continuance;
(ii) The Xxxxx Stockholders Meeting to approve the Amended and Restated
Articles of Xxxxx set forth in Exhibit B-4;
(iii) The filing of a Certificate of Continuance with the Delaware
Secretary of State;
(iv) The Carpatsky Stockholder Meeting to approve and adopt the Merger and
the Merger Agreement; and
(v) The filing of the Certificates of Merger with the Delaware and Nevada
Secretaries of State.
For all tax purposes, the Closing shall be effective at the end of the day on
the Closing Date.
SECTION 1.04 Effect of the Continuance and Merger. The Continuance shall
have the effects specified in [Section 182] of the ABCA and Section 388 of the
DGCL, and the Merger shall have the effects specified in Section 251 of the
DGCL.
SECTION 1.05 Certificate of Incorporation; Bylaws. At the Effective Time,
the certificate of incorporation of Carpatsky, with such amendments thereto as
provided in the Certificate of Merger attached hereto as Exhibit B-3, shall be
the certificate of incorporation of the Surviving Corporation and thereafter
shall continue to be its certificate of incorporation until amended as provided
therein and pursuant to Delaware Law. The bylaws of Carpatsky, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation and thereafter shall continue to be its bylaws until amended as
provided therein and in the certificate of incorporation and pursuant to
Delaware Law.
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SECTION 1.06 Directors and Officers. The directors of the Surviving
Corporation immediately after the Effective Time shall be the individuals
identified in Schedule 1.06, each to hold office until the next annual meeting
of stockholders and in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation, and the officers of the Surviving
Corporation immediately after the Effective Time shall be the individuals
identified in Schedule 1.06, each to hold office in accordance with the bylaws
of the Surviving Corporation, and until their respective successors are duly
elected or appointed and qualified.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.01 Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of Carpatsky, Xxxxx, Acquisition Corp. or their respective
stockholders:
(a) Subject to the other provisions of this Article II, each
share of Carpatsky Common Stock issued and outstanding immediately prior to the
Effective Time (excluding any Carpatsky Common Stock described in Section
2.01(c) of this Agreement and shares held by Dissenting Carpatsky Stockholders)
shall be converted into the right to receive .57842 shares of Xxxxx Common
Stock; each share of Carpatsky Preferred Stock shall be converted into the right
to receive 1.07291776 shares of Xxxxx Preferred Stock; and each share of
Acquisition Corp. Common Stock issued and outstanding at the Effective Time
shall be converted into one share of Carpatsky Common Stock. Notwithstanding the
foregoing, except as contemplated by this Agreement, if between the date of this
Agreement and the Effective Time the outstanding shares of Carpatsky
Common Stock or Xxxxx Common or Preferred Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, conversion, recapitalization, split,
combination or exchange of shares, the exchange ratios shall be correspondingly
adjusted to reflect such stock dividend, subdivision, reclassification,
conversion, recapitalization, split, combination or exchange of shares.
(b) To the extent the applicable agreements governing
Carpatsky Options and Carpatsky Warrants require Xxxxx to assume such Carpatsky
Options and Carpatsky Warrants, the rights to acquire shares of Carpatsky Common
Stock pursuant to Carpatsky Options (as defined in Section 4.03) and Carpatsky
Warrants (as defined in Section 4.03) outstanding at the Effective Time shall,
following the Effective Time, reflect the right to receive Xxxxx Common Stock as
provided in such Carpatsky Options and Carpatsky Warrants. At the Effective
Time, Xxxxx shall assume such Carpatsky Options and Carpatsky Warrants and Xxxxx
shall reserve a sufficient number of shares of Xxxxx Common Stock for issuance
pursuant to such Carpatsky Options and Carpatsky Warrants.
(c) Notwithstanding any provision of this Agreement to the
contrary, each share of Carpatsky Common Stock held in the treasury of Carpatsky
and each share of Carpatsky Common Stock owned by Xxxxx or Acquisition Corp.,
respectively, or any direct or indirect wholly owned subsidiary of Carpatsky or
of Xxxxx, immediately prior to the Effective Time shall be canceled.
(d) Subject to the provisions of Section 2.01(e), all shares
of Carpatsky Common Stock and Carpatsky Preferred Stock shall cease to be
outstanding and shall automatically be canceled and retired, and each
certificate previously evidencing Carpatsky Common Stock or Carpatsky Preferred
Stock immediately prior to the Effective Time (the "Converted Shares" or
"Converted Share Certificates," as the case may be) shall thereafter represent
the right to receive, subject to Section 2.02(e) of this Agreement, that number
of shares of Xxxxx Common Stock or Xxxxx Preferred Stock determined pursuant to
Section 2.01(a) hereof or, if applicable, cash pursuant to Sections 2.01(f) or
2.02(g) of this Agreement (the "Merger Consideration"). The holders of Converted
Share Certificates shall cease to have any rights with respect to such Converted
Shares except as otherwise provided herein or by law. Such Converted Share
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Certificates shall be exchanged for certificates evidencing whole shares of
Xxxxx Common Stock or Xxxxx Preferred Stock upon the surrender of such Converted
Share Certificates in accordance with the provisions of Section 2.02 of this
Agreement, without interest. No fractional shares of Xxxxx Common Stock or Xxxxx
Preferred Stock shall be issued in connection with the Merger and, in lieu
thereof, a cash payment shall be made pursuant to Section 2.02(g) of this
Agreement. Each share of Acquisition Corp. Common Stock shall be automatically
converted into one share of Carpatsky Common Stock.
(e) Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of capital stock of Carpatsky held
by a Dissenting Carpatsky Stockholder who has not voted in favor of or consented
to the Continuance or the Merger and who complies with all the provisions of the
ABCA or Delaware Law concerning the right of holders of such stock to dissent
from the Continuance or the Merger and to require appraisal of their shares,
shall not be converted as described in Section 2.01(a) but shall become, at the
Effective Time, by virtue of the Merger and without any further action, the
right to receive such consideration as may be determined to be due to such
Dissenting Carpatsky Stockholder pursuant to the ABCA or Delaware Law, as the
case may be; provided, however, that shares of Carpatsky Common Stock
outstanding immediately prior to the Effective Time and held by a Dissenting
Carpatsky Stockholder who shall, after the Effective Time, withdraw his demand
for appraisal or lose his right of appraisal, in either case pursuant to the
ABCA or Delaware Law, as the case may be, shall be deemed to be converted as of
the Effective Time, into the right to receive Xxxxx Common Stock.
SECTION 2.02 Exchange and Surrender of Certificates.
(a) Prior to the Effective Time, Xxxxx shall appoint
Computershare Trust Company, Inc. or another or additional agent reasonably
acceptable to Carpatsky (the "Exchange Agent") for the purpose of exchanging
Converted Share Certificates for the Merger Consideration. Xxxxx will make
available to the Exchange Agent, as needed, the Merger Consideration to be paid
in respect of the Converted Shares. Promptly after the Effective Time, Xxxxx
will send, or will cause the Exchange Agent to send, to each holder of record at
the Effective Time of Carpatsky Common Stock a letter of transmittal for use in
such exchange (which shall specify that the delivery shall be effected, and risk
of loss and title shall pass, only upon proper delivery of the Canceled
Certificates to the Exchange Agent) in such form as Carpatsky and Xxxxx may
reasonably agree, for use in effecting delivery of Converted Share Certificates
to the Exchange Agent.
(b) Each holder of Carpatsky Common Stock and Carpatsky
Preferred Stock that has been converted into a right to receive the Merger
Consideration, upon surrender to the Exchange Agent of a Canceled Share
Certificate, together with a properly completed letter of transmittal, will be
entitled to receive the Merger Consideration in respect of the Converted Shares
represented by such Certificate. Until so surrendered, each such Canceled Share
Certificate shall, after the Effective Time, represent for all purposes only the
right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid
to a Person other than the Person in whose name the Canceled Certificate is
registered, it shall be a condition to such payment that the Canceled
Certificate so surrendered shall be properly endorsed or otherwise be in proper
form for transfer and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result of such payment
to a Person other than the registered holder of such Canceled Certificate or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
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(d) After the Effective Time, there shall be no further
registration of transfers of Carpatsky Common Stock. If, after the Effective
Time, Canceled Certificates are presented to the Surviving Corporation, they
shall be canceled and exchanged for the consideration provided for, and in
accordance with the procedures set forth, in this Section 2.02.
(e) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.02(a) that remains unclaimed by the
holders of Converted Shares one year after the Effective Time shall be returned
to Xxxxx, upon demand, and any such holder who has not exchanged his Converted
Shares for the Merger Consideration in accordance with this Section prior to
that time shall thereafter look only to Xxxxx for payment of the Merger
Consideration in respect of his Converted Shares. Notwithstanding the foregoing,
Xxxxx shall not be liable to any holder of Converted Shares for any amount paid
to a public official pursuant to applicable abandoned property laws. Any amounts
remaining unclaimed by holders of Converted Shares three years after the
Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable law, become the property of
Xxxxx free and clear of any claims or interest of any Person previously entitled
thereto.
(f) No dividends or other distributions with respect to Xxxxx
Common Stock issued in the Merger shall be paid to the holder of any
unsurrendered Canceled Share Certificates until such Canceled Share Certificates
are surrendered as provided in this Section. Subject to the effect of applicable
laws, following such surrender, there shall be paid, without interest, to the
record holder of the Xxxxx Common Stock, issued in exchange therefor (i) at the
time of such surrender, all dividends and other distributions payable in respect
of such Xxxxx Common Stock with a record date after the Effective Time and a
payment date on or prior to the date of such surrender and not previously paid
and (ii) at the appropriate payment date, the dividends or other distributions
payable with respect to such Xxxxx Common Stock with a record date after the
Effective Time but with a payment date subsequent to such surrender. For
purposes of dividends or other distributions in respect of Xxxxx Common Stock,
all Xxxxx Common Stock to be issued pursuant to the Merger (but not options
unless actually exercised at the Effective Time) shall be entitled to dividends
pursuant to the immediately preceding sentence as if issued and outstanding as
of the Effective Time.
(g) No certificates or scrip evidencing fractional shares of
Xxxxx Common Stock shall be issued upon the surrender for exchange of Converted
Share Certificates, and such fractional share interests shall not entitle the
owner thereof to any rights as a stockholder of Xxxxx. In lieu of any such
fractional interests, each holder of a Converted Share Certificate shall, upon
surrender of such certificate for exchange pursuant to this Article II, be paid
an amount in cash (without interest), rounded to the nearest cent, determined by
multiplying the last sale price of the Xxxxx Common Stock in the
Over-the-Counter market prior to the Closing Date by the fractional share of
Xxxxx Common Stock to which such holder would otherwise be entitled (after
taking into account all Converted Shares held of record by such holder at the
Effective Time).
(h) Xxxxx shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any former holder
of Carpatsky Common or Xxxxx Preferred Stock such amounts as Xxxxx (or any
affiliate thereof) is required to deduct and withhold with respect to the making
of such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Xxxxx, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of the Carpatsky Common or Xxxxx Preferred Stock in respect of
which such deduction and withholding was made. In the event the amount withheld
is insufficient so to satisfy the withholding obligations of Xxxxx, (or any
affiliate thereof), such former stockholder shall reimburse Xxxxx (or such
affiliate), at its request, the amount of any such insufficiency.
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(i) At the Closing, Xxxxx shall deliver to Bellwether
Exploration Company a certificate representing the number of shares of Xxxxx
Preferred Stock to which Bellwether is entitled, such certificate to be executed
and otherwise in such form as to comply with the requirements of Nevada law and
the Xxxxx Articles of Incorporation and bylaws for certificates representing
duly authorized, validly issued fully paid and non-assessable shares of its
preferred stock.
SECTION 2.03 Lost Certificates. If any Converted Share Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Converted Share Certificate to be lost, stolen
or destroyed and, if required by the Surviving Corporation, the posting by such
person of a bond, in such reasonable amount as the Surviving Corporation may
direct, as indemnity against any claim that may be made against it with respect
to such Converted Share Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Converted Share Certificate the Merger
Consideration to be paid in respect of the Converted Shares represented by such
Converted Share Certificates as contemplated by this Article.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx and Acquisition Corp. hereby jointly and severally represent and
warrant to Carpatsky that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of Xxxxx,
Acquisition Corp. and their respective subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as it is now being conducted and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of the business conducted by
it or the ownership or leasing of its properties makes such qualification
necessary, other than where the failure to be so duly qualified and in good
standing would not have a Xxxxx Material Adverse Effect. The term "Xxxxx
Material Adverse Effect" as used in this Agreement shall mean any change or
effect that, individually or when taken together with all other such changes or
effects, would be reasonably likely to be materially adverse to the assets,
liabilities, financial condition, results of operations or current or future
business of Xxxxx and its subsidiaries, taken as a whole. Schedule 3.01 of the
disclosure schedule delivered to Carpatsky by Xxxxx and attached hereto and made
a part hereof (the "Xxxxx Disclosure Schedule") sets forth, as of the date
hereof, a true and complete list of all Xxxxx'x directly or indirectly owned
subsidiaries, together with (A) the jurisdiction of incorporation or
organization of each subsidiary and the percentage of each subsidiary's
outstanding capital stock or other equity interests owned by Xxxxx or another
subsidiary of Xxxxx, and (B) an indication of whether each such subsidiary is a
"Significant Subsidiary" as defined in Section 9.03(h) of this Agreement. Except
as set forth in Schedule 3.01 to the Xxxxx Disclosure Schedule, neither Xxxxx
nor any of its subsidiaries owns an equity interest in any other partnership or
joint venture arrangement or other business entity that is material to the
assets, liabilities, financial condition, results of operations or current or
future business of Xxxxx and its subsidiaries, taken as a whole.
SECTION 3.02 Articles of Incorporation and Bylaws. Xxxxx has heretofore
furnished to Carpatsky complete and correct copies of the articles of
incorporation and the bylaws or the equivalent organizational documents as
presently in effect of Xxxxx and Acquisition Corp. and each of their
subsidiaries. Neither Xxxxx, Acquisition Corp. nor any of their subsidiaries are
in violation of any of the provisions of its articles or any material provision
of its bylaws (or equivalent organizational documents).
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SECTION 3.03 Capitalization.
