EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
CONTINENTAL SOUTHERN RESOURCES, INC.
CSOR ACQUISITION CORP.
AND
NSNV, INC.
DATED FEBRUARY 26, 2004
TABLE OF CONTENTS
ARTICLE I THE MERGER......................................................................... 1
1.1 The Merger............................................................ 1
1.2 Merger Consideration; Exchange of Securities.......................... 3
1.3 Subsequent Actions.................................................... 5
ARTICLE II CLOSING DELIVERIES................................................................ 5
2.1 Deliveries of the Company............................................. 5
2.2 Deliveries of Parent and Merger Sub................................... 6
2.3 Other Required Deliveries............................................. 7
ARTICLE III REPRESENTATIONS AND WARRANTIES................................................... 7
3.1 Representations and Warranties of the Company......................... 7
3.2 Representations and Warranties of Parent and Merger Sub.............. 13
ARTICLE IV AGREEMENTS OF THE PARTIES........................................................ 20
4.1 Financial Statements................................................. 20
4.2 Lock-Up Agreements................................................... 20
4.3 Prohibition on Trading in Parent Stock............................... 21
4.4 Parent Board of Directors and Officers............................... 21
4.5 Acknowledgment of Approvals; Written Consent of Parent............... 21
4.6 Advisory Fee......................................................... 21
4.7 Plan of Reorganization............................................... 22
ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER.......................................... 22
5.1 Conditions to the Obligations of Each Party.......................... 22
5.2 Conditions to Obligations of the Company............................. 24
5.3 Conditions to Obligations of Parent and Merger Sub................... 25
ARTICLE VI SURVIVAL......................................................................... 26
6.1 Nature of Statements................................................. 26
6.2 Survival of Representations and Warranties........................... 26
ARTICLE VII MISCELLANEOUS................................................................... 26
7.1 Notices.............................................................. 26
7.2 Agreement; Assignment................................................ 27
7.3 Binding Effect; Benefit.............................................. 27
7.4 Headings............................................................. 27
7.5 Counterparts......................................................... 27
7.6 Governing Law........................................................ 27
7.7 Arbitration.......................................................... 28
7.8 Severability......................................................... 28
7.9 Expenses............................................................. 28
7.10 Amendment and Modification........................................... 28
7.11 Certain Definitions.................................................. 28
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EXHIBITS
Exhibit 2.1(ii) - Stockholder Certificate
Exhibit 2.1(ix) - Form of Legal Opinion of Counsel to the Company
Exhibit 2.2(xi) - Form of Legal Opinion to Counsel to the Parent and Merger Sub
Exhibit 3.1(q)(i) - PGS Main Agreement Exhibit 3.1(q)(ii) - PGS License
Agreement
Exhibit 3.1(q)(iii) - PGS Consulting Services Agreement
Exhibit 3.1(q)(iv) - PGS Software License Agreement
Exhibit 4.2(a) - Lock-Up Agreement / Company Shareholders and New Management
Exhibit 4.2(b) - Lock-Up Agreements/Certain Parent Shareholders and Former
Management
Exhibit 5.1(g)(i) - Amended Certificate of Designation of Series A Preferred
Stock
Exhibit 5.1(g)(ii) - Amended Certificate of Designation of Series B Preferred
Stock
Exhibit 5.1(g)(iii) - Amended Certificate of Designation of Series C Preferred
Stock
Exhibit 5.1(h) - Registration Rights Agreement
Exhibit 5.1(f) - Executive Employment Agreements
Exhibit 5.1(k) - Parent Incentive Plan
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SCHEDULES
COMPANY SCHEDULES
-----------------
Schedule 3.1(a) - Corporate Existence and Power
Schedule 3.1(c) - No Contravention
Schedule 3.1(d) - Capitalization and Share Ownership
Schedule 3.1(e) - Financial Statements
Schedule 3.1(f) - Assets; Absence of Liens and Encumbrances
Schedule 3.1(g) - No Contingent Liabilities
Schedule 3.1(i) - Taxes
Schedule 3.1(j) - Insurance Coverage
Schedule 3.1(l) - Contracts, Leases, Agreements and Other Commitments
Schedule 3.1(m) - Labor Relations
Schedule 3.1(n) - Conflicting Interests
Schedule 3.1(p) - Absence of Certain Changes or Events
Schedule 3.1(r) - ERISA
Schedule 3.1(t) - Intellectual Property
Schedule 3.1(t)(iii) - Owned Intellectual Property
Schedule 3.1(t)vii) - Intellectual Property Licensed to Third Parties
PARENT/MERGER SUB SCHEDULES
---------------------------
Schedule 3.2(a) - Corporate Existence and Power
Schedule 3.2(b) - Subsidiaries Other Than Merger Sub
Schedule 3.2(d) - No Contravention
Schedule 3.2(e) - Capitalization
Schedule 3.2(g) - No Contingent Liabilities
Schedule 3.2(h) - Litigation
Schedule 3.2(k) - Assets; Absence of Liens and Encumbrances
Schedule 3.2(l) - Taxes
Schedule 3.2(n) - Conflicting Interests
Schedule 3.2(o) - Absence of Certain Changes or Events
Schedule 4.2(b) - Parent Shareholders Subject to Lock-Up Agreement
Schedule 5.1(d) - Parent Non-Core Assets
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), is made and
entered into as of February 26, 2004, by and among CONTINENTAL SOUTHERN
RESOURCES, INC. a Nevada corporation ("Parent"), CSOR ACQUISITION CORP., a
Delaware corporation and wholly-owned subsidiary of Parent ("Merger Sub"), NSNV,
INC., a
Texas corporation (the "Company").
RECITALS
WHEREAS, the Boards of Directors of each of Parent, Merger Sub and the
Company has approved, and deem it advisable and in the best interests of their
respective companies and stockholders to consummate, a merger of the Company
with and into Merger Sub (the "Merger"), with Merger Sub as the surviving
corporation in the Merger in accordance with the General Corporation Law of the
State of Delaware ("DGCL") and the
Texas Business Corporation Act, as amended
(the "TBCA") and upon the terms and subject to the conditions set forth in this
Agreement; and
WHEREAS, for United States federal income tax purposes, it is the
intention of the parties to this Agreement that the Merger shall qualify as a
"reorganization" for federal income tax purposes within the meaning of Section
368(a) of the Internal Revenue Code and that this Agreement shall constitute a
"plan of reorganization" for the purposes of the Internal Revenue Code.
NOW, THEREFORE, in consideration of the foregoing premises and
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
(a) The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the DGCL and the TBCA, the Merger
shall be effected and the Company shall be merged with and into Merger Sub at
the Effective Time with the separate corporate existence of the Company ceasing
and Merger Sub continuing as the surviving corporation (the "Surviving
Corporation"). The Surviving Corporation shall continue its corporate existence
under the laws of the State of Delaware as a wholly owned subsidiary of Parent.
(b) Closing. The closing of the Merger (the "Closing") shall take place
on the date hereof (the "Closing Date"), at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, unless another time, date and place is mutually
agreed upon in writing by the parties hereto.
(c) Effective Time. On the Closing Date, the parties shall file a
certificate of merger ("Certificate of Merger") with the Secretary of State of
the State of Delaware and articles of merger ("Articles of Merger") with the
Secretary of State of the State of
Texas, and make all other filings or
recordings required by the DGCL and the TBCA in connection with the Merger. The
Merger shall become effective at such time as the Certificate of Merger and
Articles of Merger are duly filed with the Secretary of State of the State
Delaware and
Texas, respectively, or at such later time as Parent and the
Company shall agree and specify in the Certificate of Merger and Articles of
Merger (the time the Merger becomes effective being the "Effective Time").
(d) Certificate of Incorporation and Bylaws.
(i) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein or by applicable law, except that Article I of the
Certificate of Incorporation of Merger Sub shall be amended to read as follows:
"The name of the corporation is Endeavour Operating Corporation."
(ii) At the Effective Time, the Bylaws of Merger Sub, as in
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided therein or by
applicable law.
(e) Directors and Officers of the Surviving Corporation.
(i) The directors of the Company immediately prior to the
Effective Time shall be the directors of the Surviving Corporation at the
Effective Time, and thereafter until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.
(ii) The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation at the
Effective Time, and thereafter until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.
(f) Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the DGCL and the TBCA. Without limiting the
foregoing, and subject thereto, at the Effective Time, all of the property,
rights, powers, privileges and franchises of the Company and Merger Sub shall be
vested in the Surviving Corporation, and all of the debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
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1.2 MERGER CONSIDERATION; EXCHANGE OF SECURITIES.
(a) Merger Consideration. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Sub, the Company or
the holders of any of the following securities:
(i) each of the issued and outstanding shares ("Company
Shares") of common stock, $0.01 par value per share ("Company Common Stock"), of
the Company immediately prior to the Effective Time (other than any shares of
Company Common Stock to be cancelled pursuant to Section 1.2(a)(ii)) shall, by
virtue of the Merger and without any action on the part of the holders of the
Company Shares, be converted into the right to receive such number of validly
issued, fully paid and nonassessable shares of common stock, par value $.001 per
share, of Parent ("Parent Common Stock") equal to the Company Shares Common
Exchange Ratio (as defined below);
(ii) each share of Company Stock held in the treasury of the
Company and each share of Company Stock owned by Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company immediately prior
to the Effective Time shall be cancelled and extinguished without any conversion
thereof and no payment or distribution shall be made with respect thereto; and
(iii) each share of common stock, par value $.001 per share,
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, par value $.001 per share, of the Surviving
Corporation. The stock certificate evidencing shares of common stock of Merger
Sub shall then evidence ownership of the outstanding shares of common stock of
the Surviving Corporation.
