EXHIBIT 10.29
AGREEMENT AND PLAN OF MERGER
by and among
Delta Petroleum Corporation,
as Purchaser,
Delta Acquisition Company, Inc.,
as Merger Sub,
Piper Petroleum Company,
and ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
TABLE OF CONTENTS
1. Certain Definitions................................................... 1
2. The Merger and Consideration.......................................... 3
2.1 Merger Consideration............................................ 3
2.2 Merger.......................................................... 4
2.3 Shareholder Approvals........................................... 4
2.4 Closing......................................................... 5
2.5 Consummation of the Transaction at the Closing.................. 5
2.6 Effect of Merger................................................ 6
2.7 Effect on Capital Stock......................................... 6
3. Representations and Warranties of Piper............................... 8
3.1 Incorporation and Corporate Status.............................. 8
3.2 Binding Agreement............................................... 8
3.3 Authorized Stock................................................ 8
3.4 Stock Fully Paid................................................ 8
3.5 Ownership of Securities......................................... 8
3.6 Title........................................................... 9
3.7 No Other Agreements............................................. 9
3.8 Financial Representations....................................... 9
3.9 No Liabilities.................................................. 9
3.10 No Change In Financial Condition................................ 10
3.11 Certain Tax Matters............................................. 10
3.12 Financial Disclosure............................................ 11
3.13 Condition of Tangible Assets.................................... 11
3.14 Real Property................................................... 11
3.15 All Assets...................................................... 12
3.16 Stock Transfer Records and Minute Books......................... 13
3.17 Indefeasible Title.............................................. 13
3.18 Leases and Mineral Interests.................................... 13
3.19 Insurance....................................................... 14
3.20 Intellectual Property Rights.................................... 14
3.21 No Litigation................................................... 14
3.22 No Violation of Laws or Regulations............................. 14
3.23 Approvals....................................................... 15
3.24 Labor Agreements................................................ 15
3.25 Contracts....................................................... 15
3.26 Employees....................................................... 16
3.27 Environmental Matters........................................... 16
3.28 Stock Representations........................................... 17
3.29 Licenses, Facilities............................................ 17
3.30 Accounts Receivable............................................. 18
3.31 Payables........................................................ 18
3.32 Permits......................................................... 18
3.33 Employee Benefit Matters........................................ 19
3.34 Directors and Officers.......................................... 19
3.35 Subsidiaries.................................................... 19
3.36 Full Disclosure................................................. 19
4. Representations and Warranties of Purchaser and Merger Sub............ 19
4.1 Good Standing................................................... 19
4.2 Binding Agreement............................................... 20
4.3 Litigation; Compliance with Laws................................ 20
4.4 Current Filings With SEC........................................ 20
4.5 Purchaser's Stock............................................... 21
5. Activities Prior to the Closing Date.................................. 22
5.1 Operation of Piper's Business................................... 22
5.2 Access to Information........................................... 24
5.3 Confidentiality................................................. 24
5.4 Benefit Plans................................................... 25
5.5 Best Efforts and Standstill..................................... 25
5.6 Listing of Purchaser Common Stock............................... 25
5.7 Meeting of Piper's Shareholders................................. 25
5.8 Compliance with Laws............................................ 25
5.9 Contract with Third Parties..................................... 26
6. Conditions Precedent to the Purchaser's and Merger Sub's Obligations.. 26
6.1 Representations and Warranties.................................. 26
6.2 Performance of Obligations...................................... 26
6.3 Performance at Closing.......................................... 26
6.4 Dissenter's Rights.............................................. 26
6.5 Absence of Litigation or Restraining Action..................... 26
6.6 No Attachment................................................... 26
6.7 No Liens, Indebtedness.......................................... 26
6.8 Resignations and Employee Terminations.......................... 27
6.9 Corporate Records............................................... 27
6.10 Consents and Waivers............................................ 27
6.11 Legal Compliance................................................ 27
6.12 Absence of Adverse Changes...................................... 27
6.13 Opinion of Counsel.............................................. 27
6.14 Certificates.................................................... 27
6.15 Shareholder Approval............................................ 27
6.16 Marketing Contracts............................................. 28
6.17 Piper's Disclosure Statement.................................... 28
6.18 Audit of Piper's Financial Statements........................... 28
6.19 General Due Diligence Review. 28
7. Conditions Precedent to Piper's and Piper Shareholders' Obligations... 28
7.1 Representations and Warranties.................................. 28
7.2 Performance of Obligations...................................... 29
7.3 Performance at Closing.......................................... 29
7.4 Absence of Restraining Action................................... 29
7.5 Nasdaq Listing of Shares........................................ 29
7.6 Market Price of Delta Stock..................................... 29
7.7 Due Diligence Review............................................ 29
8. Post-Closing Covenants................................................ 30
8.1 Cooperation of The Principal Shareholders and Former Officers
of Piper....................................................... 30
8.2 Litigation Support.............................................. 30
8.3 Other Transitional Matters...................................... 30
8.4 Cooperation After Closing....................................... 31
8.5 Confidential Information........................................ 31
8.6 Disclosure Required in Legal Proceedings........................ 31
8.7 Registration of Delta Stock Issued to Piper Shareholders........ 31
8.8 Cooperation on Filing of Amendment to Form 8-K.................. 32
8.9 Continuity of Business.......................................... 32
8.10 ▇▇▇▇▇▇ Exploration Company Duties............................... 32
9. Delivery of Closing Documents......................................... 32
9.1 Delivery of Closing Documents to Purchaser and Merger Sub....... 32
9.2 Delivery of Documents to Piper and the Piper Shareholders....... 33
10. Termination........................................................... 34
10.1 Events of Termination.......................................... 34
11. Miscellaneous......................................................... 35
11.1 Notices........................................................ 35
11.2 Brokerage Commissions.......................................... 36
11.3 Successors and Assigns......................................... 36
11.4 Arbitration.................................................... 37
11.5 No Oral Modifications.......................................... 37
11.6 Waiver......................................................... 37
11.7 Governing Law.................................................. 37
11.8 Severability................................................... 37
11.9 Headings and Captions for Convenience.......................... 37
11.10 Counterparts................................................... 37
11.11 Representations, Warranties and Covenants...................... 37
11.12 Indemnification by Principal Shareholder of Piper............. 38
11.13 Purchaser's Indemnification................................... 39
11.14 Limitation on Indemnification................................. 40
11.15 No Benefit To Others.......................................... 41
11.16 Expenses...................................................... 41
11.17 Publicity..................................................... 41
11.18 Exhibits...................................................... 41
11.19 Entire Agreement.............................................. 42
11.20 Currency Amounts.............................................. 42
ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made this 26th day of
December, 2001, by and among Delta Petroleum Corporation, a Colorado
corporation ("Purchaser"), Delta Acquisition Company, Inc., a Colorado
corporation ("Merger Sub"), and Piper Petroleum Company, a Delaware
corporation ("Piper"), and ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇, the principal shareholder of
Piper ("Principal Shareholder of Piper").
