ASSET ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
AND
PLAN
OF REORGANIZATION
THIS
ASSET ACQUISITION AGREEMENT AND PLAN OF REORGANIZATION
(this
“Agreement”)
is
made and entered in on this the 4th day of October, 2006, by and among
Tandem
Energy Corporation,
a
Colorado corporation (“Seller”),
Platinum
Energy Resources, Inc.,
a
Delaware corporation (“Platinum”),
and
PER
Acquisition Corporation,
Delaware corporation and a wholly owned subsidiary of Platinum (“Buyer”).
BACKGROUND
A. Seller
is
currently engaged in the oil and gas exploration and production
business;
B. Buyer
desires to acquire, and Seller desires to sell, all of the assets and properties
of Seller, including all aspects of Seller’s business, and Buyer desires to
assume certain liabilities of Seller, all in exchange solely for voting stock
of
Platinum (the “Acquisition”);
and
C. The
parties intend that the Acquisition shall be treated for United States federal
income tax purposes as a reorganization within the meaning of Section
368(a)(1)(C) of the Code, and that this Agreement, as it relates to the
Acquisition, shall constitute a “plan of reorganization” within the meaning of
Treasury Regulation Section 1.368-3.
ARTICLE
I
DEFINITIONS
1.01 Defined
Terms.
As used
in this Agreement, the following terms shall have the meanings ascribed to
them
below:
(a) “Affiliate”
of
a
person shall mean (i) a person that directly or indirectly, through one or
more
intermediaries, controls, is controlled by, or is under common control with,
the
first-mentioned person and (ii) an "associate," as that term is defined in
Rule
12b-2 promulgated under the Exchange Act.
(b) “Ancillary
Documents”
shall
mean each agreement, instrument and document (other than this Agreement)
executed or to be executed by Seller, Platinum, Buyer or their respective
shareholders in connection with the consummation of the transactions
contemplated hereby.
(c) “Applicable
Law”
shall
mean any statute, law, rule or regulation or any judgment, order, writ,
injunction or decree of any Governmental Authority to which a specified person
or property is subject.
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(d) “Assets”
shall
mean all of the assets, properties and rights of Seller, whether such assets,
properties and rights are tangible or intangible, of every kind, nature and
description wherever situated, including, without limitation, all of the assets,
properties and rights owned by Seller on the Closing Date but excluding
Seller’s
charter
to exist as a corporation, Seller’s minute book, Seller’s corporate seal, and
other corporate records having exclusively to do with its corporate organization
and capitalization. The Assets being conveyed hereunder include but are not
limited to the following:
(i) All
assets of Seller shown on Seller’s Balance Sheet;
(ii)All
equipment and other items of tangible personal property utilized in connection
with the operation of the Business and whether or not such items of tangible
personal property are of such character to be considered to be
fixtures;
(iii)All
cash,
time and demand deposits and cash equivalents of Seller as of the
Closing;
(iv)All
accounts receivable of Seller;
(v)The
interests of Seller in all Contracts to which Seller is a party;
(vi)The
interests of Seller in all licenses and permits held by Seller relating to
the
ownership, development and operation of the Assets to the extent such licenses
and permits are assignable;
(vii)All
insurance policies with respect to the Assets and any and all rights of Seller
thereunder;
(viii)All
intellectual property rights owned by Seller;
(ix)All
capital stock of ▇▇▇▇▇ Drilling, Inc. and all limited partnership units in
Spring Creek Limited Partnership;
(x)All
financial, customer, administrative and personnel records (including, without
limitation, all equipment records, administrative files, customer lists and
records, and customer billing records, documents, catalogs, books, records,
files, operating manuals, and existing financial data relating to the ownership
and operation of the Assets);
(xi)All
goods
and consumable supplies used in connection with the operation of the Acquired
Business or the Assets;
(xii)The
interests of Seller in and to all personal property, tangible or intangible,
arising or acquired by Seller in the Ordinary Course of Business relating to
the
Assets, between the date of execution of this Agreement and the Closing
Date;
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(xiii) All
prepaid expenses of Seller relating to the Business;
(xiv)The
interests of Seller in and to its telephone number, its facsimile number and
its
Seller internet domain name;
(xv)The
interests of Seller in and to the name “Tandem Energy Corporation” and any
variation thereof, and any related going concern value and goodwill; and
(xvi)All
computer software and all computer disks and programs owned, licensed or
otherwise used in the Business.
(xvii)All
real
property owned by Seller, including improvements and structures thereon and
appurtenances thereto and including the Oil and Gas Interests
(e) “Business”
shall
mean the oil and gas exploration and production business of the Seller,
including all of the Oil and Gas Interests of Seller.
(f) “Business
Day”
shall mean a day on which banks are open for the transaction of business in
Dallas, Texas.
(g) “Closing”
shall mean the consummation of the exchange of Assets for the Platinum Exchange
Shares (as such term is defined in Section 2.04).
(h) “Closing
Date”
shall mean the date on which the Closing occurs.
(i) “Code”
shall
mean the Internal Revenue Code of 1986, as amended
(j) “Contract”
shall mean, when such term is capitalized herein, written
or oral agreements, commitments or arrangements
of Seller.
(k) “Control”
(including the terms “controlling,”
“controlled
by”
and
“under
common control with”)
shall
mean the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through ownership
of voting securities, by contract, or otherwise.
(l) “Control
Persons”
means
▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇.
(m) “Encumbrances”
shall
mean liens, charges, pledges, options, mortgages, deeds of trust, security
interests, claims, restrictions (whether on voting, sale, transfer, disposition
or otherwise), easements and other encumbrances of every type and description,
whether imposed by law, agreement, understanding or otherwise.
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(n) “Environmental
Law”
shall
mean any and all laws, statutes, ordinances, rules, regulations, notices, orders
or determinations of any tribal authority or other Governmental Authority
pertaining to health or the environment, including, without limitation, the
Clean Air Act, as amended: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”),
as
amended; the Federal Water Pollution Control Act, as amended; the Occupational
Safety and Health Act of 1970, as amended; the Resource Conservation, and
Recovery Act of 1976 (“RCRA”),
as
amended; the Safe Drinking Water Act, as amended; the Toxic Substances Control
Act, as amended; the Hazardous & Solid Waste Amendments Act of 1984, as
amended; the Superfund Amendments and Reauthorization Act of 1986, as amended;
the Hazardous Materials Transportation Act, as amended; any state laws
pertaining to the handling of oil and gas exploration or production wastes
or
the use, maintenance and closure of pits and impoundments; and any other
environmental conservation or protection laws. As used in this Agreement with
respect to Environmental Law, “hazardous
substance”
and
“release”
(or
“threatened
release”)
have
the meanings specified in CERCLA, and the terms “solid
waste”
and
“disposal”
(or
“disposed”)
have
the meanings specified in RCRA; provided, however, that (A) to the extent the
laws of the jurisdiction wherein any assets are located establish a meaning
for
“hazardous
substance,”
“release,”
“solid
waste”
or
“disposal”
that
is
broader than that specified in either CERCLA or RCRA, such broader meaning
shall
apply and (B) the terms “hazardous
substance”
and
“solid
waste”
shall
include all oil and gas exploration and production wastes that may present
an
endangerment to public health or welfare or the environment, even if such wastes
are specifically exempt from classification as hazardous substances or solid
wastes pursuant to CERCLA or RCRA or the state analogues to those
statutes.
(o) “ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as
amended.
(p) “Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended.
(q) “Good,
Marketable and Defensible Title”
shall
mean title in and to the Oil and Gas Interests that, except for any permitted
Encumbrances, and that to Seller’s knowledge:
(i) Is
free
and clear of all defects, burdens and liens;
(ii) In
the
case of each Oil and Gas Interest, (A) is filed, recorded or otherwise
referenced of record in the records of the applicable county in a manner which
under applicable local law constitutes imputed notice of such Oil and Gas
Interest to third parties acquiring an interest in or an encumbrance against
such Oil and Gas Interest, or (1) in the case of federal leases, in the records
of the applicable office of the Bureau of Land Management, (2) in the case
of
Indian leases and mineral development agreements, in the applicable office
of
the Bureau of Indian Affairs or applicable tribal records, or (3) in the case
of
state leases, in the records of the applicable state land office, but only
to
the extent the records referenced in (1), (2) and (3) above constitute imputed
notice under applicable local law to third parties acquiring an interest in
or
an encumbrance against such leases, or (B) is assignable to Seller or a
Buyersidiary out of an interest of record (as provided in clause (A) above),
but
only to the extent that all conditions required to earn an enforceable right
to
such assignment
have been satisfied and the record owner of such interest is ready, willing
and
able to make such assignment;
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(iii) In
the
case of each Oil and Gas Interest set forth in the reserve reports of Seller
that entitles Seller to receive and retain, without reduction, suspension or
termination and after deduction of all applicable royalties, overriding
royalties, production payments or other burdens payable out of production,
not
less than the percentage set forth in the reserve reports as Seller’s
“Net
Revenue Interest”
of
all
Hydrocarbons produced, saved and marketed from such Oil and Gas Interest,
through the productive life of such Oil and Gas Interest, except for changes
or
adjustments in such “Net
Revenue Interest”
after
the date hereof and in compliance with Seller’s covenants and agreement under
this Agreement that result from the establishment of new units, changes in
existing units (or the participating areas therein), the entry into of new
pooling or unitization agreements, or an election not to participate in an
operation under a joint operating agreement or a unit agreement;
(iv) In
the
case of each Oil and Gas Interest set forth in the reserve report of Seller
that
obligates Seller to bear not greater than the percentage set forth in the
reserve report as Seller’s “Working
Interest”
of
the
costs and expenses relating to the maintenance, development and operation of
such Oil and Gas Interest (including the plugging and abandonment and site
restoration with respect to all existing and future ▇▇▇▇▇ located thereon or
attributable thereto), through plugging, abandonment and salvage of all ▇▇▇▇▇
and related lease facilities located on such Oil and Gas Interest or lands
pooled, unitized or otherwise combined therewith, except for changes or
adjustments in such “Working
Interest”
after
the date hereof and in compliance with Seller’s covenants and agreement under
this Agreement that result from the establishment of new units, changes in
existing units (or the participating areas therein), the entry into of new
pooling or unitization agreements, or an election by a third party not to
participate in an operation under a joint operating agreement or a unit
agreement;
(v) In
the
case of each Oil and Gas Interest, reflects that all royalties, rentals, ▇▇▇▇
clause payments, shut in gas payments and other payments due with respect to
such Oil and Gas Interest have been properly and timely paid, except for
payments held in suspense for title or other reasons which are customary in
the
industry and which will not result in grounds for cancellation of Seller’s
rights in such Oil and Gas Interest; and
(vi) Reflects
that all consents to assignment, notices of assignment or preferential purchase
rights which are applicable to or must be complied with in connection with
the
transaction contemplated by this Agreement, have been obtained and complied
with
to the extent the failure to obtain or comply with the same could render this
transaction or any such prior sale, assignment or transfer (or any right or
interest affected thereby) void or voidable or could result in Seller incurring
any liability or loss of title.
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(r) “Governmental
Authority”
shall
mean any court or tribunal in any jurisdiction (domestic or foreign) or any
public, governmental, or regulatory body, agency, department, commission, board,
bureau or other authority or instrumentality (domestic or foreign, federal
or
state).
(s) “HSR
Act”
shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
(t) “Hydrocarbons”
shall
mean oil, condensate, gas, casinghead gas and other liquid or gaseous
Hydrocarbons.
(u) “Hydrocarbon
Agreement”
shall
mean any of the Hydrocarbon Sales Agreements and Hydrocarbon Purchase
Agreements.
(v) “Hydrocarbon
Purchase Agreement”
shall
mean any material sales agreement, purchase contract, or marketing agreement
that is currently in effect and under which Seller is a buyer of Hydrocarbons
for resale (other than purchase agreements entered into in the ordinary course
of business with a term of three months or less, terminable without penalty
on
30 days' notice or less, which provide for a price not greater than the market
value price that would be paid pursuant to an arm's-length contract for the
same
term with an unaffiliated third-party seller, and which do not obligate Seller
to take any specified quantity of Hydrocarbons or to pay for any deficiencies
in
quantities of Hydrocarbons not taken).
(w) “Hydrocarbon
Sales Agreement”
shall
mean any material sales agreement, purchase contract, or marketing agreement
that is currently in effect and under which Seller is a seller of Hydrocarbons
(other than “spot” sales agreements entered into in the ordinary course of
business with a term of three months or less, terminable without penalty on
30
days` notice or less, and which provide for a price not less than the market
value price that would be received pursuant to an arm's- length contract for
the
same term with an unaffiliated third party purchaser).
(x) “IRS”
shall
mean the Internal Revenue Service.
(y) “Knowledge”
as
used
with respect to a Person (including references to such Person being aware of
a
particular matter) shall mean those facts that are actually known by the chief
executive officer, president, chief financial officer, or any senior executive
or other vice president of such Person without any inquiry or
investigation.
(z) “Material
Adverse Change”
shall
mean with respect to any Person, any adverse change or adverse condition in
or
relating to the financial condition, of such Person and its subsidiaries that
is
material to such Person and its subsidiaries taken as a whole.
(aa) “Material
Contract”
shall
mean, as relates to Seller, (i) oil and gas leases, (ii) operating agreements
relating to such leases, and (iii) Contracts relating to the Business and
involving a total commitment by or to any party thereto of at least $10,000
on
an annual basis
and
which cannot be terminated by Seller with notice of ninety (90) days or less
without penalty to Seller.
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(bb) “Oil
and Gas Interests”
shall
mean: (i) direct and indirect interests in and rights with respect to oil,
gas,
mineral and related properties and assets of any kind and nature, direct or
indirect, including, without limitation, working, royalty and overriding royalty
interests, mineral interests, leasehold interests, production payments,
operating rights, net profits interests, other non-working interests and
non-operating interests; (ii) interests in and rights with respect to
Hydrocarbons and other minerals or revenues therefrom and contracts in
connection therewith and claims and rights thereto (including oil and gas
leases, operating agreements, unitization and pooling agreements and orders,
division orders, transfer orders, mineral deeds, royalty deeds, oil and gas
sales, exchange and processing contracts and agreements and, in each case,
interests thereunder), surface interests, fee interests, reversionary interests,
reservations and concessions; (iii) easements, rights of way, licenses, permits,
leases, and other interests associated with, appurtenant to, or necessary for
the operation of any of the foregoing; and (iv) interests in equipment and
machinery (including well equipment and machinery), oil and gas production,
gathering, transmission, compression, treating, processing and storage
facilities (including tanks, tank batteries, pipelines and gathering systems),
pumps, water plants, electric plants, gasoline and gas processing plants,
refineries and other tangible personal property and fixtures associated with,
appurtenant to, or necessary for the operation of any of the
foregoing.
(cc) “Ordinary
Course of Business”
shall
mean an action taken by a Person if:
(i) Such
action is taken in the ordinary course of the normal day-to-day operations
of
such Person and is consistent with past practices of such Person;
(ii) Such
action is not required to be authorized by the Board of Directors o of such
Person and is not required to be specifically authorized by the shareholders,
if
any, of such Person; and
(iii) Such
action is similar in nature and magnitude to actions customarily taken, without
any authorization by the Board of Directors, in the ordinary course of the
normal day-to-day operations of other Persons that are in the same line of
business as such Person.
(dd) “Person”
shall
mean any individual, corporation, partnership, joint venture, association,
joint-stock Seller, trust, enterprise, limited liability Seller, unincorporated
organization or Governmental Authority.
(ee) “Proceedings”
shall
mean all proceedings, actions, claims, suits, investigations and inquiries
by or
before any arbitrator or Governmental Authority.
(ff) “Reasonable
Best Efforts” shall
mean a party’s best efforts in accordance with reasonable commercial practice
and without the incurrence of unreasonable expense.
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(gg) “Registration
Statement”
shall
mean the registration statement on Form S-4 that Platinum intends to file with
the SEC relating to registration of the Platinum Exchange Shares and the
solicitation of proxies from Platinum’s shareholders.
(hh) “Related
Person”
shall
mean either (i) a member of an affiliated group within the meaning of Section
1504 of the Code, but without regard to Section 1504(b), which includes Platinum
(generally, a corporation of which Platinum owns at least 80% of both the vote
and value, directly or indirectly through other affiliated corporations), or
(ii) a corporation that is controlled by Platinum, or that controls Platinum,
under the rules of Section 304(a)(2) of the Code without regard to Treasury
Regulation section 1.1502-80(b) (generally, a corporation that Platinum owns
at
least 50% of its vote or value, subject to various attribution rules, or a
corporation that owns at least 50% of the vote or value of Platinum, subject
to
various attribution rules) in each case as defined in Treasury Regulation
Section 1.368-1(e)(3).