As used in this Agreement "Company Shares Exchange Ratio"
shall mean the quotient obtained by dividing (A) 12,500,000 shares of Parent
Common Stock by (B) the total number of shares of Company Common Stock issued
and outstanding immediately prior to the Effective Time.
(b) Adjustment to Conversion Ratios. If, during the period between the
date hereof and the Effective Time, any change in the Capital Stock of Parent
shall occur by reason of reclassification, recapitalization, stock split or
combination, exchange or readjustment of shares, or any stock dividend thereon
with a record date during such period or any similar event, the Company Shares
Common Exchange Ratio shall be correspondingly adjusted to the extent
appropriate to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange or readjustment of shares.
(c) Exchange of Certificates. At Closing, each Company shareholder
shall deliver to Parent any certificate evidencing a Company Share, and receive
in exchange therefor the Parent Common Stock to be received in connection with
the Merger as provided in Section 1.2. If such certificates are not delivered at
Closing, and after the Effective Time, certificates for the Company Shares that
were outstanding immediately prior to the Effective Time shall be
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delivered to Parent, and such shares shall be exchanged for the Parent Common
Stock to be received in connection with the Merger as provided in Section 1.2.
Until surrendered as contemplated by this Section 1.2(c), each
certificate evidencing Company Shares shall be deemed after the Effective Time
to represent only the right to receive upon surrender the Parent Common Stock
with respect to the Company Shares formerly represented thereby to which such
holder is entitled pursuant to Section 1.2(a)(i).
(d) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered certificate
with respect to the Company Shares represented thereby until such holder shall
surrender such certificate in accordance with Section 1.2(c).
(e) No Further Ownership Rights in Company Common Stock. From and after
the Effective Time, the holders of certificates evidencing ownership of the
Company Shares outstanding immediately prior to the Effective time shall cease
to have any rights with respect to such Company Shares except as otherwise
provided for herein or by applicable law.
(f) No Fractional Shares. No certificates or scrip representing
fractional Parent Common Stock shall be issued upon the surrender for exchange
of certificates representing Company Common Stock, no dividend or distribution
of Parent shall relate to such fractional share interests and such fractional
share interests will not entitle the owner thereof to vote or to exercise any
rights of a stockholder of Parent. Each Company shareholder who would otherwise
have been entitled to receive a fraction of a share of a Parent Common Stock
(after taking into account all certificates and agreements delivered by such
holder) shall receive that number of shares of Parent Common Stock that such
holder would have received if such fractional share of Parent Common Stock was
rounded to the nearest whole number (with .5 of a share or higher being rounded
up).
(g) Lost, Stolen or Destroyed Certificates. In the event any
certificate(s) representing Company Shares shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such certificate(s) to be lost, stolen or destroyed and, an agreement by such
Person to indemnify and hold harmless Parent and the Surviving Corporation
against any claim that may be made against it with respect to such certificate,
the Parent will issue in exchange for such lost, stolen or destroyed certificate
or the Parent Common Stock to which such Person is entitled pursuant to this
Agreement.
(h) Transfer Books. The stock transfer books of the Company shall be
closed immediately at the Effective Time and thereafter there shall be no
further registration of transfers of shares of Company Capital Stock on the
records of the Company. If, after the Effective Time, certificates or agreements
are presented to the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Article 1.
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1.3 SUBSEQUENT ACTIONS.
If at any time after the Effective Time the Surviving Corporation shall
determine, in its sole discretion, or shall 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 of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the property,
rights, powers, privileges, franchises or other assets of either of the Company
or Merger Sub acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or otherwise to carry out this
Agreement, then the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, and shall execute and deliver, in the name
and on behalf of either the Company or Merger Sub, all such deeds, bills of
sale, assignments, assurances and to take and do, in the name and on behalf of
each such corporation or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title or
interest in, to and under such property, rights, powers, privileges, franchises
or other assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II
CLOSING DELIVERIES
2.1 DELIVERIES OF THE COMPANY.
At the Closing, the Company shall deliver, or cause to be delivered, to
Parent, the following documents:
(i) Certificates representing all of the issued and
outstanding Company Shares;
(ii) A Stockholder Certificate executed by each of the Company
Shareholders substantially in the form attached hereto as Exhibit 2.1(ii);
(iii) Any outstanding shareholder agreements relating to the
Company Capital Stock;
(iv) The Company shall execute and deliver the Articles of
Merger with such amendments thereto as the parties hereto shall deem mutually
acceptable;
(v) A certificate of good standing from the Secretary of State
of the State of
Texas, dated at or about the Closing, to the effect that Company
is in good standing under the laws of the State of
Texas;
(vi) An incumbency certificate signed by certain of the
officers of the Company dated at or about the Closing;
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(vii) Articles of Incorporation certified by the Secretary of
State of the State of
Texas and Bylaws certified by the Secretary of the Company
shall be delivered by the Company;
(viii) Board and shareholder resolutions dated at or about the
Closing authorizing the transactions contemplated by this Agreement certified by
the Secretary of the Company; and
(ix) the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel to the
Company, dated the Closing Date, covering the matters set forth on Exhibit
2.1(ix), in a form reasonably satisfactory to Parent.
2.2 DELIVERIES OF PARENT AND MERGER SUB.
At Closing, Parent shall deliver, or cause to be delivered, to the
Company and the Company Shareholders, as applicable, the following documents:
(i) Parent shall deliver or shall cause to be delivered to the
Company Shareholders certificates evidencing the Parent Common Stock in
accordance with Section 1.2(a)(i) and Section 1.2(c);
(ii) A certificate of good standing from the Secretary of
State of the State of Nevada dated at or about the Closing that Parent is in
good standing under the laws of said state;
(iii) A certificate of good standing from the Secretary of
State of the State of Delaware dated at or about the Closing that Merger Sub is
in good standing under the laws of said state;
(iv) An incumbency certificate signed by all of the officers
of Parent dated at or about the Closing;
(v) An incumbency certificate signed by all of the officers of
Merger Sub dated at or about the Closing;
(vi) Articles of Incorporation of Parent certified by the
Secretary of State of the State of Nevada at or about the Closing and a copy of
the Bylaws of Parent certified by the Secretary of Parent dated at or about the
Closing;
(vii) Certificate of Incorporation of Merger Sub certified by
the Secretary of State of the State of Delaware at or about the Closing and a
copy of the Bylaws of Merger Sub certified by the Secretary of Merger Sub dated
at or about the Closing;
(viii) Board resolutions of Parent dated at or about the
Closing authorizing the transactions contemplated by this Agreement certified by
the Secretary of Parent;
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(ix) Board and shareholder resolutions of Merger Sub dated at
or about the Closing authorizing the transactions contemplated by this Agreement
certified by the Secretary of Sub;
(x) Resignations effective as of the Effective Time of each of
the officers and directors of Parent, Merger Sub and other Parent Subsidiaries
(except ▇▇▇▇ Miss Partners, L.P.), other than ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III and ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇ as directors of Parent; and
(xi) the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, P.C., counsel to
Parent and Merger Sub, dated the Closing Date, covering the matters set forth on
Exhibit 2.2(xi), in a form reasonable satisfactory to the Company.
2.3 OTHER REQUIRED DELIVERIES.
Each of the parties to this Agreement shall have otherwise executed
and/or delivered to the other party whatever documents and agreements, provided
whatever consents or approvals and shall have taken all such actions as are
required under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As a material inducement to Parent and Merger Sub to execute this
Agreement and consummate the Merger and other transactions contemplated hereby,
Company represents and warrants to Parent and Merger Sub as follows:
(a) Corporate Existence and Power. Company is a corporation duly
incorporated, validly existing and in good standing under the laws of
Texas, and
has all corporate powers and all governmental licenses, authorizations, consents
and approvals required to carry on its business as now conducted. Except as set
forth on Schedule 3.1(a), Company is duly qualified to do business as a foreign
corporation in its places of business and is in good standing in its places of
business and in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities requires such qualification. True,
correct and complete copies of the Articles of Incorporation and Bylaws of the
Company, as amended to date, are attached hereto as Schedule 3.1(a) and are made
a part hereof. The Company owns no securities in any other entity.
(b) Due Authorization and requisite approvals.
(i) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company, enforceable in accordance with its terms, except as such enforcement
may be limited by applicable bankruptcy, insolvency, moratorium, and other
similar laws relating to, limiting or affecting the enforcement of creditors
rights generally or by the application of equitable principles. Except for the
filing of
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the Articles of Merger, all corporate action on the part of the Company required
under applicable law, its Articles of Incorporation and Bylaws in order to
consummate the Merger has occurred.
(ii) the Board of Directors of the Company and the Company
Shareholders have approved this Agreement, its execution and the consummation of
the Merger and, if required, all other transactions contemplated hereby.