RECITALS
▇. ▇▇▇▇▇ is engaged in the ownership, leasing, acquisition,
exploration, drilling and development of oil and gas properties and working
interests, royalty, overriding royalty and other mineral interests, primarily
located in Colorado, Kansas, Louisiana, Mississippi, New Mexico, Oklahoma and
Texas and in Australia and the production and sale of oil and gas;
B. Purchaser owns 100% of the issued and outstanding capital stock of
Merger Sub; and
C. Purchaser desires to acquire Piper's business by merging Piper with
and into Merger Sub in accordance with the terms and conditions of this
Agreement in a transaction designed and intended to meet the requirements of
Section ("Sec.") 368(a)(l)(A) and Sec. 368(a)(2)(D) of the Internal Revenue
Code of 1986, as amended ("Code"), and as a result of such transaction Merger
Sub, following the merger of Piper with and into it, shall be the Surviving
Corporation and, as such, shall be a wholly owned subsidiary of the Purchaser.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Certain Definitions. The definitions set forth below shall apply to
the meaning of the terms as used throughout this Agreement. All other
capitalized terms shall have the meaning as defined in other sections of this
Agreement.
1.1 "Affiliate" shall mean with reference to a particular Person
(i) any Person, directly or indirectly, owning, controlling or holding with
power to vote 10% or more of the outstanding voting securities of such
particular Person; (ii) any Person 10% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with power to
vote by such particular Person; or (iii) any Person, directly or indirectly,
controlled by, controlling or under common control with such particular
Person.
1.2 "Agreement" shall mean this Agreement and Plan of Merger.
1.3 "Closing" shall mean the consummation of the transactions
contemplated by this Agreement.
1.4 "Closing Date" shall mean the date on which the Closing occurs
pursuant to Section 2.4 hereof.
1.5 "Commission" shall mean the United States Securities and
Exchange Commission.
1.6 "Delta Common Stock" shall mean the $.01 par value voting
common stock of Purchaser.
1.7 "Effective Time" shall mean the time when this Agreement or
the Certificate or Articles of Merger are filed as provided in Section 2.5 of
this Agreement and the Merger of Piper with and into Merger Sub becomes
effective under Colorado and Delaware law.
1.8 "Marketable Title" shall mean a title that is free of
encumbrances and any reasonable doubt as to its validity, and such that a
reasonable and prudent person engaged in the business of the ownership,
development and operation of any of the assets to which this term applies as
provided in this Agreement, with the knowledge of all the facts and their
legal bearing, would be willing to accept in the exercise of ordinary business
prudence.
1.9 "Merger" shall have the same meaning as set forth in Section
2.2 of this Agreement.
1.10 Permitted Encumbrances. The following liens, charges and
other encumbrances of a similar nature are collectively referred to in this
Agreement as the "Permitted Encumbrances" with respect to the properties and
assets of Piper:
1.10.1 Tax Liens. Liens for current state or local
property taxes not yet due and payable or subject to penalties.
1.10.2 Immaterial Violations of Law. Zoning ordinances,
building laws, restrictions, regulations and rules imposed by governmental
authorities, if any, none of which is materially violated by existing
buildings and land uses by Piper.
1.10.3 Governmental Assessments. Any assessment for local
benefits levied by any governmental authority and not now a lien upon all or
any portion of such real property; provided, however, neither the Principal
Shareholder of Piper nor Piper know or have reason to know of any such
assessment.
1.10.4 Liens Released Prior to Closing. Liens of carriers,
warehousemen, mechanics, laborers, materialmen and other like statutory liens
in existence less than 120 days from the date of creation thereof, all of
which shall be satisfied and released on or prior to the Closing Date.
1.10.5 Encumbrances of Leasehold Properties. Any mortgage,
deeds of trust or other encumbrances on leasehold properties which Piper is
leasing from a third party which is the owner of the property being leased by
Piper subject to any such encumbrance.
1.10.6 Property Restrictions Not Impairing Value. Liens,
easements, rights-of-way, restrictions, servitude, permits, conditions,
covenants, exceptions, reservations, and other similar encumbrances which are
incurred in the ordinary course of business or existing on property and which
appear of public record in the records maintained by the appropriate local or
state governmental authority and which do not materially impair the value of
the assets of Piper or interfere with the ordinary conduct of Piper's business
or its rights to its assets.
1.10.7 Operator's Liens. Liens and security interests for
currently due obligations (other than obligations arising with respect to the
properties in Australia in which Piper has an interest), not in excess of as
to individual property of $5,000 and in the aggregate of $50,000 as of the
date of this Agreement, which liens and security interests are created by
operating agreements or similar agreements relating to the operation of
Piper's oil and gas properties and none of which agreements is in default nor
are the obligations under any such agreement past due or in breach.
1.10.8 Summit Lien. Liens of Summit National Bank against
the building of Piper in Fort Worth, Texas, securing payment of the
indebtedness to Summit National Bank as more particularly described in
Schedule 3.17 attached to this Agreement. As of the Closing Date, the unpaid
principal amount and accrued interest owed by Piper to Summit National Bank
shall not exceed sixty thousand dollars ($60,000).
1.11 "Person" shall mean an individual, partnership, corporation,
trust, limited liability company, unincorporated organization, association or
joint venture or a government, agency, political subdivision or
instrumentality thereof.
1.12 "Piper" shall mean Piper Petroleum Company, a Delaware
corporation, and where appropriate in the context used shall include its
subsidiaries, if any, as shall have been set forth in Schedule 3.35 attached
to this Agreement.
1.13 "Piper Stock" shall mean the voting common stock, with no par
value, of Piper, which is the only authorized capital stock of Piper.
1.14 "Principal Shareholder of Piper" shall mean ▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇.
1.15 "Purchaser" shall mean Delta Petroleum Corporation, a
Delaware corporation.
1.16 "Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
1.17 "Surviving Corporation" shall have the same meaning as set
forth in Section 2.2 of this Agreement.
All other capitalized terms shall have the meanings as specified
elsewhere in this Agreement.