(ii) “SEC”
shall
mean the United States Securities and Exchange Commission.
(jj) “Seller’s
Parent”
shall
mean Tandem Energy Holdings, Inc., a Nevada corporation.
(kk) “Subsidiary”
shall
mean an entity in which fifty percent (50%) or more of its outstanding equity
securities or interests are owned by Seller.
(ll) “Tax”
shall
mean any income taxes or similar assessments or any sales, excise, occupation,
use, ad valorem, property, produc-tion, severance, transportation, employment,
payroll, franchise or other tax imposed by any United States federal, state
or
local (or any foreign or provincial) taxing authority, including any interest,
penalties or additions attributable thereto.
(mm) “Tax
Return”
shall
mean any return or report, including any related or supporting information,
with
respect to Taxes.
(nn) “Securities
Act”
shall
mean the Securities Act of 1933, as amended
ARTICLE
II
EXCHANGE
OF ASSETS FOR STOCK
2.01
Acquisition
of Assets.
Subject
to the terms and conditions specified in this Agreement, Seller shall convey,
transfer and deliver to Buyer, and Buyer shall acquire from Seller, all of
the
Assets as specified herein on the Closing Date. Seller shall convey Good,
Marketable and Defensible Title to the Assets and all parts thereof to Buyer
free and clear of all Encumbrances, except as expressly provided in this
Agreement or in the Seller’s Disclosure Schedule to the contrary.
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2.02 Assumed
Liabilities.
Buyer
shall assume or pay in full, at and as of the Closing Date, all of the
liabilities, obligations and commitments of Seller except those specifically
excluded pursuant to Section 2.03 of this Agreement. The liabilities,
obligations and commitments of Seller assumed by Buyer pursuant to this Section
2.02 are hereinafter referred to as the “Assumed
Liabilities.”
As
part of its obligation with respect to the Assumed Liabilities, Buyer shall
pay
in full at the Closing all of the then outstanding indebtedness of Seller to
Guaranty Bank of Texas (or any successor bank), ▇▇▇ ▇. ▇▇▇▇, the Estate of
▇▇▇▇
▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the present principal amount of each of which is
set
forth in Section 2.02 of the Seller Disclosure Statement.
The
assumption of the Assumed Liabilities by Buyer shall not in any way limit the
rights of Platinum or Buyer for any breach of the covenants, representations
or
warranties of Seller contained in this Agreement.
2.03
Excluded
Liabilities.
Except
for the Assumed Liabilities, all of the liabilities and obligations or the
Seller shall at and after the Closing remain the sole and exclusive
responsibility of the Seller. Without limiting the generality of the foregoing,
Buyer will not assume, and will not discharge or otherwise be liable for the
following specific liabilities:
(a) Liabilities
or obligations of Seller with respect to any transactions occurring after the
Closing Date;
(b) Any
Taxes
imposed upon Seller by reason of the transactions contemplated by this
Agreement;
(c) Liabilities
or obligations of Seller arising out of its failure to comply with:
(1) Any
provision of the federal securities laws, rules, or regulations;
and
(2) The
securities laws of any state or rules and regulations of any authorities
administering such laws;
(d) Liabilities
or obligations of Seller arising from or related to any employee welfare benefit
plans or employee pension benefit plans, within the meaning of ERISA,
maintained, sponsored or contributed to by Seller; and
(e) Liabilities
or obligations of the Seller relating to or arising out of any actions, suits,
claims, investigations or legal, administrative or arbitration proceedings
pending or threatened against the Seller, to the extent that such actions,
suits, claims, investigations or legal, administrative or arbitration proceeding
relate to or arise out of events occurring prior to Closing.
The
foregoing liabilities are hereinafter referred to as the “Excluded
Liabilities.”
2.04
Acquisition
Consideration.
In
exchange for the Assets transferred by Seller, Buyer shall issue and deliver
to
Seller that number of shares (rounded upward to the nearest whole share) of
Platinum voting common stock, par value $0.0001 per share, (the “Platinum
Common Stock”)
determined by dividing Sixty Million Dollars ($60,000,000) by the actual per
share conversion price, as calculated as the amount of funds held in Platinum’s
trust account as of two business days prior to the Closing Date divided by
Fourteen Million Four Hundred Thousand (14,400,000) (the “Platinum
Exchange Shares”).
Prior
to the issuance and delivery of the Platinum Exchange Shares, Platinum shall
have caused such Platinum Exchange Shares to be registered pursuant to a
registration statement properly filed in accordance with Section 6 of the
Securities Act and such registration statement shall have been declared
effective by the SEC.
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2.05 Closing.
The
Closing shall take place (i) at the offices of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, at 10:00 a.m., local time, on after
the Business Day immediately following the date on which the later to occur
of
the receipt by Platinum of the approval of its shareholders of the Acquisition
or the receipt by Seller’s Parent of the approval of its shareholders to the
liquidation and dissolution of Seller’s Parent; or (ii) at such other time or
place or on such other date as the parties hereto shall agree. The transfer
of
the Assets and the Acquired Business as provided in this Agreement shall be
effected by assignments, bills of sale and other instruments of transfer and
conveyance in that form necessary to effectively transfer all of Seller’s Assets
and the Acquired Business to Buyer as specified by this Agreement and as
reasonably required by Platinum, Buyer or their counsel. The assignment and
assumption of the Assumed Liabilities as provided in this Agreement shall be
effected by an assignment and assumption agreement and other instruments of
assignment and assumption in the form necessary to effectively assign all of
the
Assumed Liabilities to Buyer and to have Buyer fully assume all the Assumed
Liabilities as specified by this Agreement and as reasonably required by Seller
or its counsel. All Closing transactions shall be deemed to have occurred
simultaneously.
2.06
Liquidation
and Dissolution of Seller.
Promptly after the Closing Date but not later than thirty (30) calendar days
after the Closing Date, Seller shall proceed, and Seller’s Parent shall cause
Seller to proceed, with due diligence to wind up Seller’s affairs, liquidate,
and distribute Seller’s remaining assets, including the Platinum Exchange Shares
received pursuant to the exchange, to Seller’s Parent and voluntarily dissolve
Seller. In connection with the winding up of Seller’s affairs, Seller shall
proceed promptly after the Closing Date to prepare and file all income Tax
Returns and reports required under Applicable Law, covering all periods (or
portions of any period) ending on or before the Closing Date for which Tax
Returns and reports have not previously been filed. Buyer shall have no
obligations or responsibilities in connection with the liquidation and
dissolution of the Seller. The Acquisition, including, without limitation,
the
sale of the Assets to Buyer, shall not be effected in any respect by the failure
or delay of the Seller to effect or consummate its liquidation or
dissolution.
ARTICLE
III
SHAREHOLDER
APPROVAL
3.01 Platinum.
Platinum will use its Reasonable Best Efforts to take all steps necessary to
hold a meeting of its shareholders at the earliest practicable date for the
purpose of submitting this Agreement to them for approval and requesting
authorization of the Acquisition. In connection with such meeting of
shareholders, Platinum will solicit proxies from its shareholders and Platinum
and Seller will cooperate with each other (including, without limitation,
providing to each other appropriate information) for the purpose of complying
with the requirements of the Securities Act and the Exchange Act, and the rule
and regulations promulgated thereunder, as they relate to such meeting. In
the
materials that it provides in connection with its solicitation of proxies,
Platinum shall include a recommendation of its board of directors that its
shareholders approve the Acquisition.
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3.02 Buyer.
Buyer
has obtained the consent of Platinum, its sole shareholder, to the
Acquisition.
3.03 Seller.
Seller
has obtained the consent of Seller’s Parent, its sole shareholder, to the
Acquisition.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES
4.01
Representations
and Warranties of Seller.
Seller
represents and warrants to Buyer and Platinum, except as set forth in the
Disclosure Schedule which Seller shall furnish to Platinum and Buyer on or
before November 10, 2006 (the “Seller Disclosure Schedule”) and which will set
forth the exceptions to the representations and warranties contained in this
Section 4.01 and items requiring description by this Section 4.01 under the
captions referencing the subsections to which such exceptions apply,
that:
(a) Organization
and Good Standing of Seller.
Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Colorado and has the requisite corporate power to carry
on
its business as it is now being conducted, and
to
own, operate or lease the properties and assets it currently owns, operates
or
holds under lease.
Seller
is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or leased
or
the nature of its activities makes such qualification necessary.
(b) Organization
and Good Standing of Subsidiary.
Seller
has one subsidiary, ▇▇▇▇▇ Drilling, Inc., which is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has the requisite power to carry on its respective business
as
it is now being conducted, and
to
own, operate or lease the properties and assets it currently owns, operates
or
holds under lease.
Seller’s
subsidiary is duly qualified as a foreign corporation to do business, and is
in
good standing, in each jurisdiction where the character of their respective
properties owned or leased or the nature of
their
activities makes such qualification necessary.
(c) Power.
Seller
has the power and authority to enter into this Agreement and perform this
Agreement and the transactions contemplated hereby. The execution, delivery
and
performance of this Agreement by Seller, and the consummation of the
transactions contemplated hereby, will not (i) violate or conflict with any
provision of the certificate of organization or bylaws of Seller, (ii) violate
or conflict with any material agreement or instrument to which Seller is a
party
or by which Seller or any of the properties are bound; (iii) violate or conflict
with any judgment, order, ruling, or decree applicable to Seller as a party
in
interest, (iv) violate or conflict with any law, rule or regulation applicable
to Seller, or (v) result in the creation or imposition of any lien, charge
or
other encumbrance upon the Assets.
-11-
(d) Execution,
Delivery; Valid and Binding Agreement.
The
execution, delivery and performance of this Agreement by Seller and the
Ancillary Documents to which Seller is a party and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all requisite corporate action, and no other corporate Proceedings
are necessary to authorize the execution, delivery or performance of this
Agreement and the Ancillary Documents to which Seller is a party. This Agreement
has been, and each of the Ancillary Agreements to be executed by Seller at
Closing will be, duly executed and delivered by Seller and constitute the valid
and binding obligation of Seller, enforceable in accordance with their
respective terms.
(e) Governmental
Authorities; Consents.
Seller
is not required to submit any notice, report or other filing with any
Governmental Authority in connection with its execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby, and,
except as set forth in the Seller Disclosure Schedule, no consent, approval
or
authorization of any Governmental Authority or any other Person is required
to
be obtained by Seller in connection with its execution, delivery and performance
of this Agreement or the transactions contemplated hereby and except for such
consents, approvals and authorizations which, if not obtained, would not result
in a Material Adverse Change with respect to Seller.
(f) Capital
Stock.
The
authorized capital stock of Seller consists of 500,000 shares of common stock,
of which 500 shares are currently issued and outstanding. All of the outstanding
shares of Seller’s common stock have been duly authorized and are validly
issued, fully paid and nonassessable. All outstanding shares of capital stock
of
Seller’s subsidiary and 33.33% of the limited partnership units in Spring Creek
Limited Partnership are owned
by
Seller, free and clear of any Encumbrances. All outstanding shares of capital
stock of Seller
are owned by Seller’s Parent and are free and clear of any
Encumbrances.
(g) Financial
Statements.
The
following audited and unaudited financial statements (collectively, the
“Seller Financial
Statements”)
have
been delivered to Purchaser and are attached as Appendix 4.01(d) to the Seller
Disclosure Schedule:
(i) The
audited consolidated balance sheet of Seller’s Parent as of December 31, 2005,
and the related audited statements of operations and changes in stockholders'
equity for the fiscal year then ended; and
(ii) The
unaudited consolidated balance sheet of Seller’s Parent and the related
unaudited statements of operations for the period ended June 30,
2006.
-12-
The
Seller Financial
Statements (i) have been, or will be, prepared in accordance with generally
accepted accounting principles (“GAAP”)
on a basis consistent throughout the periods covered thereby; (ii) present,
or
will present, fairly, in all material respects, the financial condition of
Seller as of the dates thereof and the results of their operations for the
periods then ended; and (iii) are, or will be, consistent with the books and
records of Seller, which books and records are true, correct and complete in
all
material respects. For purposes of this Agreement, the “Balance
Sheet”
means the consolidated balance sheet of Seller’s Parent dated as of June 30,
2006, and the “Balance
Sheet Date”
means June 30, 2006. All
liabilities and obligations, whether absolute, accrued, contingent or otherwise,
whether direct or indirect, and whether due or to become due, which existed
at
the date of the Seller Financial Statements and are required, under GAAP, to
be
recorded or disclosed in the balance sheets included in the Seller Financial
Statements or disclosed in notes to the Seller Financial Statements are, or
will
be, so recorded or disclosed.
Since
the Seller Balance Sheet Date there has been no change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in
the
results of operations of Seller and its subsidiary, which has had or is
reasonably likely to result in a Material Adverse Change. To Seller’s knowledge,
the accounts receivable of Seller included in the Seller Balance Sheet are
reasonably expected to be collectible substantially in full over a reasonable
period subject to reserves for bad debt established therefor and which are
reflected in the Seller Financial Statements (by use of Seller's normal
collection methods without resort to litigation or reference to a collection
agency), and to Seller’s knowledge, (i) there do not exist any defenses,
counterclaims and set-offs which would materially adversely affect such
receivables, and (ii) all such receivables are actual and bona fide receivables
representing obligations for the total dollar amount thereof shown on the books
of Seller. Seller has performed all obligations in all material respects with
respect thereto which they were obligated to perform to the date
hereof.
(h) Condition
of Properties.
To the
Knowledge of Seller,
except as may be limited by the ordinary course of business occurring on a
day-to-day basis, all properties and assets owned or utilized by Seller
and its subsidiary,
specifically including, but not limited to, the oil and gas properties owned
by
Seller,
are in good operating condition and repair, free from any defects (except such
minor defects as do not interfere with the use thereof in the conduct of the
normal operations of Seller
and its subsidiary),
ordinary wear and tear excepted, and have been maintained consistent with
prudent industry practice. No other assets or properties are needed
to
permit Seller and
its subsidiary
to carry
on their respective businesses as conducted during the preceding 12 months
and
as proposed to be conducted. To the Knowledge of Seller, all buildings, plants
and other structures owned or otherwise utilized
by Seller and
its subsidiary
are in
good condition and repair, ordinary wear and tear excepted, and have no
structural defects or other defects (except such minor defects as do not
significantly interfere with the use thereof in the conduct of the normal
operations of Seller
and its subsidiary)
and are
suitable and adequate for the purposes for which they are presently being
used.
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(i) Intellectual
Property.
Seller
and
its subsidiary
own, or
are licensed or otherwise has the right to use, all patents, patent rights,
trademarks, trademark rights, trade names, trade name rights, service marks,
service ▇▇▇▇ rights, copyrights, technology, know-how, processes and other
proprietary intellectual property rights and computer programs (“Intellectual
Property Rights”)
which
are material to the condition (financial or otherwise) or conduct of the
business and operations of Seller and
its subsidiary.
To the
knowledge of Seller, (i) the use of Intellectual Property Rights by Seller
and
its subsidiary
does not
infringe on the Intellectual Property Rights of any person, subject to such
claims and infringements as do not, in the aggregate, give rise to any liability
on the part of Seller or
its subsidiary
which
could result in a Material Adverse Change; and (ii) no one or more persons
are,
in any manner that in the aggregate could result in a Material Adverse Change,
infringing on any Intellectual Property Right of Seller and
its subsidiary.
No
claims are pending or, to the Knowledge of Seller, threatened that Seller is
infringing or otherwise adversely affecting the rights of any Person with regard
to any Intellectual Property Right.
(j) No
Undisclosed Liabilities.
Neither Seller nor its subsidiary has any debt, liability or obligation of
any
kind, whether accrued, absolute, contingent, inchoate, determined, determinable,
or otherwise, except for (i) liabilities or obligations which, individually
or
in the aggregate, would not result in a Material Adverse Change; (ii)
liabilities or obligations under this Agreement or incurred in connection with
the transactions contemplated hereby; (iii) liabilities or obligations disclosed
in the Balance
Sheet or footnotes thereto;
and (iv) liabilities or obligations arising in the ordinary course of business
after the Balance Sheet Date and which do not result in a Material Adverse
Change.
(k) No
Litigation.
There
is no suit, action, proceeding, or investigation presently pending or, to the
Knowledge of Seller, threatened against or affecting the Seller or
its subsidiary
or the
Assets that has had or could reasonably be expected to result in a Material
Adverse Change or prevent, hinder or materially delay the ability of the Seller
to consummate the Acquisition, nor is there any judgment, decree, injunction,
rule or order of any Governmental Authority or arbitrator outstanding against
the Seller or
its subsidiary
or the
Assets which has had, or which, insofar as reasonably can be foreseen, in the
future could have, any such effect.