(c) No Contravention. Except as set forth on Schedule 3.1(c), the
execution and delivery of the Agreement does not, and the consummation of the
transactions contemplated hereby will not: (i) conflict with or result in any
violation of any provision of the Articles of Incorporation or Bylaws of the
Company; or (ii) conflict with or result in any violation or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of a right or obligation or loss
under, any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement, instrument, permit, concession, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to the
Company, or any of its properties or assets, or result in the creation or
imposition of any Encumbrance on the Company, except Permitted Encumbrances, or
prevent Company from consummating the transactions contemplated by this
Agreement. Except as set forth on Schedule 3.1(c), no consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by or with respect to the
Company in connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby.
(d) Capitalization and Share Ownership. The authorized Capital Stock of
the Company consists solely of 100,000 Company Shares. The Company Shares have
the rights and preferences set forth in the Articles of Incorporation and Bylaws
of the Company. As of the date hereof, there are 100,000 Company Shares
outstanding, all of which are owned by the Company Shareholders as set forth on
Schedule 3.1(d). The Company Shares are duly authorized and validly issued and
are fully paid and nonassessable and free of preemptive rights. Except for the
Company Shares or as set forth on Schedule 3.1(d), there are outstanding (A) no
shares of Capital Stock or other voting securities of the Company, (B) no
securities of the Company convertible into or exchangeable for shares of Capital
Stock or voting securities of the Company and (C) no options, warrants or other
rights to acquire from Company, the Company Shareholders, or any other Person,
and no obligation of the Company to issue, any Capital Stock, voting securities
or securities convertible into or exchangeable for Capital Stock or voting
securities of the Company, and there are no agreements or commitments to do any
of the foregoing. There are no voting trusts or voting agreements applicable to
any shares of Capital Stock of the Company. The Company Shares are owned of
record and beneficially by the Company Shareholders identified on Schedule
3.1(d) free and clear of any Encumbrances or Rights. There are no agreements
(other than this Agreement) to sell, pledge, assign or otherwise transfer such
securities.
(e) Financial Statements. Attached hereto as Schedule 3.1(e) are true
and correct copies of the unaudited balance sheet and statement of operations of
the Company on and for the period of its inception until January 31, 2004
(collectively, the "Company Financial Statements"). The Company Financial
Statements will have been prepared in accordance with
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generally accepted accounting principles consistently applied throughout the
periods reported upon and will fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of
operations for the periods then ended.
(f) Assets; Absence of Liens and Encumbrances. Except as set forth in
Schedule 3.1(f), the Company owns, leases or has the legal right to use all of
the properties and assets, including, without limitation, real property and
personal property used in the conduct of the business of the Company or
otherwise owned, leased or used by the Company (all such properties and assets
being the "Company Assets"). The Company has good and indefeasible title to, or,
in the case of leased or subleased Company Assets, valid and subsisting
leasehold interests in, all the Company Assets, free and clear of all
Encumbrances (except Permitted Encumbrances). The equipment of the Company used
in the operations of its business is, taken as a whole, in good repair and
operating condition (subject to normal maintenance requirements and ordinary
wear and tear excepted).
(g) No Contingent Liabilities. The Company has no material liabilities
or indebtedness, whether related to tax or non-tax matters, known or unknown,
due or not yet due, liquidated or unliquidated, fixed or contingent, determined
or determinable in amount or otherwise, except as and to the extent (i) recorded
or reserved against in the Company Balance Sheet as of January 31, 2004, (ii)
incurred in the ordinary course of business since such Balance Sheet date or
(iii) set forth in Schedule 3.1(g).
(h) Litigation. There is no action, suit, investigation or proceeding
(or, to the Knowledge of the Company, any basis therefor) pending against, or to
the Knowledge of the Company, threatened against or affecting Company or any of
its properties before any court or arbitrator or any governmental body, agency
or official.
(i) Taxes. Except as disclosed on Schedule 3.1(i), the Company has
timely filed all tax returns required to be filed by it. The Company has paid in
a timely all taxes required to be paid in respect of the periods covered by such
returns, and the books and the financial statements of the Company reflect
adequate reserves for all taxes payable by the Company which have been accrued
but are not yet due. The Company is not delinquent in the payment of any
material tax, assessment or governmental charge. No deficiencies for any taxes
have been proposed, asserted or assessed against Company. Company is not aware
of any facts which would constitute the basis for the proposal or assertion of
any such deficiency and there is no action, suit, proceeding, audit or claim now
pending or, to the knowledge of the Company, threatened against Company,
asserting any deficiency in the payment of taxes. All taxes which Company are
required by law to withhold and collect have been duly withheld and collected,
and have been timely paid over to the proper authorities to the extent due and
payable. For the purposes of this Agreement, the term "tax" shall include all
federal, state, local and foreign income, property, sales, excise and other
taxes of any nature whatsoever. Neither the Company nor any member of any
affiliated or combined group of which the Company is or has been a member has
granted any extension or waiver of the limitation period applicable to any tax
returns. There are no Encumbrances (except Permitted Encumbrances) for taxes
upon the assets of the Company. There are no tax sharing or tax allocation
agreements to which the Company is now or ever has been a party. The Company
will not be required under Section 481(c) of the
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Code, to include any material adjustment in taxable income for any period
subsequent to the Merger. The Company (i) has not been a member of an affiliated
group filing a consolidated federal income tax return (other than a group the
common parent of which was Company) and (ii) has no liability for the taxes of
any Person (other than Company) under Treasury Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise.
(j) Insurance Coverage. Schedule 3.1(j) sets forth a list of all
Company key-man life insurance policies and other insurance policies material to
the current and proposed business of the Company. All of such policies are in
full force and effect and all premiums payable have been paid in full and the
Company is in compliance in all material respects with the terms and conditions
of such policies. The Company has not received any notice from any issuer of
such policies of its intention to cancel or refusal to renew any policy issued
by it or of its intention to renew any such policy based on a material increase
in premium rates other than in the ordinary course of business. None of such
policies are subject to cancellation by virtue of the Merger or the consummation
of the other transactions contemplated by this Agreement. There is no claim by
the Company pending under any of such policies as to which coverage has been
questioned or denied.
(k) Compliance with Laws. The Company is, and has been, in compliance
in all material respects with any applicable provisions of any laws, statues,
ordinances or regulations. The Company has all material licenses, permits,
certificates and authorizations needed or required for the conduct of business
of the Company as presently conducted and for the use of its properties and
premises occupied by it.
(l) Contracts, Leases, Agreements and Other Commitments. Except for the
PGS Agreements (as described in Section 3.1(q)) and equipment and furniture
leases entered into the ordinary course of business, Schedule 3.1(l) lists each
legally binding lease, agreement, contract, or commitment or other legally
binding contractual right or obligation (whether written or oral) involving a
maximum possible expenditure or obligation on the part of the Company to expend
more than $10,000 separately or more than $25,000 in the aggregate
(collectively, the "Company Material Contracts").
The Company Material Contracts constitute all of the material
agreements and instruments that are necessary and desirable to operate the
business as currently conducted by the Company. True, correct and complete
copies of each Company Material Contract described and listed on Schedule 3.1(l)
have been made available to Parent. The term "Company Material Contract"
excludes purchase orders entered into in the ordinary course for personal or
inventory which may be returned to the vendor without penalty. All of the
Company Material Contracts are valid, binding and enforceable against the
respective parties thereto in accordance with their respective terms. Neither
the Company, and, to the best of its Knowledge, nor any other party, is in
default or in arrears under the terms thereof, and, to the Knowledge of the
Company, no condition exists or event has occurred which, with the giving of
notice or lapse of time or both, would constitute a default thereunder by the
Company. The consummation of this Agreement and the Merger will not result in an
impairment or termination of any of the rights of the Company under any Company
Material Contract.
10
(m) Labor Relations. Except as described on Schedule 3.1(m), (i) there
are no activities or proceedings of any labor union to organize any
non-unionized employees of the Company; (ii) there are no unfair labor practice
charges and/or complaints pending against the Company before the National Labor
Regulations Board, or any similar foreign labor relations governmental bodies,
or any current union representation questions involving employees of the
Company; and (iii) there is no strike, slowdown, work stoppage or lockout, or
threat thereof, by or with respect to any employees of the Company. The Company
is not a party to any collective bargaining agreements. There are no
controversies pending or threatened between the Company and any of its
employees, except for such controversies that would not be reasonably likely to
have a Material Adverse Effect
(n) Conflicting Interests. Except as set forth on Schedule 3.1(n), no
director, officer or employee of the Company nor relative or Affiliate (other
than PGS or its Affiliates in the case of clause (i) below) of any of the
foregoing (i) sells or purchases goods or services from Company or has any
pecuniary interest in any supplier or client of any of the foregoing or in any
other business enterprise with which Company conducts business or with which any
of the foregoing is in competition, or (ii) is indebted to the Company except
for money borrowed and as set forth on the Company Financial Statements.
(o) Environmental Protection. The Company has not been notified by any
governmental authority, agency or third party, and the Company has no Knowledge
of, any violation by such Person of any Environmental Statute (as defined
below). All registrations by the Company with, licenses from or permits issued
by governmental agencies pursuant to environmental, health and safety laws are
in full force and effect. The term "Environmental Statutes" means all statutes,
ordinances, regulations, orders and requirements of law concerning discharges to
the air, soil, surface water or groundwater and concerning the storage,
treatment or disposal of any waste or hazardous substance. There is no hazardous
substance at any premises currently or previously occupied by the Company. The
Company has not received any notice or any request for information, notice of
claim, demand or other notification that it may be potentially responsible with
respect to any investigation or clean-up of any threatened or actual release of
hazardous substances. All hazardous wastes and substances have been stored,
treated, disposed of and transported in conformance with all requirements
applicable to such hazardous substances and wastes.