2. The Merger and Consideration.
2.1 Merger Consideration. On the Closing Date, the shares of
Piper Stock owned by the Piper shareholders, consisting of a total of seven
thousand four hundred eighty-five (7,485) shares of Piper Stock, which
constitutes one hundred percent (100%) of the issued and outstanding shares of
Piper's capital stock, subject to the provisions of this Agreement, shall be
delivered by all of the Shareholders of Piper for surrender to the Surviving
Corporation and exchanged for the Consideration ("Merger Consideration") as
follows:
2.1.1 Delta Stock. Subject to the provisions of Sections
2.1.3 and 6.4 of this Agreement, the shares of Piper Stock held by the
shareholders of Piper shall be exchanged for, converted into and become One
Million Three Hundred Eighty Thousand (1,380,000) shares of Delta Common Stock
("Stock Consideration") which shall be issued by Purchaser to the Shareholders
of Piper;
2.1.2 Loan Repayment and Additional Delta Stock. Purchaser
shall assume and repay the promissory notes for the full amount of the
indebtedness owed by Piper to ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇, which as of November 30,
2001, was in the amount of $796,836.58 and ▇▇▇▇▇▇ Exploration Company in the
amount of $404,575.15, and in consideration of the repayment of the full
amount of such loans, on the Closing Date ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ and ▇▇▇▇▇▇
Exploration Company shall deliver to Purchaser the promissory notes evidencing
such indebtedness which shall be marked on the face thereof as "paid in full"
and shall be signed by an officer of ▇▇▇▇▇▇ Exploration Company duly
authorized to sign on its behalf and ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ as each of their names
appear thereon as the payee of each such note. The indebtedness owed by piper
to ▇▇▇▇▇▇ Exploration Company will increase by $9,000 per month, plus an
amount equal to the amount of any joint interest ▇▇▇▇▇▇▇▇ of Piper paid by
▇▇▇▇▇▇ Exploration Company after November 30, 2001. In addition to the
repayment of such notes, Purchaser shall deliver to ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ on the
Closing Date a stock certificate representing 51,000 shares of Delta Common
Stock as reimbursement for the unpaid salary (net of previously paid social
security and withholding taxes) owed by Piper to ▇▇. ▇▇▇▇▇▇;
2.1.3 Reduction in Stock Consideration. To the extent that
any shareholders of Piper Stock exercise their dissenter's rights as provided
in Section 6.4 of this Agreement and receive cash in lieu of the issuance of
shares of Delta Common Stock in exchange for their Piper Stock, the number of
shares of Delta Common Stock which it shall be required to exchange under this
Agreement shall be reduced by one hundred eighty-four (184) shares of Delta
Common Stock for each share of Piper Stock for which dissenter's rights have
been exercised;
2.1.4 Allocation of Delta Stock. Such shares of Delta Common
Stock shall be divided and issued to the shareholders of Piper in proportion
to their respective ownership interests in the Piper Stock, as set forth in
Exhibit A attached to this Agreement.
2.2 Merger. At the Effective Time and subject to and upon the
terms and conditions of this Agreement and in accordance with Colorado and
Delaware law, Piper shall be merged with and into Merger Sub.
2.2.1 Termination of Piper's Existence. As a result of such
Merger, the separate corporate existence of Piper shall cease and Merger Sub
shall continue as the surviving corporation. Merger Sub as the surviving
corporation after the merger is hereafter sometimes referred to as the
"Surviving Corporation."
2.2.2 Post Merger Authority of Surviving Corporation. The
Merger will have the effect set forth in the Colorado Business Corporation Act
and the Delaware General Corporation Law. The Surviving Corporation may, at
any time after the Effective Time, take any action, including executing and
delivering any certificates, instruments and documents as shall be determined
by the Board of Directors of the Surviving Corporation to be necessary and
appropriate, in the name and on behalf of either Piper or Merger Sub in order
to carry out and effectuate the transactions contemplated by this Agreement.
2.3 Shareholder Approvals. Subsequent to the date of this
Agreement and prior to the Effective Time, the parties hereto shall use their
best efforts to obtain the requisite shareholder approval as required under
their respective Certificates or Articles of Incorporation and Bylaws and
under Colorado and Delaware law as follows:
2.3.1 Merger Sub Approval. The board of directors of Merger
Sub and Purchaser, as the sole shareholder of Merger Sub, by approval of its
board of directors at a special meeting of its board duly called, pursuant to
notice or waiver thereof, shall approve this Agreement and the issuance of the
shares of Delta Common Stock for the number of shares and the payment of the
cash as part of the Merger Consideration as contemplated under Section 2.1 of
this Agreement, all in accordance with Colorado law, the Articles of
Incorporation and Bylaws of Merger Sub and Purchaser; and
2.3.2 Piper Approval. Piper's board of directors at a
special meeting, duly called pursuant to notice, shall approve and shall duly
call, give notice of, convene and hold a special meeting of its shareholders
(the "Special Meeting") to consider and vote upon the approval and adoption of
this Agreement and the Merger contemplated hereby, or shall seek the requisite
written consent of its shareholders, all in accordance with Delaware law and
its Certificate of Incorporation and Bylaws. Piper shall hold the Special
Meeting or obtain such written consent as soon as practicable prior to or
after the date of this Agreement.
2.4 Closing. The Closing Date shall occur on that date which is
on or before three (3) days after any and all required conditions and
approvals, including any required approval of the shareholders of Purchaser;
but in no event later than February 15, 2002. Purchaser and Piper will use
their best efforts to close as soon as possible following the execution of
this Agreement. In the event that the Closing Date falls on a Saturday,
Sunday or federal holiday, then the next succeeding date which is not a
Saturday, Sunday or federal holiday shall be the Closing Date. The Closing
shall take place at the offices of Clanahan, Tanner, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C.,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. Mountain
Daylight Time on the Closing Date, or at such other time or place as mutually
agreed by the parties to this Agreement. Such Closing may be accomplished by
facsimile transmission of Closing Documents and facsimile signatures, provided
that the original of such signed documents are transmitted to the party or
parties entitled to receive such documents within three (3) business days
following the Closing Date. The Closing shall be effective as of the close of
business of the Closing Date. At the Closing, (a) Piper and the Principal
Shareholder of Piper will deliver to Merger Sub and the Purchaser the various
certificates and instruments and documents referred to in Section 9.1 of this
Agreement, (b) Purchaser and Merger Sub will deliver to Piper the various
certificates, instruments and documents referred to in Section 9.2 of this
Agreement, and (c) Merger Sub will deliver to the shareholders of Piper in the
manner provided below in Section 9.2.1 the Stock Certificates evidencing the
Stock Consideration issued in the Merger, subject to the provisions of
Sections 2.1.3 and 6.4 of this Agreement. As of the Closing Date, Certificate
of Merger substantially in the form of Exhibit B attached to this Agreement
will be filed with the Secretary of State of Colorado and the Secretary of
State of Delaware.