(l) Compliance
with Laws and Permits.
Neither
Seller nor its subsidiary is in violation of, or in default in any material
respect under, and no event has occurred that (with notice or the lapse of
time
or both) would constitute a violation of or default under any applicable law,
rule, regulation, ordinance, order, writ, decree or judgment of any Governmental
Authority. Seller and
its subsidiary
have
obtained and hold all permits, licenses, variances, exemptions, orders,
franchises, approvals and authorizations of all Governmental Authorities
necessary for the lawful conduct of its business and the lawful ownership,
use and operation of the Assets (the “Seller
Permits”),
except for Seller Permits which the failure to obtain or hold would not,
individually or in the aggregate, result in a Material Adverse Change. Seller
and
its subsidiary are
in
compliance with the terms of the Seller Permits, except where the failure to
comply would not, individually or in the aggregate, result in a Material Adverse
Change. All of the Seller Permits are in full force and effect and no action
or
claim is pending nor, to the Knowledge of Seller, is threatened to revoke or
terminate any Seller Permit or declare any Seller Permit invalid in any material
respect. No investigation or review by any Governmental Authority with respect
to Seller or its subsidiary is pending or, to the knowledge of Seller,
threatened, other than those the outcome of which would not, individually or
in
the aggregate, result in a Material Adverse Change. All Seller Permits that
are
material to Seller are set forth in Section 4.01(l) of the Seller Disclosure
Schedule.
-14-
(m) Title
to Assets.
Seller
has Good, Marketable and Defensible Title to all of its Oil and Gas Interests.
All leases relating to the Oil and Gas Interests are in full force and effect,
and Seller has not received any notice of default with respect to any of such
leases.
(n) Oil
and Gas Operations.
To the
Knowledge of Seller, as to ▇▇▇▇▇ not operated by Seller, and without
qualification as to Knowledge, as to ▇▇▇▇▇ operated by Seller:
(i) As
of the
date of this Agreement, (A) none of the ▇▇▇▇▇ included in the Oil and Gas
Interests of Seller has been overproduced such that it is subject or liable
to
being shut-in or to any overproduction penalty, (B) Seller has not received
any
deficiency payment under any gas contract for which any person has a right
to
take deficiency gas from Seller, and (C) Seller has not received any payment
for
production which is subject to refund or recoupment out of future
production;
(vii) There
have been no changes proposed in the production allowables for any ▇▇▇▇▇
included in the Oil and Gas Interests of Seller that could reasonably be
expected to result in a Material Adverse Change;
(viii) All
▇▇▇▇▇
included in the Oil and Gas Interests of Seller have been drilled and (if
completed) completed, operated, and produced in accordance with good oil and
gas
field practices and in compliance in all material respects with applicable
oil
and gas leases and applicable laws, rules, and regulations, except where any
failure or violation could not reasonably be expected to result in a Material
Adverse Change;
(ix) Seller
has not agreed to nor are is it now obligated to abandon any well operated
by it
and included in the Oil and Gas Interests that is or will not be abandoned
and
reclaimed in accordance with applicable laws, rules, and regulations and good
oil and gas industry practices;
(x) Proceeds
from the sale of Hydrocarbons produced from and attributable to the Oil and
Gas
Interests are being received by Seller in a timely manner and are not being
held
in suspense for any reason (except for amounts, individually
or in the aggregate, not in excess of $5,000 and held in suspense in the
ordinary course of business);
(xi) Subject
to the terms of Section 4.01(l) below, no person has any call on, option to
purchase, or similar rights with respect to the Oil and Gas Interests or to
the
production attributable thereto, and upon consummation of the transactions
contemplated by this Agreement, Buyer will have the right to market production
from the Oil and Gas Interests on terms no less favorable than the terms upon
which Seller is currently marketing such production; and
-15-
(xii) All
royalties, overriding royalties, compensatory royalties and other payments
due
from or in respect of production with respect to the Oil and Gas Interests,
have
been or will be, prior to the Effective Time, properly and correctly paid or
provided for in all material respects, except for those for which Seller has
a
valid right to suspend and for which Seller has created appropriate suspense
accounts.
(o) Hydrocarbon
Sales and Purchase Agreements.
(i) None
of
the Hydrocarbon Sales Agreements of Seller or Hydrocarbon Purchase Agreements
of
Seller has required, or will require as of or after the Closing Date, Seller
to
(A) have sold or delivered, or to sell or deliver, Hydrocarbons for a price
materially less than the market value price that would have been, or would
be,
received pursuant to any arm's-length contract with an unaffiliated third-party
purchaser; or (B) to have purchased or received, or to purchase or receive,
Hydrocarbons for a price materially greater than the market value price that
would have been, or would be, paid pursuant to an arm's-length contract with
an
unaffiliated third-party seller;
(ii) Each
of
the Hydrocarbon Agreements of Seller is valid, binding, and in full force and
effect, and no party is in material breach or default of any Hydrocarbon
Agreement of Seller, and to the knowledge of Seller, no event has occurred
that
with notice or lapse of time (or both) would constitute a material breach or
default or permit termination, modification, or acceleration under any
Hydrocarbon Agreement of Seller;
(iii) There
have been no claims from any third party for any price reduction or increase
or
volume reduction or increase under any of the Hydrocarbon Agreements of Seller
or any of its Subsidiaries, and Seller has not made any claims for any price
reduction or increase or volume reduction or increase under any of the
Hydrocarbon Agreements of Seller;
(iv) Payments
for Hydrocarbons sold pursuant to each Hydrocarbon Sales Agreement of Seller
have been made (subject to adjustment in accordance with such Hydrocarbon Sales
Agreements) materially in accordance with prices or price-setting mechanisms
set
forth in such Hydrocarbon Sales Agreements;
(v) No
purchaser under any Hydrocarbon Sales Agreement of Seller has notified Seller
(or, to the knowledge of Seller, the operator of any property where Seller
is
not the designated operator) of its intent to cancel, terminate, or renegotiate
any Hydrocarbon Sales Agreement of Seller or otherwise to fail and refuse to
take and pay for Hydrocarbons in the quantities and at the price set out in
any
hydrocarbon sales agreement, whether such failure or refusal was pursuant to
any
force majeure, market out, or similar provisions contained in such Hydrocarbon
Sales Agreement or otherwise;
-16-
(vi) Seller
is
not obligated in any Hydrocarbon Sales Agreement by virtue of any prepayment
arrangement, a “take-or-pay” or similar provision, a production payment, or any
other arrangements to deliver Hydrocarbons produced from an oil and gas interest
of Seller at some future time without then or thereafter receiving payment
therefor;
(vii) The
information heretofore provided to Buyer by Seller contains a true and correct
calculation of Seller's gas balancing positions as of the dates shown therein;
and
(xiii) The
Hydrocarbon Agreements of Seller are of the type generally found in the oil
and
gas industry, do not, individually or in the aggregate, contain unusual or
unduly burdensome provisions that would, individually or in the aggregate,
result in a Material Adverse Change, and are in form and substance considered
normal within the oil and gas industry.
(p) Environmental
Matters.
With
respect to environmental matters, (i) the Assets have not violated and do not
violate any order or requirement of any Governmental Authority or any
Environmental Law, nor are there any conditions existing on, in, at, under,
or
about or resulting from the past or present operations of the Assets that may
give rise to any on-site or off-site investigation or remedial obligations
under
any Environmental Laws, and to Seller's Knowledge the ownership and operation
of
the Assets have been in compliance with Environmental Laws; (ii) the Assets
are
not subject to any existing, pending or threatened notice of violation, action,
suit, investigation, inquiry or Proceeding by or before any court, any
applicable tribal authority or any other Governmental Authority or arbitrator
with respect to environmental matters, nor has any such notice been issued
that
has not been fully satisfied and complied with in a timely manner so as to
bring
the Assets into full compliance with Environmental Law; (iii) no lien, deed
notice or use restriction has been recorded pursuant to any Environmental Law
with respect to the Assets; (iv) to Seller's Knowledge, all notices, permits,
licenses or similar authorizations, if any, required to be obtained or filed
in
connection with the Assets, including, without limitation, those relating to
the
past or present treatment, storage, disposal or release of a hazardous substance
or solid waste into the environment have been duly obtained or filed, and Seller
has been and are in compliance with the terms and conditions of all such
notices, permits, licenses and, similar authorizations; (v) to Seller’s
Knowledge, all hazardous substances or solid waste generated at or as a result
of the operations of Seller and its subsidiaries and the Assets have, since
the
effective date of the relevant requirements of RCRA, been transported, treated
and disposed of only by carriers maintaining valid authorizations under RCRA
and
any other Environmental Law and only at treatment storage and disposal
facilities maintaining valid authorizations under RCRA and any other
Environmental Law, which carriers and facilities have been and are operating
in
compliance with such authorizations and are not the subject of any existing,
pending or overtly threatened action, investigation or inquiry by any
Governmental Authority
in connection with any Environmental Law; (vi) neither Seller nor its subsidiary
currently owns or operates, nor in the past has it owned or operated, any
property that is on the United States Environmental Protection Agency’s National
Priorities or CERCLIS list, or any similar list; (vii) to Seller’s Knowledge, no
hazardous substance or solid waste has been disposed of or otherwise released
(including without limitation discharges or releases into pits) and there has
been no threatened release of any hazardous substances or solid waste, on,
to,
from or as a result of the operations of Seller and its subsidiary or the Assets
except in compliance with Environmental Law, and there are no storage tanks
or
other containers on or under any of the properties of Seller and its subsidiary
comprising a part of the Assets from which hazardous substances, petroleum
products or other contaminants may be released into the surrounding environment;
(viii) neither Seller nor its subsidiary has owned, operated or leased any
real
property other than the properties comprising a part of the Assets that it
currently owns, leases or operates; and (ix) to Seller’s Knowledge, there is no
liability (contingent or otherwise) in connection with any release or threatened
release of any hazardous substance or solid waste into the environment as a
result of or with respect to the Assets.
-17-
(q) Tax
Matters.
Except
as set forth in Seller Disclosure Schedule, as relates to Tax
matters:
(i) Seller
and any affiliated, combined or unitary group of which Seller is or was a member
for purposes of any Taxes has timely filed, been included in or sent, and will,
prior to the Closing, timely file, be included in or send all Tax Returns
required to be filed or sent by or relating to any of them prior to the Closing
relating to any Taxes with respect to any income, properties or operations
of
Seller prior to the Closing Date.
(ii) As
of the
time of filing, the Tax Returns of Seller and its subsidiary:
(A) Correctly
reflected (and, as to any Tax Returns not filed as of the date hereof, will
correctly reflect) in all material respects the facts regarding the income,
business, assets, operations, activities and status of Seller and any other
information required to be shown therein;
(B) Constituted
(and, as to any Tax Returns not filed as of the date hereof, will constitute)
complete and accurate representations of the Tax liabilities for the periods
covered; and
(C) Accurately
set forth all items (to the extent required to be included or reflected in
the
Tax Returns) relevant to future Tax liabilities, including the Tax bases of
properties and assets;
(iii) Seller
and its subsidiary have timely paid all Taxes whether or not shown as due and
payable on the Tax Returns that have been filed;
(iv) A
reserve
(in accordance with generally accepted accounting principles) has been
established on the Seller Financial Statements for any Taxes that
relate
to
past periods but are not yet due; and will establish such a reserve for all
other Taxes payable for any periods that end before the Closing for which no
Tax
Returns have yet been filed and for any periods that begin before the Closing
and end after the Closing to the extent such Taxes are attributable to the
portion of any such period ending at the Closing;
-18-
(v) The
charges, accruals and reserves for Taxes reflected on the Seller Financial
Statements are adequate to cover the Tax liabilities accruing or payable by
Platinum in respect of periods prior to the date hereof;
(vi) Neither
Seller nor its subsidiary is delinquent in the payment of any Taxes and has
not
requested any extension of time within which to file or send any Tax Return,
which Tax Return has not since been filed or sent;
(vii) To
Seller’s Knowledge, no deficiency for any Taxes has been proposed, asserted or
assessed against Seller or its subsidiary (or any member of any affiliated
or
combined group of which Seller or its subsidiary is or has been a member for
which Seller or its subsidiary could be liable for Taxes);
(viii) Neither
Seller nor its subsidiary has granted any extension of the limitation period
applicable to any Tax claims and neither Seller nor its subsidiary has waived
any such limitation period;
(ix) Neither
Seller nor its subsidiary is, nor has either been, a party to any tax sharing
agreement with any corporation which is not a member of the affiliated group
of
which Seller is a member;
(x) Neither
Seller nor its subsidiary has made any elec-tion under Section 341(f) or Section
1362(a) of the Code;
(xi) No
Tax is
required to be withheld pursuant to Section 1445 of the Code as a result of
the
transactions contemplated in this Agreement;
(xii) Neither
Seller nor its subsidiary nor any Affiliate is a party to any agreement,
contract plan or arrangement that has resulted or would result, separately
or in
the aggregate, in the payment of any “excess parachute payments” within the
meaning of Section 280G of the Code and the consummation of the transactions
contemplated by this Agreement will not be a factor causing payments to be
made
by Platinum that are not deductible (in whole or in part) under Section 280G
of
the Code;
(xiii)
To
Seller’s Knowledge, no examinations of the Tax Returns of Seller or its
subsidiary are currently in progress or, to the Knowledge of Seller, threatened
and no deficiencies have been asserted or assessed against Seller as a result
of
any audit
by
the Internal Revenue Service or any other taxing authority and no such
deficiency has been proposed or threatened;
(xiv) There
are
no liens for Taxes (other than for current Taxes not yet due and payable) upon
the Assets.
-19-
(xv) Neither
Seller nor its subsidiary will be required to include any item of income in,
or
exclude any item of deduction from taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of (A) a change
in
method of accounting for a taxable period (or portion thereof) ending on or
prior to the Closing Date, (B) any “closing agreement,” as described in Code
§7121 (or any corresponding provision of state, local or foreign income Tax
law), (C) any intercompany transaction or any excess loss account (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income Tax law), (D) any installment sale or open transaction
made on or prior to the Closing Date, or (E) as a result of any prepaid amount
received on or prior to the Closing Date.
(xvi) Neither
Seller nor its subsidiaries has distributed stock of another Person, or has
had
its stock distributed by another Person, in a transaction that was purported
or
intended to be governed in whole or in part by Code §355 or Code
§361.
(xvii) Seller
and its subsidiary have withheld and timely paid all Taxes required to have
been
withheld and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
(r) Contracts.
Each
Contract is in full force and effect and is the legal, valid and binding
obligation of Seller and, to the Knowledge of the Seller, of the other parties
thereto, enforceable against Seller and, to the Knowledge of the Seller, the
other parties thereto in accordance with its terms and, upon consummation of
the
Acquisition, shall continue in full force and effect without penalty or other
adverse consequence. Seller is not in material default under any Contract,
nor,
to the Knowledge of Seller, is any other party to any Contract in breach of
or
default thereunder, and no event has occurred that with the lapse of time or
the
giving of notice or both would constitute a material breach or default by
Seller, or to the Knowledge of the Seller, any other party thereunder. No party
to any of the Contracts has exercised any termination rights with respect
thereto, and no such party has given notice of any significant dispute with
respect to any Contract. Seller has, and will transfer to Buyer at the Closing,
good and valid title to the Contracts, free and clear of all Encumbrances.
All
of the Material Contracts of Seller are listed in the Seller Disclosure
Schedule, and Seller has delivered to Buyer true, correct and complete copies
of
all of the Material Contracts, together with all amendments, modifications
or
supplements thereto.
(s) Employees.
Except
as set forth in the Seller Disclosure Statement, (1) no executive employee
of
Seller or its subsidiary and, to the Knowledge of Seller, no group of employees
of Seller or its subsidiary has any plans to terminate his, her or its
employment; (2) neither Seller nor its subsidiary has any material labor
relations problem pending and their respective labor relations are satisfactory
to Seller and its subsidiary; (3) there are no workers’ compensation claims
pending against Seller or its subsidiary, nor is Seller aware of any facts
that
would give rise to such a claim; (d) to Seller’s Knowledge, no employee of
Seller or its subsidiary is subject to any secrecy or non-competition agreement
or any other agreement or restrictions of any kind that would impede in any
way
the ability of such employee to carry out fully all activities of such employee
in furtherance of the Business; (e) no employee or former employee of Seller
or
its subsidiary has any claim with respect to any intellectual property rights
of
Seller or its subsidiary; and (f) Seller has furnished to Platinum and Buyer
copies of all non-competition agreements between Seller and any of the managers
or employees of Seller and its subsidiary.
