Merger of
BPZ ENERGY INC.
Into
NAVIDEC MERGER CORP.
A wholly owned subsidiary of
NAVIDEC, INC.
Dated July __, 2004
MERGER AGREEMENT
MERGER AGREEMENT (this "Agreement"), dated as of July __, 2004, by and
among Navidec, Inc., a Colorado corporation ("Navidec"), Navidec Merger Corp., a
Colorado transitory corporation ("Merger Corp."), and BPZ Energy, Inc., a Texas
corporation ("BPZ"). Each of Navidec, Merger Corp. and BPZ is sometimes referred
to herein as a "Party" and together, as the "Parties."
W I T N E S S E T H :
WHEREAS, the shareholders of BPZ, listed on Schedule A ("BPZ
Shareholders"), hold all of the issued and outstanding shares of BPZ common
stock, no par value per share (the "BPZ Common Stock"); and
WHEREAS, Navidec is subject to the reporting requirements of Sections 13(a)
and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and shares of Navidec common stock, no par value per share (the "Navidec
Common Stock"), are listed on the NASD OTC Electronic Bulletin Board; and
WHEREAS, pursuant to this Agreement, Merger Corp. will merge with and into
BPZ on the terms and subject to the conditions set forth herein (the "Merger")
and, in connection therewith, and subject to the satisfaction of certain
conditions, up to 27,000,000 shares of Navidec Common Stock shall be issued to
BPZ in accordance with Schedule A and in the manner set forth in Article II
hereof and upon the terms and conditions otherwise set forth in this Agreement
in order that BPZ shall be the surviving entity and shall be a wholly-owned
subsidiary of Navidec, and BPZ shall own 71% of the issued and outstanding
shares of Navidec Common Stock and the name of the Company shall be changed to
BPZ Energy, Inc. and,
WHEREAS, the respective Boards of Directors of the Parties have adopted
resolutions approving this Agreement and declaring its advisability;
WHEREAS, for federal income tax purposes, the Merger is intended to qualify
as a tax-free reorganization in accordance with the provisions of Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Parties do hereby agree, subject to the
terms and conditions hereinafter set forth, as follows:
Article I
THE MERGER
----------
1.1 Consummation of the Merger. Unless this Agreement has been terminated
and the transactions contemplated have been abandoned pursuant to Section 9.1,
and subject to the satisfaction or waiver of the conditions set forth in Article
V, the consummation of the Merger (the "Closing") shall take place in accordance
with the applicable provisions of the Colorado Business Corporations Act (the
"CBCA") at 10:00 a.m. on the second business day after satisfaction or waiver of
the conditions set forth in Article V (other than those to be satisfied at or as
of the date of the Closing) at the Denver offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, LLP, unless another date, time or place is agreed to by the Parties
(the "Closing Date") at which time Merger Corp. will merge with and into BPZ,
and BPZ shall be the surviving entity and become a wholly-owned subsidiary of
Navidec. BPZ shall file a Certificate of Merger in the State of Texas and the
State of Colorado, and BPZ shall be the surviving corporation (the "Surviving
Corporation").
1.2 Subsequent Actions. If, at any time after the Closing Date, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm the Surviving Corporation's right, title
or interest in, to or under any of the rights, properties, privileges,
franchises or assets of either of its constituent corporations acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger, or otherwise to carry out the intent of this Agreement, the officers and
directors of the Surviving Corporation shall be authorized to execute and
deliver, in the name and on behalf of the Parties, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each such corporation, all such other actions and things as may be necessary
or desirable to vest, perfect or confirm any and all right, title and interest
in, to and under such rights, properties, privileges, franchises or assets in
the Surviving Corporation or otherwise to carry out the intent of this
Agreement.
1.3 Surviving Corporation: Certificate of Incorporation; By-laws; Officers
and Directors. Unless otherwise agreed to by the Parties prior to the Closing,
on the Closing Date:
(a) the certificate of incorporation of Surviving Corporation as in
effect immediately prior to the Closing (a true and correct copy of which is
attached hereto as Schedule 1.3(a)) shall be, at and after the Closing Date, the
certificate of incorporation of Surviving Corporation (the "Certificate of
Incorporation") until further altered, amended or repealed in accordance with
the this Agreement or applicable law;
(b) the by-laws of Surviving Corporation as in effect immediately
prior to the Closing (a true and correct copy of which is attached hereto as
Schedule 1.3(b)) shall be, at and after the Closing Date, the by-laws of
Surviving Corporation until further altered, amended or repealed in accordance
with this Agreement, such by-laws or applicable law; and
(c) the officers and directors of Surviving Corporation and Navidec
from and after the Closing shall be the Persons set forth on Schedule 1.3(c),
until their successors are elected or appointed and qualified or until their
earlier resignation or removal.
Article II
CAPITAL STOCK
-------------
2.1 Treatment of Capital Stock. The manner and basis of converting shares
of BPZ Common Stock for shares of common stock, no par value per share, of
Navidec by virtue of the Merger and without any action on the part of the
Parties or any holder thereof, shall be as set forth in this Article II. At or
before Closing, all shares of BPZ Preferred Stock shall convert to BPZ Common
Stock.
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2.2 Conversion of BPZ Common Stock. At the Closing, the BPZ Common Stock,
shall be converted into 9,000,000 shares of validly issued, fully paid and
nonassessable shares of Navidec Common Stock (the "BPZ Converted Shares") in
exchange for all of the BPZ Common Stock issued and outstanding. Immediately
subsequent to the Closing Date, Navidec shall file a proxy statement with the
Securities and Exchange Commission to seek shareholder approval to amend the
Navidec Articles of Incorporation to change the name of Navidec to BPZ Energy,
Inc. and to increase the number of shares of Navidec Common Stock authorized for
issuance to 100,000,000 shares. To provide capital to satisfy the requirements
of Section 2.5. Except as otherwise provided herein, commencing immediately
after the Closing, each certificate (a "BPZ Certificate") which, immediately
prior to the Closing, represents all or a portion of the BPZ Common Stock shall
evidence the right to receive a proportionate share of the BPZ Converted Shares
on the basis set forth in this Section 2.2 and dividends or distributions, if
any, pursuant to Section 2.4 hereof.
2.3 Conversion of Merger Corp. Common Stock. At the Closing, each share of
Merger Corp. Common Stock issued and outstanding immediately prior to the
Closing, and all rights in respect thereof, shall forthwith cease to exist and
shall be converted into one validly issued, fully paid and nonassessable share
of common stock of BPZ.
2.4 Exchange Procedures. On the Closing Date, BPZ shall surrender to
Navidec one or more BPZ Certificates representing the BPZ Common Stock, together
with a duly executed and completed letter of transmittal and all other documents
and materials reasonably required by Navidec to be delivered in connection
therewith, and shall be entitled to receive a certificate or certificates
representing the BPZ Converted Shares into which the shares of BPZ Common Stock
which immediately prior to the Closing were represented by such surrendered BPZ
Certificate or Certificates shall have been converted pursuant to the provisions
of Section 2.2. Unless and until a BPZ Certificate is so surrendered, no
dividend or other distribution, if any, payable to the holders of record of
shares of Navidec Common Stock as of any date subsequent to the Closing Date
shall be paid to the holder of such BPZ Certificate in respect thereof or in
respect of the Navidec Common Stock into which such BPZ Certificate is
exchangeable. Except as otherwise provided herein, upon the surrender of a BPZ
Certificate, the record holder of the certificate or certificates representing
shares of Navidec Common Stock issued in exchange therefor shall be entitled to
receive (i) at the time of surrender, the amount of any dividends or other
distributions (net of any applicable tax withholdings) having a record date
after the Closing Date and a payment date prior to the surrender date, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
(net of any applicable tax withholdings) having a record date after the Closing
Date and a payment date subsequent to the surrender date, in each case, payable
in respect of such shares of Navidec Common Stock. No interest shall be payable
in respect of the payment of dividends or distributions pursuant to the
immediately preceding sentence.