(a) The authorized capital stock of Xxxxx consists of
4,000,000 shares of Xxxxx Common Stock, of which 1,688,698 shares are issued and
outstanding, no shares are held in treasury by Xxxxx and 11,806,834 shares are
reserved for future issuance pursuant to outstanding stock options or other
contractual arrangements and which will be reserved for issuance as at the
Effective Time; 830,000 shares of authorized preferred stock, par value $.01 per
share of which 145,300 shares are designated as Series B 5% PIK cumulative
convertible preferred stock, par value $.01 per share, of which 105,828 shares
are issued and outstanding, no shares are held in treasury and 39,472 shares are
reserved for future issuance pursuant to outstanding stock options or other
contractual arrangements and 684,700 shares remain undesignated. The authorized
capital stock of Acquisition Corp. consists of 100 shares of common stock, par
value $.01 per share of which 100 shares are issued and outstanding. Except as
described in this Section 3.03 or in Schedule 3.03(a) to the Xxxxx Disclosure
Schedule, no shares of capital stock of Xxxxx are reserved for any purpose. Each
of the outstanding shares of capital stock of, or other equity interests in,
each of Xxxxx and its subsidiaries, including Acquisition Corp., is duly
authorized, validly issued, and, in the case of shares of capital stock, fully
paid and nonassessable, and has not been issued in violation of (nor are any of
the authorized shares of capital stock of, or other equity interests in, such
entities subject to) any preemptive or similar rights created by statute, the
charter or bylaws (or the equivalent organizational documents) of Xxxxx or any
of its subsidiaries, including Acquisition Corp., or any agreement to which
Xxxxx or any of its subsidiaries, including Acquisition Corp., is a party or
bound, and such outstanding shares or other equity interests owned by Xxxxx or a
subsidiary, including Acquisition Corp., of Xxxxx are owned free and clear of
all security interests, liens, claims, pledges, agreements, limitations on
Xxxxx'x or such subsidiaries' voting rights, charges or other encumbrances of
any nature whatsoever.
(b) Except as set forth in Schedule 3.03(b)(i) to the Xxxxx
Disclosure Schedule, there are no options, warrants or other rights (including
registration rights), agreements, arrangements or commitments of any character
to which Xxxxx or any of its subsidiaries is a party relating to the issued or
unissued capital stock of Xxxxx or any of its subsidiaries or obligating Xxxxx
or any of its subsidiaries to grant, issue or sell any shares of the capital
stock of Xxxxx or any of its subsidiaries, by sale, lease, license or otherwise.
Except as set forth in Schedule 3.03(b)(ii) to the Xxxxx Disclosure Schedule,
there are no obligations, contingent or otherwise, of Xxxxx or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of Xxxxx
Common or Preferred Stock or other capital stock of Xxxxx, or the capital stock
or other equity interests of any subsidiary of Xxxxx; or provide material funds
to, or make any material investment in (in the form of a loan, capital
contribution or otherwise), or provide any guarantee with respect to the
obligations of, any subsidiary of Xxxxx or any other person. Except as described
in Schedule 3.03(b)(iii) to the Xxxxx Disclosure Schedule, neither Xxxxx nor any
of its subsidiaries (x) directly or indirectly owns, (y) has agreed to purchase
or otherwise acquire or (z) holds any interest convertible into or exchangeable
or exercisable for, 5% or more of the capital stock of any corporation,
partnership, joint venture or other business association or entity (other than
the subsidiaries of Xxxxx set forth in Schedule 3.01 to the Xxxxx Disclosure
Schedule). Except as set forth in Schedule 3.03(b)(iv) to the Xxxxx Disclosure
Schedule, there are no agreements, arrangements or commitments of any character
(contingent or otherwise) pursuant to which any person is or may be entitled to
receive any payment based on the revenues or earnings, or calculated in
accordance therewith, of Xxxxx or any of its subsidiaries. Except as
contemplated hereby, there are no voting trusts, proxies or other agreements or
understandings to which Xxxxx or any of its subsidiaries is or will be a party
or by which Xxxxx or any of its subsidiaries is or will be bound with respect to
the voting of any shares of capital stock of Xxxxx or any of its subsidiaries.
7
(c) Xxxxx has made available to Carpatsky complete and correct
copies of its existing (i) stock option plans (collectively, the "Xxxxx Option
Plans") and the forms of options issued pursuant to the Xxxxx Option Plans,
including all amendments thereto, and (ii) all options and warrants that are not
in the form specified under clause (i) above. Schedule 3.03(c) to the Xxxxx
Disclosure Schedule sets forth a complete and correct list of all outstanding
warrants and options, restricted stock or any other stock awards (the "Xxxxx
Stock Awards") granted under the Xxxxx Option Plans or otherwise, setting forth
as of the date hereof (i) the number and type of Xxxxx Stock Awards, (ii) the
exercise price of each outstanding stock option or warrant, (iii) the number of
stock options and warrants presently exercisable, and (iv) any other material
terms and conditions thereof.
(d) The shares of Xxxxx Common Stock and Preferred Stock to be
issued pursuant to the Merger (i) will be duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights created by statute,
Xxxxx'x articles of incorporation or bylaws or any agreement to which Xxxxx is a
party or by which it is bound, (ii) will be registered under the U.S. Securities
Act of 1933, as amended ("Securities Act") and the Securities Exchange Act of
1934, as amended (the "Exchange Act") and (iii) will be registered or exempt
from registration under applicable Canadian federal and provincial securities
laws ("Canadian Securities Laws") and United States state securities or blue sky
laws ("Blue Sky Laws").
SECTION 3.04 Authority. Each of Xxxxx and Acquisition Corp. has all
requisite corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby (subject to, with respect to the Merger, the Conversion and
the issuance of the Xxxxx Common Stock and Xxxxx Preferred Stock pursuant to the
Merger and Conversion, the approval of an amendment to and restatement of the
articles of incorporation by the stockholders of Xxxxx as described in Section
3.12 hereof and the approval and adoption of this Agreement and Merger as
provided by Section 3.12 hereof). The execution and delivery of this Agreement
by Xxxxx and Acquisition Corp. and the consummation by Xxxxx and Acquisition
Corp. of the transactions contemplated hereby have been duly authorized by all
necessary corporate action and no other corporate proceedings on the part of
Xxxxx are necessary to authorize this Agreement or to issue the Xxxxx Common
Stock and Xxxxx Preferred Stock, with the exception of the approval and adoption
of this Agreement and the Merger by the stockholders of Xxxxx as described in
Section 3.12 hereof. This Agreement has been duly executed and delivered by
Xxxxx and Acquisition Corp. and, assuming the due authorization, execution and
delivery thereof by Carpatsky, constitutes the legal, valid and binding
obligation of Xxxxx and Acquisition Corp. enforceable against Xxxxx and
Acquisition Corp. in accordance with its terms, except that such enforcement may
be subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
SECTION 3.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Xxxxx and
Acquisition Corp. does not, and the consummation of the transactions
contemplated hereby in accordance with its terms will not (i) conflict with or
violate the articles of incorporation or bylaws, or the equivalent
organizational documents, in each case as amended or restated, of Xxxxx or any
of its subsidiaries, including Acquisition Corp., (ii) conflict with or violate
any federal, provincial, state, or local law, statute, ordinance, rule,
regulation, order, judgment or decree, domestic or foreign, (collectively,
"Laws") applicable to Xxxxx or any of its subsidiaries, including Acquisition
Corp., or by or to which any of their respective properties is bound or subject
or (iii) except as described in Schedule 3.05 to the Xxxxx Disclosure Schedule,
result in any breach of or constitute a default (or an event that with notice or
8
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or require
payment under, or result in the creation of a lien or encumbrance on any of the
properties or assets of Xxxxx or any of its subsidiaries, including Acquisition
Corp., pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Xxxxx or any of its subsidiaries, including Acquisition Corp., is a party or by
or to which Xxxxx or any of its subsidiaries, including Acquisition Corp., or
any of their respective properties is bound or subject, except for any such
conflicts or violations described in clause (ii) or breaches, defaults, events,
rights of termination, amendment, acceleration or cancellation, payment
obligations or liens or encumbrances described in clause (iii) that would not
have a Xxxxx Material Adverse Effect.
(b) The execution and delivery of this Agreement by each of
Xxxxx and Acquisition Corp. does not, and consummation of the transactions
contemplated hereby will not, require Xxxxx or Acquisition Corp. to obtain any
consent, license, permit, approval, waiver, authorization or order of, or to
make any filing with or notification to, any court or governmental or regulatory
authority, domestic or foreign (collectively, "Governmental Authorities"),
except (i) for filing (A) a registration statement on Form S-4 (the "Form S-4")
under the Securities Act, (B) preliminary and definitive proxy materials under
the Exchange Act, (C) registrations, qualifications and claims for exemptions
under Canadian Securities Laws and Blue Sky Laws, and (D) appropriate merger
documents as required by Delaware Law and the General Corporations Law of the
State of Nevada ("Nevada Law"), and (ii) where the failure to obtain such
consents, licenses, permits, approvals, waivers, authorizations or orders, or to
make such filings or notifications, would not, either individually or in the
aggregate, materially interfere with Xxxxx'x and Acquisition Corp.'s performance
of their obligations under this Agreement and would not have a Xxxxx Material
Adverse Effect.
SECTION 3.06 Reports; Financial Statements.
(a) Since December 31, 1997, Xxxxx and its subsidiaries have
filed all forms, reports, statements and other documents required to be filed
with (A) the Securities and Exchange Commission (the "SEC") including, without
limitation, (1) all Registration Statements filed under the Securities Act, (2)
all Annual Reports on Form 10-K or 10-KSB, (3) all Quarterly Reports on Form
10-Q or 10-QSB, (4) all proxy statements relating to meetings of stockholders
(whether annual or special), (5) all Current Reports on Form 8-K and (6) all
other reports, schedules, registration statements or other documents
(collectively referred to as the "Xxxxx SEC Reports") and (B) any applicable
state securities authorities and all forms, reports, statements and other
documents required to be filed with any other applicable federal or state
regulatory authorities, except where the failure to file any such forms,
reports, statements or other documents would not have a Xxxxx Material Adverse
Effect (all such forms, reports, statements and other documents in clauses (i)
and (ii) of this Section 3.06(a) being referred to herein, collectively, as the
"Xxxxx Reports"). The Xxxxx Reports, including all Xxxxx Reports filed after the
date of this Agreement and prior to the Effective Time, including, without
limitation, the Form S-4 relating to the Merger, (x) were or will be prepared in
accordance with the requirements of applicable Law (including, with respect to
Xxxxx SEC Reports, the Securities Act and the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such Xxxxx SEC
Reports) and (y) did not at the time they were filed, or will not at the time
they are filed, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.
9
(b) Each of the consolidated financial statements (including,
in each case, any related notes thereto) contained in Xxxxx SEC Reports filed
prior to the Effective Time, including, without limitation, the Form S-4 (as
regards Xxxxx), have been or will be prepared in accordance with the published
rules and regulations of the SEC and U.S. generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
(a) to the extent required by changes in generally accepted accounting
principles; (b) with respect to Xxxxx SEC Reports filed prior to the date of
this Agreement, as may be indicated in the notes thereto; and (c) with respect
to interim financial statements as may be permitted by Article 10 of Regulation
S-X) and fairly present or will fairly present the consolidated financial
position of Xxxxx and its subsidiaries as of the respective dates thereof and
the consolidated results of operations and cash flows for the periods indicated
(including reasonable estimates of normal and recurring year-end adjustments),
except that (x) any unaudited interim financial statements were or will be
subject to normal and recurring year-end adjustments and (y) any pro forma
financial statements contained in such consolidated financial statements are not
necessarily indicative of the consolidated financial position of Xxxxx and its
subsidiaries as of the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated.
SECTION 3.07 Absence of Litigation. Except as disclosed in the Xxxxx
SEC Reports filed prior to the date of this Agreement or as set forth in
Schedule 3.07 to the Xxxxx Disclosure Schedule, there is no claim, action, suit,
litigation, proceeding, arbitration or, to the knowledge of Xxxxx, investigation
of any kind, at law or in equity (including actions or proceedings seeking
injunctive relief), pending or, to the knowledge of Xxxxx, threatened against
Xxxxx or any of its subsidiaries or any properties or rights of Xxxxx or any of
its subsidiaries (except for claims, actions, suits, litigation, proceedings,
arbitrations or investigations which if adversely determined would not have a
Xxxxx Material Adverse Effect), and neither Xxxxx nor any of its subsidiaries is
subject to any continuing order of, consent decree, settlement agreement or
other similar written agreement with, or, to the knowledge of Xxxxx, continuing
investigation by, any Governmental Authority, or any judgment, order, writ,
injunction, decree or award of any Government Entity or arbitrator, including,
without limitation, cease-and-desist or other orders, except for matters that
would not have a Xxxxx Material Adverse Effect.
SECTION 3.08 Employee Benefit Plans; Labor Matters.
(a) Schedule 3.08(a) to the Xxxxx Disclosure Schedule sets
forth each employee benefit plan (as such term is defined in ERISA Section 3(3))
maintained or contributed to during the past five years by Xxxxx or any member
of its ERISA Group or with respect to which Xxxxx or any member of its ERISA
Group could incur liability under Sections 4063, 4069, 4212(c) or 4204 of ERISA,
and any other retirement, pension, stock option, stock appreciation rights,
profit sharing, incentive compensation, deferred compensation, savings, thrift,
vacation pay, severance pay, or other employee compensation or benefit plan,
agreement, practice, or arrangement, whether written or unwritten, whether or
not legally binding (collectively, the "Xxxxx Benefit Plans"). For purposes of
this Agreement, "ERISA Group" means a controlled or affiliated group within the
meaning of Code Section 414(b), (c), (m), or (o) of which Xxxxx is a member.
Xxxxx has made available to Carpatsky correct and complete copies of all Xxxxx
Benefit Plans (including a detailed written description of any Xxxxx Benefit
Plan that is unwritten, including a description of eligibility criteria,
participation, vesting, benefits, funding arrangements and assets and any other
provisions relating to Xxxxx) and, with respect to each Xxxxx Benefit Plan, a
copy of each of the following, to the extent each is applicable to each Xxxxx
Benefit Plan: the most recent favorable determination letter, materials
submitted to the Internal Revenue Service in support of a pending determination
letter request, the most recent letter issued by the Internal Revenue Service
recognizing tax exemption, each insurance contract, trust agreement, or other
funding vehicle, the three most recently filed Forms 5500 plus all schedules and
attachments, the three most recent actuarial valuations, and each summary plan
description or other general explanation or communication distributed or
otherwise provided to employees with respect to each Xxxxx Benefit Plan that
describes the terms of the Xxxxx Benefit Plan.