2.5 Consummation of the Transaction at the Closing. Purchaser,
Merger Sub and Piper will each carry out the procedures specified under the
applicable provisions of Colorado and Delaware law as shall be necessary and
appropriate to assure the effectiveness of the Merger. The Merger shall be
consummated by filing the Articles of Merger and Certificate of Merger with
the Secretary of State of the State of Colorado and State of Delaware,
respectively, in such form as required by, and executed in accordance with,
the relevant provisions of Colorado and Delaware law.
2.6 Effect of Merger. At the Effective Time:
2.6.1 Surviving Corporation. Piper shall be merged with and
into Merger Sub, with Merger Sub as the Surviving Corporation, and the
separate existence of Piper shall cease. As a result of the Merger, the
shareholders of Piper who held stock certificates representing the Piper Stock
prior to the Merger, shall cease to have any rights with respect to such stock
and all rights, privileges, powers, franchises and interest of Piper and all
of its properties, whether real, personal or mixed, all debts due on whatever
account, and every other interest of Piper, whether tangible or intangible,
shall be deemed to vest in the Surviving Corporation without further act or
deed, and all claims, demands property and every other interest shall be as of
the Effective Time the property of the Surviving Corporation to the same
extent as though previously owned or held by the Surviving Corporation.
2.6.2 Articles of Incorporation. The Articles of
Incorporation of Merger Sub in effect at and as of the Effective Time shall
remain the Articles of Incorporation of the Surviving Corporation, until
thereafter amended as provided by law.
2.6.3 Bylaws. 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 by law and provisions of such
Bylaws.
2.6.4 Directors and Officers. Immediately prior to the
Effective Time of the Merger, the directors and officers of Piper holding such
positions immediately prior to the Effective Time shall tender their
resignations to Piper as in the form of resignation attached to this Agreement
as Exhibit C. The number of directors of the Surviving Corporation and the
persons serving as Directors of the Surviving Corporation shall be four (4)
directors who shall be elected by the Purchaser, as the sole shareholder of
the Surviving Corporation immediately following the Effective Time and such
persons as so appointed shall continue to hold office until their successors
have been duly nominated, elected or appointed as provided under the Surviving
Corporation's Bylaws as may subsequently be amended in accordance with the
provisions thereof. The officers of the Surviving Corporation shall be
appointed, immediately following the Effective Time and the election by the
Purchaser of the directors of its Board of Directors, by the directors of the
Surviving Corporation and such officers as so appointed shall hold such
offices in the Surviving Corporation following the Effective Time, until such
time as their successors have been duly appointed and qualified.
2.6.5 The Merger. From and after the Effective Time, the
Merger shall have all the effects provided for a merger under both Colorado
and Delaware law and the laws of Colorado law shall govern the Surviving
Corporation.
2.7 Effect on Capital Stock.
2.7.1 Conversion of Piper Stock. At the Effective Time, as
a result of the Merger and without any action on the part of Purchaser, Merger
Sub, Piper or the holders of any of their securities, all of the issued and
outstanding shares of Piper Stock immediately prior to the Effective Time,
held by the shareholders of Piper shall be delivered for surrender to the
Purchaser on the Closing Date and at the Effective Time converted into the
right to receive all of the shares of Delta Common Stock payable under this
Agreement as provided in Section 2.1 of this Agreement.
2.7.2 Cancellation of Piper Stock Certificates. The
certificate or certificates representing Piper Stock shall, after the
Effective Time, cease to have any rights with respect to such shares of Piper
Stock except the right to the issuance of the number of shares of Delta Common
Stock as provided in Exhibit A attached to this Agreement or the payment of
cash, to the extent provided in Section 2.1.3 of this Agreement, for such
Piper Stock upon the surrender of such certificate or certificates in
accordance with this Section 2.7 of this Agreement. Upon the filing of the
Articles of Merger with the Colorado Secretary of State and the filing of the
Certificate of Merger with the Delaware Secretary of State as a consequence of
the Merger and without any other action on the part of the parties to this
Agreement, each of the issued and outstanding shares of Piper Stock shall be
cancelled and retired by the Surviving Corporation in exchange for the shares
of Delta Common Stock or the payment of cash as provided in Section 2.1 of
this Agreement and as set forth in Exhibit A attached to this Agreement and
all other shares of Piper's capital stock shall automatically be cancelled and
retired.
2.7.3 Cash Payment for Piper Stock. Payment by the
Purchaser or Merger Sub shall be made with respect to the Piper Stock in the
manner and only to the extent provided in Sections 2.1.3 and 6.4 of this
Agreement and except as so provided neither the Purchaser nor Merger Sub shall
have any obligations to purchase any additional shares of the Piper Stock in
exchange for the payment of cash.
2.7.4 Subsequent Transfer: Lost, Stolen or Destroyed
Certificates. After the Effective Time, there shall be no transfer on the
stock transfer books of the Surviving Corporation of shares of Piper Stock
that were registered as outstanding immediately prior to the Effective Time.
If any registered certificate for Piper shall have been lost, stolen or
destroyed, the Surviving Corporation, upon making of an affidavit signed by
the Person claiming such certificate to have been lost, stolen or destroyed
and setting forth the facts and other information relating to such loss or
destruction shall, subject to the provisions of this Section 2.7.4, deliver a
stock certificate for the appropriate number of shares of Delta Common Stock
in exchange for, and conversion of, the Piper Stock represented by such
certificate in accordance with Section 2.1 of this Agreement to the Person(s)
legally entitled thereto. The Surviving Corporation, in the sole discretion
of its board of directors and as a condition precedent to the delivery of the
shares of Delta Common Stock in exchange for, and conversion of, the shares of
Piper Stock represented by such certificate, may require the owner of such
lost, stolen or destroyed certificate to provide a bond or other security in
such sum as it reasonably may direct as indemnity against any claim that may
be made against the Surviving Corporation with respect to the certificate
alleged to have been so lost, stolen or destroyed.
2.7.5 Merger Sub Stock. The shares of the $.01 par value
common stock of Merger Sub, which are issued and outstanding immediately prior
to the Effective Time, shall continue to be held by Purchaser and as such
shall constitute all of the issued and outstanding shares of the Surviving
Corporation's Common Stock.
2.7.6 Dissenting Shares. As provided in Section 6.4 of this
Agreement and subject to the limitations as to the number of shares of Piper
Stock exercising such rights as provided in Section 6.4 of this Agreement, the
shareholders of Piper shall be entitled to exercise their dissenter's rights
under the applicable provisions of the Delaware General Corporation Law, as
amended, relating to their rights to an appraisal of the shares of Piper Stock
held by each of them.