-20-
(t) Labor
Relations.
(i) There
are
(1) no collective bargaining agreements or other similar agreements,
arrangements or understandings, written or oral, with employees as a group
to or
by which Seller or its subsidiary is a party or is bound, (2) no employees
of
Seller or its subsidiary are represented by any labor organization, collective
bargaining representative or group of employees, (3) no labor organization,
collective bargaining representative or group of employees claims to represent
a
majority of the employees of Seller or its subsidiary in an appropriate unit
of
Seller or its subsidiary, (4) neither Seller nor its subsidiary has been the
subject of any representational campaign by any union or other organization
or
group seeking to become the collective bargaining representative of any of
its
employees or been subject to or, to the Knowledge of Seller, threatened with
any
strike or other concerted labor activity or dispute, and (5) neither
Seller nor its subsidiary is obligated to bargain collectively with respect
to
wages, hours and other terms and conditions of employment with any recognized
or
certified labor organization, collective bargaining representative or group
of
employees.
(ii) Seller
and its subsidiary are in compliance in all material respects with all
Applicable Laws pertaining to employment and employment practices, wages, hours,
equal opportunity, collective bargaining, the payment of social security and
other taxes and other terms and conditions of employment in respect of their
respective employees, except for noncompliance with such Applicable Laws which
does not and will not result in a Material Adverse Change with respect to Seller
or its subsidiary. There is no pending or, to the Knowledge of Seller,
threatened Proceeding by or before, and neither Seller nor its subsidiary is
subject to any judgment, order, writ, injunction or decree of or inquiry from,
the National Labor Relations Board, the Equal Employment Opportunity Commission,
the Department of Labor or any other Governmental Authority in connection with
any current, former or prospective employee of Seller or its
subsidiary.
(u) Employee
Plans.
Neither
Seller nor its subsidiary
maintain s any plans which would be considered an “employee benefit plan” under
ERISA. Seller maintains a medical insurance plan and a term life insurance
plan
for its employees (the “Seller
Employee Plans”).
Each Seller Employee Plan has been maintained and operated in all material
respects in accordance with its terms and with the provisions of applicable
law.
All insurance premiums and other payments required to be made to or under each
Seller Employee Plan with respect to all periods prior to the Closing have
been
made or provided for. Each Seller Employee Plan may be unilaterally terminated
or amended by Seller at any time. The consummation of the Acquisition will
not
(either alone or in conjunction with another event, such as a termination of
employment or other services) entitle any employee or other person to receive
severance or other compensation which would not otherwise be payable absent
the
consummation of
the Acquisition.
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(v) Bank
Accounts.
The Seller Disclosure Schedule contains a true, correct and complete list of
the
names and locations of all banks, trust companies, savings and loan associations
and other financial institutions at which Seller or its subsidiary maintains
safe deposit boxes or accounts of any nature and the names of all Persons
authorized to draw thereon, make withdrawals therefrom or have access
thereto.
(w) Books
and Records.
All the
books and records of Seller and its subsidiary, including all personnel files,
employee data, and other materials relating to employees have been in all
material respects maintained in accordance with good business practice and
all
Applicable Laws. Such books and records accurately and fairly reflect, in
reasonable detail, all material transactions, revenues, expenses, assets and
liabilities of Seller and its subsidiary.
(x) Brokerage.
No
third party shall be entitled to receive any brokerage commissions, finder’s
fees, fees for financial advisory services or similar compensation in connection
with the Acquisition based on any arrangement or agreement made by or on behalf
of Seller.
(y) Indebtedness.
As of
the Closing Date, Seller will not have any outstanding obligations or
liabilities of a nature required by generally accepted accounting principles
to
be recognized or discussed in the Financial Statements as debt which are not
recognized or discussed in the Financial Statements, other than trade payables
and similar obligations incurred in the Ordinary Course of
Business.
(z) Filing
Information.
The
information supplied by or on behalf of Seller for inclusion in the Registration
Statement on shall not at the time the proxy statement/prospectus forming a
part
of such Registration Rtatement is mailed to Platinum’s shareholders contain any
untrue statement of a material fact or omit to state any material fact required
to be stated in the proxy statement/prospectus or necessary in order to make
statements in the proxy statement/prospectus, in light of the circumstances
under which they were made, not misleading, and the information included or
supplied by on or behalf of Seller for inclusion in any filing pursuant to
Rule
165 and Rule 425 under the Securities Act or Rule 14a-12 under the Exchange
Act
(each a “Regulation M-A Filing”), shall not, on the date the proxy
statement/prospectus is first mailed to stockholders of Platinum and at the
time
such Regulation M-A Filing is filed with the SEC contain any statement that,
at
such time and in light of the circumstances under which it shall be made, is
false or misleading with
respect to any material fact, or omit to state any material fact necessary
in
order to make the statements made in the proxy statement/prospectus not false
or
misleading, or omit to state any material fact necessary to correct any a
statement in any earlier communications with respect to the solicitation for
proxies for the Platinum shareholders’ meeting that has become false or
misleading.
-22-
(aa) Insurance.
Each
insurance policy maintained by Seller covering the Assets, copies of which
have
been provided to Buyer, is listed in the Seller Disclosure Statement, is in
full
force and effect, and is reasonable in coverage and amount in relation to the
risks to which Seller and the Assets may be exposed in the operation of its
business prior to the Closing. None of such policies shall, pursuant to their
terms, in any way be affected by or terminate or lapse by reason of this
Agreement or the Acquisition. No notice of cancellation or termination has
been
received with respect to any such policy.
(bb) Affiliated
Transactions.
Except
for the instruments evidencing the indebtedness of Seller to ▇▇▇ ▇. ▇▇▇▇, the
Estate of ▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ listed in Section 2.04 of the Seller
Disclosure Statement which is a part of the Assumed Liabilities and which Buyer
has agreed to pay in full at the Closing, there are no Contracts or other
material transactions or agreements between Seller, on the one hand, and any
(a)
officer or director of Seller or Seller’s Parent; (b) Control Persons; or (c)
Affiliate of any such officer, director or Control Person.
(cc) Sufficiency
of Assets.
The
Assets constitute, and on the Closing Date will constitute, all of the assets
and property owned by the Seller and comprise all of those properties assets
and
rights necessary to operate the Business in the ordinary course.
(dd) No
Material Adverse Change.
Since
June 30, 3006, there has not been any Material Adverse Change in the, or event
or condition that might reasonably be expected to result in any Material Adverse
Change in, the assets, financial condition, operating results, customer,
employee or supplier relations business condition or prospects of Seller or
its
subsidiary.
(ee) Accuracy
of Information.
All of
the information and other data relating to the Assets and the Business furnished
to Buyer and Platinum by or on behalf of Seller in connection with the with
the
Acquisition is accurate and complete in all material respects, and none of
such
information contains any untrue statement of a material fact, or omits to state
a material fact necessary to make the statements contained therein, under the
circumstances in which they are made, not misleading.
4.02
Representations
and Warranties of Platinum and Buyer.
Platinum and Buyer hereby jointly and severally represent and warrant to Seller
that, except as set forth in the Platinum Disclosure Schedule on or before
November 10, 2006 (the “Platinum
Disclosure Schedule”)
and
which will set forth the exceptions to the representations and warranties
contained in this Section 4.02 and items requiring description by this Section
4.02 under captions referencing the subsections to which such exceptions apply,
that:
(a) Incorporation
and Corporate Power.
Except
as set forth in the Platinum Disclosure Schedule, each of Platinum and Buyer
is
a corporation duly incorporated, validly existing and in good standing under
the
laws of the state of its incorporation and has the corporate power and authority
and all authorizations, licenses, permits and certifications necessary to own
and operate its properties and to carry on its business as now conducted and
presently proposed to be conducted. The copies of the Articles of Incorporation
and Bylaws of each of Platinum and Buyer which have been furnished to Seller
prior to the date hereof reflect all amendments made thereto and are correct
and
complete as of the date hereof. Platinum is qualified to do business as a
foreign corporation in the states in which the nature of its business or its
ownership of property requires it to be so qualified except for those
jurisdictions in which the failure to be so qualified would not, individually
or
in the aggregate, result in a Material Adverse Change with respect to
Platinum.
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(b) Execution,
Delivery; Valid and Binding Agreement.
The
execution, delivery and performance of this Agreement by each of Platinum and
Buyer and the Ancillary Documents to which Platinum or Buyer are a party and
the
consummation of the transactions contemplated hereby and thereby have been
duly
and validly authorized by all requisite corporate action, and no other corporate
Proceedings are necessary to authorize the execution, delivery or performance
of
this Agreement and the Ancillary Documents to which Platinum or Buyer are a
party. This Agreement has been, and each of the Ancillary Agreements to be
executed by Platinum and Buyer at Closing will be, duly executed and delivered
by each of Platinum and Buyer and constitute the valid and binding obligation
of
each, enforceable in accordance with their respective terms.
(c) No
Breach.
The
execution, delivery and performance of this Agreement by each of Platinum and
Buyer and the Ancillary Documents to which Platinum or Buyer are a party and
the
consummation by them of the transactions contemplated hereby and thereby do
not
(i) conflict with or result in a violation of any provision of the charter
or
bylaws of either Platinum or Buyer, (ii) constitute a default under, or give
rise to any right of termination, cancellation, or acceleration under any
material bond, debenture, note, mortgage, indenture, lease, Contract, agreement,
or other instrument or obligation to which Platinum or Buyer is a party or
by
which either of them or any of their properties may be bound, (iii) result
in
the creation or imposition of any Encumbrance upon the properties of Platinum
or
Buyer, or (iv) violate any Applicable Law binding upon Platinum or Buyer except,
in the case of clauses (ii), (iii), and (iv) above, for any such conflicts,
violations, defaults, terminations, cancellations, accelerations or Encumbrances
which would not, individually or in the aggregate, result in a Material Adverse
Change with respect to Platinum.
(d) Governmental
Authorities; Consents.
Other
than with respect to any securities law reporting obligation or the filing
of
any pre-Acquisition notification form required by the HSR Act, neither Platinum
nor Buyer is required to submit any notice, report or other filing with any
Governmental Authority in connection with their respective execution or delivery
of this Agreement or the consummation of the transactions contemplated hereby,
and no consent, approval or authorization of any Governmental Authority or
any
other Person is required to be obtained by either Platinum or Buyer in
connection with their respective execution, delivery and performance of this
Agreement or the transactions contemplated hereby and except for such consents,
approvals and authorizations which, if not obtained, would not result in a
Material Adverse Change with respect to Platinum.
(e) Capital
Stock.
The
authorized capital stock of Platinum consists of 75,000,000 shares of common
stock, of which 18,000,000 shares are currently issued and outstanding, and
1,000,000 shares of preferred stock, of which none are currently outstanding.
All of the outstanding shares of Platinum Common Stock have been duly authorized
and are validly issued, fully paid and nonassessable. The Platinum Disclosure
Schedule lists all warrants, options, conversion rights and agreements to
purchase or otherwise acquire from Platinum any shares of capital stock or
other
securities of Platinum outstanding as of the date of this Agreement and on
the
Closing Date. All of the outstanding shares of capital stock of Buyer are owned
directly by Platinum.
-24-
(f) Financial
Statements.
The
following audited and unaudited financial statements (collectively, the
“Platinum
Financial Statements”)
have
been delivered to Seller and are attached as Appendix 4.02(f) to the Platinum
Disclosure Schedule:
(i) The
audited consolidated balance sheet of Platinum as of December 31, 2005, and
the
related audited statements of operations and changes in stockholders' equity
for
the fiscal year then ended; and
(ii) The
unaudited consolidated balance sheet of Platinum and the related unaudited
statements of operations for the period ended June 30, 2006.
The
Platinum Financial
Statements (i) have been, or will be, prepared in accordance with generally
accepted accounting principles (“GAAP”)
on a basis consistent throughout the periods covered thereby; (ii) present,
or
will present, fairly, in all material respects, the financial condition of
Platinum as of the dates thereof and the results of their operations for the
periods then ended; and (iii) are, or will be, consistent with the books and
records of Platinum which books and records are true, correct and complete
in
all material respects. For purposes of this Agreement, the “Platinum
Balance Sheet”
means the consolidated balance sheet of Platinum dated as of June 30, 2006,
and
the “Balance
Sheet Date”
means June 30, 2006. All
liabilities and obligations, whether absolute, accrued, contingent or otherwise,
whether direct or indirect, and whether due or to become due, which existed
at
the date of the Platinum
Financial Statements and are required, under GAAP, to be recorded or disclosed
in the balance sheets included in the Platinum Financial Statements or disclosed
in notes to the Platinum Financial Statements are, or will be, so recorded
or
disclosed.
Since
the Platinum Balance Sheet Date there has been no change in the assets or
liabilities, or in the business or condition, financial or otherwise, or in
the
results of operations of Platinum, which has had or is reasonably likely to
result
in
a Material Adverse Change. To Platinum’s Knowledge, the accounts receivable and
other receivables of Platinum included in the Platinum Balance Sheet are
reasonably expected to be collectible substantially in full over a reasonable
period subject to reserves for bad debt established therefor and which are
reflected in the Platinum Financial Statements (by use of Platinum's normal
collection methods without resort to litigation or reference to a collection
agency), and to Platinum’s Knowledge, (i) there do not exist any defenses,
counterclaims and set-offs which would materially adversely affect such
receivables, and (ii) all such receivables are actual and bona fide receivables
representing obligations for the total dollar amount thereof shown on the books
of Platinum. Platinum has performed all obligations in all material respects
with respect thereto which they were obligated to perform to the date
hereof.
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(g) Absence
of Undisclosed Liabilities.
Except
as disclosed in the Platinum Balance Sheet or as set forth in the Platinum
Disclosure Statement, Platinum has no material liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise, whether due or to become due,
whether known or unknown, and regardless of when asserted) arising out of
transactions or events heretofore entered into, or any action or inaction,
or
any state of facts existing, with respect to or based upon transactions or
events heretofore occurring, except liabilities which have arisen after
June 30, 2006 in the Ordinary Course of Business (none of which is a material
uninsured liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit) and other liabilities which, in the aggregate,
are not material to Platinum or Buyer.
(h) No
Material Adverse Change.
Since
June 30, 2006, there has not been any Material Adverse Change in, or any event
or condition that might reasonably be expected to result in any Material Adverse
Change in, the assets, financial condition, operating results, customer,
employee or supplier relations, business condition or prospects of Platinum
oerr
Bu.
(i) Tax
Matters.
Except
as set forth on the Platinum Disclosure Schedule:
(i) Each
of
Platinum and any affiliated, combined or unitary group of which Platinum is
or
was a member for purposes of any Taxes (the “Platinum
Group”)
has
timely filed, been included in or sent, and will, prior to the Closing, timely
file, be included in or send all Tax Returns required to be filed or sent by
or
relating to any of them prior to the Closing relating to any Taxes with respect
to any income, properties or operations of the Platinum Group prior to the
Closing Date;
(ii) As
of the
time of filing, the Tax Returns of the Platinum Group:
(A) Correctly
reflected (and, as to any Tax Returns not filed as of the date hereof, will
correctly reflect) in all material respects the facts regarding the income,
business, assets, operations, activities and status of the Platinum Group and
any other information required to be shown therein;
(B) Constituted
(and, as to any Tax Returns not filed as of the date hereof, will constitute)
complete and accurate representations of the Tax liabilities for the periods
covered; and
(C) Accurately
set forth all items (to the extent required to be included or reflected in
the
Tax Returns) relevant to future Tax liabilities, including the Tax bases of
properties and assets;
(D) Platinum
has timely paid all Taxes whether or not shown as due and payable on the Tax
Returns that have been filed by the Platinum Group;
-26-
(E) Platinum
has established a reserve (in accordance with generally accepted accounting
principles) on Platinum’s Financial Statements for any Taxes that relate to past
periods but are not yet due; and will establish such a reserve for all other
Taxes payable for any periods that end before the Closing for which no Tax
Returns have yet been filed and for any periods that begin before the Closing
and end after the Closing to the extent such Taxes are attributable to the
portion of any such period ending at the Closing;
(F) The
charges, accruals and reserves for Taxes reflected on Platinum’s Latest
Financial Statements are adequate to cover the Tax liabilities accruing or
payable by Platinum in respect of periods prior to the date hereof;
(G) Neither
Platinum nor Buyer is delinquent in the payment of any Taxes and has not
requested any extension of time within which to file or send any Tax Return,
which Tax Return has not since been filed or sent;
(H) To
Platinum’s Knowledge, no deficiency for any Taxes has been proposed, asserted or
assessed against Platinum or Buyer (or any member of any affiliated or combined
group of which Platinum and Buyer are or have been a member for which Platinum
or Buyer could be liable for Taxes);
(I) Neither
Platinum nor Buyer has granted any extension of the limitation period applicable
to any Tax claims and Neither Platinum nor Buyer has waived any such limitation
period;
(J) Neither
Platinum nor Buyer is, nor has it been, a party to any tax sharing agreement
with any corporation which is not a member of the affiliated group of which
Platinum and Buyer are a member;
(K) Platinum
has not made any elec-tion under Section 341(f) or Section 1362(a) of the
Code;
(L) No
Tax is
required to be withheld pursuant to Section 1445 of the Code as a result of
the
transactions contemplated in this Agreement;
(M) Neither
Platinum nor any Affiliate is a party to any agreement, Contract, plan or
arrangement that has resulted or would result, separately or in the aggregate,
in the payment of any “excess parachute payments” within the meaning of Section
280G of the Code and the consummation of the transactions contemplated by this
Agreement will not be a factor causing payments to be made by Platinum that
are
not deductible (in whole or in part) under Section 280G of the
Code;
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(N) To
Platinum’s Knowledge, no examinations of the Tax Returns of any member of the
Platinum Group are currently in progress or, to the Knowledge of Platinum,
threatened and no deficiencies have been asserted or assessed against any member
of the Platinum Group as a result of any audit by the Internal Revenue Service
or any other taxing authority and no such deficiency has been proposed or
threatened; and
(O) There
are
no liens for Taxes (other than for current Taxes not yet due and payable) upon
the assets of any member of the Platinum Group.