(p) Absence of Certain Changes or Events. Except as and to the extent
set forth on the Company Financial Statements, to the extent contemplated by or
disclosed in this Agreement, or as set forth on Schedule 3.1(p), since January
31, 2004, the Company has conducted its business only in the ordinary course of
business and, to the Knowledge of the Company, there has not been any event,
occurrence, development or circumstance which has had or could reasonably be
expected to have a Material Adverse Effect on the Company.
(q) Interim Operations of Company. The Company was formed in December
2003, for the purpose of engaging in the transactions whereby the Company would
(i) obtain a non-exclusive license to access and use certain seismic data
related to the North Sea region and related software ("Seismic Data") pursuant
to the terms of: (A) the Agreement dated December 16, 2003 (the "PGS Main
Agreement"), between the Company and PGS; (B) the Licence
11
Agreement dated December 16, 2003 (the "PGS Licence Agreement"), between the
Company and PGS; (C) the Terms and Conditions for Provision of Consulting
Services dated December 16, 2003 (the "PGS Consulting Services Agreement"),
between the Company and PGS; and (D) the Software Licence Agreement dated
December 16, 2003 (the ("PGS Software Licence Agreement"), between the Company
and PGS, and all schedules, exhibits, appendices and annexes thereto
(collectively, the "PGS Agreements") (copies of which are attached hereto as
Exhibit 3.1(q)(i), (ii), (iii) and (iv) respectively), (ii) secure employment
arrangements with each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇ to serve as
executive officers of the Company, as well as solicit other Persons to fill
other officer, employee and consultant positions with the Company on an
"at-will" basis (collectively, the "Employment Activities") and (iii) the
sublease (the "Sublease") of its executive offices located at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇. Other than its formation activities, its
negotiations with PGS to obtain the PGS Agreements, its Employment Activities,
the Sublease, and its activities involved with respect to this Agreement and the
transactions contemplated hereunder, including the Equity Offering (as defined
in Section 5.1(j)), the Company has not engaged in other business activities and
has conducted its operations only as contemplated by this Agreement.
(r) ERISA. Except as listed on Schedule 3.1(r), the Company does not
maintain, sponsor, or contribute to any program or arrangement that is an
"employee pension benefit plan," an "employee welfare benefit plan," or a
"multiemployer plan", as those terms are defined in Sections 3(2), 3(1), and
3(37) of the Employee Retirement Income Security Act of 1974.
(s) Investment Banking Fees. There is no investment banker, broker,
finder, advisor or other similar intermediary which has been retained by, or is
authorized by the Company to act on its or their behalf, who might be entitled
to any fee or commission from Company or any of its Affiliates upon consummation
of the Merger.
(t) Intellectual Property.
(i) Schedule 3.1(t) sets forth a true and complete list of all
Company IP Agreements.
(ii) The operation of the Company as currently conducted and
the use of the Licensed Intellectual Property in connection therewith do not
conflict with, infringe upon, misappropriate or otherwise violate the
intellectual property or other proprietary rights, including rights of privacy,
publicity and endorsement, of any third party, and no actions, suits,
proceedings, investigations or claims are pending or, to the Knowledge of the
Company, threatened against Company alleging any of the foregoing.
(iii) Company has a valid right to use Licensed Intellectual
Property in the ordinary course of its business as presently conducted or as
contemplated to be conducted. Except as set forth on Schedule 3.1(t)(iii), the
Company does not own any material Intellectual Property.
12
(iv) To the Knowledge of the Company, no Licensed Intellectual
Property, is subject to any outstanding decree, order, injunction, judgment or
ruling restricting the use of such Intellectual Property or that would impair
the validity or enforceability of such Intellectual Property.
(v) Except as set forth on Schedule 3.1(t)(iii), the Licensed
Intellectual Property include all of the Intellectual Property used in the
ordinary day-to-day conduct of the business of the Company, and there are no
other items of Intellectual Property that are material to the ordinary
day-to-day conduct of such business. To the Knowledge of the Company, the
Licensed Intellectual Property, are subsisting, valid and enforceable, and have
not been adjudged invalid or unenforceable in whole or part.
(vi) No actions or claims have been asserted or are pending
or, to the Knowledge of the Company and the Shareholder, threatened against
Company (A) based upon or challenging or seeking to deny or restrict the use by
the Company of any of the Licensed Intellectual Property, or (B) alleging that
the Licensed Intellectual Property is being licensed or sublicensed in conflict
with the terms of any license or other agreement.
(vii) To the Knowledge of the Company, no Person is engaging
in any activity that infringes the Licensed Intellectual Property. Except as set
forth in Schedule 3.1(t)(vii), Company has not granted any license or other
right to any third party with respect to the Licensed Intellectual Property. The
consummation of the transactions contemplated by this Agreement will not result
in the termination or impairment of any of the Licensed Intellectual Property.
(u) Statements And Other Documents Not Misleading. This Agreement,
including all exhibits and schedules does not contain and will not contain any
untrue statement of any material fact or omit or will omit to state any material
fact required to be stated in order to make such statement, information,
document or other instruments, in light of the circumstances in which they are
made, not misleading.
3.2 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.
As a material inducement to the Company to execute this Agreement and
to consummate the Merger and the other transactions contemplated hereby, Parent
and Merger Sub hereby, jointly and severally, represent and warrant to the
Company as follows:
(a) Corporate Existence and Power. Each of Parent and Merger Sub is
presently a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Nevada and Delaware, respectively. Each of Parent
and Merger Sub has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted, except where the failure to have any of the foregoing has not had, or
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent. Each of Parent and Merger Sub is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities requires such qualification,
13
except where the failure to have any of the foregoing has not had, or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Parent. True, complete and correct copies of the Articles or
Certificate of Incorporation and Bylaws of Parent and Merger Sub, as amended to
date, are attached hereto as Schedule 3.2(a) and are made a part hereof.
(b) Subsidiaries Other Than Merger Sub.
(i) Except for Merger Sub, Schedule 3.2(b) sets forth (A) the
name of each Parent Subsidiary; (B) the percentage of outstanding Capital Stock
of each Parent Subsidiary and a list of the holders thereof; (C) the
jurisdiction of organization of each Parent Subsidiary; (D) the name of the
officers and directors or other position of similar capacity or function of each
Parent Subsidiary; and (E) the jurisdictions in which each Parent Subsidiary is
qualified or holds licenses to do business as a foreign corporation, foreign
limited liability company or foreign partnership.
(ii) Each of these Parent Subsidiaries is a corporation,
limited liability company or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation. Each of
these Parent Subsidiaries is duly qualified to conduct business and is in good
standing under the laws of each jurisdiction in which the nature of its business
or the ownership or leasing of its properties requires such qualification,
except where the failure to be so qualified or in good standing has not had, and
would not reasonably be expected to have, individually or in the aggregate,
Material Adverse Effect on Parent. Each of these Parent Subsidiaries has all
requisite corporate, limited liability company or partnership power and
authority and all governmental licenses, authorizations, consents and approvals
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it, except where the failure to have any of the
foregoing has not had, and would not reasonably be expected to have,
individually or in the aggregate, Material Adverse Effect on Parent. Parent has
delivered to the Company complete and accurate copies of the charter, bylaws or
other organizational documents of each Parent Subsidiary. None of these Parent
Subsidiaries is in default under or in violation of any provision of its
charter, bylaws or other organizational documents. All of the issued and
outstanding shares of Capital Stock of each of these Parent Subsidiaries are
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. All shares of each of these Parent Subsidiaries that are held
of record or owned beneficially by either Parent or another Parent Subsidiary
are held or owned free and clear of any Encumbrance (other than restrictions
under federal or state securities laws). There are no outstanding or authorized
options, warrants, rights, agreements or commitments to which Parent or any
Parent Subsidiary is a party or which are binding on any of them providing for
the issuance, disposition or acquisition of any Capital Stock of any Parent
Subsidiary. There are no outstanding stock appreciation, phantom stock or
similar rights with respect to any Parent Subsidiary. There are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of any Capital Stock of any Parent Subsidiary.
(iii) Except as set forth on Schedule 3.2(b), Parent does not
control, directly or indirectly, or have any direct or indirect equity
participation or similar interest in any corporation, partnership, limited
liability company, joint venture, trust or other business
14
association that is not a Parent Subsidiary. There are no contractual
obligations of Parent to provide funds to, or make any investment in (whether in
the form of a loan, capital contribution or otherwise), any other Person.
(c) Due Authorization.
(i) This Agreement, and the other agreements described herein
to which Parent or Merger Sub is a party has been duly authorized, executed and
delivered by Parent or Merger Sub, as applicable, and constitutes a valid and
binding agreement of Parent or Merger Sub, as applicable, enforceable in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency, moratorium, and other similar laws relating
to, limiting or affecting the enforcement of creditors rights generally or by
the application of equitable principles. All corporate action on the part of
Parent and Merger Sub required under applicable law in order to consummate the
Merger and the other transactions contemplated hereby has occurred.