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2.5 Earn-Out Provisions.
(a) Notwithstanding anything in this Agreement to the contrary,
promptly following the date (which date shall be no later than 24 months from
the Closing Date) that the Surviving Corporation (or any successor thereto)
receives confirmation from a licensed petroleum engineer that it owns proven
reserves totaling greater than fifty billion cubic feet (bcfe) of natural gas or
its equivalent in crude oil or any combination thereof as barrels of oil
equivalent (boe), such date being referred to herein as an "Earn-Out Achievement
Date", the BPZ Shareholders shall be entitled to and shall receive an additional
9,000,000 shares of validly issued, fully paid and non-assessable Navidec Common
Stock (the "First BPZ Earn-Out Shares"), as set forth on Schedule A, and the BPZ
Shareholders shall in addition be entitled to receive, with respect to the First
BPZ Earn-Out Shares, the amount of any dividends or other distributions (net of
any applicable tax withholdings) having a record date after the Earn-Out
Achievement Date, payable in respect of such shares of Navidec Common Stock.
Notwithstanding anything in this Agreement to the contrary, if at any Earn-Out
Achievement Date the Articles of Incorporation of Navidec have not been amended
to accommodate the delivery of the BPZ Earn-Out Shares, the BPZ Earn-Out Shares
shall be deemed issued and shall be delivered as soon as necessary corporate
action has been taken to amend such Articles of Incorporation to increase the
authorized capital as required by Section 8.5 of this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
promptly following the date (which date shall be no later than 36 months from
the first Earn Out Achievement Date as set forth in (a) above) that the
Surviving Corporation (or any successor thereto) is entitled to receive as its
proportionate share from gross production from any oil and gas ▇▇▇▇▇ owned or
operated by BPZ not less than 2,000 barrels of oil per day or the energy
equivalent thereof should said production be a mixture of both oil and natural
gas ("BOEPD") (the "Second Earn-Out Achievement Date"), the BPZ Shareholders
shall be entitled to and shall receive 9,000,000 additional shares of validly
issued, fully paid and non-assessable Navidec Common Stock (the "Second BPZ
Earn-Out Shares," and collectively or independently with the First BPZ Earn-Out
Shares, the "BPZ Earn-Out Shares"). In addition to the Second BPZ Earn-Out
Shares, the BPZ Shareholders shall be entitled to receive with respect to the
Second BPZ Earn-Out Shares, the amount of any dividends or other distributions
(net of any applicable tax withholdings) having a record date after the Second
Earn-Out Achievement Date, payable in respect of such shares of Navidec Common
Stock.
2.6 Federal Income Tax Treatment. It is the intent of the Parties that the
Merger contemplated hereby be treated for federal income tax purposes as a
tax-free merger pursuant to Section 368(a)(2)(E) of the Internal Revenue Code of
1986, as amended (the "IRC"). The Parties shall report the transactions under
this Agreement consistent with such treatment, shall keep such records and file
such information with respect thereto as is required by Treasury Regulation
1.368-3 and shall take no position that is contrary thereto except pursuant to
an administrative finding upon the appeal of a 30-day letter or unless required
to do so pursuant to a determination as defined in IRC Section 1313(a).
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Article III
REPRESENTATIONS AND WARRANTIES
------------------------------
3.1 Representations and Warranties of Navidec and Merger Corp. Except as
set forth in the Navidec disclosure schedule delivered by Navidec to BPZ prior
to the execution of this Agreement (the "Navidec Disclosure Schedule") (each
section of which qualifies the correspondingly numbered representation and
warranty or covenant and any other representation of warranty, if the disclosure
set forth in the Navidec Disclosure Schedule is reasonably apparent to such
other representation or warranty), Navidec and Merger Corp. represent and
warrant to BPZ, as follows:
(a) Power and Authority. Navidec and Merger Corp. have the corporate
power and authority to enter into this Agreement and to carry out its and their
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Boards of Directors of Navidec and Merger Corp., and no other corporate
proceedings on the part of Navidec or Merger Corp. is necessary or advisable to
authorize this Agreement and the transactions contemplated hereby.
(b) No Material Adverse Effect. Since March 31, 2004, there has not
been any material adverse change in the business, operations, properties,
assets, condition, financial or otherwise, of Navidec.
(c) Due Organization; Power; Qualification; Subsidiaries and
Affiliates, Etc.
(i) Navidec is a corporation duly organized, validly
existing, and in good standing under the laws of the state of its
incorporation and has the corporate power to own its property and to
carry on its business as now conducted. Navidec is not qualified to do
business as a foreign corporation in any jurisdiction.
(ii) Navidec has three subsidiaries namely Merger Corp.,
Navidec Financial Services, Inc. ("Navidec Financial") and Northsight
Mortgage Corporation ("Northsight"). Navidec has no other subsidiaries
or affiliates, as that term is used in the regulations promulgated
under the Securities Act of 1933, as amended (the "Securities Act").
Prior to the closing date, Northsight will become a subsidiary of
Navidec Financial.
(d) Capitalization.
(i) As of the date of this Agreement, the total authorized
capital stock of Navidec consists of 20,000,000 shares of Navidec
Common Stock. As of the Closing Date except as described in Section
3.1(d)(ii) below, 5,000,000 shares will be outstanding and/or reserved
for to permit the exercise of any vested and unexpired options which
may be outstanding at closing and as set forth on Schedule 3.1(d)(I).
If subsequent to closing any options are exercised in accordance with
their terms as set forth on Schedule 3.1(d)(c) any funds received as
proceeds of such exercises shall be payable by Navidec to Navidec
Financial. Between the date of this Agreement and the Closing Date the
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management of Navidec may take whatever actions it deems appropriate
to grant or amend stock or stock option grants to its management and
employees so long as the combined fully diluted number of shares that
are issued and outstanding or reserved for does not exceed 5,000,000
shares at the Closing Date.
(ii) Immediately upon execution of this Agreement, Navidec
with the assistance of BPZ shall commence a private placement of
Navidec Common Shares to raise up to $6 million on a best efforts all
or none $3 million minimum; best efforts $6 million maximum basis. No
more than 6,000,000 Navidec Common Shares will be issued in this
offering and to the extent that the minimum has been reached and
Closing has occurred, the balance of the shares reserved for the
private placement may continue to be offered until the maximum has
been achieved.
(iii) Other than 564,500 "A" Stock Purchase Warrants
exercisable into shares of Navidec Common Stock at an exercise price
of $2.00 per share, expiring on August 31, 2005, and 564,500 "B" Stock
Purchase Warrants exercisable into shares of Navidec Common Stock at
an exercise price of $4.00 per share, expiring on August 31, 2005
(collectively, the "Warrants"), there are no present and on the
Closing Date there will be no outstanding subscriptions, options,
warrants, contracts, calls, puts, agreements, demands or other
commitments or rights of any type to purchase or acquire any
securities of Navidec (other than the Warrants), nor are there
outstanding securities or debt instruments of Navidec which are
convertible into or exchangeable for any shares of capital stock of
Navidec, and, other than may be required in connection with this
agreement, Navidec presently has and as of the Closing Date will have
no obligations of any kind to issue any additional securities.