(P) No
member
of the Platinum Group will be required to include any item of income in, or
exclude any item of deduction from taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of (A) a change
in
method of accounting for a taxable period (or portion thereof) ending on or
prior to the Closing Date, (B) any “closing agreement,” as described in Code
§7121 (or any corresponding provision of state, local or foreign income Tax
law), (C) any intercompany transaction or any excess loss account (or any
corresponding or similar provision or administrative rule of federal, state,
local or foreign income Tax law), (D) any installment sale or open transaction
made on or prior to the Closing Date or (E) as a result of any prepaid amount
received on or prior to the Closing Date.
(Q) No
member
of the Platinum Group has distributed stock of another Person, or has had its
stock distributed by another Person, in a transaction that was purported or
intended to be governed in whole or in part by Code §355 or Code
§361.
(R) Platinum
and Buyer have withheld and timely paid all Taxes required to have been withheld
and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
(j) No
Litigation.
Except
as set forth in the Platinum Disclosure Statement, there is no suit, action,
proceeding, or investigation presently pending or, to the knowledge of Platinum
or Buyer, threatened against or affecting the Platinum or Buyer that has had
or
could reasonably be expected to result in a Material Adverse Change with respect
to Platinum or Buyer or prevent, hinder or materially delay the ability of
Platinum or Buyer to consummate the Acquisition, nor is there any judgment,
decree, injunction, rule or order of any Governmental Authority or arbitrator
outstanding against the Platinum or Buyer which has had, or which, insofar
as
reasonably can be foreseen, in the future could have, any such
effect.
(k) Employees.
(a) No
executive employee of Platinum or Buyer and, to the Knowledge of Platinum,
no
group of employees of Platinum or Buyer has any plans to terminate his, her
or
its employment; (b) Platinum and Buyer have complied in all material respects
with all laws relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the
payment of social security and other taxes; (c) Platinum and Buyer have no
material labor relations problem pending and its labor relations are
satisfactory; (d) there are no workers’ compensation claims pending against
Platinum or Buyer nor is Platinum or Buyer aware of any facts that would give
rise to such a claim; and (e) no employee of Platinum or Buyer is subject to
any
secrecy or non-competition agreement or any other agreement or restriction
of
any kind that would impede in any way the ability of such employee to carry
out
fully all activities of such employee in furtherance of the business of Platinum
or Buyer.
-28-
(l) Employee
Benefit Plans.
Neither
Platinum nor Buyer maintains
any plans which would be considered an “employee benefit plan” under
ERISA.
(m) Compliance
with Laws; Permits.
(i) Platinum
and Buyer, and their respective officers, directors, agents and employees in
their capacity as such, have complied in all material respects with all
Applicable Laws, regulations and other requirements which materially affect
the
business of Platinum and Buyer and to which Platinum or Buyer may be subject,
and, except as set forth on the Platinum Disclosure Schedule, no claims have
been filed against Platinum or Buyer alleging a violation of any such laws,
regulations or other requirements. Neither Platinum nor Buyer has any Knowledge
of any such action.
(ii) Platinum
and Buyer have, in full force and effect, all permits necessary to conduct
their
respective businesses and own and operate their respective properties. A true,
correct and complete list of all the Permits held by Platinum and Buyer is
set
forth on the Platinum Disclosure Schedule. Platinum and Buyer have conducted
their respective businesses in all material respects in compliance with all
material terms and conditions of such Permits.
(n) SEC
Filings.
Platinum has delivered to Seller copies of the following documents previously
filed by Platinum with the Securities and Exchange Commission (the
“Commission”): (i) Platinum’s annual report on Form 10-K for the fiscal year
ended December 31, 2005, (ii) Platinum’s quarterly reports on Form 10-Q for the
quarters ended March 31, 2006 and June 30, 2006, and (iii) Platinum’s current
reports on Form 8-K, filed on February 1, 2006 (as amended on August 1, 2006),
July 6, 2006, August 4, 2006, August 16, 2006, and August 22, 2006. Platinum
has
filed all reports, registration statements and other documents required to
be
filed by it under the Exchange Act since its inception (the "SEC
Filings").
Platinum has delivered to or made available for inspection by Seller and
Seller’s Parent accurate and complete copies of all the SEC Filings in the form
filed by Platinum with the Commission since its inception. The SEC Filings
were
prepared in accordance and complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as applicable. Except
to
the extent information contained therein has been revised and except for
Platinum’s Schedule 14A filed on August 1, 2006 which Platinum intends to amend,
none of such forms, reports and statements, including, without limitation,
any
financial statements, exhibits and schedules included therein and incorporated
therein by reference, at the time filed, declared effective or mailed, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
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(o) Brokerage.
Except
as set forth on the Platinum Disclosure Schedule, no third party shall be
entitled to receive any brokerage commissions, finder’s fees, fees for financial
advisory services or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement made by
or
on behalf of Platinum or Buyer or any affiliate thereof.
(p) Validity
of Platinum Common.
The
shares of Platinum Common Stock to be issued to Seller pursuant to this
Agreement have been duly authorized and, upon issuance, delivery and payment
therefor, will be validly issued, fully paid and nonassessable.
(q) Accuracy
of Information.
All of
the information and other data relating to Platinum and Buyer furnished to
Seller by or on behalf of Buyer or Platinum in connection with the Acquisition
is accurate and complete in all material respects, and none of such information
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements contained therein, under the circumstances
in which they are made, not misleading.
4.03 Representations
as to Qualification as a “C” Reorganization.
Seller,
Platinum and Buyer, as applicable by the context below, make the following
additional representations and warranties with respect to the qualifications
of
the Acquisition under Section 368(c) of the Code:
(a) Value
of Platinum Common Stock.
Seller
represents that the fair market value of the shares of Platinum Exchange Shares
received by Seller and distributed to Seller’s Parent and, in turn, distributed
by Seller’s Parent to its shareholders, will be approximately equal to the fair
market value of the Assets surrendered in the exchange.
(b) Characteristics
of Platinum Common Stock.
Platinum represents that following the Closing the Platinum Exchange Shares
will
have no less favorable characteristics (as to voting rights, liquidity,
transferability, anti-dilution, price or any other material characteristics)
than any other common equity securities of Platinum.
(c) No
Plan to Reacquire Platinum Common Stock.
Platinum represents that neither Platinum nor Buyer (nor, to the Knowledge
of
Platinum and Buyer, any Related Person to Platinum or Buyer) has any plan or
intention to redeem or otherwise reacquire, directly or indirectly through
any
transaction, agreement or arrangement with any other Person, any of the Platinum
Common Stock to be issued in the Acquisition or to make any extraordinary
distributions with respect to such stock except in transactions on the open
market through a broker for the then prevailing market price or in accordance
Rule 10-b-18 promulgated under the Exchange Act.
-30-
(d) No
Intention to Sell Assets.
Buyer
has no plan or intention to sell or otherwise dispose of any of the Assets
acquired in the Acquisition, except for dispositions made in the ordinary course
of business or transfers described in Section 368(a)(2)(C) of the
Code.
(e) Historic
Business.
Seller
represents that the business carried on by Seller is its “historic business”
within the meaning of Treasury Regulation Section 1.368-1(d) and no assets
of
Seller have been sold, transferred or disposed of which would prevent Buyer
from
using a “significant portion” of Seller’s “historic business assets” in a
business following the Acquisition, as such terms are used in Treasury
Regulation Section 1.368-1(d). Following the Acquisition, Platinum represents
that Buyer will continue the historic Business of Seller or use a significant
portion of Seller’s historic assets in a business that is substantially similar
to the Business.
(f) Payment
of Expenses.
Except
as set forth in Section 5.14 of this Agreement, Platinum, Buyer and Seller
represent that they will pay their respective expenses, if any, incurred in
connection with the Acquisition.
(g) Intercompany
Indebtedness.
There
is no intercompany indebtedness existing between either Platinum or Buyer and
Seller that was issued, acquired, or will be settled at a discount.
(h) No
Investment Seller.
No two
parties to the transaction are investment companies as defined in Section
368(a)(2)(F)(iii) of the Code.
(i) No
Equity Interest in Seller.
Platinum represents that neither Platinum nor Buyer owns, directly or
indirectly, nor has Platinum or Buyer owned during the past five years, directly
or indirectly, any equity interests in Seller.
(j) Continuation
of Buyer.
Platinum represents that it does not have any plan or intention to liquidate
Buyer, to merge Buyer into another corporation, or to sell or otherwise dispose
of the stock of Buyer.
(k) Actions
of Platinum and Buyer.
Platinum represents that neither Platinum nor Buyer shall take any action that
would jeopardize the characterization of the Acquisition as a reorganization
within the meaning of Section 368(a)(1)(C) of the Code without first obtaining
a
legal opinion that such action should not prevent the Acquisition from
qualifying as a reorganization.
(l) Ownership
of Buyer.
Platinum represents that Buyer is a wholly-owned subsidiary of
Platinum.
(m) Valid
Business Reason.
Platinum represents that there is a valid business reason for Buyer purchasing
the Assets from Seller with the Platinum Exchange Shares and assuming the
Assumed Liabilities.
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(n) Substantially
all Assets.
Seller
represents that Seller will transfer to Buyer at least 90% of the fair market
value of the net assets and at least 70% of the fair market value of the gross
assets held by Seller immediately prior to the Acquisition. For purposes of
this
representation, amounts paid by Seller to dissenters, amounts used by Seller
to
pay its reorganization expenses, amounts paid by Seller to shareholders who
receive cash or other property and all redemptions and distributions (except
for
regular, normal dividends) made by Seller immediately preceding the Acquisition
will be included as assets of Seller held immediately prior to the Acquisition.
(o) Distribution.
Seller
represents that it will distribute the Platinum Exchange Shares and its other
properties in pursuance of this Agreement and Plan of
Reorganization.
(p) Assumptions
of Liabilities.
Seller
represents that the Assumed Liabilities were incurred by Seller in the ordinary
course of its business.
(q) Value.
Seller
represents that the fair market value of the assets of Seller transferred to
Buyer will equal or exceed the sum of the liabilities assumed by Buyer plus
the
amount of liabilities, if any, to which the transferred assets are
subject.
4.04 Representations
and Warranties on Closing.
The
representations and warranties made in this Article IV will be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on
and
as of the Closing Date, except that any such representations
and warranties which expressly relate only to an earlier date shall be true
and
correct on the Closing Date as of such earlier date.
ARTICLE
V
ACTIONS
AND AGREEMENTS PENDING CLOSING
5.01 Covenants
of Seller.
Seller
hereby covenant and agree with Platinum and Buyer as
follows:
(a) Conduct
and Preservation of Business.
Except
as may be contemplated elsewhere in this Agreement, during the period from
the
date hereof to the Closing Date, Seller (i) shall conduct its operations
according to its Ordinary Course of Business and in material compliance with
all
Applicable Laws, (ii) shall use its Reasonable Best Efforts to preserve,
maintain and protect its properties and (iii) shall use its Reasonable Best
Efforts to preserve intact its business organization, to keep available the
services of its officers and employees and to maintain existing relationships
with licensors, licensees, suppliers, contractors, distributors, customers
and
others having business relationships with it; provided, however, that
Seller shall not be required to make any payments or enter into or amend any
contractual agreements, arrangements or understandings to satisfy any of the
foregoing obligations other than for those payments required to be made under
those agreements to which Seller is a party as of the date of execution
hereof.
(b) Restrictions
on Certain Actions.
Except
as otherwise expressly provided in this Agreement, prior to the Closing Date,
Seller shall not, without the prior written consent of Platinum and Buyer,
which
consent shall not be unreasonably withheld:
(i) Create,
incur, guarantee or assume any indebtedness for borrowed money or otherwise
become liable or responsible for the obligations of any other Person; (ii)
make
any loans, advances or capital contributions to, or investments in, any other
person (other than customary loans or advances to employees in amounts not
material to the maker of such loan or advance and other than accounts
receivable); (iii) pledge or otherwise encumber any equity securities of Seller;
or (iv) except in the Ordinary Course of Business or in connection with an
increase in Seller’s bank line of credit as stated above, mortgage or pledge any
of its material assets, tangible or intangible, or create any material lien
thereupon;
(ii) Acquire,
sell, lease, transfer or otherwise dispose of, directly or indirectly, any
assets outside the Ordinary Course of Business that in the aggregate are
material to Seller considered as a whole;
(iii) Acquire
(by merger, consolidation or acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division
thereof;
(iv) Make
any
capital expenditure or expenditures which, individually, is in excess of
$100,000 or, in the aggregate, are in excess of $100,000 and which are not
consistent with Seller’s current business plan;
(v) Except
as
described in the Seller Disclosure Schedule, make any tax election or settle
or
compromise any federal, state, local or foreign income tax liability material
to
Seller considered as a whole;
(vi) Change
any of the accounting principles or practices used by it, except for any change
required by reason of a concurrent change in generally accepted accounting
principles;
(vii) Take
any
action which would make any of the representations or warranties of Seller
contained in this Agreement untrue or inaccurate in any material respect as
of
any time from the date of this Agreement to the Closing or would or might result
in any of the conditions set forth in this Agreement not being satisfied;
(viii) Purchase
or otherwise acquire, or propose to purchase or otherwise acquire, any of its
outstanding securities;
(ix) Declare
or pay any dividend or distribution on any shares of capital stock of
Seller;
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(x) Make
any
acquisition of a material amount of assets or any disposition of a material
amount of assets, or enter into a material contract or release or relinquish
any
material contract rights not in the ordinary course of business;
(xi) Pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
contingent or otherwise) other than payment of interest on the indebtedness
listed in Section 2.02 of the Seller Disclosure Statement or and the payment
of
ordinary trade payables in accordance with past practice;
(xii) waive,
release, grant or transfer any rights of value or modify or change in any
material respect any existing material license, lease, Contract or other
agreement or arrangement;
(xiii) Take
any
action with respect to the grant of any severance or termination pay (otherwise
than pursuant to written policies or consistent with written practices in effect
prior to the date hereof) or with respect to any increase of benefits payable
under its written severance or termination pay practices in effect on the date
hereof;
(xiv) Pay
any
benefit not required by any existing Seller Benefit Plan;
(xv) Propose
or adopt any amendments to its Articles of Incorporation or Bylaws if the result
of same would be a material detrimental to the Assets or the
Business;
(xvi) enter
into any new employment agreement with any officer, director or employee or
grant any material increase in the compensation or benefits to any officer,
director or employee;
(xvii) Take
any
action to terminate any of its employee benefit plans if Platinum or Buyer,
pursuant to the terms of this Agreements, assuming any obligations with respect
thereto; or
(xviii) Authorize
or propose, or agree in writing or otherwise to take, any of the actions
described in this Section 5.01(b).
5.02 Covenants
of Platinum and Buyer.
Platinum and Buyer hereby covenant and agree with Seller as
follows:
(a) Conduct
and Preservation of Business.