10
(b) With respect to the Xxxxx Benefit Plans, no event has
occurred and, to the knowledge of Xxxxx, there exists no condition or set of
circumstances, in connection with which Xxxxx or any member of its ERISA Group
could be subject to any liability under the terms of such Xxxxx Benefit Plans,
ERISA, the Code or any other applicable Law which would have a Xxxxx Material
Adverse Effect. Except as otherwise set forth on Schedule 3.08(b) to the Xxxxx
Disclosure Schedule:
(i) As to any Xxxxx Benefit Plan intended to be
qualified under Section 401 of the Code, such Xxxxx Benefit Plan satisfies the
requirements of such Section and there has been no termination or partial
termination of such Xxxxx Benefit Plan within the meaning of Section 411(d)(3)
of the Code and Xxxxx has administered all such Plans in accordance with all
applicable Laws;
(ii) There are no actions, suits or claims
pending (other than routine claims for benefits) or, to the knowledge of Xxxxx,
threatened against, or with respect to, any of the Xxxxx Benefit Plans or their
assets, any plan sponsor, or any fiduciary (as such term is defined in Section
3(21) of ERISA), and Xxxxx has no knowledge of any facts that could give rise to
any actions, suits or claims;
(iii) All contributions required to be made to the
Xxxxx Benefit Plans pursuant to their terms and provisions have been made
timely;
(iv) As to any Xxxxx Benefit Plan subject to
Title IV of ERISA, there has been no event or condition which presents the
material risk of plan termination, no accumulated funding deficiency, whether or
not waived, within the meaning of Section 302 of ERISA or Section 412 of the
Code has been incurred, no reportable event within the meaning of Section 4043
of ERISA has occurred, no notice of intent to terminate the Xxxxx Benefit Plan
has been given under Section 4041 of ERISA, no proceeding has been instituted
under Section 4042 of ERISA to terminate the Xxxxx Benefit Plan, and no
liability to the Pension Benefit Guaranty Corporation or to the Plan has been
incurred;
(v) Neither Xxxxx nor any party in interest (as
such term is defined in ERISA Section 3(14)) nor any disqualified person has
engaged in any prohibited transaction within the meaning of ERISA Section 406 or
Code Section 4975 that would subject Xxxxx to any liability; and
(vi) The consummation of the transactions
contemplated by this Agreement will not give rise to any acceleration of vesting
of payments or options, the acceleration of the time of making any payments, or
the making of any payments, which in the aggregate would result in an "excess
parachute payment" within the meaning of Section 280G of the Code and the
imposition of the excise under Section 4999 of the Code.
(c) Except as set forth in Schedule 3.08(c) to the Xxxxx
Disclosure Schedule, neither Xxxxx nor any member of its ERISA Group, including,
without limitation, any of its subsidiaries, is or has ever been a party to any
collective bargaining or other labor union contracts. No collective bargaining
agreement is being negotiated by Xxxxx or any of its subsidiaries. There is no
pending or threatened labor dispute, strike or work stoppage against Xxxxx or
any of its subsidiaries which may interfere with the respective business
activities of Xxxxx or any of its subsidiaries. None of Xxxxx, any of its
subsidiaries or any of their respective representatives or employees has
committed any unfair labor practices in connection with the operation of the
respective businesses of Xxxxx or its subsidiaries, and there is no pending or
threatened charge or complaint against Xxxxx or any of its subsidiaries by the
National Labor Relations Board or any comparable state agency.
11
(d) Except as disclosed in Schedule 3.08(d) to the Xxxxx
Disclosure Schedule and as contemplated by this Agreement, neither Xxxxx nor any
of its subsidiaries is a party to or is bound by any severance agreements,
programs or policies. Schedule 3.08(d) to the Xxxxx Disclosure Schedule sets
forth, and Xxxxx has made available to Carpatsky true and correct copies of, all
employment agreements with officers or Xxxxx or its subsidiaries; all agreements
with consultants of Xxxxx or its subsidiaries obligating Xxxxx or any subsidiary
to make annual cash payments in an amount exceeding $25,000; all non-competition
agreements with Xxxxx or a subsidiary executed by officers of Xxxxx; and all
plans, programs, agreements and other arrangements of Xxxxx or its subsidiaries
with or relating to its directors.
(e) Except as provided in Schedule 3.08(e) to the Xxxxx
Disclosure Schedule, (x) no Xxxxx Benefit Plan provides retiree medical or
retiree life insurance benefits to any person and (y) neither Xxxxx nor any of
its subsidiaries is contractually or otherwise obligated (whether or not in
writing) to provide any person with life insurance or medical benefits upon
retirement or termination of employment, other than as required by the
provisions of Sections 601 through 608 of ERISA and Section 4980B of the Code
and each such Xxxxx Benefit Plan or arrangement may be amended or terminated by
Xxxxx or its subsidiaries at any time without liability.
(f) Except as set forth in Schedule 3.08(f) to the Xxxxx
Disclosure Schedule, neither Xxxxx nor any member of its ERISA Group including,
without limitation, any of its subsidiaries, contributes to or has an obligation
to contribute to, and has not within six years prior to the date of this
Agreement contributed to or had an obligation to contribute to or has any
secondary liability under ERISA Section 4204 to, a multiemployer plan within the
meaning of Section 3(37) of ERISA.
(g) Except as contemplated by this Agreement or as set forth
in Schedule 3.08(g), Xxxxx has not amended, or taken any actions with respect
to, any of the Xxxxx Benefit Plans or any of the plans, programs, agreements,
policies or other arrangements described in Section 3.08(d) of this Agreement
since December 31, 1998.
(h) With respect to each Xxxxx Benefit Plan that is a "group
health plan" within the meaning of Section 5000(b) of the Code, each such Xxxxx
Benefit Plan complies and has complied with the requirements of Part 6 of Title
I of ERISA and Sections 4980B and 5000 of the Code, except where the failure to
so comply would not have a Xxxxx Material Adverse Effect.
SECTION 3.09 Taxes. Except as set forth in the Xxxxx SEC Reports or as
otherwise set forth in the Xxxxx Disclosure Schedule and except as would not,
individually or in the aggregate, have a Xxxxx Material Adverse Effect, (i) all
Xxxxx Tax Returns required to be filed with any taxing authority by, or with
respect to, Xxxxx have been filed in accordance with all applicable laws; (ii)
Xxxxx has timely paid all Taxes shown as due and payable on Xxxxx Tax Returns
that have been so filed, and, as of the time of filing, Xxxxx Tax Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities and the status of Xxxxx and its subsidiaries (other than
Taxes which are being contested in good faith and for which adequate reserves
are reflected on the Xxxxx Balance Sheet); (iii) Xxxxx and its subsidiaries have
made provision for all Taxes payable by Xxxxx and its subsidiaries for which no
Xxxxx Tax Return has yet been filed; (iv) the charges, accruals and reserves for
Taxes with respect to Xxxxx and its subsidiaries reflected on the Xxxxx Balance
Sheet are adequate under GAAP to cover the Tax liabilities accruing through the
date thereof; (v) there is no action, suit, proceeding, audit or claim now
proposed or pending against or with respect to Xxxxx or any of its subsidiaries
in respect of any Tax where there is a reasonable possibility of an adverse
determination; and (vi) to the best of Xxxxx'x knowledge and belief, neither
Xxxxx nor any of its subsidiaries is liable for any Tax imposed on any entity
other than such Person.
12
SECTION 3.10 Certain Business Practices. None of Xxxxx, any of its
subsidiaries, including Acquisition Corp., or any directors, officers, agents or
employees of Xxxxx or any of its subsidiaries has used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
political activity, made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or campaigns
or violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended, or made any other unlawful payment.
SECTION 3.11 Environmental Matters.
(a) Except as set forth in the Xxxxx SEC Reports filed prior
to the date hereof and with such exceptions as, individually or in the
aggregate, have not had, and would not reasonably be expected to have, a Xxxxx
Material Adverse Effect, (i) no notice, notification, demand, request for
information, citation, summons, complaint or order has been received by, and no
investigation, action, claim, suit, proceeding or review is pending or, to the
knowledge of Xxxxx or any of its subsidiaries, threatened by any Person against,
Xxxxx or any of its subsidiaries, and no penalty has been assessed against Xxxxx
or any of its subsidiaries, in each case, with respect to any matters relating
to or arising out of any Environmental Law; (ii) Xxxxx and its subsidiaries are
and have been in compliance with all Environmental Laws; (iii) there are no
liabilities of or relating to Xxxxx or any of its subsidiaries relating to or
arising out of any Environmental Law of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability; and (iv) there has been no environmental
investigation, study, audit, test, review or other analysis conducted of which
Xxxxx has knowledge in relation to the current or prior business of Xxxxx or any
of its subsidiaries or any property or facility now or previously owned, leased
or operated by Xxxxx or any of its subsidiaries which has not been delivered to
Carpatsky at least five days prior to the date hereof.
(b) For purposes of this Agreement, the following terms shall
be defined as follows:
(i) "Environmental Laws" shall mean any and all
laws, statutes, ordinances, rules, regulations or orders of any Governmental
Authority pertaining to pollution, health, safety, or the environment,
including, without limitation, the Clean Air Act, the Comprehensive
Environmental, Response, Compensation, and Liability Act ("CERCLA"), the Clean
Water Act, the Occupational Safety and Health Act, the Resource Conservation and
Recovery Act, the Solid Waste Disposal Act, the Emergency Planning and Community
Right-To- Know Act, the Safe Drinking Water Act, the Toxic Substances Control
Act, the Hazardous Materials Transportation Act, the Oil Pollution Act, all as
amended, any state laws implementing the foregoing federal laws, any state laws
pertaining to, health, safety and waste management including, without
limitation, the handling of asbestos, medical waste or disposable products,
hydrocarbon products, PCBs or other Hazardous Materials or processing or
disposing of wastes or the use, maintenance and closure of pits and
impoundments, all other federal, provincial, state or local environmental
conservation or protection and health and safety laws, domestic and foreign, and
any common law creating liability for environmental conditions. Environmental
Laws shall include, without limitation, all restrictions, conditions, standards,
limitations, prohibitions, requirements, guidelines, obligations, schedules and
timetables contained in Environmental Laws or contained in any regulation, plan,
code, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or approved thereunder
13
(ii) "Hazardous Materials" shall mean any
materials that are regulated by or form the basis of liability under
Environmental Laws, and include, without limitation, asbestos, wastes,
including, without limitation, medical wastes or disposable products, hazardous
substances, pollutants or contaminants, hazardous or solid wastes, hazardous
constituents, hazardous materials, toxic substances, petroleum, including crude
oil or any fraction thereof, natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel (or mixtures of natural gas and such
synthetic gas)
SECTION 3.12 Vote Required. The only vote of the holders of any class
or series of Xxxxx capital stock necessary to authorize restatement and
amendment to Xxxxx'x articles of incorporation in the form of Exhibit B-4 (the
"Amended and Restated Articles of Xxxxx") is the affirmative vote of the holders
of at least a majority of the outstanding shares of Xxxxx Common Stock. The
Merger and this Agreement do not require the approval of any class or series of
Xxxxx capital stock.
SECTION 3.13 Brokers. Except as set forth in Schedule 3.13 to the Xxxxx
Disclosure Schedule, no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Xxxxx. Prior to the date of this Agreement, Xxxxx has made
available to Carpatsky a complete and correct copy of all agreements referenced
in Schedule 3.13 to the Xxxxx Disclosure Schedule pursuant to which such firm
will be entitled to any payment relating to the transactions contemplated by
this Agreement.
SECTION 3.14 Certain Contracts and Restrictions. Other than agreements,
contracts or commitments listed elsewhere in the Xxxxx Disclosure Schedule,
Schedule 3.14 to the Xxxxx Disclosure Schedule lists, as of the date hereof,
each agreement, contract or commitment (including any amendments thereto) to
which Xxxxx or any of its subsidiaries is a party or by which Xxxxx or any of
its subsidiaries is bound (i) involving consideration during the next twelve
months in excess of $10,000 or (ii) which is otherwise material to the assets,
liabilities, financial condition, results of operations or current or future
business of Xxxxx and its subsidiaries, taken as a whole. As of the date of this
Agreement and except as indicated on the Xxxxx Disclosure Schedule, (i) Xxxxx
has fully complied with all material terms and conditions of all agreements,
contracts and commitments listed in the Xxxxx Disclosure Schedule and all such
agreements, contracts and commitments are in full force and effect, (ii) Xxxxx
has no knowledge of any defaults thereunder or any cancellations or
modifications thereof, and (iii) such agreements, contracts and commitments are
not subject to any memorandum or other written document or understanding
permitting cancellation.
SECTION 3.15 Futures Trading and Fixed Price Exposure. None of Xxxxx or
any of its subsidiaries is presently engaged in any futures or options trading
or is a party to any price, interest rate or currency swaps, xxxxxx, futures or
other derivative instruments.
SECTION 3.16 Opinion of Financial Advisor. Xxxxx has received the
opinion of Xxxxxxxx Xxxxx & Company, Inc., to the effect that, as of the date of
such opinion, the Merger is fair from a financial point of view to the holders
of Xxxxx Common Stock, and as of the date hereof, such opinion has not been
withdrawn.
SECTION 3.17 Information Supplied. Without limiting any of the
representations and warranties contained herein, the representations and
warranties of Xxxxx contained in this Agreement and the information set forth in
the Xxxxx Disclosure Schedule is complete and accurate and does not contain any
untrue statement of material fact, or omit a material fact necessary in order to
make the statements contained therein, in light of the circumstances under which
such statements are or were made, not misleading.
14
SECTION 3.18 Absence of Certain Changes or Events. Except as disclosed
in the Xxxxx Disclosure Schedule or as contemplated by this Agreement or as set
forth in Schedule 3.18 to the Xxxxx Disclosure Schedule, since December 31,
1999, each of Xxxxx and its subsidiaries has conducted its business in the
ordinary course of business consistent with past practice. Except as disclosed
in Schedule 3.18 to the Xxxxx Disclosure Schedule, since December 31, 1999,
there has not been (i) any event, change, or effect (including the occurrence of
any liabilities of any nature, whether or not accrued, contingent or otherwise)
having or, which would be reasonably likely to have, individually or in the
aggregate, a Xxxxx Material Adverse Effect; (ii) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to the equity interests of Xxxxx or any redemption,
purchase or other acquisition by Xxxxx of any of Xxxxx'x securities; (iii) any
revaluation by Xxxxx of its assets, including the writing down of the value of
inventory or the writing down or off of its proven reserves or notes or accounts
receivable, other than in the ordinary course of business and consistent with
past practices; (iv) any change by Xxxxx in accounting principles or methods,
except insofar as may be required by a change in U.S. generally accepted
accounting principles; (v) a fundamental change in the nature of Xxxxx'x
business; or (vi) a Xxxxx Material Adverse Effect.