(iv) As contemplated, the Parties agree that prior to
Closing, Navidec shall establish a record date to spin out the shares
of Navidec Financial owned by Navidec to all shareholders of record of
Navidec at the record date. The Parties believe that this transaction
may require registration. Furthermore, the Parties agree that at or
before Closing, in addition to assigning the Navidec ownership of
Northsight to Navidec Financial, all other assets and liabilities of
Navidec shall be assigned to Navidec Financial. It is contemplated by
the parties to this Agreement that at the effective date of the
completion of all transactions contemplated by this Agreement
including the finalization of the spin-off of Navidec Financial,
effectively Navidec, as of the Closing Date, would have no assets, no
liabilities and no effective business other than the businesses of
BPZ.
(e) Securities Filings; Financial Information; No Material Adverse
Change.
(i) The common stock of Navidec is listed on the NASD OTC
Electronic Bulletin Board. Navidec has filed its annual report on Form
10-K for the year ended December 31, 2003 and its quarterly report on
Form 10-QSB for the period ended March 31, 2004 (the "Navidec Periodic
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Reports") with the SEC. The Navidec Periodic Reports were true,
correct and accurate as of the date of filing and do not contain any
untrue statement of material fact or omit to state a material fact
required to be stated therein in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(ii) The Navidec Periodic Reports include Navidec's audited
balance sheets and income statements for the fiscal years ended
December 31, 2002 and December 31, 2003, and unaudited financial
information for March 31, 2003 and 2004 (collectively, the "Financial
Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles, do not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and fairly present in all material
respects, the financial condition of Navidec as at the respective
dates thereof, and the results of operation of Navidec for the periods
then ended.
(iii) At March 31, 2004, there were no liabilities, absolute
or contingent of Navidec that were not shown or reserved against on
the balance sheets included in the Financial Statements, except
obligations under the contracts shown on or as otherwise disclosed in
Schedule 3.1(e) of the Navidec Disclosure Schedule. As of the Closing
Date, Navidec shall have no assets or liabilities of any kind, whether
known or unknown, accrued, absolute, contingent or otherwise.
(iv) Since March 31, 2004, Navidec has not sold or otherwise
disposed of or encumbered any of the properties or assets reflected on
the Financial Statements, or other assets owned or leased by it,
except in the ordinary course of business, or as otherwise disclosed
on Schedule 3.1(e) of the Navidec Disclosure Schedule.
(f) Tax Matters.
(i) Navidec has filed or caused to be filed with the
appropriate federal, state, county, local and foreign governmental
agencies or instrumentalities all material tax returns and reports
required to be filed, and all taxes, assessments, fees and other
governmental charges have been fully paid when due (subject to any
extensions filed on a timely basis).
(ii) There is not pending nor, to the knowledge of Navidec,
is there any threatened federal, state or local tax audit of Navidec.
There is no agreement with any federal, state or local taxing
authority by Navidec that may affect the subsequent tax liabilities of
Navidec.
(iii) Without limiting the foregoing: (A) the Financial
Statements include adequate provisions for all taxes, assessments,
fees, penalties and governmental charges which have been or in the
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future may be assessed against Navidec with respect to the period then
ended and all periods prior thereto; and (B) on the date hereof,
Navidec is not liable for any taxes, assessments, fees or governmental
charges.
(g) No Conflict or Default; Enforceability; Corporate Records;
Compliance with Law. Neither the execution and delivery of this Agreement, nor
compliance with the terms and provisions hereof, including without limitation
the consummation of the transactions contemplated hereby, will violate any
statute, regulation or ordinance of any governmental authority, or conflict with
or result in the material breach of any term, condition or provision of the
articles of incorporation, by-laws or other charter documents of Navidec or
Merger Corp., nor of any agreement, deed, contract, mortgage, indenture, writ,
order, decree, legal obligation or instrument to which Navidec or Merger Corp.
is a party or by which Navidec, Merger Corp. or any of its or their assets or
properties is or may be bound; or constitute a material default (or an event
which, with the lapse of time or the giving of notice, or both, would constitute
a material default) thereunder, nor result in the creation or imposition or any
lien, charge or encumbrance, or restriction of any nature whatsoever with
respect to any properties or assets of Navidec or Merger Corp., nor give to
others any interest or rights, including rights of termination, acceleration or
cancellation in or with respect to any of the properties, assets, contracts or
business of Navidec or Merger Corp. This Agreement and all other agreements and
documents delivered by Navidec and Merger Corp. in connection herewith have been
duly executed and delivered by Navidec and Merger Corp. and constitute the
binding obligations of Navidec and Merger Corp. enforceable in accordance with
their respective terms. Navidec and Merger Corp. have permitted, or will permit,
BPZ to examine their respective corporate minute and stock records books. The
corporate minute books contain the articles of incorporation, by-laws and other
charter documents of Navidec and Merger Corp. as in effect on the date hereof
and a true and complete record of all actions by and meetings of the directors
(and committees thereof) and stockholders of Navidec and Merger Corp. and
accurately reflect all transactions referred to therein. To their knowledge,
neither Navidec nor Merger Corp. are in violation of any outstanding arbitration
award, judgment, order or decree; or to their knowledge, in violation of any
material statute, regulation or ordinance ("Law"), including, but not limited
to, any antidiscrimination, hazardous and toxic substances, wage, hour, working
condition, payroll withholding, pension, building, zoning and tax Law. To their
knowledge, there have been no allegations of or inquiries concerning any
material violations of Law by Navidec or Merger Corp. within the past three
years.
(h) Litigation. Except as disclosed in the Navidec Periodic Reports,
or in Schedule 3.1(h) there are no actions, suits, investigations, or
proceedings pending, nor, to the knowledge of Navidec, threatened against
Navidec or Merger Corp., the performance of the terms and conditions hereof, or
the consummation of the transactions contemplated hereby, in any court or by or
before any governmental body or agency, including without limitation any claim,
proceeding or litigation for the purpose of challenging, enjoining or preventing
the execution, delivery or consummation of this Agreement. Neither Navidec nor
Merger Corp. is subject to any order, judgment, decree, stipulation or consent
or any agreement with any governmental body or agency. As of the Closing Date,
neither Navidec nor Merger Corp. shall be party to any action, suit or
proceeding of any kind.
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(i) Governmental and Other Approval. Navidec and Merger Corp each have
all material permits, licenses, orders and approvals of all federal, state,
local or foreign governmental or regulatory bodies required for Navidec and
Merger Corp. to conduct its or their business as presently conducted. All such
permits, licenses, orders and approvals are in full force and effect and no
suspension or cancellation of any of them is threatened, except as would not
reasonably be expected to have a material adverse effect on Navidec or Merger
Corp., and none of such permits, licenses, orders or approvals will be affected
by the consummation of the transactions contemplated by this Agreement. No
approval or authorization of or filing with any governmental authority or any
other person or entity on the part of Navidec or Merger Corp. is required as a
condition to the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby other than the filing of any documents
contemplated by this Agreement.
(j) Salaries. Schedule 3.1(j) of the Navidec Disclosure Schedule sets
forth a complete list of all of the persons who are employed by Navidec and
Merger Corp. as of the date of this Agreement, together with their compensation
(including bonuses) for the calendar year ended December 31, 2003, and the rate
of compensation (including bonus arrangements) currently being paid to each such
employee. As of the Closing Date, all employees, agents and officers of Navidec
and Merger Corp. shall have resigned and provided Navidec and Merger Corp. with
general releases in form and substance satisfactory to BPZ.
(k) Accrued Compensation. Neither Navidec nor Merger Corp. has, nor
shall it on Closing, have any outstanding liability for payment of wages,
vacation pay (whether accrued or otherwise), salaries, bonuses, pensions or
contributions under any labor or employment contract, whether oral or written,
or by reason of any past practices with respect to such employees based upon or
accruing with respect to services of present or former employees of Navidec or
Merger Corp.