During
the period from the date hereof to the Closing Date, Platinum and Buyer (i)
shall conduct its operations according to its Ordinary Course of Business and
in
material compliance with all Applicable Laws, (ii) shall use its Reasonable
Best Efforts to preserve, maintain and protect its properties and
(iii) shall use its Reasonable Best Efforts to preserve intact its business
organization, to keep available the services of its officers and employees
and
to maintain existing relationships with licensors, licensees, suppliers,
contractors, distributors, customers and others having business relationships
with it; provided, however, that neither Platinum nor Buyer shall be
required to make any payments or enter into or amend any contractual agreements,
arrangements or understandings to satisfy any of the foregoing obligations,
other than for those payments required to be made under those agreements to
which Platinum or Buyer is a party as of the date of execution hereof.
Notwithstanding the foregoing, nothing contained herein shall restrict the
ability of Platinum or a subsidiary thereof to enter into any acquisition
transaction (including, without limitation, a merger) in which Platinum or
a
subsidiary thereof is the acquiring party or surviving corporation which is
consummated primarily through the issuance of shares of stock of
Platinum.
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(b) Restrictions
on Certain Actions.
Except
as may be otherwise expressly provided in this Agreement, during the period
from
the date hereof to the Closing Date neither Platinum nor Buyer shall, without
the prior written consent of Seller, which consent shall not be unreasonably
withheld:
(i) Amend
its
Articles of Incorporation or Bylaws;
(ii) Take
any
action which would make any of the representations or warranties of Platinum
and
Buyer contained in this Agreement untrue or inaccurate in any material respect
as of any time from the date of this Agreement to the Closing
or
would
or might result in any of the conditions set forth in this Agreement not being
satisfied; or
(iii) Authorize
or propose, or agree in writing or otherwise to take, any of the actions
described in this Section 5.02(b).
5.03 Access
to Information.
(a) Requirements
of Seller.
Subject
to Applicable Law, between the date hereof and the Closing, Seller
(i) shall give Platinum and its authorized representatives reasonable
access at Seller’s principal office during normal business hours, to all
employees, all plants, offices and other facilities, and all books and records
of Seller, (ii) shall permit Platinum and its authorized representatives to
make such inspections as Platinum may reasonably require to verify the accuracy
of any representation or warranty contained in Article IV or the title of Seller
to the Assets and (iii) shall cause Seller’s officers to furnish Platinum
and its authorized representatives with such financial and operating data and
other information with respect to Seller as Platinum may from time to time
reasonably request; provided, that Seller shall have the right to have a
representative present at all times and provided further, however, that no
such
activity shall be disruptive to the ongoing conduct of the day-to-day business
by Seller.
(b) Requirements
of Platinum and Buyer.
Subject
to Applicable Law, between the date hereof and the Closing, Platinum and Buyer
(i) shall permit Seller and its authorized representatives to make such
inspections as they may reasonably require to verify the accuracy of any
representation or warranty contained in Article IV and (ii) shall cause
Platinum’s and Buyer’s officers to furnish Seller and its authorized
representatives with such financial and operating data and other information
with respect to Platinum and its subsidiaries as Seller may from time to time
reasonably request; provided, that Platinum and Buyer shall have the right
to
have a representative present at all times and provided further, however, that
no such activity shall be disruptive to the ongoing conduct of the day-to-day
business by Platinum or Buyer.
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5.04 Nondisclosure.
(a) Requirements
of Seller.
Except
as and to the extent required by Applicable Law and except in connection with
the exercise of their rights or the performance of its obligations under this
Agreement, Seller agrees that from and after the date hereof (and without
limitation of time), such parties shall (and shall cause its affiliates to)
hold
in confidence, and shall use all Reasonable Best Efforts to cause all present
and former members, managers, officers and employees of Seller and its
Affiliates to hold in confidence, any and all proprietary, confidential or
secret information or data of or in respect of Platinum and Buyer (collectively,
the “Platinum Confidential Information”) and shall not disclose, publish or
intentionally use such Platinum Confidential Information or data for any purpose
other than as provided in this Agreement (i) without the prior written consent
of Platinum and Buyer, (ii) until such information or data has been publicly
disclosed by Platinum or Buyer or otherwise ceased to be secret or confidential
as evidenced by general public knowledge
through no fault of Seller or its Affiliates; provided, however, that Seller
shall have the right to disclose such Platinum Confidential Information or
data,
without consent, to the extent that, in the opinion of its counsel, which
counsel and opinion shall be reasonably satisfactory to Platinum, such
disclosure is compelled by any Governmental Authority, audit, defense or
prosecution of a Proceeding; provided further, however, that if Seller proposes
to make such disclosure based upon such opinion of counsel, it shall advise
and
consult with Platinum and Buyer before such disclosure concerning the
information or data it proposes to disclose and shall give Platinum an
opportunity to seek a protective order or other appropriate remedy to foreclose
such disclosure without penalty to Seller.
(b) Requirements
of Platinum and Buyer.
Except
as and to the extent required by Applicable Law and except in connection with
the exercise of their rights or the performance of their obligations under
this
Agreement, Platinum and Buyer agree that from and after the date hereof and
ending on the Closing Date, such parties shall (and shall cause its Affiliates
to) hold in confidence, and shall use all Reasonable Best Efforts to cause
its
Affiliates to hold in confidence, any and all proprietary, confidential or
secret information or data of or in respect of Seller (the “Seller Confidential
Information”) and shall not disclose, publish or intentionally use such Seller
Confidential Information or data for any purpose other than as provided in
this
Agreement (i) without the prior written consent of Seller, (ii) until such
information or data has been publicly disclosed by Seller or otherwise ceased
to
be secret or confidential as evidenced by general public knowledge through
no
fault of Platinum or Buyer; provided, however, that Platinum or Buyer shall
have
the right to disclose such Seller Confidential Information or data, without
consent, to the extent that, in the opinion of its counsel, which counsel and
opinion shall be reasonably satisfactory to Seller, such disclosure is compelled
by any Governmental Authority, audit, defense or prosecution of a Proceeding;
provided further, however, that if Platinum or Buyer propose to make such
disclosure based upon such opinion of counsel, they shall advise and consult
with Seller before such disclosure concerning the information or data it
proposes to disclose and shall give Seller an opportunity to seek a protective
order or other appropriate remedy to foreclose such disclosure without penalty
to Platinum or Buyer.
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(c) Requirements
of All Parties Upon Termination of Agreement.
If this
Agreement is terminated for any reason, upon the written request of Seller,
Platinum and its affiliates and representatives shall promptly return to Seller
or destroy any Seller Confidential Information in their possession and shall
certify in writing to Seller that they have done so. Similarly, if this
Agreement is terminated for any reason, upon the written request of Platinum,
Seller shall promptly return to Platinum or destroy any Platinum Confidential
Information in their possession and shall certify in writing to Platinum that
they have done so.
5.05 Notification
of Certain Matters.
Seller
shall give prompt notice to Platinum and Buyer of (a) the discovery of any
fact
or circumstance which would be likely to cause any representation or warranty
contained in Article IV and made by it to be untrue or inaccurate at or prior
to
the Closing, (b) the occurrence or nonoccurrence of any event which would be
likely to cause any representation or warranty contained in Article IV and
made by it to be untrue or inaccurate in any material respect at or prior to
the
Closing and (c) any material failure
of Seller to comply with or satisfy any covenant, condition or agreement to
be
complied with or satisfied by Seller hereunder or in any Ancillary Document.
Platinum and Buyer shall give prompt notice to Seller of (i) the discovery
of
any fact or circumstance which would be likely to cause any representation
or
warranty contained in Article IV and made by it to be untrue or inaccurate
at or
prior to the Closing, (ii) the occurrence or nonoccurrence of any event which
would be likely to cause any representation or warranty contained in Article
IV
and made by it to be untrue or inaccurate in any material respect at or prior
to
the Closing and (iii) any material failure of Platinum or Buyer to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by Platinum or Buyer hereunder or in any Ancillary Document. The
delivery of any notice pursuant to this Section 5.05 shall not be deemed to
(i) modify the representations or warranties hereunder of the party
delivering such notice, (ii) modify the conditions set forth in Sections
6.01 and 6.02, or (iii) limit or otherwise affect the remedies available
hereunder to the party receiving such notice; provided, however, that if
the Closing shall occur, then all matters disclosed pursuant to this Section
5.05 at or prior to the Closing shall be waived and no party shall be entitled
to make a claim thereon pursuant to the terms of this Agreement.
5.06 Reasonable
Best Efforts.
Each
party hereto agrees that it will not voluntarily undertake any course of action
inconsistent with the provisions or intent of this Agreement and will use its
Reasonable Best Efforts to take, or cause to be taken, all action and to do,
or
cause to be done, all things reasonably necessary, proper or advisable under
Applicable Laws to consummate the transactions contemplated by this
Agreement, including, without limitation, (a) cooperation in determining
whether any other consents, approvals, orders, authorizations, waivers,
declarations, filings or registrations of or with any Governmental Entity or
third party are required in connection with the consummation of the transactions
contemplated hereby, (b) using its Reasonable Best Efforts to obtain any
such consents, approvals, orders, authorizations and waivers required to
consummate the transactions contemplated by this Agreement and to effect any
such declarations, filings and registrations, (c) using its Reasonable Best
Efforts to cause to be lifted or rescinded any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate
the
transactions contemplated hereby, (d) using its Reasonable Best Efforts to
defend, and to cooperate in defending, all lawsuits or other Proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby, (v) causing the conditions set forth in Articles Sections 6.01 and
6.02, as applicable, to be satisfied on or prior to the Closing Date and (e)
the
execution of any additional instruments necessary to consummate the transactions
contemplated hereby.
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5.07 Public
Announcements.
Except
as may be required by Applicable Law or by obligations pursuant to any listing
agreement with any national securities exchange, neither Platinum and Buyer,
on
the one hand, nor Seller, on the other, shall issue any press release or
otherwise make any public statement with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party. Notwithstanding anything to the contrary contained herein, each party
prior to or after Closing or termination of this Agreement, as applicable,
may
issue any press release or make any public statement without approval of the
other as may be required by law, provided the party issuing the press release
or
making such statement shall give prior notice thereof to the other party and
consult with the other party as to the contents thereof.
5.08 Indemnification
of Claims of Brokers.
Seller,
on the one hand, and Platinum, on the other, shall indemnify and hold each
other
harmless from any claim or demand for commission, finder’s fee or similar
compensation by any broker, finder, agent or similar intermediary claiming
to
have been employed by or on behalf of Seller or any of Seller’s Affiliates or
Platinum or any of Platinum's Affiliates, as the case may be, and shall bear
the
cost of legal fees and expenses incurred in defending against any such
claim.
5.09 Performance
of Buyer.
Platinum shall cause Buyer to comply with all its obligations hereunder and,
subject to the terms and conditions hereof, to consummate the Acquisition as
contemplated herein.
5.10 Characteristics
of Platinum Common Stock.
Platinum shall insure that for a period of three (3) years following the Closing
the Platinum Exchange Shares will have no less favorable characteristics (as
to
voting rights, liquidity, transferability, anti-dilution, price or any other
material characteristics) than any other common equity securities of
Platinum.
5.11 Amendment
of Schedules.
Each
party hereto agrees that, with respect to the representations and warranties
of
such party contained in this Agreement, such party shall have the continuing
obligation until the Closing to supplement or amend the Schedules hereto with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth
or
described in the Schedules. For all purposes of this Agreement, including
without limitation for purposes of determining whether the conditions set forth
in Sections 6.01 and 6.02 have been fulfilled, the Schedules hereto shall be
deemed to include only that information contained therein on the date of this
Agreement and shall be deemed to exclude all information contained in any
supplement or amendment thereto; provided, however, that if the Closing
shall occur, then all matters disclosed pursuant to any such supplement or
amendment at or prior to the Closing shall be waived and no party shall be
entitled to make a claim thereon pursuant to the terms of this
Agreement.
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5.12 No
Redemption.
Platinum agrees that for a period of one year following the Closing, it will
not
repurchase or redeem any of its shares of Platinum Common Stock except in
transactions on the open market through a broker for the then prevailing market
price or transactions that comply with Rule 10b-18 under the Exchange Act.
5.13 Further
Assurances.
At and
after the Closing Date, the directors and officers of Buyer shall be authorized
to execute and deliver, in the name and on behalf of Seller or Buyer, any deeds,
bills of sale, assignments or assurances, and to take and do, in the name and
on
behalf of Seller or Buyer, any other actions and things to vest, perfect or
confirm of record or otherwise in Buyer any and all right, title and interest
in, to and under any of the rights, properties or assets of Seller or Buyer
acquired or to be acquired by Buyer as a result of, or in connection with,
the
Acquisition. Further, at and after the Closing Date, the directors and officers
of Buyer, or the managers and officers of Seller, shall be authorized to execute
and deliver, on the name and on behalf of Buyer or Seller, respectively, as
required, any instruments of assignment and assumption
necessary to effectively assign all of the Assumed Liabilities to Buyer and
to
have Buyer fully assume all the Assumed Liabilities as specified by this
Agreement.
5.14 Fees
and Expenses.
Except
as otherwise expressly provided in this Agreement, all fees and expenses,
including fees and expenses of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fee or expense. Notwithstanding
the foregoing, if the Closing shall occur, Platinum will at Closing pay Seller’s
attorneys and accountants directly for theretofore unpaid attorney’s fees,
accounting fees, and expenses incurred by Seller in connection with the
transactions contemplated by this Agreement.
5.15 Management
Matters.
On the
Closing Date, Buyer shall employ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as Senior Vice President,
▇▇▇▇ ▇▇▇▇▇▇ as Senior Vice President of Engineering, and ▇▇▇▇▇ ▇▇▇▇▇ as Vice
President of Operations. On the Closing Date, Platinum, acting through its
board
of directors, shall increase the number of its directors by one and elect ▇▇▇
▇.
▇▇▇▇ or his designee as a director of Platinum to fill such vacancy. For so
long
as ▇▇▇ ▇. ▇▇▇▇ shall own at least one percent (1%) of the outstanding shares
of
Platinum, he shall be entitled to nominate one member for election to the board
of directors of Platinum in the same way other board members are nominated
and
submitted for election by the shareholders of Platinum.
5.16 No
Solicitation.
Unless
and until this Agreement shall have been terminated by either party in
accordance with the provisions of Section 7.01 hereof, Seller shall not, and
shall not authorize or permit any of its officers, directors, employees or
representatives, without first obtaining the written consent of Platinum or
Buyer, to solicit, initiate, encourage, negotiate or conclude any transaction
which entails the sale of all or any part of the Assets (other than sales in
the
Ordinary Course of Business), any acquisition or consolidation of Seller with
any person or entity other than Platinum or Buyer, the sale or other transfer
of
any shares of its capital stock to any person or entity other than Platinum
or
Buyer. In the event Seller receives or learns that any of Seller’s officers,
directors, employees or representatives has received, from any third party,
any
offer to enter into any such prohibited transaction, then Seller shall promptly
communicate to Platinum or Buyer the material terms of such offer and the
identity of the third party making such offer.
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5.17 Standstill
Agreement.
In
recognition and consideration of the fact that Seller and Seller’s Parent have
and will invest substantial time and effort in connection with the transactions
contemplated by this Agreement and, in addition, will be foregoing other
opportunities to dispose of the Assets, Platinum agrees that it will not, for
so
long as this Agreement is in effect, acquire Oil and Gas Interests or any equity
in any entity which owns Oil and Gas Interests from any Person prior to the
Closing Date specified herein.
5.18 Reservation
of Shares.
Platinum shall reserve out of its authorized but unissued shares of Platinum
Common Stock a sufficient number of shares to permit it to issue the Platinum
Exchange Shares in accordance with the terms of this Agreement.
5.19 SEC
Filings.
Platinum shall use its Reasonable Best Efforts, and Seller and the Control
Persons shall provide such reasonable assistance as Platinum shall require,
to
file and cause to
be
declared effective with the SEC the Registration Statement, as well as to make
any required M-A Filings described in that Section.
ARTICLE
VI
CONDITIONS
TO CONSUMMATION OF THE ACQUISITION
6.01 Conditions
to Obligations of Seller.
The
obligations of Seller to consummate the Acquisition shall be subject to the
fulfillment on or prior to the Closing Date of each of the following conditions,
unless waived by Seller as provided herein:
(a) Representations
and Warranties True.
All the
representations and warranties of Platinum and Buyer contained in this
Agreement, and in any Ancillary Document delivered pursuant hereto or in
connection herewith on or prior to the Closing Date, shall be true and correct
in all material respects on and as of the Closing Date as if made on and as
of
such date, except as affected by transactions contemplated or permitted by
this
Agreement and except to the extent that any such representation or warranty
is
made as of a specified date, in which case such representation or warranty
shall
have been true and correct in all material respects as of such specified
date.