SECTION 3.19 Permits; Compliance. Each of Xxxxx and its subsidiaries is
in possession of all franchises, grants, authorizations, leases, agreements,
licenses, permits, easements, variances, exemptions, consents, registrations,
certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as it is now being conducted
(collectively, the "Xxxxx Permits"), and there is no action, proceeding or
investigation pending or, to the knowledge of Xxxxx, threatened regarding
suspension or cancellation of any of the Xxxxx Permits, except where the failure
to possess, or the suspension or cancellation of, such Xxxxx Permits would not
have a Xxxxx Material Adverse Effect. Except as set forth in Schedule 3.19 to
the Xxxxx Disclosure Schedule, Xxxxx has not received from any Governmental
Authority any written notification with respect to possible conflicts, defaults
or violations of Laws, except for written notices relating to possible
conflicts, defaults or violations that would not have a Xxxxx Material Adverse
Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CARPATSKY
Carpatsky hereby represents and warrants to Xxxxx that:
SECTION 4.01 Organization and Qualifications; Subsidiaries. Each of
Carpatsky and its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
Carpatsky's Representative Office in the Republic of Ukraine ("Representative
Office") is duly organized, validly existing and in good standing under the
current laws of the Republic of Ukraine ("Ukraine") and each has all requisite
legal power and authority to own, lease and operate its properties and to carry
on its business as it is now being conducted and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary, other than where the failure to be so duly qualified
and in good standing would not have a Carpatsky Material Adverse Effect. The
term "Carpatsky Material Adverse Effect" as used in this Agreement shall mean
any change or effect that, individually or when taken together with all such
other changes or effects, would be reasonably likely to be materially adverse to
the assets, liabilities, financial condition, results of operations or current
or future business of Carpatsky and its subsidiaries taken as a whole. Except as
set forth in Schedule 4.01 to the disclosure schedule delivered to Xxxxx by
Carpatsky and which is attached hereto and is made a part hereof (the "Carpatsky
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Disclosure Schedule"), Carpatsky does not own, directly or indirectly, any
subsidiaries and Carpatsky does not own an equity interest in any other
partnership or joint venture arrangement or other business entity that is
material to the assets, liabilities, financial condition, results of operations
or current or future business of Carpatsky and its subsidiaries, taken as a
whole.
SECTION 4.02 Charter and Bylaws. Carpatsky has heretofore furnished to
Xxxxx a complete and correct copy of the certificate of incorporation and bylaws
or the equivalent organizational documents as presently in effect of Carpatsky
and each of its subsidiaries and for the Representative Office. Carpatsky and
its subsidiaries are not in violation of any of the provisions of their
respective charters or any material provision of their respective bylaws.
SECTION 4.03 Capitalization.
(a) The authorized capital stock of Carpatsky consists of an
unlimited number of shares of Carpatsky Common Stock, of which 77,728,263 shares
are issued and outstanding and an unlimited number of shares of Carpatsky
Preferred Stock, of which 95,450,000 shares are issued and outstanding. Except
as set forth in Schedule 4.03(a), there are no shares liable for future issuance
pursuant to outstanding stock options (the "Carpatsky Options") and warrants
("Carpatsky Warrants") or any other purpose. Each of the outstanding shares of
capital stock of, or other equity interests in, Carpatsky and its subsidiaries
is duly authorized, validly issued, and, in the case of shares of capital stock,
fully paid and nonassessable, and has not been issued in violation of (nor
are any of the authorized shares of capital stock of, or other equity interests
in, such entities subject to) any preemptive or similar rights created by
statue, the charter or bylaws (or the equivalent organizational documents) of
Carpatsky and its subsidiaries, or any agreement to which Carpatsky and its
subsidiaries is a party or bound, and such outstanding shares or other equity
interests owned by Carpatsky and its subsidiaries are owned free and clear of
all security interests, liens, claims, pledges, agreements, limitations on
Carpatsky's or its subsidiaries' voting rights, charges or other encumbrances of
any nature whatsoever.
(b) Except as set forth in Schedule 4.03(b)(i) to the
Carpatsky Disclosure Schedule, there are no options, warrants or other rights
(including registration rights), agreements, arrangements or commitments of any
character to which Carpatsky is a party relating to the issued or unissued
capital stock of Carpatsky or obligating Carpatsky to grant, issue or sell any
shares of the capital stock of Carpatsky, by sale, leases, license or otherwise.
Except as set forth in Schedule 4.03(b)(ii) to the Carpatsky Disclosure
Schedule, there are no obligations, contingent or otherwise, of Carpatsky to (i)
repurchase, redeem or otherwise acquire any shares of Carpatsky Common Stock or
other capital stock of Carpatsky; or (ii) provide material funds to, or make any
material investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of any
other person. Except as described in Schedule 4.03(b)(iii) to the Carpatsky
Disclosure Schedule, Carpatsky (x) does not directly or indirectly own, (y) has
not agreed to purchase or otherwise acquire or (z) does not holds any interest
convertible into or exchangeable or exercisable for, 5% or more of the capital
stock of any corporation, partnership, joint venture or other business
association or entity. Except as set forth in Schedule 4.03(b)(iv) to the
Carpatsky Disclosure Schedule, there are no agreements, arrangements or
commitments of any character (contingent or otherwise) pursuant to which any
person is or may be entitled to receive any payment based on the revenues or
earnings or calculated in accordance therewith, of Carpatsky or any of its
subsidiaries. Except as set forth in Schedule 4.03(b)(v), there are no voting
trusts, proxies or other agreements or understanding to which Carpatsky is a
party or by which Carpatsky is bound with respect to the voting of any shares of
capital stock of Carpatsky.
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(c) Carpatsky has made available to Xxxxx complete and correct
copies of (i) the forms of the Carpatsky Options including all amendments
thereto and (ii) all warrants that are not in the form specified under clause
(i) above. Schedule 4.03(c) to the Carpatsky Disclosure Schedule sets forth a
complete and correct list of all outstanding warrants and options, restricted
stock or any other stock awards (the "Carpatsky Stock Awards") setting forth as
of the date hereof (i) the number of type of Carpatsky Stock Awards, (ii) the
exercise price of each outstanding stock option or warrants, and (iii) the
number of stock options and warrants presently exercisable.
SECTION 4.04 Authority. Carpatsky has all requisite corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby (subject to,
with respect to the Continuance and Merger, the adoption of this Agreement by
the stockholders of Carpatsky as described in Section 4.12 hereof). The
execution and delivery of this Agreement by Carpatsky and the consummation by
Carpatsky of the transactions contemplated hereby had been duly authorized by
all necessary corporate action and no other corporate proceedings on the part of
Carpatsky are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (subject to, with respect to the approval and
adoption of this Agreement, the Continuance, the Merger, the approval thereof by
the holders of Carpatsky Common Stock and Carpatsky Preferred Stock as described
in Section 4.12). This Agreement has been duly executed and delivered by
Carpatsky and, assuming the due authorization, execution and delivery thereof by
Xxxxx, constitutes the legal, valid and binding obligation of Carpatsky
enforceable against Carpatsky in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other similar
laws, now or hereafter in effect, affecting creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
SECTION 4.05 No Conflict: Required Filings and Consents.
(a) Except as set forth in Schedule 4.05 to the Carpatsky
Disclosure Schedule, the execution and delivery of this Agreement by Carpatsky
does not, and the consummation of the transaction contemplated hereby will not
(i) conflict with or violate the certificate of incorporation or bylaws, or the
equivalent organizational documents, in each case as amended or restated, of
Carpatsky, (ii) conflict with or violate any Laws applicable to Carpatsky or by
which any of their properties are bound or subject, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of
Carpatsky pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Carpatsky is, or upon consummation of the Continuance, will be a party or by or
to which Carpatsky or any of its respective properties is, or upon consummation
of the Continuance, will be bound or subject, except for any such conflicts or
violations described in clause (ii) or breaches, defaults, events, rights of
termination, amendment, acceleration or cancellation, payments obligations or
liens or encumbrances described in clause (iii) that would not have a Carpatsky
Material Adverse Effect.
(b) The execution and delivery of this Agreement by Carpatsky
does not, and consummation of the transactions contemplated hereby will not,
require Carpatsky to obtain any consent, re-registration, license, permit,
approval, waiver, authorization or order of, or to make any filing with or
notification to, any Governmental Authority, except for filing (A) preliminary
and definitive proxy materials and a registration statement on Form S-4 under
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applicable Canadian Laws and the Securities Act, (B) appropriate documents as
required under Delaware Law and Canadian Law in connection with the Continuance
in Delaware, (C) appropriate merger documents as required by Delaware Law and
(D) appropriate documents as required under the laws of Ukraine; and where the
failure to obtain such consents, licenses, permits, approvals, waivers,
authorizations or orders, or to make such filings or notifications, would not,
either individually or in the aggregate, materially interfere with Carpatsky's
performance of its obligations under this Agreement and would not have a
Carpatsky Material Adverse Effect.
SECTION 4.06 Permits; Compliance. Each of Carpatsky and its
subsidiaries is in possession of all franchises, grants, authorizations, leases,
agreements, licenses, permits, easements, variances, exemptions, consents,
registrations, certificates, approvals and orders necessary to own, lease and
operate its properties and to carry on its business as it is now being conducted
(collectively, the "Carpatsky Permits"), and there is no action, proceeding or
investigation pending or, to the knowledge of Carpatsky, threatened regarding
suspension or cancellation of any of the Carpatsky Permits, except where the
failure to possess, or the suspension or cancellation of, such Carpatsky Permits
would not have a Carpatsky Material Adverse Effect. Except as set forth in
Schedule 4.06 to the Carpatsky Disclosure Schedule, Carpatsky has not received
from any Governmental Authority any written notification with respect to
possible conflicts, defaults or violations of Laws, except for written notices
relating to possible conflicts, defaults or violations that would not have a
Carpatsky Material Adverse Effect.
SECTION 4.07 Financial Statements. Carpatsky's audited consolidated
financial statements (including the related notes thereto) for the year ended
December 31, 1999 and for the three month period ended March 31, 2000 (i) have
been prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except (A) to the
extent required by changes in U.S. generally accepted accounting principles and
(B) as may be indicated in the notes thereto) and (ii) except as set forth in
Schedule 4.07(ii), fairly present the consolidated financial position of
Carpatsky as of the respective dates thereof and the result of operations and
cash flows for the periods indicated (including reasonable estimates of normal
and recurring year-end adjustments), except that (x) any unaudited interim
financial statements were or will be subject to normal and recurring year-end
adjustments and (y) any pro forma financial information contained in such
financial statements is not necessarily indicative of the consolidated financial
position of Carpatsky as of the respective dates thereof and the results of
operations and cash flows for the periods indicated.
SECTION 4.08 Absence of Certain Changes or Events. Except as disclosed
in the Carpatsky Disclosure Schedule or as contemplated by this Agreement or as
set forth in Schedule 4.08 to the Carpatsky Disclosure Schedule, since December
31, 1999, each of Carpatsky and its subsidiaries, including the Representative
Office, has conducted its business in the ordinary course of business consistent
with past practice. Except as disclosed in Schedule 4.08 to the Carpatsky
Disclosure Schedule, since December 31, 1999, there has not been (i) any event,
change, or effect (including the occurrence of any liabilities of any nature,
whether or not accrued, contingent or otherwise) having or, which would be
reasonably likely to have, individually or in the aggregate, a Carpatsky
Material Adverse Effect; (ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with respect
to the equity interests of Carpatsky or any redemption, purchase or other
acquisition by Carpatsky of any of Carpatsky's securities; (iii) any revaluation
by Carpatsky of its assets, including the writing down of the value of inventory
or the writing down or off of its proven reserves or notes or accounts
receivable, other than in the ordinary course of business and consistent with
past practices; (iv) any change by Carpatsky in accounting principles or
methods, except insofar as may be required by a change in U.S. generally
accepted accounting principles; (v) a fundamental change in the nature of
Carpatsky's business; or (vi) a Carpatsky Material Adverse Effect.
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SECTION 4.09 Absence of Litigation. Except as set forth in Schedule
4.09 to the Carpatsky Disclosure Schedule, there is no claim, suit, litigation,
proceeding, arbitration or, to the knowledge of Carpatsky, investigation of any
kind, at law or in equity (including actions or proceedings against Carpatsky,
its subsidiaries or any of their respective properties (except for claims,
actions, suits, litigation, proceedings, arbitrations or investigations which
would not have a Carpatsky Material Adverse Effect), and neither Carpatsky nor
any of its subsidiaries are subject to any continuing order of, consent decree,
settlement agreement or other similar written agreement with, or, to the
knowledge of Carpatsky, continuing investigation by, any Governmental Authority,
or any judgment, order, writ, injunction, decree or award of any Government
Authority or arbitrator, including, without limitation, cease-and-desist or
other orders, except for matters that would not have a Carpatsky Material
Adverse Effect.
SECTION 4.10 Tax Matters. Neither Carpatsky nor, to the knowledge of
Carpatsky, any of its affiliates has taken or agreed to take any action that
would prevent the Continuance and the Merger from constituting tax-free
reorganizations qualifying under relevant provisions of the Code.
SECTION 4.11 Taxes. Except as set forth in the Carpatsky Reports or as
otherwise set forth in the Carpatsky Disclosure Schedule and except as would
not, individually or in the aggregate, have a Carpatsky Material Adverse Effect,
(i) all Carpatsky Tax Returns required to be filed with any taxing authority by,
or with respect to, Carpatsky have been filed in accordance with all applicable
laws; (ii) Carpatsky has timely paid all Taxes shown as due and payable on
Carpatsky Tax Returns that have been so filed, and, as of the time of filing,
Carpatsky Tax Returns correctly reflected the facts regarding the income,
business, assets, operations, activities and the status of Carpatsky and its
subsidiaries (other than Taxes which are being contested in good faith and for
which adequate reserves are reflected on the Carpatsky Balance Sheet); (iii)
Carpatsky and its subsidiaries have made provision for all Taxes payable by
Carpatsky and its subsidiaries for which no Carpatsky Tax Return has yet been
filed; (iv) the charges, accruals and reserves for Taxes with respect to
Carpatsky and its subsidiaries reflected on the Carpatsky Balance Sheet are
adequate under GAAP to cover the Tax liabilities accruing through the date
thereof; (v) there is no action, suit, proceeding, audit or claim now proposed
or pending against or with respect to Carpatsky or any of its subsidiaries in
respect of any Tax where there is a reasonable possibility of an adverse
determination; and (vi) to the best of Carpatsky's knowledge and belief, neither
Carpatsky nor any of its subsidiaries is liable for any Tax imposed on any
entity other than such Person.