(l) Employee Benefit Plans. Neither Navidec nor Merger Corp. has,
maintains or contributes to and never has had, maintained or contributed to, any
pension plan, profit sharing plan or employee's savings plan, and neither is
otherwise subject to any applicable provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
(m) Material Contracts, Etc. Schedule 3.1(m) of the Navidec Disclosure
Schedule contains an accurate list of all material contracts, commitments,
leases, instruments, agreements, licenses or permits, written or oral, to which
Navidec or Merger Corp. is a party or by which it or its properties are bound
(including without limitation contracts with customers, joint venture or
partnership agreements, contracts with any labor organizations, employment
agreements, consulting agreements, loan agreements, indemnity or guaranty
agreements, BPZ's, mortgages, options to purchase land, liens, pledges or other
security agreements). As of the Closing Date, Navidec and Merger Corp. shall
have terminated and been released from any and all contracts, commitments,
leases, instruments, agreements.
(n) The representation and warranties contained herein do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
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3.2 Representations and Warranties of BPZ. Except as set forth in the
disclosure schedule delivered by BPZ to Navidec prior to the execution of this
Agreement (the "BPZ Disclosure Schedule") (each section of which qualifies the
correspondingly numbered representation or warranty or covenant and any other
representation or warranty, if the disclosure set forth in the BPZ Disclosure
Schedule is readily applicable to such other representations or warranty), BPZ
represents and warrants to Navidec as follows:
(a) Power and Authority. BPZ has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of BPZ, and no other corporate proceedings on the part of BPZ are
necessary to authorize this Agreement and the transactions contemplated hereby.
(b) BPZ Financial Statements. BPZ has heretofore delivered to Navidec
BPZ's audited Balance Sheet and Income Statements for the fiscal years ended
December 31, 2001, December 31, 2002 and December 31, 2003 (collectively, the
"BPZ Financial Statements").
(c) Financial Information; No Material Adverse Effect.
(i) The BPZ Financial Statements have been prepared in
accordance with generally accepted accounting principles, do not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and fairly present in all material
respects, the financial condition of BPZ as at the respective dates
thereof, and the results of operation of BPZ for the periods then
ended.
(ii) Since December 31, 2003, there has been no material
adverse change in the business or financial condition or the
operations of BPZ except as set forth on Schedule 3.2(c) of the BPZ
Disclosure Schedule.
(iii) At December 31, 2003, there were no liabilities,
absolute or contingent of BPZ that were not shown or reserved against
on the balance sheets included in the BPZ Financial Statements, except
obligations under the contracts shown on or as otherwise disclosed in
Schedule 3.3(n) of the BPZ Disclosure Schedule.
(iv) Since December 31, 2003, BPZ has not sold or otherwise
disposed of or encumbered any of the properties or assets reflected on
the Financial Statements, or other assets owned or leased by it,
except in the ordinary course of business, or as otherwise disclosed
on Schedule 3.2(c) of the BPZ Disclosure Schedule.
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(d) Due Organization; Power; Qualification; Subsidiaries and
Affiliates, Etc.
(i) BPZ is a corporation duly organized, validly existing,
and in good standing under the laws of the state of Texas and has the
corporate power to own its property and to carry on its business as
now conducted.
(ii) Other than a registered Peruvian branch office with the
name "BPZ Energy, Inc. SUCURSAL Peru",and SMC Corporation, a Delaware
corporation with a registered branch in Ecuador which are wholly owned
by BPZ, BPZ has no subsidiaries or affiliates, as that term is used in
the regulations promulgated under the Securities Act.
(e) Capitalization.
(i) As of the date of this Agreement, the total authorized
capital stock of BPZ consists of 40,000,000 shares of common stock, no
par value per share, of which 26,320,000 shares are issued and
outstanding. Additionally, BPZ is authorized to issue 5,000,000 shares
of preferred stock, of which 905,000 shares are outstanding as Series
A 6% Callable Convertible Redeemable Preference Shares. All of the
outstanding BPZ Common Stock and Preferred Stock have been duly
authorized and validly issued, and are fully paid and non-assessable.
(ii) There are no present and on the Closing Date there will
be no outstanding options, warrants, convertible securities or rights
which may require BPZ to issue additional shares of its capital stock
other than as listed on Schedule 3.3(e) of the BPZ Disclosure
Schedule.
(f) Tax Matters.
(i) BPZ has filed or caused to be filed with the appropriate
federal, state, county, local and foreign governmental agencies or
instrumentalities all material tax returns and tax reports required to
be filed, and all taxes, assessments, fees and other governmental
charges have been fully paid when due (subject to any extensions filed
on a timely basis).
(ii) There is not pending nor, to the knowledge of BPZ, is
there any threatened federal, state or local tax audit of BPZ. There
is no agreement with any federal, state or local taxing authority by
BPZ that may affect the subsequent tax liabilities of BPZ.
(g) Title to BPZ Shares. The BPZ Shareholders have full right, title
and interest to all of the BPZ Common Shares as set forth on Schedule A, free
and clear of any lien, encumbrance or claim of any third party whatsoever
including statutory, regulatory or equitable claims. Assignment of the title to
the BPZ Common Shares will not violate any covenant, agreement or condition to
which the BPZ Shareholders are a Party in any way related to change of control
which could in anyway impact the validity of the assignment or the value of the
BPZ assets.
11
(h) No Conflict or Default; Enforceability; Corporate Records;
Compliance with Law. Neither the execution and delivery of this Agreement, nor
compliance with the terms and provisions hereof, including without limitation
the consummation of the transactions contemplated hereby, will violate any
statute, regulation or ordinance of any governmental authority, or conflict with
or result in the material breach of any term, condition or provision of the
articles of incorporation, by-laws or other charter documents of BPZ, nor of any
agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation or instrument to which BPZ is a party or by which BPZ or any of its
respective assets or properties are or may be bound; or constitute a material
default (or an event which, with the lapse of time or the giving of notice, or
both, would constitute a material default) thereunder, nor result in the
creation of imposition of any lien, charge or encumbrance, or restriction of any
nature whatsoever with respect to any properties or assets of BPZ, nor give to
others any interest of rights, including rights of termination, acceleration or
cancellation in or with respect to any of the properties, assets, contracts or
business of BPZ. This Agreement and each other agreement and document delivered
by BPZ in connection herewith have been duly executed and delivered and
constitute the binding obligations of BPZ enforceable in accordance with their
respective terms. BPZ has permitted, or will permit, Navidec to examine the
corporate minute and stock records books of BPZ. The corporate minute books
contain the articles of incorporation and by-laws and other charter documents of
BPZ as in effect on the date hereof and a true and complete record of all
actions by and meetings of the directors (and committees thereof) and the BPZ
Shareholders and accurately reflect all transactions referred to therein. BPZ is
not in violation of any outstanding arbitration award, judgment, order or
decree; or in violation of any applicable Law, including, but not limited to,
any antidiscrimination, hazardous and toxic substances, wage, hour, working
condition, payroll withholding, pension, building, zoning and tax Law. There
have been no allegations of or inquiries concerning any violations of law by BPZ
within the past three years.
(i) Party to Agreements. To its knowledge, BPZ is not in default in
any material respect under any contract or agreement to which BPZ is a party or
by which BPZ or any of its assets is or may be bound.