2.7.7 Tax Free Exchange. Notwithstanding anything to the
contrary in this Agreement, no actions shall be taken or payments made which
would disqualify this transaction from tax free treatment under Section
368(a)(1)(A) and Section(a)(2)(D) of the Code.
3. Representations and Warranties of Piper. Piper and the Principal
Shareholder of Piper, represent and warrant to the Purchaser and Merger Sub,
as of the date of this Agreement and as of the Closing Date, as follows:
3.1 Incorporation and Corporate Status. Piper is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with full corporate power and authority to own, operate and
lease its properties and its interests in properties (including its interests
in oil and gas properties) and to carry on its business as now being
conducted. Piper is qualified to do business and is in good standing in all
jurisdictions where its properties, assets and/or activities and operations so
require, which states are listed in Schedule 3.1 attached to this Agreement,
except where the failure to qualify would not have a material adverse effect
on Piper. Accurate, correct and complete copies of Piper's Certificate of
Incorporation and all amendments thereto and restatements thereof, and Piper's
Bylaws and all amendments thereof and restatements thereto, certified as
accurate, correct and complete by the Secretary of Piper, are set forth in
Schedule 3.1(a) attached to this Agreement.
3.2 Binding Agreement. This Agreement, executed by Piper and the
Principal Shareholder of Piper, constitutes the valid and binding obligation
of Piper and the Principal Shareholder of Piper enforceable in accordance with
its terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, general principles of equity, or similar laws
affecting the rights of creditors generally, and will not conflict with, cause
a breach, violate or be in contravention of or result in a default under
Piper's Certificate of Incorporation or any other organizational or governing
instrument of Piper, or of any material Contract, Lease, indenture, promissory
note, agreement, mortgage or other instrument to which Piper is a party or by
which any of its assets or property is bound or affected or any law, rule,
License, Permit, regulation, judgment, decree or order of any court, agency or
other authority to which jurisdiction Piper is subject. No consent of any
third party is required for Piper to enter into this Agreement. All corporate
action necessary for the approval and/or ratification of this Agreement has
been taken or will have been taken on or before the Closing.
3.3 Authorized Stock. The only authorized capital stock of Piper
is fifteen thousand (15,000) shares of its no par value common stock, of
which, as of the date of this Agreement, seven thousand four hundred
eighty-five (7,485) shares of Piper Stock are issued and outstanding. The
shareholders of Piper own such number of shares of the issued and outstanding
Piper Stock as set forth in Exhibit A attached to this Agreement. The
information relating to the names, addresses and social security numbers of
the shareholders of Piper as set forth in Exhibit A is accurate, complete and
correct according to Pipers records. To the best knowledge of Piper and the
Principal Shareholder of Piper, no other Person has any legal or beneficial
ownership interest in and to any shares of the Piper Stock, except as noted on
Exhibit A.
3.4 Stock Fully Paid. All issued and outstanding shares of the
Piper Stock have been duly authorized and validly issued and are fully paid
and non-assessable. As of the date of this Agreement, there are not, and as
of the Closing Date there will not be, any (i) options, warrants, purchase
rights, subscription rights or other contract rights or commitments, stock
appreciation rights, phantom stock or other any rights to purchase any shares
of the Piper Stock or any debt or securities convertible into such shares or
(ii) obligations of Piper, contractual or contingent, to issue any such
options, warrants, rights or shares.
3.5 Ownership of Securities. As of the date hereof, record
ownership of the Piper Stock is held one hundred percent (100%) by the
shareholders of Piper, and each such shareholder owns of record and
beneficially the number of shares set forth opposite such Shareholder's name
in Exhibit A attached to this Agreement, except as noted on Exhibit A. The
Principal Shareholder of Piper represents and warrants that, as of the date of
this Agreement and as of the Closing Date, the Piper Stock owned by him is and
will be free and clear of all pledges, liens, security interests,
encumbrances, equities, claims or other restrictions (excluding restrictions
imposed on the transfer of the Piper Stock under the Securities Act) and of
all voting trusts, voting agreements, proxies and other voting restrictions.
3.6 Title. The Principal Shareholder of Piper has, and to the
best knowledge of Piper and the Principal Shareholder of Piper, the other
shareholders of Piper have, Marketable Title to the shares of the Piper Stock
to be transferred pursuant to the terms of this Agreement and such shares at
the Closing will be delivered to the Surviving Corporation, free and clear of
all pledges, liens, security interests, encumbrances, equities, claims or
other restrictions (other than restrictions imposed under the Securities Act),
and such shareholders have full power and authority to consummate the
transactions described in this Agreement.
3.7 No Other Agreements. Neither Piper nor the Principal
Shareholder of Piper have entered into any agreement (other than this
Agreement) with any Person providing for (i) the sale, lease, exchange or
other disposition of any of Piper's properties or assets, except in the
ordinary course of its business; or (ii) the sale, hypothecation, transfer,
assignment or other disposition of the ownership, direct or indirect, of any
of the shares of the Piper Stock.
3.8 Financial Representations. Attached hereto as Schedule 3.8
are a Balance Sheet, Statement of Income (Loss and Deficit) and Statement of
Changes in Financial Position (including notes to such financial statements)
as of December 31, 2000, and for the nine (9) month period ended September 30,
2001 (collectively the "Financial Statements"). The Financial Statements have
been prepared in accordance with federal income tax basis principles applied
on a consistent basis, except as disclosed therein, and present the financial
position of Piper on an income tax basis as of December 31, 2000 and as of
September 30, 2001 ("Financial Statement Date") and the results of operations
for the nine (9) month period which ended on the Financial Statement Date and
for the twelve (12) month period ended December 31, 2000. The year-end
statement has been reviewed by independent public accountants, but the
September 30, 2001 statement has not been reviewed. Purchaser may, at its
expense, audit the financial statements prior to Closing, and Piper shall
offer reasonable assistance and access to its financial records during the
audit process.
3.9 No Liabilities. Except as disclosed or reflected in the
Financial Statements, or as set forth in Schedule 3.9 attached to this
Agreement, Piper has no, and as of the Closing Date will not have any,
material liabilities or obligations of any nature (whether accrued, absolute,
contingent, and due or to become due) other than liabilities and obligations
currently averaging with respect to the domestic properties not in excess of
$12,000 per month arising under leases, operating agreements and other
agreements to which Piper is a party, or to which it or its assets are
subject, which to the extent that the current liabilities or obligations,
including the current liabilities or obligations with respect to the
Australian properties in which Piper has an interest (which current
liabilities as of the date of this Agreement do not exceed $276,000) exceed
individually or in the aggregate such dollar amount are described in detail in
Schedule 3.9 attached to this Agreement. The aggregate total of the current
liabilities of Piper for which it has received invoices as of December 21,
2001, is $365,218.62 (excluding the amounts owed under Section 2.1.2 of this
Agreement).