SECTION 4.12 Vote Required. The affirmative vote of the holders
(present in person or by proxy at the special meeting of stockholders to be
called for the purpose of approving the transactions contemplated herein) of at
least (i) two-thirds of the issued and outstanding shares of Carpatsky Common
Stock and Carpatsky Preferred Stock, voting together as a class, is required to
approve the Continuance and (ii) a majority of the issued and outstanding shares
of Carpatsky Common Stock and Carpatsky Preferred Stock, voting together as a
class, is required to approve the Merger.
SECTION 4.13 Brokers. Except as set forth in Schedule 4.13 of the
Carpatsky Disclosure Schedule, no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Carpatsky. Prior to the date of this Agreement,
Carpatsky has made available to Xxxxx a complete and correct copy of all
agreements referenced in Schedule 4.13 pursuant to which any such firm will be
entitled to any payment related to the transactions contemplated by this
Agreement.
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SECTION 4.14 Information Supplied. Without limiting any of the
representations and warranties contained herein, no representation or warranty
of Carpatsky and no statement by Carpatsky or other information contained in or
documents referred to in the Carpatsky Disclosure Schedule, as of the date of
such representation, warranty, statement or document, contains or contained any
untrue statement of material fact, or, at the date thereof, omits or omitted to
state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which such statements are or were
made, not misleading.
SECTION 4.15 Employee Benefit Plans; Labor Matters.
(a) Except as set forth in Schedule 4.15(a) to the Carpatsky
Disclosure Schedule, Carpatsky does not maintain nor has it contributed during
the past five years to any employee benefit plan (as such term is defined in
ERISA Section 3(s)) or with respect to which Carpatsky or any member of its
ERISA Group would incur liability under Sections 4065, 4069, 4212 (c) or 4204 of
ERISA, or any analogous federal or provincial law of Canada, and any other
retirement, pension, stock option, stock application rights, profit sharing,
incentive compensation, deferred compensation, savings, thrift, vacation pay,
severance pay, or other employee compensation or benefit plan, agreement,
practice or arrangement, whether written or unwritten, whether or not legally
binding (collectively, the "Carpatsky Benefit Plans"). As of the date of this
Agreement, except as would not have a Carpatsky Material Adverse Effect, the
material Carpatsky Benefit Plans maintained by Carpatsky, or any member of its
ERISA Group, or with respect to which Carpatsky has or may have a liability are
in substantial compliance with applicable laws. Schedule 4.15(a) sets forth a
list of all Carpatsky Plans, true and complete copies of which have been
furnished to Xxxxx.
(b) With respect to the Carpatsky Plans, no event has occurred
and, to the knowledge of Carpatsky, there exists no condition or set of
circumstances, in connection with which Carpatsky or any member of its ERISA
Group could be subject to any liability under the terms of such Carpatsky Plans
or other applicable Law which would have a Carpatsky Material Adverse Effect.
(c) Except as otherwise set forth on Schedule 4.15(c) to the
Carpatsky Disclosure Schedule, neither Carpatsky nor any member of its ERISA
Group contributes to or has an obligation to contribute to, and has not within
five years prior to the date of this Agreement contributed to or had an
obligation to contribute to or has any secondary liability to a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(d) Neither Carpatsky nor any member of its ERISA Group, is or
has ever been a party to any collective bargaining or other labor union
contracts. No collective bargaining agreement is being negotiated by Carpatsky.
There is no pending or threatened labor dispute, strike or work stoppage against
Carpatsky or any of its subsidiaries which may interfere with the business
activities of Carpatsky. None of Carpatsky or any of its representatives or
employees has committed any unfair labor practices in connection with the
operation of the business of Carpatsky, and there is no pending or threatened
charge or complaint against Carpatsky by any governmental authority.
(e) With respect to each Carpatsky Benefit Plan that is a
"group health plan" as defined in Section 5000(b) of the Code, each such
Carpatsky Benefit Plan complies and has complied with the requirements of
applicable laws, except where the failure to so comply would not have a
Carpatsky Material Adverse Effect.
(f) Except as disclosed in Schedule 4.15(f), through the date
of this Agreement, Carpatsky and its subsidiaries are not obligated nor
responsible for benefit plans, pensions, employee taxes, employer's taxes or
similar obligations with respect to citizens or residents of Ukraine who may be
employed, directly or indirectly, by any subsidiary of Carpatsky, Ukrcarpatoil
or the Representative Office.
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SECTION 4.16 Certain Business Practices. None of Carpatsky, its
subsidiaries and its Representative Office or any directors, offices, agents or
employees of any of them has used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, made
any unlawful payment to foreign or domestic government officials or employees or
to foreign or domestic political parties or campaigns.
SECTION 4.17 Environmental Matters. Except as set forth in the
Carpatsky Reports filed prior to the date hereof and with such exceptions as,
individually or in the aggregate, have not had, and would not reasonably be
expected to have, a Carpatsky Material Adverse Effect, (i) no notice,
notification, demand, request for information, citation, summons, complaint or
order has been received by, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of Carpatsky or any of its
subsidiaries, threatened by any Person against, Carpatsky or any of its
subsidiaries, and no penalty has been assessed against Carpatsky or any of its
subsidiaries, in each case, with respect to any matters relating to or arising
out of any Environmental Law; (ii) Carpatsky and its subsidiaries are and have
been in compliance with all Environmental Laws; (iii) there are no liabilities
of or relating to Carpatsky or any of its subsidiaries relating to or arising
out of any Environmental Law of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances which could reasonably be
expected to result in such a liability; and (iv) there has been no environmental
investigation, study, audit, test, review or other analysis conducted of which
Carpatsky has knowledge in relation to the current or prior business of
Carpatsky or any of its subsidiaries or any property or facility now or
previously owned, leased or operated by Carpatsky or any of its subsidiaries
which has not been delivered to Xxxxx at least five days prior to the date
hereof.
SECTION 4.18 Certain Contracts and Restrictions. Other than agreements,
contracts or commitments listed elsewhere in the Carpatsky Disclosure Schedule,
Schedule 4.18 to the Carpatsky Disclosure Schedule lists, as of the date hereof,
each agreement, contract or commitment (including any amendments thereto) to
which Carpatsky is a party or by which Carpatsky is bound involving
consideration during the next twelve months in excess of $10,000 or which is
otherwise material to the assets, liabilities, financial condition, results of
operations or current or future business of Carpatsky and its subsidiaries,
taken as a whole. As of the date of this Agreement and except as indicated on
the Carpatsky Disclosure Schedule, (i) Carpatsky and its subsidiaries each has
fully complied with all material terms and conditions of all agreements,
contracts and commitments that will be listed in the Carpatsky Disclosure
Schedule and all such agreements, contracts and commitments are in full force
and effect, Carpatsky has no knowledge of any defaults thereunder or any
cancellations or modifications thereof, and such agreements, contracts and
commitments are not subject to any memorandum or other written document or
understanding permitting cancellation.
SECTION 4.19 Futures Trading and Fixed Price Exposure. Neither
Carpatsky nor any of its subsidiaries is presently engaged in any futures or
options trading nor are they party to any price, interest rate or currency
swaps, xxxxxx, futures or other derivative instruments.
ARTICLE V
COVENANTS
SECTION 5.01 Affirmative Covenants of Xxxxx. Xxxxx hereby covenants and
agrees that, at or prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by Carpatsky, Xxxxx
will and will cause its subsidiaries to:
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(a) Use all reasonable efforts to preserve substantially
intact its business organization, maintain its material rights and franchises,
retain the services of its respective officers and employees and maintain its
relationships with its material customers and suppliers;
(b) maintain and keep its material properties and assets in
as good repair and conditions as at present, ordinary wear and tear excepted;
(c) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage to that
currently maintained;
(d) furnish to Carpatsky the most recent reserve report
regarding Xxxxx'x interests in its oil and gas properties prepared by
Netherland, Xxxxxx & Associates, Inc. in accordance with Reg. S-X;
(e) take all such steps as are commercially reasonable in
order to consummate the Exchange and the Merger and all other transactions
contemplated hereby, including, without limitation, securing all requisite
consents thereto; and
(f) operate its business in all material respects in the usual
and ordinary course.
SECTION 5.02 Negative Covenants of Xxxxx. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by
Carpatsky, from the date of this Agreement until the Effective Time, Xxxxx will
not do, and will not permit any of its subsidiaries to do, any of the foregoing:
(a) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock, except for
dividends by a wholly owned subsidiary of Xxxxx to Xxxxx or another wholly owned
subsidiary of Xxxxx;
(b) except as contemplated by this Agreement or as described
in Schedule 3.03(b)(ii) to the Xxxxx Disclosure Schedule, (i) redeem, purchase
or otherwise acquire any shares of its or any of its subsidiaries' capital stock
or any securities or obligations convertible into or exchangeable for any shares
of its or its subsidiaries' capital stock (other than pursuant to the Exchange
or any such acquisitions directly from any wholly owned subsidiary of Xxxxx in
exchange for capital contributions or loans to such subsidiary), or any options,
warrants or conversion or other rights to acquire any shares of its or its
subsidiaries' capital stock or any such securities or obligations (except in
connection with the exercise of outstanding stock options in accordance with
their terms); effect any reorganization or recapitalization (other than the
Exchange); or split, combine or reclassify any of its or its subsidiaries'
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its or
its subsidiaries' capital stock;
(c) except as described in Schedule 3.03(b)(i) to the Xxxxx
Disclosure Schedule or as contemplated by the Exchange and this Agreement,
issue, deliver, award, grant or sell, or authorize or propose the issuance,
delivery, award, grant or sale (including the grant of any security interests,
liens, claims, pledges, limitations in voting rights, charges or other
encumbrances) of, any shares of any class of its or its subsidiaries' capital
stock (including shares held in treasury), any securities convertible into or
exercisable or exchangeable for any such shares, or any rights, warrants or
options to acquire any such shares (except as permitted pursuant to Sections
2.01(a), 2.01(b) and 2.01(e) of this Agreement or for the issuance of shares
upon the exercise of outstanding stock options or the vesting of restricted
stock in accordance with the terms of outstanding Xxxxx Stock Awards); amend or
otherwise modify the terms of any such rights, warrants or options the effect of
which shall be to make such terms more favorable to the holders thereof; or take
any action to accelerate the exercisability of stock options;
22
(d) except as contemplated by this Agreement, acquire or agree
to acquire, by merging or consolidating with, by purchasing any equity interest
in or a portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets of any other person
(other than the purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice);
(e) except as disclosed in Schedule 5.02(e) to the Xxxxx
Disclosure Schedule, sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its material assets or any material
assets of any of its subsidiaries, except for the sale of inventory or other
dispositions in the ordinary course;
(f) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, any Competing Transaction (as defined below), or enter
into discussions or negotiate with any person or entity in furtherance of such
inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of the officers, directors or
employees of Xxxxx or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by
Xxxxx or any of Xxxxx'x subsidiaries to take any such action, and Xxxxx shall
promptly notify Carpatsky of all relevant terms of any such inquiries and
proposals received by Xxxxx or any of its subsidiaries or by any such officer,
director, investment banker, financial advisor, attorney, accountant or other
representative relating to any of such matters and if such inquiry or proposal
is in writing, Xxxxx shall promptly deliver or cause to be delivered to
Carpatsky a copy of such inquiry or proposal. For purposes of this Agreement,
"Competing Transaction" shall mean any of the following (other than the
transactions contemplated by this Agreement, including, without limitation, the
Exchange) involving a party hereto or any of its subsidiaries: (i) any merger,
consolidation, share exchange, business combination or similar transaction; (ii)
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of
20% or more of the assets of a party hereto and its subsidiaries, taken as a
whole, (iii) any tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of a party hereto or the filing of a
registration statement under the Securities Act in connection therewith; (iv)
any person (other than stockholders as of the date of this Agreement) having
acquired beneficial ownership of, or any group (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) having been formed which beneficially owns or has the right to
acquire beneficial ownership of, 20% or more of the outstanding shares of
capital stock of a party hereto; or (v) any public announcement of a proposal,
plan or intention to do any of the foregoing or any agreement to engage in any
of the foregoing;
(g) except as contemplated by this Agreement, adopt or propose
to adopt any amendments to its articles of incorporation or bylaws, which would
alter the terms of its capital stock or would have an adverse impact on the
consummation of the transactions contemplated by this Agreement;
(h) (A) change any of its methods of accounting in effect at
December 31, 1999, or (B) make or rescind any express or deemed election
relating to Taxes, settle or compromise any claim, action, suit, litigation,
audit or controversy relating to Taxes (except where the amount of such
settlements or controversies, individually or in the aggregate, does not exceed
$10,000), or change any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ended December 31, 1998, except
in each case, as may be required by Law or generally accepted accounting
principles;
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(i) incur any obligations for borrowed money or purchase money
indebtedness or guarantee, whether or not evidenced by a note, bond, debenture
or similar instrument, except in the ordinary course of business consistent with
past practice and in no event in excess of $10,000 in the aggregate;
(j) enter into any material arrangement, agreement or contract
with any third party which provides for an exclusive arrangement with that third
party or is substantially more restrictive on Xxxxx or substantially less
advantageous to Xxxxx than arrangements, agreements or contracts existing on the
date hereof;
(k) take any action, other than actions required by this
Agreement, which would result in a failure to maintain the registration of the
Xxxxx Common Stock under the Exchange Act;
(l) except as contemplated by this Agreement, adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other material reorganization of Xxxxx or any
of its subsidiaries;
(m) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations, (x) reflected on, or reserved against in, or
contemplated by, the financial statements (or the notes thereto) of Xxxxx and
its subsidiaries, (y) incurred in the ordinary course of business consistent
with past practice or (z) which are legally required to be paid, discharged or
satisfied;
(n) knowingly take, or agree to commit to take, any action
that would make any representation or warranty of Xxxxx contained herein
inaccurate in any respect at, or as of any time prior to, the Effective Time;
(o) other than between or among wholly-owned subsidiaries of
Xxxxx which remain wholly-owned or between Xxxxx and its wholly-owned
subsidiaries which remain wholly- owned, neither Xxxxx nor any of its
subsidiaries will engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of Xxxxx'x
affiliates, including, without limitation, any transactions, agreements,
arrangements or understanding with any affiliate or other person covered under
Item 404 of Regulation S-K promulgated under the Securities Act, other than
pursuant to such agreement, arrangements or understandings existing on the date
of this Agreement (which are set forth on Schedule 5.02(o) of the Xxxxx
Disclosure Schedule) or as disclosed in writing to Carpatsky on the date hereof
or which are contemplated under this Agreement; provided, that Xxxxx provides
Carpatsky with all information concerning any such agreement, arrangement or
understanding that Carpatsky may reasonably request;
(p) agree to or approve any commitment, including any
authorization for expenditure or agreement to acquire property, obligating Xxxxx
for an amount in excess of $100,000, other than for authorizations for
expenditure involving Xxxxx oil field operations which are made pursuant to
existing agreements or are otherwise effected in the ordinary course or in order
that Xxxxx conduct its operations in a prudent manner consistent with industry
standards;
(q) engage in any futures or options trading or be a party to
any price or currency swaps, xxxxxx, futures or derivative instruments; or
(r) agree in writing or otherwise to do any of the foregoing.