(b) Covenants
and Agreements Performed.
Platinum and Buyer shall have performed and complied with in all material
respects all covenants and agreements required by this Agreement to be performed
or complied with by them on or prior to the Closing Date.
(c) Certificate.
Seller
shall have received a certificate executed on behalf of Platinum by the Chairman
of the Board, the President or the Vice President - Finance of Platinum, dated
the Closing Date, representing and certifying, in such detail as Seller may
reasonably request, that the conditions set forth in this Section 6.01 have
been
fulfilled and that Platinum and Buyer are not in breach of any provision of
this
Agreement, including, without limitation, any representation or warranty made
herein.
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(d)
Opinions
of Counsel.
Seller
shall have received an opinion of ▇▇▇▇▇ Cummis ▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C., legal
counsel to Platinum and Buyer, dated the Closing Date, with respect to such
matters as Seller or its legal counsel may reasonably request. In rendering
such
opinion, such counsel may rely as to factual matters upon certificates or
other
documents furnished by directors and officers of each of Platinum and Buyer
and
by government officials and upon such other documents and data as such counsel
deems appropriate as a basis for such opinion. To the extent the foregoing
opinion concerns the laws of any jurisdiction other than New York or New
Jersey,
such counsel may rely upon the opinion of legal counsel, who shall be reasonably
satisfactory to Seller and who shall be admitted to practice in such other
jurisdiction. Any opinion relied upon by such counsel, which shall be in
form
and substance reasonably satisfactory to Seller and its legal counsel,
shall be delivered together with the opinion of such counsel, which shall
state
that such counsel believes that its reliance thereon is
justified.
(e) Legal
Proceedings.
No
Proceeding shall, on the Closing Date, be pending or threatened seeking to
restrain, prohibit or obtain damages or other relief in connection with this
Agreement or the consummation of the Acquisition.
(f) Consents.
All
consents, approvals, orders, authorizations and waivers of, and all
declarations, filings and registrations with, third parties (including
Governmental Authorities) required to be obtained or made by or on the part
of
the parties hereto, or otherwise reasonably necessary for the consummation
of
the Acquisition, shall have been obtained or made, and all thereof shall be
in
full force and effect at the time of Closing, unless the failure to obtain
or
make any such consent, approval, order, authorization, waiver, declaration,
filing or registration would not result in a Material Adverse Change with
respect to Platinum or Buyer or on the business or assets of Platinum or Buyer,
considered as a whole.
(g) Market
Value of Platinum Common Stock.
The
average of the closing sale prices of a share of the Platinum Common Stock
as
reported on a national securities exchange or quotation system for each business
day in the 60-calendar day period ending on the day before the day for Closing
shall have been not less than $7.00 per share.
(h) Other
Documents.
Seller
shall have received the certificates, instruments and documents listed
below:
(i) A
copy of
the resolutions of the Board of Directors of Platinum authorizing the execution,
delivery and performance by Platinum of this Agreement, certified by the
secretary or an assistant secretary of Platinum.
(ii) Copies
of
the resolutions of the Board of Directors of Buyer, and those of Platinum,
as
the sole stockholder of Buyer, authorizing the execution, delivery and
performance by Buyer of this Agreement, certified by the secretary or an
assistant secretary of Buyer.
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(iii) A
certificate from the Secretary of State of Delaware, dated not more than 10
days
prior to the Closing Date, as to the legal existence and good standing of
Platinum under the laws of such state.
(iv) Certificates
from the Secretary of State of Delaware, dated not more than 10 days prior
to
the Closing Date, as to the legal existence and good standing of Buyer under
the
laws of such state.
(v) An
assignment and assumption of the Assumed Liabilities executed by
Buyer.
(vi) Such
other certificates, instruments and documents as may be reasonably requested
by
Seller to carry out the intent and purposes of this Agreement.
(vii) A
certificate certifying that Buyer is not a "foreign person", as such term is
defined in Section 1445 of the Code, and that the acquisition of the Platinum
Exchange Shares is not subject to the federal income tax withholding
requirements of such section of the Code.
(j) Registration
Statement.
The
Registration Statement shall have been declared effective by the
SEC.
6.02 Conditions
to Obligations of Platinum and Buyer.
The
obligations of Platinum and Buyer to consummate the transactions contemplated
by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions, unless waived by Platinum and Buyer
as
provided herein:
(a)
Representations
and Warranties True.
All the
representations and warranties of Seller contained in this Agreement, and in
any
Ancillary Document delivered pursuant hereto or in connection herewith on or
prior to the Closing Date, shall be true and correct in all material respects
on
and as of the Closing Date as if made on and as of such date, except as affected
by transactions contemplated or permitted by this Agreement and except to the
extent that any such representation or warranty is made as of a specified date,
in which case such representation or warranty shall have been true and correct
in all material respects as of such specified date.
(b)
Covenants
and Agreements Performed.
Seller
shall have performed and complied with in all material respects all covenants
and agreements required by this Agreement to be performed or complied with
by
Seller on or prior to the Closing Date.
(c)
Certificate.
Platinum and Buyer shall have received a certificate executed on behalf of
Seller by the President of Seller, dated the Closing Date, representing and
certifying, in such detail as Platinum may reasonably request, that the
conditions set forth in this Section 6.02 have been fulfilled and that Seller
is
not in breach of any provision of this Agreement including, without limitation,
any representation or warranty made herein.
(d)
Opinion
of Counsel.
Platinum shall have received an opinion of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇, legal
counsel to Seller, dated the Closing Date, with respect to such matters as
Platinum and its legal counsel may reasonably request. In rendering such
opinion, such counsel may rely as to factual matters upon certificates or other
documents furnished by managers and officers of Seller and by government
officials and upon such other documents and data as such counsel deems
appropriate as a basis for such opinion. To the extent the foregoing opinion
concerns the laws of any jurisdiction other than
Texas, such counsel may rely upon the opinion of legal counsel, who shall be
reasonably satisfactory to Platinum, admitted to practice in such other
jurisdiction. Any opinion relied upon by such counsel, which shall be in form
and substance reasonably satisfactory to Platinum, shall be delivered together
with the opinion of such counsel, which shall state that such counsel believes
that its reliance thereon is justified.
(e)
Legal
Proceedings.
No
Proceeding shall, on the Closing Date, be pending or threatened seeking to
restrain, prohibit or obtain material damages or other relief in connection
with
this Agreement or the consummation of the transactions contemplated hereby.
(f)
Consents.
All
consents, approvals, orders, authorizations and waivers of, and all
declarations, filings and registrations with, third parties (including
Governmental Authorities) required to be obtained or made by or on the part
of
the parties hereto, or otherwise reasonably necessary for the consummation
of
the Acquisiton, shall have been obtained or made, and all thereof shall be
in
full force and effect at the time of Closing, unless the failure to obtain
or
make any such consent, approval, order, authorization, waiver, declaration,
filing or registration would not result in a Material Adverse Change with
respect to Seller or its subsidiary or on the Business or Assets, considered
as
a whole.
(g)Other
Documents.
Platinum or Buyer, as applicable, shall have received the certificates,
instruments and documents listed below:
(i) Assignments
and Bills of Sale, each duly executed by Seller, transferring the Assets to
Buyer free and clear of any Encumbrances except as otherwise set forth
herein.
(ii) All
Seller’s books and records, including, without limitation bank account records,
accounting records, computer records and all contracts with third
parties.
(iii) A
copy of
the resolutions of the Seller’s Parent authorizing the execution, delivery and
performance by Seller of this Agreement, certified by the secretary or an
assistant secretary of Seller’ Parent.
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(iv) A
copy of
the resolutions of the Seller’s Board of Directors authorizing the execution,
delivery and performance of Seller of this Agreement, certified by the secretary
or assistant secretary of Seller.
(v)A
Certificate from the Secretary of State of Colorado, dated not more than 10
days
prior to the Closing Date, as to the legal existence of Seller under the laws
of
such state.
(vi) A
Certificate from the Comptroller of Public Accounts of the State of Texas,
dated
not more than 10 days prior to the Closing Date, as to the good standing of
Seller under the laws of such state.
(vii) A
certificate certifying that Seller is not a "foreign person", as such term
is
defined in Section 1445 of the Code, and that the sale of the Assets is not
subject to the federal income tax withholding requirements of such section
of
the Code.
(viii) Such
other certificates, instruments and documents as may be reasonably requested
by
Platinum or Buyer to carry out the intent and purpose of this
Agreement.
(h)
Approval
of Acquisition, Etc.
The
Acquisition, as well as an amendment to Platinum's certificate of incorporation,
shall have been duly approved by the requisite vote under applicable law of
the
shareholders of Platinum at a duly held meeting and the shareholders of Platinum
owning twenty percent (20%) or more of the shares sold in Platinum's initial
public offering shall not have exercised their conversion rights as described
in
the Platinum's Prospectus dated October 24, 2005;
(i) Registration
Statement.
The
Registration Statement shall have been declared effective by the
SEC.
ARTICLE
VII
TERMINATION,
AMENDMENT AND WAIVER
7.01 Termination.
This
Agreement may be terminated and the transactions contemplated hereby abandoned
at any time prior to the Closing in the following manner:
(a) By
mutual
written consent of Seller, Platinum and Buyer; or
(b) By
either
Seller, Platinum or Buyer, if:
(i) The
Closing shall not have occurred on or before December 31, 2006, unless such
failure to close shall be due to a breach of this Agreement by the party seeking
to terminate this Agreement pursuant to this clause (i); or
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(ii) There
shall be any statute, rule or regulation that makes consummation of the
transactions contemplated hereby illegal or otherwise prohibited or a
Governmental Entity shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
consummation of the transactions contemplated
hereby,
and such order, decree, ruling or other action shall have become final and
nonappealable; or
(iii) Platinum
is delinquent in filing, or is no longer filing, periodic reports under the
Exchange Act on the Closing Date; or
(c) By
Seller
if (i) any of the representations and warranties of Platinum and Buyer
contained in this Agreement shall not be true and correct in any material
respect, when made or at any time prior to the Closing as if made at and as
of
such time, in any respect which is material to Platinum and Buyer or the ability
of Platinum and Buyer to consummate the transactions contemplated hereby or
(ii) Platinum or Buyer shall have failed to fulfill in any material respect
any of its material obligations under this Agreement, which failure is material
to the obligations of Platinum and Buyer under this Agreement, and, in the
case
of each of clauses (i) and (ii), such misrepresentation, breach of warranty
or
failure (provided it can be cured) has not been cured within ten (10) days
of
actual knowledge thereof by Platinum or Buyer; or
(d) By
Platinum and Buyer if (i) any of the representations and warranties of
Seller contained in this Agreement shall not be true and correct in any material
respect, when made or at any time prior to the Closing as if made at and as
of
such time, in any respect which is material to Seller considered as a whole
or
the ability of Seller to consummate the transactions contemplated hereby or
(ii) Seller shall have failed to fulfill in any material respect any of its
material obligations under this Agreement, which failure is material to the
obligations of Seller under this Agreement, and, in the case of each of clauses
(i) and (ii), such misrepresentation, breach of warranty or failure (provided
it
can be cured) has not been cured within ten (10) days of actual knowledge
thereof by Seller.
7.02 Effect
of Termination.
In the
event of the termination of this Agreement pursuant to Section 7.01 by Platinum
and Buyer, on the one hand, or Seller, on the other, written notice thereof
shall forthwith be given to the other party specifying the provision hereof
pursuant to which such termination is made, and this Agreement shall become
void
and have no effect, and there shall be no liability hereunder on the part of
Platinum, Buyer or Seller or any of their respective directors, officers,
managers, employees, stockholders or representatives, except that the agreements
contained in this Section 7.02 and in Sections 5.04, 5.08 and 5.14 shall survive
the termination hereof. Nothing contained in this Section 7.02 shall otherwise
relieve any party from liability for damages actually incurred as a result
of
any breach of this Agreement.
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7.03 Waiver.
Each of
Seller, on the one hand, and Platinum and Buyer, on the other, may
(a) waive any inaccuracies in the representations and warranties of the
other contained herein or in any document, certificate or writing delivered
pursuant hereto; and (b) waive compliance by the other with any of the
other’s agreements or fulfillment of any conditions to its own obligations
contained herein. Any agreement on the part of a party hereto to any such waiver
shall be valid only if set forth in an instrument in writing signed by or on
behalf of such party. No failure or delay by a party hereto in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
7.04 Remedies
Not Exclusive.
In the
event this Agreement is terminated prior to Closing, the rights and remedies
provided in this Article VII shall be cumulative and not exclusive of any rights
or remedies provided by law. The rights and remedies of any party based upon,
arising out of, or otherwise in respect of any inaccuracy in or breach of any
representation, warranty, covenant or agreement contained in this Agreement
shall in no way be limited by the fact that the act, omission, occurrence or
other state of facts upon which any claim of any such inaccuracy or breach
is
based may also be the subject matter of any other representation, warranty,
covenant or agreement contained in this Agreement (or in any other agreement
between the parties) as to which there is no inaccuracy or breach.
ARTICLE
VIII
SURVIVAL
OF REPRESENTATIONS AND WARRANTIES/INDEMNIFICATION
8.01 Survival.
All
representations and warranties, covenants and agreements of the parties
contained in this Agreement shall survive the Closing. All representations,
warranties, covenants and agreements of the parties contained in this Agreement
shall expire, terminate and be of no force and effect on and after the
expiration of the close of business on the first anniversary of the Closing
Date, except that:
(a) (a) The
representations and warranties regarding title to the Assets contained in
4.01(j) and the indemnifications set forth in Sections 8.02 and 8.03 shall
survive indefinitely; and
(b) The
representations and warranties regarding the Taxes, Tax Return filings and
payments of Taxes, contained in Section 4.01(n) and Section 4.02(i) hereof
shall
survive until ninety (90) days after the expiration of the applicable statutory
period of limitation (including extensions thereto granted prior to the Closing
Date).
(c) The
covenants set forth in Sections 5.04, 5.15 and 5.16 hereof shall survive for
the
minimum period required to effectuate the intent of the provisions of such
Sections.
8.02 Indemnification
by the Control Persons.
Subject
to the terms and conditions of this Article VIII, the Control Persons,
severally in the proportions set forth in Annex “C”, shall indemnify, defend and
hold harmless Platinum and Buyer and their respective Affiliates (collectively,
the “Platinum
Indemnitees”)
from
and against any and all claims, losses, damages, liabilities, judgments, costs
and expenses (including reasonable attorneys’ fees and expenses) (collectively,
“Damages”),
incurred by any of the Platinum Indemnitees by reason of or resulting from
(a)
any breach by Seller of any of its representations, warranties, covenants or
agreements contained in this Agreement, (b) the Excluded Liabilities, (c) the
operation of Seller prior to the Closing Date other than for the Assumed
Liabilities; and (d) liabilities incurred as a result of the cancellation of
shares of common stock of Seller’s Parent originally issued to Aritex
Corporation (collectively “Platinum
Claims”).
Notwithstanding the foregoing,
the indemnification obligations of the Control Persons pursuant to this Section
8.02 shall be subject to the following limitations:
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(i) No
indemnification shall be required to be made by the Control Persons pursuant
to
this Section 8.02 with respect to any Platinum Claims to the extent that the
aggregate amount of Damages incurred by Platinum and Buyer exceeds Ten Million
and No/100 Dollars ($10,000,000.00) in total amount.
(ii) No
indemnification shall be required to be made by any Control Person pursuant
to
this Section 8.02 with respect to any Platinum Claims unless and until the
aggregate amount of Damages incurred by the Platinum Indemnitees with respect
to
all Platinum Claims exceeds Five Million and No/100 Dollars ($5,000,000.00),
it
being agreed and understood that, if such amount is exceeded, the Control
Persons shall not be liable to the full extent of such Damages but shall be
liable only to the extent that the aggregate amount of Damages incurred by
the
Platinum Indemnitees exceeds Five Million and No/100 Dollars
($5,000,000.00).
(iii) The
amount of Damages required to be paid by the Control Persons to the Platinum
Indemnitees pursuant to this Section 8.02 as a result of any Platinum Claim
shall be reduced to the extent of any amounts to which the Platinum Indemnitees
are entitled to receive pursuant to the terms of the insurance policies (if
any)
covering such Platinum Claim.
(iv) The
amount of Damages required to be paid by the Control Persons to the Platinum
Indemnitees pursuant to this Section 8.02 as a result of any Platinum Claim
shall be reduced by the amount of any Tax benefit actually realized by the
Platinum Indemnitees as a result of such Platinum Claim (the “Platinum
Claim Reduction Amount”).