(j) Litigation. There are no actions, suits, investigations, or
proceedings pending, or, threatened, against BPZ or with respect to the
conveyance of clear title to BPZ shares, the BPZ shareholders, the performance
of the terms and conditions hereof, or the consummation of the transactions
contemplated hereby, in any court or by or before any governmental body or
agency, including without limitation any claim, proceeding or litigation for the
purpose of challenging, enjoining or preventing the execution, delivery or
consummation of this Agreement.
(k) Governmental and Other Approval. BPZ has all material permits,
licenses, orders and approvals of all federal, state, local or foreign
governmental or regulatory bodies required for them to conduct their respective
business as presently conducted. All such permits, licenses, orders and
approvals are in full force and effect and no suspension or cancellation of any
of them is threatened, except as would not reasonably be expected to have a
material adverse effect on BPZ, and none of such permits, licenses, orders or
approvals will be affected by the consummation of the transactions contemplated
by this Agreement. No approval or authorization of or filing with any
governmental authority or any other person or entity on the part of BPZ is
required as a condition to the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby other than the filing of
any documents contemplated by this Agreement.
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(l) Salaries. Schedule 3.3(k) of the BPZ Disclosure Schedule sets
forth a complete list of all of the persons who are employed by BPZ as of the
date of this Agreement, together with their compensation (including bonuses) for
the calendar year ended December 31, 2003, and the rate of compensation
(including bonus arrangements) currently being paid to each such employee.
(m) Accrued Compensation. BPZ does not have any outstanding liability
for payment of wages, vacation pay (whether accrued or otherwise), salaries,
bonuses, pensions or contributions under any labor or employment contract,
whether oral or written, or by reason of any past practices with respect to such
employees based upon or accruing with respect to services of present or former
employees of BPZ other than as disclosed on Schedule 3.3(l) of the BPZ
Disclosure Schedule.
(n) Employee Benefit Plans. BPZ does not have, maintain or contribute
to and never has had, maintained or contributed to, any pension plan, profit
sharing plan or employee's savings plan, and neither is otherwise subject to any
applicable provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
(o) Material Contracts, Etc. Schedule 3.3(n) of the BPZ Disclosure
Schedule contains an accurate list of all material contracts, commitments,
leases, instruments, agreements, licenses or permits, written or oral, to which
BPZ is a party or by which it or its properties are bound (including without
limitation contracts with customers, joint venture or partnership agreements,
contracts with any labor organizations, employment agreements, consulting
agreements, loan agreements, indemnity or guaranty agreements, BPZ's, mortgages,
options to purchase land, liens, pledges or other security agreements).
(p) Assets of BPZ. BPZ, via its Peruvian registered branch BPZ Energy,
Inc. SUCURSAL Peru, has exclusive contractual rights under the Peruvian
Hydrocarbon Regulations to (100%) of Areas VI and XVI, and Block XIX located in
Peru, and five percent (5%) of Block Z-1 plus the balance of interest of
ninety-five percent (95 %), which has been recently released by the former
operator and assigned to BPZ subject to appropriate amendment of the contract,
located in Peru (collectively the "BPZ Owned Peru Blocks"), in each instance
subject to an aggregate ten percent (10%) cost-free interest in the gross
revenues, net of royalties paid to the government, of the BPZ Owned Peru Blocks.
This overriding ten percent (10%) interest is separately owned by BPZ &
Associates, Inc., the predecessor organization that originally developed the
information and relationships that created the prospects and projects currently
owned by BPZ Energy, Inc. Legal descriptions of Areas VI and XVI, and Blocks XIX
and Z-1 are as set forth on Schedule 3.3(o) of the BPZ Disclosure Schedule. In
addition, BPZ's wholly owned subsidiary, SMC Ecuador, Inc., holds a ten percent
(10%) working interest in and to the oil and gas producing property known as the
Campo ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ oilfield of Ecuador.
13
(q) The representation and warranties contained herein do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Article IV
COVENANTS
4.1 Navidec Negative Covenants. Navidec agrees that, prior to the Closing
Date:
(a) No dividend shall be declared or paid or other distribution
(whether in cash, stock, property or any combination thereof) or payment
declared or made in respect of Navidec Common Stock, nor shall Navidec purchase,
acquire or redeem or split, combine or reclassify any shares of its capital
stock; provided, however, (subject to Section 3.1(d)), Navidec may affect a
dividend in respect of the Navidec Common Stock, payable in Navidec Common
Stock, and further, Navidec may effect the "spin-off" of Navidec Financial.
(b) Except pursuant to Section 3.1(d), no change shall be made in the
number of authorized or issued Navidec Common Stock nor shall any option,
warrant, call, right, commitment or agreement (other than this Agreement) of any
character be granted or made by Navidec relating to its authorized or issued
Navidec Common Stock; nor shall Navidec issue, grant or sell any securities or
obligations convertible into or exchangeable for Navidec Common Stock.
(c) Navidec will not take, agree to take, or knowingly permit to be
taken any action, nor do or knowingly permit to be done anything in the conduct
of the business of Navidec or otherwise, which would be contrary to or in breach
of any of the terms or provisions of this Agreement, or which would cause any of
Navidec's representations and warranties contained herein to be or become untrue
in any material respect at the Closing Date including without limitation
amending Navidec's charter documents and By-laws, except as otherwise provided
hereby.
(d) Navidec will not (i) incur any indebtedness for borrowed money;
(ii) assume, guarantee, endorse, or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
individual, firm or corporation; or (iii) make any loans, advances or capital
contributions to or investments in, any other individual, firm or corporation.
(e) Navidec will not make, alter or change any employment or other
contract with any of its management personnel or make, adopt, alter, revise, or
amend any pension, bonus, profit-sharing or other employee benefit plan, or
grant any salary increase or bonus to any person without the prior written
consent of BPZ.
4.2 Conduct of Business Pending the Merger. Prior to the effective date of
the Merger, unless each of the Parties hereto shall otherwise agree in writing,
none of Navidec, Merger Corp. or BPZ shall (i) operate its business otherwise
than in the ordinary course, or (ii) authorize, recommend or propose any merger,
consolidation, acquisition of assets, disposition of assets, material change in
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its capitalization or any comparable event, not in the ordinary course of
business or in furtherance of the transactions contemplated hereby (in each
case, other than the transactions contemplated hereby and transactions as to
which written notice has been given to the other companies prior to the date
hereof).
Article V
CERTAIN COVENANTS
5.1 General. Each of the Parties shall use its reasonable best efforts to
take all action and to do all things necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the conditions set forth in Article
V below).
5.2 Navidec Financial. Navidec shall take all steps necessary to effect the
"spin-off" of its wholly owned subsidiary, Navidec Financial to the shareholders
of Navidec as of any record date preceding the Closing. Prior to the spin-off,
Navidec Financial shall be assigned essentially all of the business assets
including two million shares of duly issued fully paid Navidec common stock and
all of the liabilities of Navidec and agree to indemnify Navidec from any
liability relating to the assigned liabilities. Additionally, Navidec
Financial's management shall take the steps deemed necessary at its expense to
qualify the spin-off pursuant to the Securities Act as is required. To the
extent that the actions required to complete the spin-off of Navidec Financial
are not completed prior to the date of Closing, the Parties hereto agree in
accordance with Section 1.2 to cooperate fully with the new management of
Navidec Financial to complete all necessary filings, registrations, and the
execution of all agreements required to consummate the transactions contemplated
and necessary relative to the spin-off.
5.3 Directors. At Closing, all existing directors of Navidec and Merger
Corp. shall resign except ▇▇▇▇ ▇▇▇▇▇▇▇. ▇▇. ▇▇▇▇▇▇▇ shall then appoint a slate
of directors as set forth on Schedule 1.3(c). Navidec shall file any reports
required to be filed with the SEC as a result of the resignation and appointment
of directors, if any, and BPZ shall provide information reasonably requested by
Navidec in connection therewith.