24
SECTION 5.03 Affirmative Covenants of Carpatsky. Carpatsky hereby
covenants and agrees that, prior to the Effective Time, unless otherwise
expressly contemplated by this Agreement or consented to in writing by Xxxxx,
Carpatsky will:
(a) furnish to Xxxxx the most recent reserve report regarding
Carpatsky's interests in oil and gas properties in the Republic of the Ukraine
prepared by Xxxxx Xxxxx Company Petroleum Engineers;
(b) operate its business in all material respects in the usual
and ordinary course;
(c) use all reasonable efforts to preserve substantially
intact its business organization, maintain its material rights and franchises
and maintain its relationships with its material customers, suppliers, partners
and joint enterprise shareholders;
(d) use all commercially reasonable efforts to maintain and
keep its material properties and assets in as good repair and condition as at
present, ordinary wear and tear excepted, and maintain supplies and inventories
in quantities consistent with its customary business practice;
(e) use all reasonable efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of coverage to that
currently maintained; and
(f) take all such steps as are commercially reasonable in
order to consummate the Continuance and the Merger and all other transactions
contemplated hereby, including, without limitation, securing all requisite
consents thereto.
SECTION 5.04 Negative Covenants of Carpatsky. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by Xxxxx,
from the date of this Agreement until the Effective Time, Carpatsky will not do
or permit any of its subsidiaries to do any of the following:
(a) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock;
(b) (A) redeem, purchase or otherwise acquire any shares of
its capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any options, warrants or
conversion or other rights to acquire any shares of its or any such securities
or obligations (except in connection with the exercise of outstanding stock
options in accordance with their terms); (B) effect any reorganization or
recapitalization; or (C) split, combine or reclassify any of its capital stock
or issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock;
(c) except as contemplated by this Agreement, (i) issue,
deliver, award, grant or sell, or authorize or propose the issuance, delivery,
award, grant or sale (including the grant of any security interests, liens,
claims, pledges, limitations in voting rights, charges or other encumbrances)
of, any shares of any class of its capital stock (including shares held in
treasury), any securities convertible into or exercisable or exchangeable for
any such shares, or any rights, warrants or options to acquire any such shares
(except as permitted pursuant to Sections 2.01(a), 2.01(b) and 2.01(e) of this
Agreement or for the issuance of shares upon the exercise of outstanding stock
options or the vesting of restricted stock in accordance with the terms of
outstanding Carpatsky Stock Awards); (ii) amend or otherwise modify the terms of
any such rights, warrants or options the effect of which shall be to make such
terms more favorable to the holders thereof; or (iii) take any action to
accelerate the exercisability of stock options;
25
(d) acquire or agree to acquire, by merging or consolidating
with, by purchasing any equity interest in or a portion of the assets of, or by
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or agree
to acquire any assets of any other person (other than pursuant to this Agreement
or for the purchase of assets from suppliers or vendors in the ordinary course
of business and consistent with past practice);
(e) sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, or agree to sell, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of, any of its material assets;
(f) initiate, solicit or encourage (including by way of
furnishing information or assistance), or take any other action to facilitate,
any inquiries or the making of any proposal relating to, or that may reasonably
be expected to lead to, any Competing Transaction, or enter into discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Competing Transaction, or agree to or endorse any Competing
Transaction, or authorize or permit any of the officers, directors or employees
of Carpatsky or any investment banker, financial advisor, attorney, accountant
or other representative retained by Carpatsky to take any such action, and
Carpatsky shall promptly notify Xxxxx of all relevant terms of any such
inquiries and proposals received by Carpatsky or any of its subsidiaries or by
any such officer, director, investment banker, financial advisor, attorney,
accountant or other representative relating to any of such matters and if such
inquiry or proposal is in writing, Carpatsky shall promptly deliver or cause to
be delivered to Xxxxx a copy of such inquiry or proposal;
(g) adopt or propose to adopt any amendments to its
certificate of incorporation or bylaws, which would alter the terms of its
capital stock or would have an adverse impact on the consummation of the
transactions contemplated by this Agreement;
(h) (A) except for changing its fiscal year end in connection
with the Merger to December 31 in each year and, as a result of the Continuance
becoming subject to U.S. generally accepted accounting principles, change any of
its methods of accounting in effect at December 31, 1999 or (B) make or rescind
any express or deemed election relating to Taxes, settle or compromise any
claim, action, suit, litigation, audit or controversy relating to Taxes (except
where the amount of such settlements or controversies, individually or in the
aggregate, does not exceed $10,000), or change any of its methods of reporting
income or deductions for federal income tax purposes from those employed in the
preparation of the its income tax returns for the taxable year ended June 30,
1999, except in each case, as may be required by Law or U.S. or Canadian
generally accepted accounting principles;
(i) incur any obligations for borrowed money or purchase money
indebtedness or guarantee, whether or not evidenced by a note, bond, debenture
or similar instrument, except in the ordinary course of business consistent with
past practice and in no event in excess of $10,000 in the aggregate;
(j) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
material reorganization of Carpatsky;
(k) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations, (x) reflected on, or reserved against in, or
contemplated by, the financial statements (or the notes thereto) of Carpatsky,
(y) incurred in the ordinary course of business consistent with past practice or
(z) which are legally required to be paid, discharged or satisfied;
26
(l) knowingly take, or agree to commit to take, any action
that would make any representation or warranty of Carpatsky contained herein
inaccurate in any respect at, or as of any time prior to, the Effective Time;
(m) Except to the extent described in Schedule 5.04(m),
Carpatsky will not engage in any transaction with, or enter into any agreement,
arrangement, or understanding with, directly or indirectly, any of Carpatsky's
affiliates, including, without limitation, any transactions, agreements,
arrangements or understanding with any affiliate or other person covered under
Item 404 of Regulation S-K promulgated under the Securities Act, other than
pursuant to such agreement, arrangements or understandings existing on the date
of this Agreement (which are set forth on Section 5.04(m) of the Carpatsky
Disclosure Schedule) or as disclosed in writing to Xxxxx on the date hereof or
which are contemplated under this Agreement; provided, that Carpatsky provides
Xxxxx with all information concerning any such agreement, arrangement or
understanding that Xxxxx may reasonably request;
(n) engage in any futures or options trading or be a party to
any price or currency swaps, xxxxxx, futures or derivative instruments; or
(o) agree in writing or otherwise to do any of the foregoing.
SECTION 5.05 Access and Information.
(a) Xxxxx shall, and shall cause its subsidiaries to, (i)
afford Carpatsky and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively, the
"Carpatsky Representatives") reasonable access at reasonable times, upon
reasonable prior notice, to the officers, employees, agents, properties, offices
and other facilities of Xxxxx and its subsidiaries and to the books and records
thereof and (ii) furnish promptly to Carpatsky and the Carpatsky Representatives
such information concerning the business, properties, contracts, records and
personnel of Xxxxx and its subsidiaries (including, without limitation,
financial, operating and other data and information) as may be reasonably
requested, from time to time, by Carpatsky or such Representatives.
(b) Carpatsky shall, and shall cause its subsidiaries to, (i)
afford to Xxxxx and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives (collectively, the
"Xxxxx Representatives") reasonable access at reasonable times, upon reasonable
prior notice, to the officers, employees, accountants, agents, properties,
offices and other facilities of Carpatsky and its subsidiaries and to the books
and records thereof and (ii) furnish promptly to Xxxxx and Xxxxx Representatives
such information concerning the business, properties, contracts, records and
personnel of Carpatsky and its subsidiaries (including, without limitation,
financial, operating and other data and information) as may be reasonably
requested, from time to time, by Xxxxx or such Representatives.
(c) Notwithstanding the foregoing provisions of this Section
5.05, neither party shall be required to grant access or furnish information to
the other party to the extent that such access to or the furnishing of such
information is prohibited by Law. No investigation by the parties hereto made
heretofore or hereafter shall affect the representations and warranties of the
parties which are herein contained and each such representation and warranty
shall survive such investigation.
(d) The information received pursuant to Section 5.05(a) and
(b) by either party hereto (the "Recipient") shall be deemed to be "confidential
information" and may not be publically disclosed except pursuant to express
written permission by the other party hereto (the "Informant") or valid court or
investigative order unless such information is already in the public domain or
in the possession of the Recipient and such disclosure and was not obtained in
breach of any duty owed by the Informant.
27
SECTION 5.06 The Exchange. Xxxxx will use its commercially reasonable
efforts to cause the holders of its Preferred Stock to exchange such Preferred
Stock for an aggregate of 8,865,665 shares of Common Stock pursuant to the
Exchange Agreement attached as Exhibit A (the "Exchange") on or prior to the
Closing Date.
SECTION 5.07 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Constituent Entities, any
deeds, bills of sale, assignments or assurances, and to take and do, in the name
and on behalf of the Constituent Entities, any other actions and things to vest,
perfect, or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Constituent Entities to be acquired by the Surviving Corporation
as a result of, or in connection with, the Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Meetings of Stockholders.
(a) Xxxxx shall, promptly after the effectiveness of the Form
S-4, take all actions necessary in accordance with Nevada Law and its articles
of incorporation and bylaws to convene a special meeting of Xxxxx'x stockholders
to approve the Amended and Restated Articles of Xxxxx (the "Amendment") and to
elect the directors listed in Schedule 1.06 (the "Xxxxx Stockholders Meeting"),
and Xxxxx shall consult with Carpatsky in connection therewith. Xxxxx shall use
its reasonable efforts to solicit from stockholders of Xxxxx proxies in favor of
the approval and adoption of the Amendment and the election of directors and to
secure the vote of stockholders required by Nevada Law, its articles of
incorporation and bylaws to approve and adopt the Amendment, the election of
directors and to otherwise satisfy the closing conditions set forth in Sections
7.01 and 7.02.
(b) Carpatsky shall, promptly after the effectiveness of the
Form S-4, take all action necessary in accordance with Delaware and Canadian Law
and its charter and bylaws to convene a special meeting of Carpatsky's
shareholders to (i) approve the Continuance and (ii) act on this Agreement (the
"Carpatsky Stockholders Meeting"). Carpatsky shall recommend approval of the
Continuance of Carpatsky in Delaware and the approval and adoption of this
Agreement and the Merger and shall use its reasonable efforts to solicit from
shareholders of Carpatsky proxies in favor of the approval and adoption of the
Continuance, the Merger and this Agreement and to secure the vote of
shareholders required by Canadian and Delaware Law and its charter and bylaws to
approve and adopt the Continuance, the Merger, this Agreement and the
transactions contemplated hereby.
SECTION 6.02 Registration Statement.
(a) As promptly as practicable after the execution of this
Agreement, Carpatsky and Xxxxx shall amend the Form S-4 previously filed by
Xxxxx, including a proxy statement and management information circular for
stockholders of Xxxxx and Carpatsky in connection with the transactions
contemplated by this Agreement and a prospectus for the issuance by Xxxxx of the
Xxxxx Common Stock (the "Proxy Statement/Prospectus"). In connection with the
preparation and filing of the Proxy Statement/Prospectus, Carpatsky shall
reconcile its financial statements in accordance with U.S. generally accepted
accounting principles and the provisions of Reg. S-X and shall change its fiscal
year end to December 31 for all fiscal years ending after June 30, 1999. Each of
Carpatsky and Xxxxx shall use its commercially reasonable efforts to cause the
Form S-4 to be declared effective by the SEC as promptly as practicable, and
28
shall take any action required to be taken under any applicable federal or state
securities laws in connection with the issuance of shares of Xxxxx Common Stock
and Xxxxx Preferred Stock in the Conversion and the Merger. Each of Carpatsky
and Xxxxx shall furnish to the other all information concerning it and the
holders of its capital stock as the other may reasonably request in connection
with such actions. As promptly as practicable after the Form S-4 shall have been
declared effective by the SEC, Xxxxx shall mail the Proxy Statement/Prospectus
to its stockholders entitled to notice of and to vote at the Xxxxx Stockholders
Meeting and to the stockholders of Carpatsky entitled to notice of and to vote
at the Carpatsky Stockholders Meeting. The Proxy Statement/Prospectus shall
include the recommendation of Xxxxx'x Board of Directors in favor of the
Amendment and approval and adoption of this Agreement and the Merger. The Proxy
Statement/Prospectus shall also be filed as a management information circular in
the principal review jurisdiction of Carpatsky in Canada. The Proxy
Statement/Prospectus shall include the recommendation of Carpatsky's Board of
Directors that shareholders vote in favor of approval of the Continuance, and
that shareholders vote to approve and adopt the Merger and this Agreement.
(b) The information supplied by Xxxxx for inclusion in the
Form S-4 shall not, at the time the Proxy Statement/Prospectus is mailed to the
stockholders of Xxxxx and Carpatsky, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. If at any time
prior to the Effective Time any event or circumstance relating to Xxxxx or any
of its affiliates, or its or their respective officers or directors, is
discovered by Xxxxx that should be set forth in a supplement to the Proxy
Statement/Prospectus, Xxxxx shall promptly inform Carpatsky thereof in writing.
All documents that Xxxxx is responsible for filing with the SEC in connection
with the transactions contemplated herein shall comply as to form in all
material respects with the applicable requirements of the Securities Act, the
rules and regulations thereunder, the Exchange Act and the rules and regulations
thereunder, and applicable Canadian securities laws and regulations.