(v) No
indemnification shall be required to be made by the Control Persons pursuant
to
this Section 8.02 with respect to any Platinum Claims arising out of or
resulting from the breach of the representations and warranties of Seller
contained in Article IV if the Control Persons, or any of them, can establish
that Platinum had actual knowledge on or before the Closing Date of the event,
occurrence, condition or circumstance constituting such breach.
(vi) The
indemnification obligations of the Control Persons pursuant to this Section
8.02
shall be limited to actual damages and shall not include incidental,
consequential, indirect, punitive or exemplary damages.
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(vii) All
indemnification obligations of the Control Persons shall be made in cash or
at
the option of the Control Persons in shares of Platinum Common Stock having
a
fair market value based upon the 60-Day Average Adjusted Price equal to the
amount of such obligation.
(viii) Notwithstanding
anything herein to the contrary, the limitations set forth in subsections (i)
and (ii) above shall not apply with respect to Platinum Claims relating
to
liabilities
incurred by the Platinum Indemnitees as a result of the cancellation of shares
of common stock of Seller’s Parent originally issued to Aritex Corporation.
8.03 Indemnification
by Platinum.
Subject
to the terms and conditions of this Section 8.03, Platinum shall indemnify,
defend and hold harmless the shareholders of Seller’s Parent (collectively, the
“Tandem
Shareholder Indemnitees”)
from
and against any and all Damages incurred by any the Tandem Shareholders by
reason of or resulting from (a) any breach by Platinum or Buyer of any of its
representations, warranties, covenants or agreements contained in this
Agreement; or (b) the Assumed Liabilities (collectively “Tandem
Shareholder Claims”).
Notwithstanding the foregoing, the indemnification obligations of Platinum
pursuant to this Section 8.03 shall be subject to the following
limitations:
(i) No
indemnification shall be required to be made by Platinum pursuant to this
Article X with respect to any Tandem Shareholder Claims to the extent that
the aggregate amount of Damages incurred by the Tandem Shareholder Indemnitees
exceeds Ten Million and No/100 Dollars ($10,000,000.00) in total
amount.
(ii) No
indemnification shall be required to be made by Platinum pursuant to this
Article X with respect to any Tandem Shareholder Claims unless and until
the aggregate amount of Damages incurred by the Tandem Shareholder Indemnitees
with respect to all Tandem Shareholders Claims exceeds Five Million and No/100
Dollars ($5,000,000.00), it being agreed and understood that, if such amount
is
exceeded, Platinum shall not be liable to the full extent of such Damages but
shall be liable only to the extent that the aggregate amount of Damages incurred
by the Tandem Shareholder Indemnitees exceeds Five Million and No/100 Dollars
($5,000,000.00).
(iii) The
amount of Damages required to be paid by Platinum to the Tandem Shareholder
Indemnitees pursuant to this Section 8.03 as a result of any Tandem Shareholder
Claim shall be reduced to the extent of any amounts to which the Tandem
Shareholder Indemnitees are entitled to receive pursuant to the terms of the
insurance policies (if any) covering such Tandem Shareholder Claim.
(iv) The
amount of Damages required to be paid by Platinum to the Tandem Shareholder
Indemnitees pursuant to this Section 8.03 as a result of any Tandem Shareholder
Claim shall be reduced by the amount of any Tax benefit actually realized by
the
Tandem Shareholder Indemnitees as a result of such Tandem Shareholder Claim
(the
“Tandem
Shareholder Claim Reduction Amount”).
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(v) No
indemnification shall be required to be made by Platinum pursuant to this
Section 8.03 with respect to any Tandem Shareholder Claim arising out of or
resulting from the breach of the representations and warranties of Platinum
or
Buyer contained in Article IV if Platinum can establish that a Control Person
had actual knowledge on or before the Closing Date of the event, occurrence,
condition or circumstance constituting such breach.
(vi) The
indemnification obligations of Platinum pursuant to this Section 8.03 shall
be
limited to actual damages and shall not include incidental, consequential,
indirect, punitive or exemplary damages.
(vii) All
indemnification obligations of Platinum shall be made in shares of Platinum
Common Stock having a fair market value based upon the 60-Day Average Adjusted
Price equal to the amount of such obligation.
(viii) No
indemnification shall be required for any Tandem Shareholder Claims relating
to
or arising out of the liquidation and dissolution of Seller, including, without
limitation, the failure or delay of Seller to effect or consummate such
liquidation and dissolution or the tax treatment of such liquidation and
dissolution.
(ix) Notwithstanding
anything herein to the contrary, the limitations set forth in subsections (i)
and (ii) above shall not apply with respect to Tandem Shareholder Claims
relating to liabilities incurred by the Tandem Shareholder Indemnitees as a
result of any claims by ▇▇▇▇▇ ▇▇▇▇▇▇ or his Affiliates for broker’s, finders or
other fees relating to the Acquisition.
8.04 Indemnification
Procedure.
The
following indemnification procedures shall apply to the indemnification rights
set forth in Sections 8.02 and 8.03:
(a) Platinum
Claims.
Platinum shall give prompt written notice to the Tandem Representative (as
such
term is defined in Section 8.05 of this Agreement) of any claim for which
indemnification pursuant to Section 8.02 is being sought (a “Notice
of Platinum Claim”).
The
Notice of Platinum Claim shall set forth with reasonable specificity the basis
under this Agreement, and the facts that otherwise form the basis, of such
Platinum Claim; provided, however, that the failure of the Platinum Indemnitee
to provide a Notice of Platinum Claim shall not preclude it from seeking
indemnification hereunder unless such failure has materially prejudiced the
Control Person’s ability to defend such claim..
If
the
Platinum Claim involves results from or in connection with a lawsuit or other
legal action brought by an unrelated third party, the Control Persons shall
be
entitled to, at their sole expense, either:
|
(i)
|
to
participate therein; or
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|
(ii)
|
to
assume the entire defense thereof with counsel who is selected by
it and
who is reasonably satis-fac-tory to the Platinum Indemnitees, provided
that the Control Persons agree in writing that they do not and will
not
contest their responsibility for indemnifying the Platinum Indemnitees
in
respect of such Platinum Claim, and no settlement shall be made without
the prior written consent of the Platinum Indemnitees which shall
not be
unreasonably withheld (except that no such consent shall be required
if
the claimant is entitled under the settlement to only monetary
damages to be paid solely by the Control Persons). If, however, the
Claim
would, if successful, result in the imposition of Damages for which
the
Control Persons would not be solely responsible hereunder, or
representation of both parties by the same counsel would otherwise
be
inappropriate due to actual or potential differing interests between
them,
then the Platinum Indemnitees shall not be entitled to assume the
entire
defense and each party shall be entitled to retain counsel (at their
own
expense) who shall cooperate with one another in defending against
such
Claim. If the Control Persons do not choose to defend against a Platinum
Claim by a third party, the Platinum Indemnitees may defend against
such
Platinum Claim in such manner as it deems appropriate or settle such
Platinum Claim (after giving notice thereof to the Control Persons)
on
such terms as the Platinum Indemnitees may deem appropriate, and
the
Platinum Indemnitees shall be entitled to periodic reimbursement
of
expenses incurred in connection therewith and prompt indemnification
from
the Control Persons, including without limitation reasonable attorneys'
fees, in accordance with Section 8.02 hereof.
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In
the
event the Platinum Claim involves any action by an unaffiliated third party,
no
compromise or settlement thereof may be effected by Platinum without the Tandem
Representative’s consent (which shall not be unreasonably
withheld).
(b) Tandem
Claims.
The
Tandem Representative shall give prompt written notice to Platinum of any claim
for which indemnification pursuant to Section 8.03 is being sought (a
“Notice
of Tandem Claim”).
The
Notice of Tandem Claim shall set forth with reasonable specificity the basis
under this Agreement, and the facts that otherwise form the basis, of such
Tandem Claim; provided that the failure of any Tandem Shareholder Indemnitee
to
provide a Notice of Tandem Claim shall not preclude it from seeking
indemnification hereunder unless such failure has materially prejudiced
Platinum’s ability to defend such claim..
Any
Tandem Claim for which indemnification is being sought shall be handled in
the
same manner as a Platinum Claim would be handled pursuant to Section 8.04(a).
8.05 Tandem
Representative.
For
purposes of this Article VIII, the Tandem Shareholders shall be represented
by
▇▇▇ ▇. ▇▇▇▇ or such other person (the “Tandem Representative”) as may be
designated from time to time by the Control Persons upon written notice to
Platinum. Platinum shall (i) give the Tandem Representative and his agents,
representatives and advisors access to all employees, offices and other
facilities, and all books and records of the Platinum and Buyer and (ii) furnish
the Tandem Representative and his agents, representatives and advisors with
such
financial and operating data and other information with respect to Platinum
and
Buyer, in each case as the Tandem Representative may reasonably require to
verify the accuracy of any Platinum Claim or Damages alleged by any Platinum
Indemnitee.
8.06 Sole
Remedy.
Except
as otherwise provided in this Section, Seller, Control Persons, Platinum and
Buyer acknowledge and agree that, following the Closing, the indemnification
provided in this Article VIII shall be the sole and exclusive remedy available
to the Tandem Shareholders, on the one hand, and Platinum and Buyer, on the
other, with respect to any claims arising out of, based upon or in any way
connected with the transactions contemplated by this Agreement, including,
without limitation, for any breach or inaccuracy of the representations and
warranties set forth in Article IV, except for any claim for fraudulent
inducement. The provisions of the foregoing sentence shall apply only to
monetary damages and shall not restrict a party from seeking specific
performance or other nonmonetary and equitable remedies for breach of another
part of this Agreement.
ARTICLE
IX
MISCELLANEOUS
9.01 Entire
Agreement.
This
Agreement, together with the Schedules, Exhibits, Annexes, Ancillary
Documents and other writings referred to herein or delivered pursuant hereto,
constitute the entire agreement between the parties hereto with respect to
the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, between the parties with respect to the subject matter
hereof. Each party to this Agreement acknowledges that no representations,
inducements, or agreements, oral or otherwise have been made by any party,
or
anyone acting on behalf of any party, which are not embodied herein or in the
Schedules, Annexes and Exhibits hereto, and no other agreement, statement or
promise not contained in this Agreement or in the Schedules, Annexes or Exhibits
hereto shall be binding. The parties hereto have had the opportunity to consult
with their respective attorneys concerning the meaning and the import of this
Agreement and the Schedules, Annexes and Exhibits hereto and each has read
this
Agreement and the Schedules and Exhibits hereto, as signified by such party’s
signature below, and are executing the same for the purposes and consideration
herein expressed.
9.02 Binding
Effect; Assignment; No Third Party Benefit.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, heirs, personal representatives and permitted
assigns; provided, however, that neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (by operation of law or otherwise) without the prior written consent
of
the other parties, except that upon written notice to Seller (a) Buyer may
assign to any other direct wholly owned domestic corporate subsidiary of
Platinum all of Buyer’s rights, interests or obligations hereunder, provided as
a condition of such assignment to any subsidiary of Platinum, such subsidiary
shall be required to make the same representations to Seller as Buyer had under
Article IV hereof. Except as set forth in this Section 9.01, nothing in this
Agreement, express or implied, is intended to or shall confer upon any Person
other than Platinum, Buyer and Seller any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement.
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9.03 Severability.
If any
provision of this Agreement is held to be unenforceable, this Agreement shall
be
considered divisible and such provision shall be deemed inoperative
to the extent it is deemed unenforceable, and in all other respects this
Agreement shall remain in full force and effect; provided, however, that if
any
such provision may be made enforceable by limitation thereof, then such
provision shall be deemed to be so limited and shall be enforceable to the
maximum extent permitted by Applicable Law.
9.04 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the substantive
laws of the State of Texas regardless of the laws that might otherwise govern
under principles of conflicts of laws applicable thereto.
9.05 Notices.
All
notices, requests, demands, claims and other communications required or
permitted to be given hereunder shall be in writing and shall be given by (a)
personal delivery (effective upon delivery); (b) facsimile (effective on the
next day after transmission); (c) recognized overnight delivery service
(effective on the next day after delivery to the service); or (d) registered
or
certified mail, return receipt requested and postage prepaid (effective on
the
third day after being so mailed), in each case addressed to the intended
recipient as set forth below:
If
to
Platinum or Buyer:
Platinum
Energy Resources, Inc.
▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
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Facsimile:
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With
a
copy to:
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Cummis ▇▇▇▇▇▇▇ & ▇▇▇▇▇ P.C.
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Attention:
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Facsimile:
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If
to
Seller:
Tandem
Energy Corporation
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▇▇▇▇▇▇▇,
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Attention:
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Facsimile:
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-49-
With
a
copy to:
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▇▇▇▇▇ & ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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Attention:
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Facsimile:
214-691-2501
Any
party
may change his or its address for receiving notices by giving written notice
of
such change to the other parties in accordance with this Section
9.05.
9.06 Injunctive
Relief.
The
parties hereto acknowledge and agree that irreparable damage would occur in
the
event any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement, and shall be entitled to enforce
specifically the provisions of this Agreement, in any court of the United States
or any state thereof having jurisdiction, in addition to any other remedy to
which the parties may be entitled under this Agreement or at law or in
equity.
9.07 DTPA
Waiver.
To the
extent applicable to the transaction contemplated hereby, each of Platinum
and
Buyer waives the provisions of the Texas Deceptive Trade Practices Act, Chapter
17, Subchapter E, Sections 17.41 through 17.63, inclusive, Texas Bus. & Com.
Code. Notwithstanding the foregoing, the parties hereto agree that such waiver
shall not in any way modify, limit, reduce or otherwise impact the obiligations
of the Control Persons pursuant to Section 8.02 of this Agreement.
9.08 Descriptive
Headings.
The
descriptive headings herein are inserted for convenience of reference only
and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.
9.09 Counterparts.
This
Agreement may be executed by the parties hereto in any number of counterparts,
each of which shall be deemed an original, but all of which shall constitute
one
and the same agreement. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all, the parties
hereto.
14.6
9.10 Descriptive
Headings.
The
descriptive headings herein are inserted for convenience of reference only,
do
not constitute a part of this Agreement and shall not affect in any manner
the
meaning or interpretation of this Agreement.
9.11 Gender.
Pronouns in masculine, feminine and neuter genders shall be construed to include
any other gender, and words in the singular form shall be construed to include
the plural and vice versa, unless the context otherwise requires.
9.12 References.
All
references in this Agreement to Articles, Sections and other subdivisions refer
to the Articles, Sections and other subdivision of this Agreement unless
expressly
provided otherwise. The words “this Agreement”, “herein”, “hereof”, “hereby”,
“hereunder” and words of similar import refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. Whenever the
words “include”, “includes” and “including” are used in this Agreement, such
words shall be deemed to be followed by the words “without limitation”. Each
reference herein to a Schedule or Exhibit refers to the item identified
separately in writing by the parties hereto as the described Schedule or Exhibit
to this Agreement. All Schedules, Annexes and Exhibits are hereby incorporated
in and made a part of this Agreement as if set forth in full
herein.
-50-
9.13 United
States Dollars.
Unless
expressly indicated otherwise, all dollar amounts in this Agreement and the
Schedules and Exhibits hereto are expressed in United States
dollars.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
-51-
Signatures
To
evidence the binding effect of the foregoing terms and condition, the parties
have caused their respective duly authorized representative to execute and
deliver this Agreement on the date first above written.
| Seller: | ||
| TANDEM ENERGY CORPORATION | ||
| |
|
|
| By: | /s/ ▇▇▇ ▇. ▇▇▇▇ | |
|
▇▇▇ ▇. ▇▇▇▇ |
||
| President | ||
| Platinum: | ||
| PLATINUM ENERGY RESOURCES, INC. | ||
| |
|
|
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
|
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, |
||
| Chairman | ||
|
Buyer:
|
||
|
PER
ACQUISITION CORP.
|
||
| |
|
|
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |
|
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ |
||
| President | ||
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CONTROL
PERSON AGREEMENT
The
following persons hereby acknowledge that (i) they are the Control Persons
defined in the foregoing Asset Acquisition Agreement and Plan of Reorganization,
and (ii) they are executing and delivering this Control Person Agreement in
their individual capacities to evidence their agreement to be bound by the
provisions of Section 8.02 of the Asset Acquisition Agreement and Plan of
Reorganization, but not otherwise.
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| By: | /s/ ▇▇▇ ▇. ▇▇▇▇ | |
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▇▇▇ ▇. ▇▇▇▇ |
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| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
||
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| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ | |
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ |
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| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |
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▇▇▇▇ ▇. ▇▇▇▇▇▇ |
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