5.4 Leak Out/Voting Agreements. At Closing, Navidec shall deliver to BPZ
leak out and voting agreements executed by each of the Navidec shareholders
identified on Schedule 5.4 (collectively, the "Leak Out Agreements"). The form
of such Leak Out and Voting Agreements shall be prepared by or on behalf of BPZ
and subject to the approval of Navidec, which approval shall not be unreasonably
withheld, delayed or conditioned. The Voting Agreements shall provide, among
other things for the Navidec shareholders identified on Schedule 5.4 to vote
their Navidec Common Stock favorably on all matters relating to consummate the
transactions contemplated hereby for a period of not less than 1 year or such
shorter period the shareholders own the stock subject to this Agreement.
5.5 Disclosure. Each of the Parties hereto acknowledges that it has, and
will have, possession of important confidential information ("Confidential
Information") regarding the other Parties. Each of the Parties hereto agrees
that it shall not use any confidential information except in furtherance of the
transactions contemplated hereby and shall not divulge, communicate, furnish or
15
make accessible any Confidential Information to any person, firm, partnership,
corporation or other entity. No party hereto shall make any public statement
from the date of this Agreement through the Closing Date, including without
limitation any press release, with respect to this Agreement and the
transactions contemplated hereby, without the prior written consent of the other
Parties (which consent may not be unreasonably withheld), except as may be
required by law, in which case the Parties shall consult with each other as to
the nature and scope of the required disclosure and any protective measures
which should be taken to preserve the confidentiality of the disclosed
information. If any party becomes legally compelled to disclose information
relating to this Agreement, such party shall provide the other Parties with
notice of such requirement to allow such party to seek a protective order or
other remedy. If such protective order or other remedy is not obtained, or if
compliance hereof is waived, each party agrees to disclose only that portion of
information which is legally required to be disclosed and to permit the other
Parties at their expense to take all reasonable steps to preserve the
confidentiality of the transactions hereunder.
5.6 Recommendation of Approval. The Board of Directors of Navidec shall
continue to approve this Agreement and the transactions contemplated hereby
except as the fiduciary obligations and other duties of such Board of Directors
may otherwise require.
5.7 Access. Prior to the Closing, BPZ shall afford to the officers,
attorneys, accountants, and other authorized representatives of Navidec free and
full access to the premises, books and records of BPZ, respectively, in order
that Navidec may make such investigation as it may desire of the affairs of BPZ,
provided such access is not unreasonably disruptive to BPZ's business. Prior to
the Closing, Navidec shall afford to the officers, attorneys, accountants, and
other authorized representatives of BPZ free and full access to the premises,
books and records of Navidec so that it may make such investigations as it may
desire of the affairs of Navidec, provided such access is not unreasonably
disruptive to Navidec. Notwithstanding the foregoing, the Parties hereto
acknowledge that BPZ is actively in the process of negotiating to acquire
certain oil producing properties and that such transactions may necessarily
involve the acquisition of the entities holding such properties.
5.8 No Solicitation. Subject to its fiduciary obligations, prior to
Closing, Navidec and BPZ will not, nor will they permit any agent or affiliate
to, solicit, initiate or encourage any Acquisition Proposal (as hereinafter
defined) or furnish any information to, or cooperate with, any person,
corporation, firm or other entity with respect to an Acquisition Proposal. As
used herein "Acquisition Proposal" means a proposal for a merger or other
business combination involving such entity or for the acquisition of a
substantial equity interest in, or a substantial portion of the assets of such
entity other than the Merger.
5.9 Notice of Developments. Navidec and BPZ shall give prompt written
notice to the other of any development causing a breach of any of its own
representations and warranties in Article III. No disclosure by Navidec, Merger
Corp. or BPZ pursuant to this Section 5.9, however, shall be deemed to amend or
supplement the Disclosure Schedule of the relevant party or to prevent or to
cure any misrepresentation or breach of representation or warranty.
16
Article VI
CONDITIONS
6.1 Conditions to the Obligations of Navidec. The obligations of Navidec to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or before the consummation of the transactions contemplated
hereby of each of the following conditions:
(a) No action shall have been taken, and no statute, rule, regulation
or order shall have been promulgated, enacted, entered, enforced or deemed
applicable to the transactions contemplated hereby by any federal, state or
foreign government or governmental authority or by any court, domestic or
foreign, including entry of a preliminary or permanent injunction, which would
(i) make the transactions contemplated hereby illegal, (ii) adversely affect BPZ
or BPZ's right to own its assets or operate its business, or (iii) if the
transactions contemplated hereby are consummated, subject any officer, director,
or employee of Navidec to criminal penalties or to civil liabilities not
adequately covered by insurance or enforceable indemnification maintained by
Navidec;
(b) No action or proceeding before any court or governmental
authority, domestic or foreign, by any government or governmental authority or
by any other person, domestic or foreign, shall be threatened, instituted or
pending which would (i) reasonably be expected to result in any way of the
consequences referred to in clauses (i) through (iii) of paragraph (a) above, or
(ii) relate to any person asserting a claim that (A) he, she or it is the holder
or the beneficial owner of, or has the right to acquire or to obtain beneficial
ownership of, any stock of, or any other voting, equity, or ownership interest
in, BPZ, or (B) is entitled to all or any portion of the Navidec Common Stock;
(c) BPZ shall have complied in all material respects with the
agreements and covenants herein, and all representations and warranties of BPZ
herein shall be true and correct in all material respects at the time of Closing
as if made at that time, except to the extent they expressly relate to an
earlier date, and Navidec shall have received a certificate to that effect to
the best of the knowledge of BPZ, signed by the President of BPZ;
(d) BPZ shall have acquired title to or licenses or leases related to
the right to drill for oil and gas on the properties listed on Schedule 6.1(d).
Furthermore, Navidec shall receive comfort that the borrowed funds utilized to
acquire the rights described in this Section 6.1(d) are issued through
facilities that at Closing are not in default and all covenants are at that date
in good standing;
(e) Navidec and BPZ shall together make arrangements for Navidec to
receive debt or equity financing in one or more transactions to close at or
prior to Closing, in an amount not less than $3 million, upon such terms and
conditions as are acceptable to Navidec and BPZ (the "Financing"). The proceeds
of the Financing will be held in escrow by Navidec and will be released
immediately after Closing to be used by Navidec for working capital and general
corporate purposes.
17
(f) A Good Standing Certificate of BPZ, dated no more than 10 days
prior to the Closing Date, from the Secretary of State of Texas;
(g) The shareholders of BPZ shall have delivered to Navidec, one or
more Certificates representing the BPZ Common Stock, together with a duly
executed and completed letter of transmittal and all other documents and
materials reasonably required by Navidec to be delivered in connection
therewith; and
6.2 Conditions to the Obligations of BPZ. The obligations of BPZ to
consummate the transactions contemplated hereby are subject to the satisfaction
or waiver, at or before the consummation of the transactions contemplated
hereby, of each of the following conditions:
(a) No action shall have been taken, and no statute, rule, regulation
or order shall have been promulgated, enacted, entered, enforced or deemed
applicable to the transactions contemplated hereby by any federal, state or
foreign government or governmental authority or by any court, domestic or
foreign, including the entry of a preliminary or permanent injunction, which
would (i) make the transactions contemplated hereby illegal, or (ii) if the
transactions contemplated hereby are consummated, subject any officer, director
or employee of BPZ to criminal penalties or to civil liabilities not adequately
covered by insurance or enforceable indemnification maintained by Navidec;
(b) No action or proceeding before any court or governmental
authority, domestic or foreign, by any government or governmental authority or
by any other person, domestic or foreign, shall be threatened, instituted or
pending which would reasonably be expected to result in any of the consequences
referred to in clauses (i) or (ii) of paragraph (a) above;
(c) Navidec shall have complied in all material respects with its
agreements and covenants herein, and all representations and warranties of
Navidec and Merger Corp. herein shall be true and correct in all material
respects at the time of Closing as if made at that time, except to the extent
they expressly relate to an earlier date, and BPZ shall have received a
certificate to that effect to the best of the knowledge of Navidec, signed by
the President of Navidec;
(d) The financing for a minimum of $3 million as described in Section
6.1(e) shall have been concluded.