(d) No Contravention. The execution and delivery of the Agreement does
not, and the consummation of the transactions contemplated hereby will not (i)
conflict with or result in any violation of any provision of the Articles or
Certificate of Incorporation, Bylaws or other organizations documents of Parent,
Merger Sub or any other Parent Subsidiary or (ii) conflict with or result in any
violation or default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination, cancellation or acceleration of any
right or obligation or to a loss or a benefit under, any provision of the
Articles or Certificate of Incorporation, Bylaws or other organizational
documents of Parent, Merger Sub, or any other Parent Subsidiary or any loan or
credit agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Parent, Merger Sub, or
any other Parent Subsidiary or their respective properties or assets or result
in the creation or imposition of any Encumbrance on any asset of Parent, Merger
Sub or any other Parent Subsidiary (except Permitted Encumbrances) or prevent
Parent or Merger Sub from consummating the transactions contemplated by this
Agreement. Except as set forth on Schedule 3.2(d), no consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by or with respect to Parent,
Merger Sub or any other Parent Subsidiary in connection with the execution and
delivery of this Agreement or the consummation by Parent or Merger Sub of the
transactions contemplated hereby.
(e) Capitalization.
(i) The authorized Capital Stock of the Parent consists of
150,000,000 shares of Parent Common Stock and 10,000,000 shares of Parent
preferred stock, of these authorized shares of the Company preferred stock,
4,100,000 shares are designated as Parent Series A Preferred Stock, 500,000
shares are designated as Parent Series B Preferred Stock, and 1,500,000 shares
are designated as Parent Series C Preferred Stock. As of the date hereof but
prior to the closing of the Restructuring and the Equity Offering, (i)
38,104,668 shares of Parent Common Stock are issued and outstanding, all of
which are duly authorized, validly issued, fully
15
paid and nonassessable, (ii) no shares of the Company common stock are held in
the treasury of the Company and (iii) 6,879,596 shares of Parent Common Stock
are reserved for future issuance pursuant to outstanding options, warrants,
convertible securities or other agreements or rights obligating Parent to issue
shares of Parent Common Stock. As of the date of this Agreement, (A) 4,090,713
shares of Parent Series A Preferred Stock are issued and outstanding, (B)
143,427 shares of Parent Series B Preferred Stock are issued and outstanding,
and (C) 477,500 shares of Parent Series C Preferred Stock are issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
nonassessable. Schedule 3.2(e) set forth the number of shares of Parent Common
Stock into which each share of Parent is convertible. There are no other shares
of the Company preferred stock outstanding. As of the date hereof, the
outstanding shares of the Parent Common Stock, Parent Series A Preferred Stock,
Parent Series B Preferred Stock and Parent Series C Preferred Stock are owned as
set forth in Schedule 3.2(e). Except as set forth in Schedule 3.2(e) or as
contemplated by this Agreement, there are no outstanding options, warrants,
convertible securities or other agreements or rights obligating Parent or Merger
to issue shares of Capital Stock of Parent or Merger Sub. Except as set forth in
Schedule 3.2(e) or as contemplated by this Agreement, there are no outstanding
obligations to repurchase, redeem or otherwise acquire any share of Capital
Stock of Parent or Merger Sub. Except as set forth in Schedule 3.2(e) or as
contemplated by this Agreement, there are no stockholder agreements, voting
trusts or other agreements to which Parent or Merger Sub is a party, or of which
Parent is aware, that relates to the voting, registration or disposition of any
securities of Parent or Merger Sub.
(ii) The authorized Capital Stock of Merger Sub consists
solely of 900 shares of common stock, $.001 par value per share, of which 100
shares are issued and outstanding and owned of record and beneficially by
Parent, and 100 shares of preferred stock, $.001 par value per share, none of
which shares are issued and outstanding. The outstanding shares of Merger Sub
have been duly authorized and validly issued, and are fully paid and
nonassessable and free of any Encumbrance.
(iii) Since January 1, 2002, all of the securities offered,
sold or issued by Parent (i) have been offered, sold or issued in compliance
with the requirements of the Federal securities laws and any applicable state
securities or "blue sky" laws, except where such any noncompliance has not had,
or would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on Parent (ii) were not offered, sold or issued in
violation of any preemptive right, right of first refusal, right of first offer
and (iii) are not subject to a right of rescission, except where such right has
not had, or would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent.
(iv) Upon consummation of the Restructure and the Equity
Offering and immediately prior to the Effective Time, the authorized Capital
Stock of Parent will consist of 53,592,444 shares of Parent Series B Preferred
Stock and 19,714.29 shares of Parent Common Stock. After the Restructure and
Equity Offering and immediately prior to the Effective Time, 53,592,144 shares
of Parent Series B Preferred Stock and 19,714.29 shares of Parent Common Stock
will be issued and outstanding, and all of which will be duly authorized,
validly issued, fully paid and nonassessable. There will be outstanding options
and warrants to purchase that number of shares of Parent Common Stock set forth
on Schedule 3.2(e), and a total of 6,200,000
16
shares of Parent Common reserved for issuance under the Parent Stock Plan at the
Effective Time (including the shares of Parent Common Stock subject to
outstanding options or restricted stock grants). Other than the foregoing,
except as set forth on Schedule 3.2(e), there will be no other shares of Parent
Capital Stock or securities convertible or exercisable into Parent Capital Stock
outstanding immediately prior to the Effective Time. The Restructure and the
Equity Offering was consummated in all material respects in accordance with all
applicable laws and regulations; provided, however, no representation or
warranty is made with respect to any written information about the Company
provided by the Company or its advisors to Parent for specific inclusion in the
confidential private placement memorandum to be used in connection with the
Equity Offering or with respect to the actions of the Placement Agent in
connection with the Equity Offering. No document, certificate or other material
prepared by Parent, its Affiliates or employees or advisors in connection with
the Restructure or Equity Offering 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 contained therein not misleading;
provided, however, no representation or warranty is given by Parent or Merger
Sub with respect to any written information about the Company provided by the
Company or its advisors to Parent for specific inclusion in the confidential
private placement memorandum to be used in connection with the Equity Offering.
(f) SEC Reports and Financial Statements. Parent has filed with the
SEC, and has heretofore made available to the Company true and complete copies
of, all forms, reports, schedules, statements and other documents required to be
filed by it under the Exchange Act or the Securities Act (as such documents have
been amended since the time of their filing, collectively, the "Parent SEC
Documents"). As of their respective dates or, if amended, as of the date of the
last such amendment, the Parent SEC Documents, including any financial
statements or schedules included therein (i) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading, and (b)
complied in all material respects with the applicable requirements of the
Exchange Act and the Securities Act, as the case may be, and the applicable
rules and regulations of the SEC thereunder. Each of the financial statements
included in the Parent SEC Documents have been prepared from, and are in
accordance with, the books and records of Parent and its consolidated Parent
Subsidiaries, comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial positions and the
consolidated results of operations and consolidated cash flows of Parent and its
consolidated Parent Subsidiaries as of the dates thereof or for the periods
presented therein (subject, in the case of unaudited statements, to normal
year-end audit adjustments not material in amount).
(g) No Contingent Liabilities. Parent and the Parent Subsidiaries shall
have no material liabilities or obligations, whether related to tax or non-tax
matters, known or unknown, due or not yet due, liquidated or unliquidated, fixed
or contingent, determined or determinable in amount or otherwise, and to the
Knowledge of the Parent and Merger Sub, there is no existing condition,
situation or set of circumstances which could reasonably be expected to result
in such a material liability or obligation, except as and to the extent (i)
recorded or reserved against in the
17
Parent's most recent consolidated Balance Sheet as of September 30, 2003 and
filed with the SEC, (ii) incurred in the ordinary course of business since such
balance sheet date, (iii) incurred to consummate the transactions contemplated
by this Agreement and in accordance with the respective terms described herein
or (iv) set forth in Schedule 3.2(g).
(h) Litigation. Except as set forth on Schedule 3.2(h) or as disclosed
in the Parent SEC Documents, there is no action, suit, investigation or
proceeding (or, to the Knowledge of Parent or Merger Sub any basis therefor)
pending against, or to the Knowledge of Parent or Merger Sub threatened, against
or affecting Parent or any Parent Subsidiaries or any of their respective
properties before any court or arbitrator or any governmental body, agency or
official.
(i) Advisory Fees. Except as set forth in Section 4.6, there is no
investment banker, broker, finder or other advisor which has been retained by,
or is authorized by Parent or Merger Sub to act on its or their behalf, who
might be entitled to any fee or commission from Company, Parent, Merger Sub or
any of their respective Affiliates upon consummation of this Merger.
(j) Valid Issuance of Parent Securities. Each of the shares of Parent
Common Stock to be issued to the Company Shareholders pursuant to the Merger
will, when issued, be duly authorized, validly issued, fully paid and
nonassessable, free and clear of any Encumbrances, not subject to any preemptive
rights or rights of first refusal, and issued in compliance with applicable
laws. Parent has duly and validly reserved sufficient shares of Parent Common
Stock to permit the grants of awards under the Parent Stock Plan and the
Executive Employment Agreements described in Section 5.1(j).