3.10 No Change In Financial Condition. Except as set forth in
Schedule 3.10 attached to this Agreement, since the Financial Statement Date,
there has not been, and neither the Principal Shareholder of Piper nor Piper
know of (i) any event, condition or state of facts that has resulted or may
reasonably be expected to result in any material adverse change in the
financial condition, business, sales, income, properties, assets or
liabilities of Piper from that shown on the Financial Statements; or (ii) any
material adverse change with respect to any contracts to which Piper is a
party or any event, circumstance, fact or other occurrence which may result in
any material adverse change to the financial condition, business, sales,
income, properties or assets of Piper; or (iii) any transfer, removal or other
disposition of the assets and properties of Piper not in the ordinary course
of business or any material damage, destruction or loss to its properties,
assets or business of Piper, whether or not covered by insurance, as the
result of any fire, explosion, accident, casualty, labor disturbance or
interruption, requisition or taking of property by any governmental body or
agency, flood, embargo, or act of God or the public enemy, or cessation,
interruption or diminution of operations, which has materially and adversely
affected or impaired or which may be reasonably expected to materially or
adversely affect or impair the conduct of Piper's operations or business; or
(iv) any labor trouble other than routine grievances (including, without
limitation, any negotiation, or request for negotiation, for any
representation or any labor contract) or to the knowledge of the Principal
Shareholders' of Piper and Piper any event or condition of any character which
has materially and adversely affected or which may be reasonably expected to
materially and adversely affect or impair the conduct of Piper's operations or
business; or (v) any declaration, setting aside or payment of any dividend, or
any distribution, in respect of the Piper Stock; or (vi) any redemption,
purchase or other acquisition by Piper of any shares of the Piper Stock; or
(vii) any significant loss of customers of Piper.
3.11 Certain Tax Matters. Piper has, or shall have, prepared and
duly filed all federal, state, county and local income, franchise, use, real
property and personal property tax returns and reports required to be filed as
of the date of this Agreement, and which shall be required to be filed on or
before the Closing Date, with respect to Piper and has, or shall have duly
paid, withheld (or reserved for) all taxes, penalties and other governmental
charges required to be paid, as of such dates, that have been assessed or
levied against or upon it or its properties, assets, income, franchises,
licenses or sales, including, without limitation, all income taxes, gross
receipt taxes, ad valorem taxes, property taxes, and production taxes or to
the extent that they relate to periods on or prior to the Financial Statement
Date are reflected as a liability on the Financial Statements, or if not paid,
is contesting such amounts in good faith by the appropriate proceedings. In
the event Piper is contesting such amounts in good faith, Piper has
established a reserve sufficient to satisfy the assessment or levy being
contested and such reserve account shall be transferred to Purchaser at
Closing. In connection with the business currently conducted by Piper,
neither the Principal Shareholder of Piper nor Piper know of any proposal by
any taxing authority for additional taxes or assessments against or upon
Piper. All monies required to be withheld by Piper from employees for income
taxes, social security and unemployment insurance taxes have, as of the date
of this Agreement, been collected or withheld, and as of the Closing Date
shall have been collected and withheld, and either paid to the appropriate
governmental agencies or set aside in cash for such purpose. Piper has not
entered into any agreement or arrangement for the extension of time or the
assessment of any tax or tax delinquency, nor has Piper received any
outstanding or unresolved notices from the Internal Revenue Service or any
taxing body of any proposed examination or of any proposed deficiency or
assessment or of any tax returns or tax liabilities due and payable. Piper is
not a United States real property holding corporation within the meaning of
Sec. 897(c)(2) of the Code. Piper has or will within ten (10) days of the
date of this Agreement, deliver to Purchaser an accurate, correct and complete
copy of each return or statement, if any, filed by, on behalf of, or
including, Piper for federal income tax purposes or state and local income or
franchise tax purposes for the last three (3) tax years of Piper or for such
period as Piper has been in existence. All material elections with respect to
the taxes affecting Piper as of the date of this Agreement are set forth in
Schedule 3.11. After the date hereof, no written election permitted under
federal, state or local income, property, franchise or other tax laws,
ordinances, codes, rules or regulations will be made by Piper without
Purchaser's and Merger Sub's express written consent.
3.12 Financial Disclosure. Piper has made or will make available
to Purchaser and Merger Sub all information known to the Principal Shareholder
of Piper or Piper with respect to (i) accounts, borrowing resolutions and
deposit boxes maintained by Piper at any bank or other financial institution
and the account numbers and the names and addresses of all of the Persons
authorized to effect transactions in such accounts and pursuant to such
resolutions and with access to such boxes; and (ii) the names of all Persons
holding general or special powers of attorney from Piper and a summary of the
terms thereof.
3.13 Condition of Tangible Assets. To the best knowledge of Piper
and the Principal Shareholder of Piper with respect to all properties which
are not operated by Piper and otherwise without qualification as to properties
which are operated by Piper, all material tangible portions of the assets and
properties owned by Piper or in which Piper has a leasehold interest or a
working interest, royalty interest, farmout or farmin interest or any other
leasehold or mineral interest of any kind whatsoever in oil and gas or mineral
properties, including, without limitation, the well equipment, pipe and other
structures located on all such real properties or leasehold interests in real
property, are in good operating condition and repair, subject only to ordinary
wear and tear in light of their respective ages and the respective uses for
which they are currently used, and that the use of such tangible properties
and assets conform and comply in all material respects with all rules,
regulations and standards applicable to Piper or its assets or property,
imposed by applicable federal, state or local laws, ordinances, codes, orders,
rules or regulations adopted and supervised and enforced by each federal and
state regulatory agency, commission or other authority having jurisdiction
over such oil and gas ▇▇▇▇▇ and facilities.