(e) Good Standing Certificates of Navidec and Merger Corp., dated no
more than 10 days prior to the Closing Date, from the Secretary of State of
Colorado;
(f) All necessary third party and governmental consents and approvals
required for transactions contemplated hereby shall have been obtained;
(g) Navidec shall have delivered to BPZ copies of the resignations of
all of the directors of Navidec and Merger Corp. as of the Closing Date, with
the exception of ▇▇. ▇▇▇▇ ▇▇▇▇▇▇▇, which resignations shall be dated as of the
Closing Date;
18
(h) Navidec shall have delivered to BPZ copies of the Leak Out
Agreements executed by the individuals listed on Schedule 4.4; and
(i) Navidec shall have delivered to BPZ a certificate or certificates
representing the BPZ Converted Shares.
Article VII
INDEMNIFICATION
7.1 Navidec hereby agrees to indemnify and hold BPZ, and its officers,
directors, employees and agents harmless from and against the following:
(a) Any and all liabilities, losses, claims, costs, expenses, damages
and judgments (including, without limitation, any legal or other expenses
incurred in connection with investigating or defending any matter, including any
action, that could give rise to such liabilities, losses, claims, costs,
expenses, damages and judgments) (collectively, the "Losses") resulting from or
arising out of any breach of any representation, warranty, or non-performance of
any covenant or agreement on the part of Navidec contained in this Agreement or
in any statement or certificate furnished or to be furnished by Navidec pursuant
hereto or in connection with the transactions contemplated hereby; and
(b) Any and all losses resulting from or arising out of the conduct of
any business, any act or any omissions by or on behalf of Navidec prior to the
Closing.
7.2 BPZ hereby agrees, to indemnify and hold Navidec, its officers,
directors, employees and agents harmless from and against any and all Losses
resulting from or arising out of any breach of any representation, warranty, or
non-performance of any covenant or agreement on the part of BPZ contained in
this Agreement or in any statement or certificate furnished or to be furnished
by BPZ pursuant hereto or in connection with the transactions contemplated
hereby. Additionally, after Closing, the newly appointed officers, directors and
affiliates of Navidec shall support any and all reasonable claims that the
former officers and directors may make for indemnification pursuant to the
Navidec Articles of Incorporation and the CBCA regarding their activities prior
to the Closing Date and their resignations pursuant to this Agreement.
7.3 In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 7.1, 7.2 or 7.3 (the
"Indemnified Party"), the Indemnified Party shall promptly notify the person
against whom such indemnity may be sought (the "Indemnifying Party") in writing.
A delay in giving notice shall only relieve the Indemnifying Party of liability
to the extent the Indemnifying Party suffers actual prejudice because of the
delay. The Indemnifying Party shall have the right, at its option and expense,
to participate in the defense of such a proceeding or claim, but not to control
the defense, negotiation or settlement thereof, which control shall at all times
rest with the Indemnified Party, unless the proceeding or claim involves only
money damages, not an injunction or other equitable relief, and unless the
Indemnifying Party:
19
(a) irrevocably acknowledges in writing complete responsibility for
and agrees to indemnify the Indemnified Party, and
(b) furnishes satisfactory evidence of the financial ability to
indemnify the Indemnified Party, in which case the Indemnifying Party may assume
such control through counsel of its choice and at its expense, but the
Indemnified Party shall continue to have the right to be represented, at its own
expense, by counsel of its choice in connection with the defense of such a
proceeding or claim. If the Indemnifying Party does not assume control of the
defense of such a proceeding or claim, (i) the entire defense of the proceeding
or claim by the Indemnified Party, (ii) any settlement made by the Indemnified
Party, and (iii) any judgment entered in the proceeding or claim shall be deemed
to have been consented to by, and shall be binding on, the Indemnifying Party as
fully as though it alone had assumed the defense thereof and a judgment had been
entered in the proceeding or claim in the amount of such settlement or judgment,
except that the right of the Indemnifying Party to contest the right of the
Indemnified Party to indemnification under the Agreement with respect to the
proceeding or claim shall not be extinguished. If the Indemnifying Party does
assume control of the defense of such a proceeding or claim, it will not,
without the prior written consent of the Indemnified Party settle the proceeding
or claim or consent to entry of any judgment relating thereto which does not
include as an unconditional term thereof the giving by the claimant to the
Indemnified Party a release from all liability in respect of the proceeding or
claim. The Parties hereto agree to cooperate fully with each other in connection
with the defense, negotiation or settlement of any such proceeding or claim.
7.4 The Parties agree that the representations and warranties contained in
this Agreement will survive the Closing and continue to be binding until the
second anniversary thereof regardless of any investigation made at any time by
any party.
Article VIII
POST-CLOSING MATTERS
8.1 Resignation of Officers. At the closing, Navidec will cause all of its
officers to resign from office.
8.2 AMEX/NASDAQ Small Cap Listing. Within 180 days following the Closing,
BPZ shall use reasonable commercial efforts to cause Navidec to file an
application for the listing of its common stock on the American Stock Exchange
("AMEX") or the NASDAQ Small Cap.
8.3 Proceeds from Option Exercises. To the extent that any Navidec options
that are outstanding prior to the Closing are exercised subsequent to the
Closing Date, Navidec shall be obligated to pay the proceeds from said exercises
to Navidec Financial, whether or not Navidec Financial shall have completed its
contemplated spin-off as of the date of the exercise of said options.
8.4 Investor Relations and Public Relations. From and after the Closing
Date, BPZ shall cause Navidec to retain Navidec Financial for investor relations
and public relations services for a period not less than twelve (12) months, and
agrees, during such period, to budget $360,000 on investor relations and public
20
relations services (the "PR Agreement"). The PR Agreement shall provide for the
payment of $30,000 per month as a fee plus all expenses of Navidec Financial
payable pursuant to the PR Agreement over the term of the Agreement. The budget
will also include the expenses of Navidec incurred in the furtherance of the
investor relations and public relations function and fees payable to other third
party vendors as may be anticipated by the parties to the PR Agreement. As
partial condition of the services of Navidec Financial, Navidec shall issue to
Navidec Financial a stock purchase warrant exercisable to acquire not more than
1,500,000 shares of Navidec Common Stock at an exercise price of $2.00 per share
which warrant shall expire on the second anniversary date of the PR Agreement.
At Closing, Navidec Financial shall own 2,000,000 shares of Navidec Common
Stock.
8.5 Amendment of Navidec Articles of Incorporation. At the first annual or
special meeting of shareholders to occur after the Closing Date, the Board of
Directors shall propose an amendment to the Navidec Articles of Incorporation to
increase the commons share capital of the Company in such a fashion as to permit
Navidec to complete the exchange for BPZ Common Stock as provided by Section 2.2
and to change the name of the Company to BPZ Energy, Inc.