(k) Assets; Absence of Liens and Encumbrances. Except as set forth in
Schedule 3.2(k), Parent and each Parent Subsidiary owns, leases or has the legal
right to use all of the properties and assets, including, without limitation,
real property and personal property used in the conduct of the business of
Parent or such Parent Subsidiary or otherwise owned, leased or used by Parent or
any Parent Subsidiary (all such properties and assets being the "Parent
Assets"). Parent and each Parent Subsidiary has good and indefeasible title to,
or, in the case of leased or subleased Parent Assets, valid and subsisting
leasehold interests in, all the Parent Assets, free and clear of all
Encumbrances (except Permitted Encumbrances). The equipment of Parent and the
Parent Subsidiaries used in the operations of their respective businesses is,
taken as a whole, in good repair and operating condition (subject to normal
maintenance requirements and ordinary wear and tear excepted).
(l) Taxes. Except as disclosed on Schedule 3.2(l), the Parent has
timely filed, or caused to be filed, all tax returns required to be filed by it
or any Parent Subsidiary. Parent and the Parent Subsidiaries have paid in a
timely fashion all taxes required to be paid in respect of the periods covered
by such returns, and the books and the consolidated financial statements of the
Parent reflect, or will reflect, adequate reserves for all taxes payable by the
Parent or any consolidated Parent Subsidiary which have been accrued but are not
yet due. Neither the Parent nor any Parent Subsidiary is delinquent in the
payment of any material tax, assessment or governmental charge. No deficiencies
for any taxes have been proposed, asserted or assessed
18
against Parent or any Parent Subsidiary. Parent is not aware of any facts which
would constitute the basis for the proposal or assertion of any such deficiency
and there is no action, suit, proceeding, audit or claim now pending or, to the
knowledge of Parent, threatened against Parent or any Parent Subsidiary,
asserting any deficiency in the payment of taxes. All taxes which either Parent
or any Parent Subsidiary are required by law to withhold and collect have been
duly withheld and collected, and have been timely paid over to the proper
authorities to the extent due and payable. For the purposes of this Agreement,
the term "tax" shall include all federal, state, local and foreign income,
property, sales, excise and other taxes of any nature whatsoever. Neither the
Parent nor any member of any affiliated or combined group of which the Parent is
or has been a member has granted any extension or waiver of the limitation
period applicable to any tax returns. There are no Encumbrances (except
Permitted Encumbrances) for taxes upon the assets of the Parent or any Parent
Subsidiary. There are no tax sharing or tax allocation agreements to which the
Parent or any Parent Subsidiary is now or ever has been a party. Neither Parent
nor any Parent Subsidiary will be required under Section 481(c) of the Code, to
include any material adjustment in taxable income for any period subsequent to
the Merger. Neither Parent nor any Parent Subsidiary (i) has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was Parent) and (ii) has any liability for the
taxes of any Person (other than the Parent or the consolidated Parent
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.
(m) Compliance with Laws. The Parent and the Parent Subsidiaries are,
and have been, in compliance with any applicable provisions of any laws,
statues, ordinances or regulations, except where such any noncompliance has not
had, or would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on Parent. The Parent and the Parent
Subsidiaries have all material licenses, permits, certificates and
authorizations needed or required for the conduct of their respective businesses
as presently conducted and for the use of their respective properties and
premises occupied by them.
(n) Conflicting Interests. Except as set forth on Schedule 3.2(n) or as
disclosed in the Parent SEC Documents filed since January 1, 2003, no director,
officer or employee of the Parent nor relative or Affiliate of any of the
foregoing (i) sells or purchases goods or services from Parent or any Parent
Subsidiary or has any pecuniary interest in any supplier or client of any of the
foregoing or in any other business enterprise with which Parent or any Parent
Subsidiary conducts business or with which any of the foregoing is in
competition, or (ii) is indebted to the Parent or any Parent Subsidiary, except
for money borrowed and as set forth on the Parent consolidated Financial
Statements.
(o) Absence of Certain Changes or Events. Except as and to the extent
set forth on the Parent consolidated Financial Statements, to the extent
contemplated by or disclosed in this Agreement, or as set forth on Schedule
3.2(o), since September 30, 2003, Parent has conducted its business and the
business of the Parent Subsidiaries only in the ordinary course of business and,
to the Knowledge of the Parent, there has not been any event, occurrence,
development or circumstance which has had or could reasonably be expected to
have a Material Adverse Effect on the Company.
19
(p) Interim Operations of Merger Sub. Merger Sub was formed by Parent
solely for the purpose of engaging in the transactions contemplated by this
Agreement has not engaged in other business activities and has conducted its
operations only as contemplated by this Agreement. Merger Sub has no
liabilities, except pursuant to this Agreement and, except for a subscription
agreement pursuant to which all of its authorized Capital Stock was issued to
Parent, is not a party to any agreement other than this Agreement and agreements
with respect to the appointment of registered agents and similar matters.
(q) Statements And Other Documents Not Misleading. This Agreement,
including all exhibits and schedules does not contain and will not contain any
untrue statement of any material fact or omit or will omit to state any material
fact required to be stated in order to make such statement, information,
document or other instruments, in light of the circumstances in which they are
made, not misleading.
ARTICLE IV
AGREEMENTS OF THE PARTIES
4.1 FINANCIAL STATEMENTS.
The Company shall cooperate with the Parent following the Closing so
that within sixty (60) days of the Closing, Parent shall cause to be prepared an
audit of the Company Financial Statements of the Company prepared in compliance
with generally accepted accounting principles, consistently applied, and in
accordance with all applicable SEC rules and regulations.
4.2 LOCK-UP AGREEMENTS.
(a) Company Shareholders; New Management. In addition to any
prohibition on transfers or sales under applicable federal and state securities
laws, (i) each of the Company Shareholders, and (ii) each of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇ ▇.
▇▇▇▇, who shall comprise the new management team immediately after the Effective
Time, shall execute at Closing lock-up agreements in substantially the form
attached as Exhibit 4.2(a) pursuant to which they would agree not to sell,
transfer or encumber or otherwise dispose of the shares of Parent of Common
Stock held by them as of the Effective Time for a period of 12 months after the
Closing.
(b) In addition to any prohibition on transfers or sales under
applicable federal and state securities laws, (i) each shareholder of Parent who
is set forth on Schedule 4.2(b) and (ii) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, shall execute at
Closing lock-up agreements in substantially the form attached as Exhibit 4.2(b)
pursuant to which they agree not to sell, transfer or encumber or otherwise
dispose of specified percentages of shares of Parent Common Stock held by them
as of the Effective Time for a period expiring on the earlier of (1)
registration with the SEC of the resale of the shares of Common Stock to be
issued in the Equity Offering or (2) 12 months after the Closing.
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4.3 PROHIBITION ON TRADING IN PARENT STOCK.
Company acknowledges that information concerning the matters that are
the subject matter of this Agreement may constitute material non-public
information under United States securities laws, and that the United States
securities laws prohibit any Person who has received material non-public
information relating to the Parent from purchasing or selling the securities of
the Parent, or from communicating such information to any Person under
circumstances in which it is reasonably foreseeable that such Person is likely
to purchase or sell securities of the Parent. Accordingly, until such time as
any such non-public information has been adequately disseminated to the public,
Company shall not purchase or sell any securities of the Parent, or communicate
such information to any other Person.
4.4 PARENT BOARD OF DIRECTORS AND OFFICERS.
As of Closing, Parent shall have taken all necessary action to (i) fix
the number of the members of the board of directors to four and obtain the
resignations of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III as directors of Parent, and appoint ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇ (the "Company Designees"), together with the two remaining Parent
directors, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, III and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, to serve as the four
directors of Parent, effective as of the Closing, and (ii) obtain the
resignation of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ as the President, Treasurer and Secretary
of Parent and all other officers of the Parent, and appoint ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
as Co-Chief Executive Officer and Secretary, and ▇▇▇▇ ▇. ▇▇▇▇▇ as Co-Chief
Executive Officer, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as Executive Vice President Exploration,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as Executive Vice President Operations and Business Development
and ▇▇▇▇▇▇ ▇. ▇▇▇▇, as Vice President Geosciences as the executive officers of
Parent, effective as of the Effective Time. As soon as commercially practicable
after the execution of this Agreement Parent shall comply with and immediately
take all actions, if any, required pursuant to Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under
this Section 4.4. In addition, Parent shall have caused the resignation of the
officers and directors or similar positions of any Parent Subsidiary (other than
▇▇▇▇-Miss Partners, L.P.) requested by the Company.
4.5 ACKNOWLEDGMENT OF APPROVALS; WRITTEN CONSENT OF PARENT.
By virtue of its signature to this Agreement, Parent acknowledges its
approval of this Agreement and its consent to the consummation of the
transactions identified herein and, with respect to Parent, shall constitute its
approval of the Merger and this Agreement by written consent in accordance with
the DGCL on and as of the date hereof with respect to all of the Merger Sub
Capital Stock owned by Parent as of the date hereof.
4.6 ADVISORY FEE.
At the Closing, Parent shall pay an advisory fee to HMA Advisors, Inc.
consisting of 375,000 shares of Parent Common Stock.