3.14 Real Property. Schedule 3.14 attached to this Agreement
lists and describes all real property, other than mineral interests, royalty
interests, and interests in oil and gas and mineral leases referred to in
Section 3.18 that Piper owns and the name of the owner of record thereof. As
to each parcel of real property and the improvements located thereon except as
described in Schedule 3.14 attached to this Agreement:
3.14.1 Title. Piper has Marketable Title to such parcel,
free and clear of any deed of trust, mortgage, lien, easement, covenant,
restriction or other encumbrance other than Permitted Encumbrances;
3.14.2 No Proceedings. There are no pending, or to the
best of the knowledge of Piper, the Principal Shareholder of Piper threatened,
condemnation proceedings, lawsuits, or administrative actions relating to the
property nor other matters pending or threatened which materially and
adversely affect or will affect the current use, occupancy, or value of such
property;
3.14.3 Buildings and Facilities. The legal description for
the parcel contained in the deed fully and adequately describes the real
property; the buildings and improvements located on such parcel are, to the
best knowledge of Piper and Principal Shareholder of Piper, located within the
boundary lines of the parcel of land as legally described in the deed, are not
in violation of applicable setback requirements, zoning laws, and ordinances;
the building or improvements may be subject to permitted non-conforming use or
permitted non-conforming structure classifications. As generally described in
Schedule 3.14.3 without being exhaustive of the potential deficiencies, the
building and improvements located may not conform with the requirements of
the Americans with Disabilities Act and the rules and regulations adopted
thereunder; the buildings and improvements located thereon do not encroach on
any easement or right of way which may burden such parcel of land; such parcel
does not serve any adjoining property for any purpose inconsistent with the
use of the land; and, without qualification, the buildings and the fixtures
attached thereto are kept and maintained and as of the Closing Date will be
kept and maintained in good operating condition and repair; and such parcel is
not located within any flood plain or subject to any similar type of
restriction for which any Permits or Licenses necessary to the use of such
property have not been obtained;
3.14.4 Governmental Approvals. Piper has not received any
notices, summons, citations or other communications from any governmental
authority which claim that the buildings, improvements or facilities located
on each parcel are in any manner in violation of any law, statute, ordinance,
rule, regulation, order, non-conforming use and to the best knowledge of Piper
and Principal Shareholder of Piper, the buildings, improvements or facilities
located on such parcel have received all Approvals, Permits and Licenses of
governmental authorities required in connection with the ownership and
operation thereof and have been operated and maintained in accordance with
applicable laws, rules and regulations except as otherwise set forth in
Schedule 3.14.3 attached to this Agreement;
3.14.5 No Leases. Except as described in Schedule 3.14.5
attached to this Agreement, there are no leases, subleases, licenses,
concessions, or other agreements, whether written or oral, granting to any
Person or Persons the right to use or occupy any portion of such parcel of
real property;
3.14.6 No Third Party Rights. There are no outstanding
options or rights of first refusal to purchase such parcel of real property,
or any portion thereof or any interest therein;
3.14.7 No Other Possessory Rights. Other than Piper and
the Lessors under the leases described in Schedule 3.14.5 attached to this
Agreement, there are no Persons in possession of such real property;
3.14.8 Availability of Services to Property. All buildings
and facilities on such parcel are supplied with utilities and other services
necessary for the operation of such buildings and facilities, including, to
the extent necessary for the operation of such building and facilities, gas,
electricity, water, telephone, sanitary sewer and storm sewer, and to the best
knowledge of Piper and Principal Shareholder of Piper all such services are
adequate in accordance with all applicable laws, ordinances, rules and
regulations; and
3.14.9 Access to Property. Such parcel has direct
vehicular access to a public road either because the parcel abuts a public
road or because access to a public road is provided by a permanent,
irrevocable, appurtenant easement benefiting such parcel.
3.15 All Assets. The properties and assets of Piper as of the
date of this Agreement include, and as of the Closing Date shall include, (i)
all properties and assets, whether or not reflected on the balance sheet
included in the Financial Statements, including, without limitation, Licenses,
Permits, Leases, Contracts, customer lists, goodwill and any other tangible or
intangible assets disclosed in the Schedules attached to this Agreement, and
(ii) assets and properties acquired by Piper after the Financial Statement
Date and on or before the date of this Agreement and the Closing Date in the
ordinary course of business or as disclosed in the Schedules attached to this
Agreement, other than such properties and assets as shall have been
transferred or otherwise disposed of by Piper in the ordinary course of
business.
3.16 Stock Transfer Records and Minute Books. The stock transfer
records and corporate minute books of Piper will be furnished to the Purchaser
and Merger Sub at least ten (10) days prior to the Closing Date and will be
complete and correct in all respects. The minute books will accurately
reflect all meetings, consents and other actions of the shareholders and Board
of Directors of Piper since its incorporation.
3.17 Indefeasible Title. Except for Permitted Encumbrances (as
defined in Section 1.9 of this Agreement), and as set forth in Schedule 3.17
attached to this Agreement, Piper has Marketable Title to all of its assets
and properties (other than the Leases and mineral interests for which a
separate representation is made in Section 3.18 of this Agreement), including
fee interests in real property and title to all its other properties and
assets owned as of the date of this Agreement and as of the Closing Date, free
and clear of all mortgages, liens, pledges, charges, claims (real or asserted)
or encumbrances of any nature whatsoever.
3.18 Leases and Mineral ▇▇▇▇▇▇▇▇▇.
▇.▇▇.▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Properties. Piper has furnished Delta
a copy of the Reserve Report, dated October 5, 2001, prepared by ▇▇▇▇▇▇ &
Associates, Inc. (the "Reserve Report") covering domestic producing oil and
gas properties owned by Piper or in which it has an interest as described in
the Reserve Report. The Reserve Report covers Piper's working interests,
royalty interests and other interests in or rights to receive production and
the proceeds of production attributable to the oil and gas leases ("Leases")
associated with each such interest which were producing as of the date of the
Reserve Report. Piper has made available to Purchaser its files which contain
copies of all oil and gas Leases, mineral deeds, and similar instruments
whereby Piper acquired title. Piper has Marketable Title to the leasehold,
royalty, overriding royalty, or mineral interests and any and all other
similar interests which are included in the properties covered by the Reserve
Report, free and clear of all security interests, claims, liens and
encumbrances of any nature, other than Permitted Encumbrances. Each such
lease in which Piper is the operator is, and to the best knowledge of Piper
and the Principal Shareholder of Piper, each such Lease with respect to which
Piper is not the operator is, in full force and effect. Each such Lease
constitutes the legal, valid and binding obligation of Piper and enforceable
against the other party or parties thereto in accordance with the terms of
each such Lease, except as may be limited by bankruptcy, insolvency,
reorganization, readjustment of debt, moratorium, general principles of equity
or other laws of general application related to or affecting the enforcement
of creditor's rights generally. Neither Piper nor the Principal Shareholder
of Piper has received notice or have any reason to know, of any claim to
material default under any such Leases.
Piper has Marketable Title to the mineral interests described on
Schedule 3.18.1 free and clear of all security interests, claims, liens and
encumbrances of any nature, other than Permitted Encumbrances.