(c) The information supplied by Carpatsky for inclusion in the
Form S-4 shall not, at the time the Proxy Statement/Prospectus is mailed to the
stockholders of Xxxxx and Carpatsky, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. If at any time
prior to the Effective Time any event or circumstance relating to Carpatsky or
any of its affiliates, or to their respective officers or directors, is
discovered by Carpatsky that should be set forth in a supplement to the Proxy
Statement/Prospectus, Carpatsky shall promptly inform Xxxxx thereof in writing.
SECTION 6.03 Appropriate Action; Consents; Filings.
(a) Xxxxx and Carpatsky shall each use, and shall cause each
of their subsidiaries to use, all reasonable efforts to (i) take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable Law or otherwise to consummate
and make effective the transactions contemplated by this Agreement, (ii) obtain
from any Governmental Authorities any consents, licenses, permits, waivers,
approvals, authorizations or orders required to be obtained or made by Carpatsky
or Xxxxx or any of its subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the
Continuance, the Exchange and the Merger, (iii) make all necessary filings, and
thereafter make any other required submissions, with respect to this Agreement,
the Continuance, the Exchange and the Merger required under (A) the Securities
Act and the Exchange Act and the rules and regulations thereunder, and any other
applicable federal or state securities laws, and (B) any other applicable Law;
provided that Carpatsky and Xxxxx shall cooperate with each other in connection
with the making of all such filings, including providing copies of all such
documents to the nonfiling party and its advisors prior to such filings and, if
requested, shall accept all reasonable additions, deletions or changes suggested
in connection therewith. Xxxxx and Carpatsky shall furnish all information
required for any application or other filing to be made pursuant to the rules
29
and regulations of any applicable Law (including all information required to be
included in the Form S-4) in connection with the transactions contemplated by
this Agreement.
(b) Carpatsky and Xxxxx agree to cooperate with respect to,
and shall cause each of their respective subsidiaries to cooperate with respect
to, and agree to use all reasonable efforts vigorously to contest and resist,
any action, including legislative, administrative or judicial action, and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Order") of any
Governmental Authority that is in effect and that restricts, prevents or
prohibits the consummation of the Continuance, the Merger or any other
transactions contemplated by this Agreement, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal
and all available legislative action. Each of Carpatsky and Xxxxx also agree to
take any and all commercially reasonable actions, including, without limitation,
the disposition of assets or the withdrawal from doing business in particular
jurisdictions, required by regulatory authorities as a condition to the granting
of any approvals required in order to permit the consummation of the Merger or
as may be required to avoid, lift, vacate or reverse any legislative or judicial
action which would otherwise cause any condition to Closing not to be satisfied;
provided, however, that in no event shall Carpatsky be required to take any
action that would or could reasonably be expected to have a Carpatsky Material
Adverse Effect, and Xxxxx shall not be required to take any action which would
or could reasonably be expected to have a Xxxxx Material Adverse Effect.
(c) (i) Each of Xxxxx and Carpatsky shall give (or Xxxxx or
Carpatsky shall cause its subsidiaries to give) any notices to third parties,
and use, and cause their respective subsidiaries to use, all reasonable efforts
to obtain any third party consents (A) necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, (B) otherwise
required under any contracts, licenses, leases or other agreements in connection
with the consummation of the transactions contemplated hereby or (C) required to
prevent a Xxxxx Material Adverse Effect from occurring prior to the Effective
Time or a Carpatsky Material Adverse Effect from occurring after the Effective
Time.
(ii) In the event that any party shall fail to
obtain any third party consent described in subsection (c)(i) above, such party
shall use all reasonable efforts, and shall take any such actions reasonably
requested by the other party, to limit the adverse effect upon Carpatsky and its
subsidiaries and Xxxxx and its subsidiaries, and their respective businesses
resulting or which could reasonably be expected to result after the Effective
Time, from the failure to obtain such consent.
(d) Each of Carpatsky and Xxxxx shall promptly notify the
other of (w) any material change in its current or future business, assets,
liabilities, financial condition or results of operations, (x) any complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) of any Governmental Authorities with respect to its business or
the transactions contemplated hereby, (y) the institution or the threat of
material litigation involving it or any of its subsidiaries or (z) any event or
condition that might reasonably be expected to cause any of its representations,
warranties, covenants or agreements set forth herein not to be true and correct
at the Effective Time. As used in the preceding sentence, "material litigation"
means any case, arbitration or adversary proceeding or other matter which would
have been required to be disclosed on the Xxxxx Disclosure Schedule pursuant to
Section 3.07 or the Carpatsky Disclosure Schedule pursuant to Section 4.09, as
the case may be, if in existence on the date hereof, or in respect of which the
legal fees and other costs to Xxxxx (or its subsidiaries) might reasonably be
expected to exceed $100,000 over the life of the matter or to Carpatsky (or its
subsidiaries) might reasonably be expected to exceed $100,000 over the life of
the matter.
30
SECTION 6.04 Tax Treatment. Each party hereto shall use all reasonable
efforts to cause the Continuance, the Exchange and the Merger to qualify, and
shall not take, and shall use all reasonable efforts to prevent any affiliate of
such party from taking, any actions that could prevent the Continuance, the
Exchange and the Merger from qualifying, as tax-free reorganizations under
relevant provisions of the Code.
SECTION 6.05 Public Announcements. Neither party shall issue any press
release or otherwise make any public statements with respect to the Merger
without the approval of the other. The press release announcing the execution
and delivery of this Agreement shall be a joint press release of Carpatsky and
Xxxxx.
SECTION 6.06 Amendment. For a period of six years after the Effective
Time, Xxxxx shall not amend or otherwise modify the Amended and Restated
Articles of Xxxxx or the Xxxxx bylaws which could adversely affect the rights
thereunder of any individuals, who at any time prior to and at the Effective
Time were or are directors or officers of Xxxxx, in respect of their terms of
office or acts or omissions occurring at or prior to or after the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement), unless such amendment or modification is required by Law. This
Section 6.06 is intended to be for the benefit of, and shall be enforceable by,
the persons referred to in the foregoing sentence, their heirs and personal
representatives, and shall be binding on Xxxxx and its successors and assigns.
SECTION 6.07 Stock Resale Agreement. Xxxxx and Carpatsky each agrees,
and each will obtain the agreement of each of their respective offices,
directors and affiliates, not purchase or sell or acquire or dispose of rights
to purchase either party's Common Stock in the open market or from any
stockholders during the period from the date hereof until consummation of the
transactions contemplated hereby. Carpatsky agrees to deliver to Xxxxx, on or
prior to the Effective Time, such customary agreements as are reasonably
requested by Xxxxx of each stockholder who is a director or executive officer or
who may be deemed to be an affiliate of Carpatsky not to effect any sales of the
Xxxxx Common Stock in excess of the volume limitations specified in Rule 145(d)
promulgated under the Securities Act.
SECTION 6.08 SEC Reports and Registration Statements. Xxxxx shall use
all reasonable efforts, including the timely filing of all Xxxxx SEC Reports
that may be due subsequent to the date hereof and obtaining any consents
required from Xxxxx'x auditors necessary to include such Xxxxx SEC Reports and
the Form S-4.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.01 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Continuance,
the Exchange, the Merger and the other transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions, any or all of which may be waived in writing by the parties hereto,
in whole or in part, to the extent permitted by applicable Law:
(a) Securities Laws. The Form S-4 shall have been declared
effective by the SEC [, describe required Canadian regulatory consent, ] and
Xxxxx shall have received all Blue Sky permits and other authorizations
necessary to consummate the transactions contemplated by this Agreement.
(b) Stockholder Approval. The Amendment shall have been
approved and adopted by the requisite vote of the stockholders of Xxxxx. The
Continuance, this Agreement and the Merger shall have been approved and adopted
by the requisite vote of the stockholders of Carpatsky.
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(c) No Order. No Governmental Authority or federal, provincial
or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is in effect and which has the effect of making the Continuance, the
Amendment, the Merger or the Exchange illegal or otherwise prohibiting
consummation of such transactions.
(d) Dissenters Rights. The number of shares of Carpatsky
Common Stock for which valid notices of intention to demand payment pursuant to
the applicable provisions of the ABCA and Delaware Law have been provided and
remain outstanding immediately prior to the effectiveness of the Merger does not
exceed five-eighths of one percent (0.625%) of the issued and outstanding
Carpatsky Common Stock immediately prior to the Effective Time.
SECTION 7.02 Additional Conditions to Obligations of Carpatsky. The
obligations of Carpatsky to effect the Continuance, the Merger and the other
transactions contemplated hereby are also subject to the satisfaction at or
prior to the Closing Date of the following conditions, any or all of which may
be waived in writing by Carpatsky, in whole or in part, to the extent permitted
by applicable Law:
(a) Representations and Warranties. Each of the
representations and warranties of Xxxxx contained in this Agreement shall be
true and correct as of the Closing Date as though made on and as of the Closing
Date (except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date). Carpatsky shall have
received a certificate of the President and the Chief Financial Officer of
Xxxxx, dated the Closing Date, to such effect.
(b) Agreements and Covenants. Xxxxx shall have performed or
complied with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. Carpatsky
shall have received a certificate of the President and the Chief Financial
Officer of Xxxxx, dated the Closing Date, to such effect.
(c) Material Adverse Change. Since the date of this Agreement,
there shall have been no change, occurrence or circumstance in the current or
future business, assets, liabilities, financial condition or results of
operations of Xxxxx or any of its subsidiaries having or reasonably likely to
have, individually or in the aggregate, a Xxxxx Material Adverse Effect.
Carpatsky shall have received a certificate of the President and the Chief
Financial Officer of Xxxxx, dated the Closing Date, to such effect.
(d) Absence of Regulatory Conditions. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Continuance or the Merger, by any
Governmental Authority in connection with the grant of a regulatory approval
necessary, in the reasonable business judgment of Carpatsky, to the continuing
operation of the current or future business of Xxxxx, which imposes any
condition or restriction upon Carpatsky or the business or operations of Xxxxx
which, in the reasonable business judgment of Carpatsky, would be materially
burdensome in the context of the transactions contemplated by this Agreement.
32
(e) Tax Opinion. Carpatsky shall have received the written
opinion of Messrs. Feleski Xxxxx, Calgary, Alberta dated the Closing Date, to
the effect that the disclosure regarding Canadian income tax laws set forth in
the Form S-4 is correct in all material respects.
(f) Xxxx X. Xxxxxx, LLC Opinion. Carpatsky shall have
received from Xxxx X. Xxxxxx, LLC, counsel to Xxxxx, a written opinion dated the
Closing Date covering such customary matters regarding Xxxxx as are reasonably
requested by Carpatsky.
(g) Withholding. Xxxxx must not have determined to withhold
any amount from the Merger Consideration pursuant to the tax withholding
provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the
Code, or of any other provision of law, except with respect to cash paid for
fractional shares and to dissenting stockholders.
(h) Exchange of Xxxxx Preferred Stock. All of the issued and
outstanding shares of Xxxxx Preferred Stock shall have been exchanged in
accordance with the Exchange.
SECTION 7.03 Additional Conditions to Obligations of Xxxxx. The
obligations of Xxxxx to effect the Exchange and the Merger and the other
transactions contemplated hereby are also subject to the satisfaction at or
prior to the Closing Date of the following conditions, any or all of which may
be waived in writing by Xxxxx, in whole or in part, to the extent permitted by
applicable law:
(a) Representations and Warranties. Each of the
representations and warranties of Carpatsky contained in this Agreement shall be
true and correct as of the Closing Date as though made on and as of the Closing
Date (except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date). Xxxxx shall have received a
certificate of the President and the Chief Financial Officer of Carpatsky, dated
the Closing Date, to such effect.
(b) Agreements and Covenants. Carpatsky shall have performed
or complied with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. Xxxxx shall
have received a certificate of the President and the Chief Financial Officer of
Carpatsky, dated the Closing Date, to such effect.
(c) Material Adverse Change. Since the date of this Agreement,
there shall have been no change, occurrence or circumstance in (i) the current
or future business, assets, liabilities, financial condition or results of
operations of Carpatsky or any of its subsidiaries having or reasonably likely
to have, individually or in the aggregate, a Carpatsky Material Adverse Effect
or (ii) the assumptions used in preparing the reserve report for the RC field
which materially adversely effects the reserve values set forth therein. Xxxxx
shall have received a certificate of the President and the Chief Financial
Officer of Carpatsky, dated the Closing Date, to such effect.
(d) Absence of Regulatory Conditions. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or deemed applicable to the Merger, by any Governmental Authority in
connection with the grant of a regulatory approval necessary, in the reasonable
business judgment of Xxxxx, to the continuing operation of the current or future
business of Carpatsky, which imposes any condition or restriction upon Xxxxx or
the business or operations of Carpatsky which, in the reasonable business
judgment of Xxxxx, would be materially burdensome in the context of the
transactions contemplated by this Agreement.
33
(e) Xxxxxx and Xxxxx, LLP Opinion. Xxxxx shall have received
from Xxxxxx and Xxxxx, LLP, counsel to Carpatsky, an opinion dated the Closing
Date, covering such customary matters regarding Carpatsky as are reasonably
requested by Xxxxx.