21
4.7 PLAN OF REORGANIZATION.
This Agreement is intended to constitute a "plan of reorganization"
within the meaning of Section 1.368-2(g) of the income tax regulations
promulgated under the Code. From and after the date of this Agreement and until
the Effective Time, each party hereto shall use its reasonable best efforts to
cause the Merger to qualify, and will not knowingly take any action, cause any
action to be taken, fail to take any action or cause any action to fail to be
taken which action or failure to act could prevent the Merger from qualifying as
a reorganization under the provisions of Section 368(a) of the Code. Following
the Effective Time, neither the Surviving Corporation nor Parent shall knowingly
take any action, cause any action to be taken, fail to take any action or cause
any action to fail to be taken, which action or failure to act could cause the
Merger to fail to qualify as a reorganization under Section 368(a) of the Code.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
5.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The obligations of the Company, Parent and Merger Sub to consummate the
Merger are subject to the satisfaction or waiver (if permissible) at or prior to
Closing of each of the following conditions:
(a) Trident Growth Fund, L.P. ("Trident") shall receive (i) an
aggregate of not more than 375,000 shares of Parent Common Stock in full
satisfaction and release of all amounts, liabilities and obligations due and
owing by Parent to Trident under that certain First Amended Loan Agreement
between Parent and Trident, the First Amended Security Agreement between Parent
and Trident and the 6% Secured Convertible Promissory Note in the principal
amount of $600,000, all dated July 29, 2003 (collectively, the "Trident 2003
Loan Documents"), and (ii) $1,500,000 cash, payable in good funds, in full
satisfaction and release of all amounts, liabilities and obligations due and
owing by Parent to Trident under that certain Loan Agreement between Parent and
Trident, the Security Agreement between Parent and Trident and the 12% Secured
Convertible Promissory Note in the principal amount of $1,500,000, all dated
April 5, 2002 (the "Trident 2002 Loan Documents," and together with the Trident
2003 Loan Documents, the "Trident Loan Documents"). In connection with the
foregoing, Trident shall deliver and surrender to Parent (i) the original
promissory notes issued by Parent in connection with the Trident Loan Documents,
(ii) a release of Parent from any and all obligations under the Trident Loan
Documents, and (iii) any other documentation necessary to facilitate the
termination and release of all Encumbrances on any asset of Parent;
(b) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") shall convert the full $1,550,000
principal amount due under the 12% convertible promissory notes issued by Parent
to Marcus, dated October 18 and 30, 2002, and all accrued interest due
thereunder, into an aggregate of not more than 1,026,624 shares of Parent Common
Stock. In connection with the foregoing, Marcus shall deliver and surrender to
Parent (i) the original promissory notes issued by Parent in connection with the
underlying loan documents, (ii) a release of Parent from any and all obligations
under
22
the underlying loan documents, and (iii) any other documentation necessary to
facilitate the termination and release of all Liens on any asset of Parent;
(c) The holders of all of Parent's outstanding shares of Series C
Convertible Preferred Stock (the "Series C Preferred Stock") shall enter into an
agreement with the Company, pursuant to which, on or prior to Closing, they will
convert their shares of Series C Preferred Stock into an aggregate of not more
than 2,808,824 shares of Parent Common Stock, waive certain registration rights
and other rights of such holders under such agreements and in connection with
such conversion obtain from such holders a general release of Parent and its
Affiliates from any and all pre-Closing claims;
(d) Parent shall purchase from the holders of all of Parent's
outstanding shares of Series A Convertible Preferred Stock and Series B
Preferred Stock not owned by Lancer Offshore, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or their
respective Affiliates (the "Non-Lancer/Laurer Series B Preferred Stock"), all of
the shares of Series A Preferred Stock and Non-Lancer/Laurer Series B Preferred
Stock in exchange for certain non-core assets of Parent set forth on Schedule
5.1(d), and in connection therewith provide a general release of Parent and its
Affiliates from any and all pre-Closing claims;
(e) RAM Trading, Ltd., a Cayman Islands exempt company and stockholder
of Parent ("RAM"), shall have purchased (i) an aggregate of 13,347,672 shares of
Parent Common Stock and 103,500.7 shares of Parent Series B Preferred Stock
owned by Lancer Offshore, Inc., a British Virgin Islands company, and (ii)
750,000 shares of Parent Common Stock owned by Lancer Partners, L.P., a
Connecticut limited partnership, and such purchase shall be approved by a final
non-appealable order of the United States Bankruptcy Court for the District of
Connecticut, Case No. 03-50942 (AHWS), and the United States District Court for
the Southern District Court for the Southern District of Florida, Docket No.
03-CV-80612. Thereafter, Parent shall have purchased from RAM the foregoing
shares of Parent Capital Stock referred to in clauses (i) and (ii) above, at an
aggregate purchase price of not more than $5,330,948 and Parent will grant
Lancer Offshore, Inc. the same registration rights granted to the investors in
the Equity Offering;
(f) Parent shall purchase the limited partnership interest in ▇▇▇▇-Miss
Partners, L.P. held by RAM Trading, Inc. in exchange for an aggregate of not
more than 835,000 shares of Parent Common Stock;
(g) Parent shall have effected an amendment to its (i) Certificate of
Designation of Series A Preferred Stock (the "Series A Designation"), (ii)
Certificate of Designation of Series B Preferred Stock (the "Series B
Designation"), and (iii) Certificate of Designation of Series C Preferred Stock
(the "Series C Designation") substantially in the forms attached hereto as
Exhibit 5.1(g)(i), Exhibit 5.1(g)(ii), and Exhibit 5.1(g)(iii), respectively;
(h) Parent shall have entered into new Registration Rights Agreement
substantially in the form attached hereto as Exhibit 5.1(h) with each of the
persons set forth on the schedule attached thereto, which agreement shall
provide a general release of Parent and its Affiliates from any and all
pre-Closing claims;
23
(i) Parent shall complete a private offering of Parent Common Stock, at
a purchase price of $2.00 per share, solely to persons it reasonably believes to
be accredited investors pursuant to an exemption from registration under Section
4(2) of the Securities Act and Rule 506 promulgated thereunder, resulting in
gross proceeds of at least $45,000,000 (the "Equity Offering");
(j) Parent shall have entered into employment agreements with each of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇ in substantially the form attached hereto
as Exhibit 5.1(f) (the "Executive Employment Agreements");
(k) Parent shall adopt, subject to Parent shareholder approval, an
incentive stock plan providing for the issuance of options shares of restricted
stock and other equity-based awards with available shares under such plan of
("Parent Plan Options") of 6,200,000 shares of Parent Common Stock, which plan
shall be in substantially the Form attached hereto as Exhibit 5.1(k);
(l) The Persons described in Section 4.2 shall have executed and
delivered to Parent the Lock-Up Agreements as set forth in Section 4.2;
(m) No domestic or foreign governmental or regulatory agency,
authority, bureau, commission, department, official or similar body or
instrumentality thereof, or any governmental court, arbitral tribunal located or
having jurisdiction in the United States shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, decree,
judgment, injunction or other order, whether temporary, preliminary or permanent
which is then in effect and has the effect of making the Closing illegal or
otherwise prohibiting consummation of the Closing; provided, that the parties
use reasonable commercial efforts to challenge any decree, judgment or
injunction or other order that is not final and non-applicable, but in no event
will any party be required to expend in excess of $10,000 with respect to such
challenge; and
(n) Other than those set forth on Schedule 3.2(h), there shall not be
pending, instituted or threatened by any Person or Governmental Authority any
suit, action, investigation or proceeding seeking to (i) alter, prevent,
materially delay, restrain or prohibit the consummation of the Merger, the
Equity Offering or the other transactions contemplated by this Agreement, (ii)
obtain from Parent (or any Parent Subsidiary) or the Company or any Parent
Subsidiary any damages that would have, or could reasonably be expected to have,
a Material Adverse Effect on Parent or the Company, as applicable, or (iii)
seeking to prohibit or limit the ownership or operation by Parent (or any Parent
Subsidiary) or the Company of its businesses or assets in a manner that would
have, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on Parent or the Company, as applicable.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to consummate the Merger and the other
transactions contemplated to be consummated by it at the Closing are subject to
the satisfaction (or, if permissible, waiver by the Company) at or prior to the
Closing (or at such other time prior thereto as may be expressly provided in
this Agreement) of each of the following conditions:
24
(a) The representations and warranties of Parent and Merger Sub set out
in this Agreement shall be true and correct in all material respects (or, if any
such representation or warranty is expressly qualified by "materiality,"
"Material Adverse Effect" or words of similar import, then in all respects) as
of the date hereof;
(b) Parent and Merger Sub shall have complied in a timely manner and in
all material respects with the respective agreements set out in this Agreement;
(c) Each of the deliveries in Section 2.2 and 2.3 (as applicable to
Parent and Merger Sub);
(d) The composition of board of directors and officers of Parent shall
be as set forth in Section 4.4; and
(e) All director, shareholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required to be obtained by Parent or Merger Sub under this
Agreement, applicable law or any applicable contract or agreement (other than as
contemplated by this Agreement) to complete the Merger shall have been secured.
5.3 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to consummate the Merger and
the other transactions contemplated to be consummated by them at the Closing are
subject to the satisfaction (or, if permissible, waiver by Parent and Merger
Sub) at or prior to the Closing (or at such other time prior thereto as may be
expressly provided in this Agreement) of each of the following conditions:
(a) The representations and warranties of the Company set out in this
Agreement shall be true and correct in all material respects (or, if any such
representation or warranty is expressly qualified by "materiality," "Material
Adverse Effect" or words of similar import, then in all respects) as of the date
hereof;
(b) Company shall have complied in a timely manner and in all material
respects with its agreements set out in this Agreement;
(c) Each of the deliveries in Section 2.1 and 2.3 (as applicable to the
Company); and
(d) All director, shareholder, lender, lessor and other parties'
consents and approvals, as well as all filings with, and all necessary consents
or approvals of, all federal, state and local governmental authorities and
agencies, as are required to be obtained by the Company under this Agreement,
applicable law or any applicable contract or agreement (other than as
contemplated by this Agreement) to complete the Merger shall have been secured.