8.6 Affiliate Party Transactions. Until the expiration of the 18th month
anniversary of the Closing Date, neither Navidec nor any of its subsidiaries
shall enter into any agreement, contract or arrangement relating to the issuance
of Navidec debt or equity securities, except as contemplated by Section 6.1(e),
with any affiliate of unless such agreement, contract or arrangement is
negotiated at arms-length at competitive terms.
Article IX
MISCELLANEOUS
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned (i) by the mutual written consent of
Navidec and BPZ at any time, (ii) by either Navidec, on the one hand, or BPZ, on
the other hand, if the transactions contemplated hereby (except the completion
of the spin-off) have not been consummated prior to September 30, 2004; (iii) by
either Navidec, on the one hand, or BPZ, on the other hand, upon 30 days'
written notice to the other, if the non-terminating party is in material breach
of this Agreement and does not cure such breach within such 30 days of receiving
detailed written notice thereof, provided that the party seeking to terminate is
not in material breach or default of this Agreement. In the event of such
termination and abandonment, neither Navidec nor BPZ (or any of their respective
directors or officers) shall have any liability or further obligations to any
other party to this Agreement, except that nothing herein will relieve any party
from liability for any willful breach of this Agreement.
9.2 Expenses. Whether or not the transactions contemplated are consummated,
all out-of-pocket costs and expenses incurred in connection with this Agreement
and the transactions contemplated will be paid by the party incurring such
expenses; provided, however, (i) BPZ shall at its sole expense, engage legal
counsel of its choosing to prepare, file and distribute all documents which are
required to be filed under the Exchange Act or Securities Act in connection with
the transactions contemplated hereby, and (ii) Navidec Financial shall incur and
pay all expenses of Navidec in connection with same, including, without
limitation, legal fees incurred in connection with preparing and filing all
21
documents necessary or advisable to be filed with the SEC and otherwise in
connection with the "spin-off" of Navidec Financial to Navidec shareholders and
distribution expenses of the Transfer Agent.
9.3 Brokers. No broker or finder is entitled to any brokerage or finder's
fee or other commission or fee from any company or based upon arrangements made
by or on behalf of any party with respect to the transactions contemplated by
this Agreement, except as disclosed on Schedule 9.3 annexed hereto, and the
party so indicated on Schedule 9.3 shall be liable for the payment thereof.
9.4 Arbitration. Any controversy arising out of, connected to, or relating
to any transactions herein contemplated, or this Agreement, or the breach
thereof, including, but not limited to any claims of violations of Federal
and/or state securities acts, banking statues, consumer protection statutes,
federal and/or state anti-racketeering (e.g. RICO) claims as well as any common
law claims and any state law claims of fraud, negligence, negligent
misrepresentations, and/or conversion and any disputes as to the arbitrability
of any such claim shall be settled by arbitration in City and County of Denver,
State of Colorado and in accordance with the commercial rules of the American
Arbitration Association by three (3) arbitrators appointed in accordance with
such rules. Any judgment on the arbitrator's award may be entered in any court
having jurisdiction thereof. The arbitrators shall hear and determine the matter
and shall execute and acknowledge its award, in writing, and if requested by
either party, shall make findings of fact and conclusions of law. Any award
determined by the arbitrators shall be final and binding on the Parties,
however, in the event of any misconduct, partiality, corruption or the like of
any arbitrator, the Parties shall retain any rights of appeal to which they may
be entitled pursuant to applicable Law. The cost and expense of arbitration,
including the fees of the arbitrator, and the reasonable legal and accounting
fees and expenses of the Parties, shall be divided between the Parties in such
proportion as the arbitrators may determine.
9.5 Other Actions. Each of the Parties hereto agrees to execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
9.6 Entire Agreement; Waiver and Amendment. This Agreement, the exhibits
and schedules hereto contain the entire agreement by and among Navidec, Merger
Corp. and BPZ with respect to the transactions contemplated hereby. Any and all
prior discussions, negotiations, commitments and understandings relating to the
subject matter of this Agreement are superseded by this Agreement. This
Agreement may not be modified, amended or terminated except by a written
agreement specifically referring to this Agreement signed by all of the Parties
hereto. No waiver of any breach or default hereunder shall be considered valid
unless in writing signed by the party giving such waiver, and no such waiver
shall be deemed a waiver of any subsequent breach or default of the same or
similar nature.
9.7 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado without regard to its
principles of conflicts of laws.
22
9.8 Descriptive Headings. The descriptive headings are for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement.
9.9 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered personally or
sent by registered or certified mail postage prepaid, addressed as follows:
If to Navidec: Navidec, Inc.
▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to BPZ: BPZ Energy Inc.
Shareholder Representatives
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
With a copy to: BPZ Energy Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one agreement.
9.11 Publicity. All public announcements relating to this Agreement or the
transactions contemplated hereby will be made only as may be agreed upon by
Navidec and BPZ or, subject always to Section 5.6, as required by applicable
Law. If public disclosure or notice is required by applicable Law, subject
always to Section 5.6, the disclosing party will use its best efforts to give
the other prior written notice of the disclosure to be made.
9.12 Gender; Number. The use of a particular pronoun herein shall not be
restrictive as to gender, and the use of the singular or plural shall not be
restrictive as to number, but shall be interpreted in all cases as the context
may require.
9.13 Schedules. The Schedules attached hereto and/or delivered herewith are
an integral part of this Agreement as if fully re-written herein.
9.14 Binding Effect. This Agreement will be binding upon and will inure to
the benefit of the Parties and their respective heirs, personal representatives,
successors and permitted assigns. Except as herein provided, no party will have
the right to assign this Agreement, or any of such party's rights hereunder,
without the prior written consent of the other Parties.
23
[Signature page to follow]
24
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the Parties hereto as of the date first
hereinabove written.
NAVIDEC, INC.
By: /s/
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
NAVIDEC MERGER CORP.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
BPZ ENERGY, INC.
By:
-------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Pflucker
Title: President
25
Schedule A
----------
BPZ Shareholders
No. of Navidec Shares
No. of BPZ to be Received
Name and Address Shares Owned in Exchange
▇▇▇▇▇▇ ▇▇▇▇▇ 5,247,737 5,247,737
Allied Crude Purchasing, Inc. 5,619,173 5,619,173
ENERGY SERVICES DEL PERU S.A.C. 737,410 737,410
Lothian Bancorp 500,000 500,000
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇ 5,004,016 5,004,016
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Pflucker 5,004,016 5,004,016
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ 240,158 240,158
▇▇▇▇ ▇▇▇ ▇▇▇ 747,679 747,679
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 1,777,975 1,777,975
▇▇▇▇ ▇▇▇▇▇▇ 283,022 283,022
▇▇▇▇▇▇ ▇▇▇▇▇▇ 41,341 41,341
▇▇▇▇▇▇ ▇▇▇▇▇ 19,275 19,275
▇▇▇▇▇▇ ▇▇▇▇▇▇ 170,128 170,128
▇▇▇▇▇▇ ▇▇▇▇▇▇ 34,876 34,876
▇▇▇▇ ▇. (▇▇▇) ▇▇▇▇▇▇▇▇ 1,117,231 1,117,231
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 204,154 204,154
▇▇▇▇▇▇▇▇ ▇.▇. Briens 170,128 170,128
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 12,368 12,368
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 15,312 15,312
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 54,002 54,002
Schedule 1.3(a)
---------------
Certificate of Incorporation of Merger Corp./Surviving Corporation
Schedule 1.3(b)
---------------
By-laws of Merger Corp./Surviving Corporation
Schedule 1.3(c)
---------------
Officers and Directors of Surviving Corporation and Navidec
Schedule 5.5
------------
Navidec Shareholders to Execute Leak Out and Voting Agreements
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