(f) Continuance. The Continuance of Carpatsky in Delaware
shall have been consummated.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement,
the Continuance, the Exchange and the Merger by the stockholders of Xxxxx and
Carpatsky:
(a) by mutual consent of Carpatsky and Xxxxx;
(b) by Carpatsky, upon a material breach of any
representation, warranty, covenant, condition or agreement on the part of Xxxxx
set forth in this Agreement or the failure to consummate the Exchange, or if any
representation or warranty of Xxxxx shall have become untrue, in either case
such that the conditions set forth in Section 7.02(a) or Section 7.02(b) of this
Agreement, as the case may be, would be incapable of being satisfied by October
31, 2000 (or as otherwise extended as described in Section 8.01(e)); provided,
that in any case, a wilful breach shall be deemed to cause such condition as to
be incapable of being satisfied for purposes of this Section 8.01(b);
(c) by Xxxxx, upon a material breach of any representation,
warranty, covenant, condition, or agreement on the part of Carpatsky set forth
in this Agreement, or if any representation or warranty of Carpatsky shall have
become untrue, in either case such that the conditions set forth in Section
7.03(a) or Section 7.03(b) of this Agreement, as the case may be, would be
incapable of being satisfied by October 31, 2000 (or as otherwise extended as
described in Section 8.01(e)); provided, that in any case, a wilful breach shall
be deemed to cause such condition as to be incapable of being satisfied for
purposes of this Section 8.01(c);
(d) by either Carpatsky or Xxxxx, if there shall be any Order
which is final and nonappealable preventing the consummation of the Continuance,
the Conversion or the Merger, except if the party relying on such Order to
terminate this Agreement has not complied with its obligations under Section
6.03(b) of this Agreement;
(e) by either Carpatsky or Xxxxx, if the Merger shall not have
been consummated before October 31, 2000; provided, however, that this Agreement
may be extended by written notice of either Carpatsky or Xxxxx to a date not
later than December 31, 2000, if the Merger shall not have been consummated by
October 31, 2000, in order to receive all required regulatory approvals or
consents with respect to the Merger;
(f) by either Carpatsky or Xxxxx, if the Amendment shall fail
to receive the requisite vote for approval and adoption by the stockholders of
Xxxxx at the Xxxxx Stockholders Meeting or if the Continuance or this Agreement
and the Merger shall fail to receive the requisite vote for approval and
adoption by the stockholders of Carpatsky at the Carpatsky Stockholders Meeting;
(g) by Carpatsky, if (i) the Board of Directors of Xxxxx
withdraws, modifies or changes its recommendation of this Agreement, the
Amendment or the Merger in a manner adverse to Carpatsky or shall resolved to do
any of the foregoing; (ii) the Board of Directors of Xxxxx shall have
34
recommended to the stockholders of Xxxxx any Competing Transaction or shall have
resolved to do so; (iii) a tender offer or exchange offer for 20% or more of the
outstanding shares of capital stock of Xxxxx is commenced, and the Board of
Directors of Xxxxx does not recommend that stockholders not tender their shares
into such tender or exchange offer; (iv) any person (other than Carpatsky or an
affiliate thereof, or any stockholder of Xxxxx as of the date of this Agreement)
shall have acquired beneficial ownership or the right to acquire beneficial
ownership of, or any "group" (as such term if defined under Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder), shall have
been formed which beneficially owns, or has the right to acquire beneficial
ownership of, 20% or more of the then outstanding shares of capital stock of
Xxxxx; or (v) Xxxxx fails to satisfy the condition to Carpatsky's obligation set
forth in Section 7.02(h);
(h) by Xxxxx if (i) the Board of Directors of Carpatsky
withdraws, modifies or changes its recommendation of this Agreement, the
Continuance or the Merger in a manner adverse to Xxxxx or shall resolved to do
any of the foregoing; (ii) the Board of Directors of Carpatsky shall have
recommended to the stockholders of Carpatsky any Competing Transaction or shall
have resolved to do so; (iii) a tender offer or exchange offer for 20% or more
of the outstanding shares of capital stock of Carpatsky is commenced, and the
Board of Directors of Carpatsky does not recommend that stockholders not tender
their shares into such tender or exchange offer; (iv) any person (other than
Xxxxx or an affiliate thereof, or any stockholder of Carpatsky as of the date of
this Agreement) shall have acquired beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term if defined under Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder),
shall have been formed which beneficially owns, or has the right to acquire
beneficial ownership of, 20% or more of the then outstanding shares of capital
stock of Carpatsky; or (v) Xxxxx'x investment banking consultant, Xxxxxxxx Xxxxx
& Company (or other investment banking firm or consultant) fails to deliver an
opinion that the transaction is fair, from a financial point of view, to the
Xxxxx stockholders.
The right of any party hereto to terminate this Agreement
pursuant to this Section 8.01 shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any party hereto,
any person controlling any such party or any of their respective officers,
directors, representatives or agents, whether prior to or after the execution of
this Agreement.
SECTION 8.02 Effect of Termination. Except as provided in Section 8.05
or Section 9.01 of this Agreement, in the event of the termination of this
Agreement, this Agreement shall forthwith become void, there shall be no
liability on the part of Carpatsky or Xxxxx or any of their affiliates to the
other or to the other's affiliates and all rights and obligations of any party
hereto shall cease.
SECTION 8.03 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of Xxxxx and Carpatsky, no amendment, which
under applicable Law may not be made without the approval of the stockholders of
Xxxxx or Carpatsky, may be made without such approval, and no amendment, which
under the applicable rules of any securities exchange, on which the Xxxxx Common
Stock shall then be listed or shall be approved for listing), may not be made
without the approval of the stockholders of Xxxxx, may be made without such
approval. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.04 Waiver. At any time prior to the Effective Time, any party
hereto may extend the time for the performance of any of the obligations or
other acts of the other party hereto, waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and waive compliance by the other party with
any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
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SECTION 8.05 Fees, Expenses and Other Payments.
(a) Except as provided in Section 8.05(c) or Section 8.05(d)
of this Agreement, in the event the Merger is not consummated all Expenses (as
defined in paragraph (b) of this Section 8.05) incurred by the parties hereto
shall be borne solely and entirely by the party that has incurred such Expenses;
it being agreed that all Expenses incurred in connection with the Form S-4 shall
be borne equally by Xxxxx and Carpatsky (other than for the fees and expenses of
such parties' respective counsel and accountants which will be borne by such
parties); provided, however, in the event the Merger is consummated, all
Expenses incurred in connection with the Merger and the transactions
contemplated hereby will be paid by Xxxxx.
(b) "Expenses" as used in this Agreement shall include all
out-of-pocket expenses (including, without limitation, all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement, the preparation, printing, filing and mailing of
the Form S-4 and the Proxy Statement/Prospectus, the solicitation of stockholder
approvals and all other matters related to the consummation of the transactions
contemplated hereby.
(c) Xxxxx agrees that if this Agreement is terminated pursuant
to:
(i) Section 8.01(b) and (x) such termination is the
result of an intentional breach of any representation, warranty, covenant or
agreement of Xxxxx contained herein, (y) Xxxxx shall have had contacts or
entered into negotiations relating to a Competing Transaction prior to or on the
date of termination of this Agreement, and (z) within twelve months after the
date of termination of this Agreement, and with respect to any person or group
with whom the contacts or negotiations referred to in clause (y) have occurred,
a Business Combination (as defined in Section 8.05(f)) shall have occurred or
Xxxxx shall have entered into a definitive agreement providing for a Business
Combination; or
(ii) Section 8.01(f) because this Agreement and the
Merger or the amendment and restatement of Xxxxx articles of incorporation shall
fail to receive the requisite vote for approval and adoption by the stockholders
of Xxxxx at the Xxxxx Stockholders Meeting and at the time of such meeting there
shall exist a Competing Transaction; or
(iii) Section 8.01(g)(i) and at the time of the
withdrawal, modification or change (or resolution to do so) of its
recommendation by the Board of Directors of Xxxxx, there shall exist a Competing
Transaction; or
(iv) Sections 8.01(g)(ii), (iii) or (v); or
(v) Section 8.01(h)(v) and within twelve months
after the date of termination of this Agreement, Xxxxx shall have entered into a
Competing Transaction;
then Xxxxx shall pay to Carpatsky an amount equal to $250,000, which amount is
inclusive of all of Carpatsky's Expenses.
(d) Carpatsky agrees that if this Agreement is terminated
pursuant to:
36
(i) Section 8.01(c) and (x) such termination is the
result of an intentional breach of any representation, warranty, covenant or
agreement of Carpatsky contained herein, (y) Carpatsky shall have had contacts
or entered into negotiations relating to a Competing Transaction prior to or on
the date of termination of this Agreement, and (z) within twelve months after
the date of termination of this Agreement, and with respect to any person or
group with whom the contacts or negotiations referred to in clause (y) have
occurred, a Business Combination (as defined in Section 8.05(f)) shall have
occurred or Carpatsky shall have entered into a definitive agreement providing
for a Business Combination; or
(ii) Section 8.01(f) because this Agreement and the
Merger shall fail to receive the requisite vote for approval and adoption by the
stockholders of Carpatsky at the Carpatsky Stockholders Meeting and at the time
of such meeting there shall exist a Competing Transaction; or
(iii) Section 8.01(h)(i) and at the time of the
withdrawal, modification or change (or resolution to do so) of its
recommendation by the Board of Directors of Carpatsky, there shall exist a
Competing Transaction; or
(iv) Sections 8.01(h)(ii) or (iii).
then Carpatsky shall pay to Xxxxx an amount equal to (i) $250,000, which amount
is inclusive of all of Xxxxx'x Expenses, plus (ii) all amounts owed to Xxxxx
pursuant to the agreement, dated October 1, 1999, pursuant to which Xxxxx agreed
to assist in preparing Carpatsky's financial statements.
(e) Any payment required to be made pursuant to Section
8.05(c) or Section 8.05(d) of this Agreement shall be made as promptly as
practicable but not later than three business days after termination of this
Agreement, and shall be made by wire transfer of immediately available funds to
an account designated by Xxxxx or Carpatsky, as the case may be, except that any
payment to be made as the result of an event described in Section 8.05(c)(i) or
Section 8.05(d)(i) shall be made as promptly as practicable but not later than
three business days after the occurrence of the Business Combination or the
execution of the definitive agreement providing for a Business Combination.
(f) For purposes of this Section 8.05, the term "Business
Combination" means a merger (other than pursuant to this Agreement),
consolidation, share exchange, business combination or similar transaction
involving Xxxxx or Carpatsky, a sale, lease, exchange, transfer or other
disposition of 20% or more of the assets of Xxxxx and its subsidiaries, or
Carpatsky and its subsidiaries, taken as a whole, in a single transaction or a
series of transactions, or the acquisition, by a person (other than Carpatsky or
any affiliate thereof) or group (as such term is defined under Section 13(d) of
the Exchange Act and the rules and regulations thereunder) of beneficial
ownership (as defined in Rule 13d-3 under the Exchange Act) of 20% or more of
the Xxxxx or Carpatsky Common or Xxxxx Preferred Stock, as the case may be,
whether by tender or exchange offer or otherwise.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Effectiveness of Representations, Warranties and
Agreements.
37
(a) Except as set forth in Section 9.01(b) of this Agreement,
the representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers, directors, representatives or agents, whether prior to or
after the execution of this Agreement.
(b) The representations, warranties and agreements in this
Agreement shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Article VIII, except that the agreements set forth in
Articles I and II and Sections 5.07, 6.05, 6.06, 6.07 and 6.08 shall survive the
Effective Time and those set forth in Sections 5.05(d), 8.02 and 8.05 and
Article IX hereof shall survive termination.
SECTION 9.02 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given upon receipt, if delivered personally or by air courier, or mailed by
registered or certified mail (postage prepaid, return receipt requested), to the
parties at the following addresses (or at such other address for a party as
shall be specified by like changes of address) or sent by electronic
transmission to the telecopier number specified below (to be followed promptly
by personal or air courier delivery or mailing as hereinafter provided):
(a) If to Carpatsky, to:
Carpatsky Petroleum, Inc.
0000 Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
Facsimile Number: (000) 000-0000
with copy to:
Xxxxxx and Xxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx III, Esq.
Facsimile Number: (000) 000-0000
(b) If to Xxxxx, to:
Xxxxx Oil and Gas Company
000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
with copy to:
Xxxx X. Xxxxxx, LLC
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile Number: (000) 000-0000
SECTION 9.03 Certain Definitions. For the purposes of this Agreement,
the term:
(a) "affiliate" means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
38
(b) a person shall be deemed a "beneficial owner" of or to
have "beneficial ownership" of Carpatsky Common Stock or Xxxxx Common and
Preferred Stock, as the case may be, in accordance with the interpretation of
the term "beneficial ownership" as defined in Rule 13d- 3 under the Exchange
Act, as in effect on the date hereof; provided that a person shall be deemed to
be the beneficial owner of, and to have beneficial ownership of, Carpatsky
Common Stock or Xxxxx Common or Preferred Stock, as the case may be, that such
person or any affiliate of such person has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding or upon the exercise of conversion
rights, exchange rights, warrants or options, or otherwise.
(c) "business day" means any day other than a day on which
banks in the State of Delaware are authorized or obligated to be closed;
(d) "control" (including the terms "controlled," "controlled
by" and "under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the management or policies of a person, whether through the
ownership of stock or as trustee or executor, by contract or credit arrangement
or otherwise;
(e) "dollar" or "$" shall refer to the freely transferable
currency of the United States of America.
(f) "knowledge" or "known" shall mean, with respect to any
matter in question, if an executive officer of Xxxxx or Carpatsky, as the case
may be, has actual knowledge of such matter;
(g) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d) of the Exchange Act);
(h) "Significant Subsidiary" means any subsidiary of Xxxxx or
Carpatsky that would constitute a Significant Subsidiary of such party within
the meaning of Rule 1-02 of Reg. S-X of the SEC; and
(i) "subsidiary" or "subsidiaries" of Xxxxx, Carpatsky, or of
any other person, means any corporation, partnership, joint venture or other
legal entity of which Xxxxx, Carpatsky, Xxxxx or any such other person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, currently or in the past, 50% or more of the stock
or other equity interests the holders of which are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity; provided, however, for purposes of this
Agreement Ukrcarpatoil, Ltd. shall be deemed to constitute a subsidiary of
Carpatsky.
SECTION 9.04 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Section references herein are, unless the
context otherwise requires, references to sections of this Agreement.
SECTION 9.05 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the extent
possible.
39
SECTION 9.06 Entire Agreement; Effect of Amendment. This Agreement
(together with the Exhibits, the Xxxxx Disclosure Schedule and the Carpatsky
Disclosure Schedule) constitutes the entire agreement of the parties, and
supersede all prior agreements and undertakings, both written and oral, among
the parties or between any of them, with respect to the subject matter hereof.
Without limitation, each party hereto forever releases and discharges the other
party and its affiliates and associates from any liability, claim, expense,
damage or other loss, however arising, whether in tort, contract or otherwise,
arising out of or related to the Original Agreement, any amendment thereto
(other than this Agreement) or any action or inaction taken or not taken in
connection therewith.
SECTION 9.07 Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.08 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied (other than as contemplated by Section 6.06 or
Section 6.08), is intended to or shall confer upon any other person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
SECTION 9.09 Specific Performance. The parties hereby acknowledge and
agree that the failure of any party to perform its agreements and covenants
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties for which damages, even if available, will not be an adequate
remedy. Accordingly, each party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such
party's obligations and to the granting by any court of the remedy of specific
performance of its obligations hereunder.
SECTION 9.10 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 9.11 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law.
SECTION 9.12 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
XXXXX OIL AND GAS COMPANY
By:
--------------------------------------
Name
---------------------------
Title
--------------------------
CPI ACQUISITION CORP.
By:
--------------------------------------
Name
---------------------------
Title
--------------------------
CARPATSKY PETROLEUM INC.
By:
--------------------------------------
Name
---------------------------
Title
--------------------------
40