25
ARTICLE VI
SURVIVAL
6.1 NATURE OF STATEMENTS.
All, but only those, statements contained in this Agreement or any
Schedule or certificate delivered by or on behalf of a party under this
Agreement shall be deemed representations and warranties made by that Party in
connection with the transactions contemplated by this Agreement.
6.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties made by the Company in Section 3.1,
and the representations and warranties made by Parent and Merger Sub in Section
3.2, shall not survive, and shall terminate upon, the Closing.
ARTICLE VII
MISCELLANEOUS
7.1 NOTICES.
All notices requests, demands, waivers and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been duly given on the date if delivered personally, or
upon the second Business Day after it shall have been deposited by certified or
registered mail with postage prepaid, or sent by telex, telegram or telecopier,
as follows (or at such other address or facsimile number for a party as shall be
specified by like notice):
If to the Company or Shareholder: with a copy to:
--------------------------------- --------------
NSNV, Inc. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, 17th Floor ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent: with a copy to:
------------ --------------
Continental Southern Resources, Inc. ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Attention: Chief Executive Officer Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
26
If to Merger Sub: with a copy to:
---------------- --------------
CSOR Acquisition Corp. ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, P.C.
c/o Continental Southern Resources, Inc. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Suite 158A Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Bala ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Fax: ▇▇▇-▇▇▇-▇▇▇▇
7.2 AGREEMENT; ASSIGNMENT.
This Agreement, including all Exhibits and Schedules hereto,
constitutes the entire Agreement among the parties with respect to its subject
matter and supersedes all prior agreements and understandings, both written and
oral, among the parties or any of them with respect to such subject matter and
shall not be assigned by operation of law or otherwise.
7.3 BINDING EFFECT; BENEFIT.
This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and assigns. Nothing in this Agreement
is intended to confer on any Person other than the parties to this Agreement or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
7.4 HEADINGS.
The descriptive headings of the sections of this Agreement are inserted
for convenience only, do not constitute a part of this Agreement and shall not
affect in any way the meaning or interpretation of this Agreement.
7.5 COUNTERPARTS.
This Agreement may be executed in two or more counterparts and
delivered via facsimile, each of which shall be deemed to be an original, and
all of which together shall be deemed to be one and the same instrument.
7.6 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of
Texas, except to the extent that the Nevada Business
Corporation Act shall apply to the internal corporate governance of the Parent,
without regard to the laws that might otherwise govern under principles of
conflicts of laws applicable thereto.
27
7.7 ARBITRATION.
If a dispute arises as to the interpretation of this Agreement, it
shall be decided finally in an arbitration proceeding conforming to the Rules of
the American Arbitration Association applicable to commercial arbitration then
in effect at the time of the dispute. The arbitration shall take place in
Philadelphia, Pennsylvania. The decision of the Arbitrators shall be
conclusively binding upon the parties and final, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. The parties
shall share equally the costs of the arbitration.
7.8 SEVERABILITY.
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid,
void, unenforceable or against its regulatory policy, the remainder of this
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
7.9 EXPENSES.
Except as otherwise expressly set forth herein, all legal and other
costs and expenses incurred in connection with the Transactions shall be paid by
the party incurring such expenses and shall be paid promptly after the Closing.
7.10 AMENDMENT AND MODIFICATION. This Agreement may be amended by
written agreement of the Parent, Merger Sub and the Company.
7.11 CERTAIN DEFINITIONS.
As used herein:
(a) "Affiliate" shall have the meanings ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act;
(b) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which federally chartered financial institutions are not open for
business in the City of Philadelphia, Pennsylvania;
(c) "Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participation or other equivalents
of corporate stock and (b) with respect to any Person that is not a corporation,
any and all partnership, membership or other equity interests of such Person;
(d) Company IP Agreements" means (a) licenses of Intellectual Property
by the Company to any third party, (b) licenses of Intellectual Property by any
third party to the Company, (c) agreements between Company and any third party
relating to the development or use of Intellectual Property, the development or
transmission of data, or the use, modification, framing, linking, advertisement,
or other practices with respect to Internet web sites, and (d)
28
consents, settlements, decrees, orders, injunctions, judgments or rulings
governing the use, validity or enforceability of the Company Intellectual
Property;
(e) "Company Shareholders" are the Persons identified on Schedule
3.1(d) that together own beneficially and of record all of the Company Shares.
(f) "Company Software" means all Software (a) material to the operation
of the business of the Company or (b) manufactured, distributed, sold, licensed
or marketed by the Company;
(g) "Copyrights" means mask works, rights of publicity and privacy, and
copyrights in works of authorship of any type, including Software, registrations
and applications for registration thereof throughout the world, all rights
therein provided by international treaties and conventions, all moral and common
law rights thereto, and all other rights associated therewith;
(h) "Encumbrances" shall mean any security or other property interest
or right, claim, lien, pledge, option, charge, security interest, contingent or
conditional sale, or other title claim or retention agreement, interest or other
right or claim of third parties, whether perfected or not perfected, voluntarily
incurred or arising by operation of law, and including any agreement to grant or
submit to any of the foregoing in the future;
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended;
(j) "Intellectual Property" means (a) Patents, (b) Trademarks, (c)
Copyrights, (d) Trade Secrets, (e) Software, and (f) Seismic Data.
(k) "Knowledge" means an individual will be deemed to have "Knowledge"
of a particular fact or other matter if such individual is aware of such fact or
other matter. A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter;
(l) "Licensed Intellectual Property" means Intellectual Property
licensed to the Company or its Subsidiaries pursuant to the Company IP
Agreements or the PGS Agreements;
(m) "Material Adverse Effect" shall mean any adverse effect on the
business, assets, liabilities, condition (financial or otherwise) or results of
operation of the relevant party and its Subsidiaries, if any, which is material
to such party and its Subsidiaries, if any, taken as a whole;
(n) "Patents" means United States, foreign and international patents,
patent applications and statutory invention registrations, including reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations
thereof, and all rights therein provided by international treaties and
conventions;
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(o) "Permitted Encumbrance" means, with respect to any Person, (a)
mechanics' Encumbrance, workmen's Encumbrance, carriers' Encumbrance,
repairmen's Encumbrance, landlord's Encumbrance or other like Encumbrance
arising or incurred in the ordinary course of business, (b) statutory landlord
Encumbrance and statutory Encumbrance for Taxes, assessments and other similar
governmental charges that are not overdue, (c) Encumbrances incurred or deposits
made to secure the performance of bids, contracts, statutory obligations, surety
and appeal bonds incurred in connection with the Person's business and in the
ordinary course of business by such Person, (d) Encumbrances that arise under
zoning, land use and other similar imperfections of title that arise in the
ordinary course of business and (e) immaterial Encumbrances that, in the
aggregate, would not reasonably be expected to materially affect the value, use
or marketability of the property subject thereto.
(p) "Person" means any individual, corporation, partnership,
association, trust or other entity or organization, including a governmental or
political subdivision or any agency or institution thereof;
(q) "Restructure" means collectively the transactions contemplated by
Sections 5.1(a) through (h) (inclusive).
(r) "Rights" shall mean any and all outstanding subscriptions,
warrants, options, voting agreements, voting trusts, proxies, or other
arrangements or commitments obligating or which may obligate a Person to dispose
of or vote any shares;
(s) "Software" means computer software, programs and databases in any
form, including Internet web sites, web content and links, source code, object
code, operating systems and specifications, data, databases, database management
code, utilities, graphical user interfaces, menus, images, icons, forms, methods
of processing, software engines, platforms, and data formats, all versions,
updates, corrections, enhancements and modifications thereof, and all related
documentation, developer notes, comments and annotations;
(t) "Subsidiaries" means, with respect to any Person, (a) a corporation
50% or more of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of directors of such corporation is at
the time owned by such Person, directly or indirectly through subsidiaries, and
(b) any partnership, limited liability company, association, joint venture,
trust or other entity in which such Person, directly or indirectly through
subsidiaries, is either a general partner, has 50% or greater equity interest at
the time or otherwise owns a controlling interest.
(u) "Trade Secrets" means trade secrets, know-how and other
confidential or proprietary technical, business and other information, including
manufacturing and production processes and techniques, research and development
information, technology, drawings, specifications, designs, plans, proposals,
technical data, financial, marketing and business data, pricing and cost
information, business and marketing plans, customer and supplier lists and
information, and all rights in any jurisdiction to limit the use or disclosure
thereof; and
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(v) "Trademarks" means trademarks, service marks, trade dress, logos,
trade names, corporate names, URL addresses, domain names and symbols, slogans
and other indicia of source or origin, including the goodwill of the business
symbolized thereby or associated therewith, common law rights thereto,
registrations and applications for registration thereof throughout the world,
all rights therein provided by international treaties and conventions, and all
other rights associated therewith.
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
President
CSOR ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
President
NSNV, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
Co-Chief Executive Officer
32