3.18.2 Australian Properties. Piper is the owner of a
non-operated working interest under the Operating Agreement described in
Schedule 3.18.2 and is a party to the other agreements described in Schedule
3.18.2 covering or relating to lands in Queensland, Australia, under the
Authority to Prospect granted by the Department of Mines for the State of
Queensland described in the schedule. To the best knowledge of Piper and the
Principal Shareholder of Piper, the agreements are in full force and effect
and constitute legal, valid and binding obligations of Piper and the other
parties to the agreements, enforceable against the other parties in accordance
with the terms of the agreements and any amendments thereto. Piper's interest
in such properties is free and clear of all security interests, claims, liens
and encumbrances of any nature, other than Permitted Encumbrances. Except as
set forth in Schedule 3.18.2 attached to this agreement, neither Piper, nor to
the best knowledge of Piper and the Principal Shareholder of Piper, any other
party to the Operating Agreement has materially breached or is in material
default under the terms of provisions of the agreements as of the date of this
Agreement, and shall not be in breach or default under the terms and
provisions of the agreements as of the Closing Date. Piper's files and
records relating to the Australian Properties including any amendments to the
Operating Agreement and other agreements relative thereto have been, and will
be, made available to Purchaser for inspection or copying at all times prior
to Closing.
3.19 Insurance. Schedule 3.19 attached to this Agreement sets
forth, as of the date hereof, an accurate and complete list and brief
description of the terms of all policies of insurance carried by Piper and
designating Piper as the insured thereunder. Schedule 3.18 does not include a
listing of the insurance policies carried by operators or others under
operating agreements covering the oil and gas properties in which Piper may be
an insured party thereunder. Piper does not know of any properties covered
under the operating agreements in which Piper owns an interest which are not
adequately insured by the operators of any such properties, but Piper has made
no inquiry as to the status of the insurance coverage of third party
operators. The description of each policy consists of a description of the
subject property, the insurance coverage, the deductibles and the additional
insureds. Piper will make available to Purchaser and Merger Sub an accurate
and complete copy of all such insurance policies. Except as set forth in
Schedule 3.19, to the best of the knowledge of the Principal Shareholder of
Piper and Piper, no insurance carrier has refused any application for
insurance by Piper or any other Person on behalf of Piper with respect to any
of its properties or assets or any of its Leases and Licenses.
3.20 Intellectual Property Rights. Schedule 3.20 attached to this
Agreement sets forth, as of the date of this Agreement and as of the Closing
Date, an accurate, correct and complete list of all letters patent, patent
applications, trademarks, service marks, trade names, brands, logos,
copyrights and license agreements or Licenses both domestic and foreign, and
rights with respect to the foregoing, whether or not registered or registrable
with any governmental authority, now owned or used by Piper. Neither the
Principal Shareholder of Piper nor Piper have received notice, or otherwise
have any reason to know, of any claimed or threatened infringement of the
rights of others with respect to any patents, trademarks, service marks, trade
names, brands, logos, copyrights and license agreements or Licenses used or
owned by Piper, the loss of which would have a material adverse effect upon
the business, operations, assets or financial condition of Piper.
3.21 No Litigation. Except as set forth in Schedule 3.21 attached
to this Agreement, there are no existing or pending, or to the best of the
knowledge of Piper and the Principal Shareholder of Piper, threatened, suits,
actions, claims, or litigation, administrative, arbitration or other
proceedings or governmental investigations or inquiries to which Piper or the
Principal Shareholder of Piper is a party with respect to or arising in
connection with the properties, operations, affairs, transactions or
agreements relating to Piper or to which any of its properties or assets are
subject.
3.22 No Violation of Laws or Regulations. Except as set forth in
Schedule 3.22 attached to this Agreement, to the best knowledge of Piper and
the Principal Shareholder of Piper, Piper has materially complied with, and is
not in any material respect in default under or in violation of or has failed
to comply with any laws, ordinances, requirements, regulations or orders
applicable to its operations, businesses, affairs and properties, nor is Piper
in violation of or in default of any order, writ, injunction, judgment or
decree of any court, arbitrator, or federal, state or local governmental
department, office, commission, authority, board, bureau, agency or other
instrumentality issued or pending against Piper which might adversely affect
the ability of Piper or the shareholders of Piper to execute, deliver and
perform their obligations under this Agreement or to consummate the
transactions contemplated under this Agreement or which challenges or seeks to
prevent, enjoin, alter or materially delay any such transactions. Neither the
Principal Shareholder of Piper nor Piper have received notice, or otherwise
have any reason to know, of any claimed default or violation with respect to
any of the foregoing. There have been no illegal payments, kickbacks, bribes
or political contributions made by Piper to any Person, entity or governmental
or regulatory body in the United States or any foreign country or political
subdivision.
3.23 Approvals. There are no approvals, authorizations and
consents ("Approvals") necessary or required to be obtained by Piper to enter
into this Agreement or for the consummation of the transactions contemplated
hereby.
3.24 Labor Agreements. There are (i) no collective bargaining
agreements between Piper and any labor union or other representative of
employees, including arrangements, agreements, amendments, supplements,
letters and memoranda of understanding of all kinds and (ii) no employment or
consulting contracts which are not terminable at will, without penalty, to
which Piper is a party.
3.25 Contracts. Schedule 3.25 attached to this Agreement sets
forth, as of the date of this Agreement and as of the Closing Date, accurate,
correct and complete lists of the following:
3.25.1 Material Contracts. Except for the Leases and
Licenses, all agreements, contracts, arrangements, commitments, understandings
or obligations, oral or written, of Piper which are to be performed in whole
or in part on or after the date hereof and which require or may require, based
upon payments made in the past year, the payment by Piper in an amount, or
under which Piper is required or may be required to provide production of oil,
gas or other commodities, goods or services of a value greater than ten
thousand dollars ($10,000) at any time within the twelve (12) month period
following the date of this Agreement;
3.25.2 Contracts Restricting Competition. Any agreement to
which Piper is a party or by which its properties or assets are bound that
limits the freedom of Piper to compete in any line of business or with any
Person; and
3.25.3 Contracts with Affiliates. All other agreements,
contracts, arrangements, commitments, understandings or obligations, oral or
written (other than oral contracts of employment), between Piper, on the one
part, and one or more or all of the shareholders of Piper or any other officer
or director of Piper, on the other part, or in which any of such persons or
entities has any financial interest, direct or indirect (including, without
limitation, any agreements affecting Piper's properties or assets and
agreements to make loans).
Prior to the Closing Date, Piper shall have furnished to, or shall
have made available for inspection by, Purchaser and Merger Sub a copy of each
agreement, contract, arrangement, commitment or obligation set forth on
Schedule 3.25, attached to this Agreement, and, any other contracts to which
Piper is subject, copies of which are located in Piper's files and other
records, including all oil and gas marketing contracts, production sharing
agreements and gas purchase agreements to which Piper is a party.
Collectively the contracts, agreements, arrangements, commitments or
obligations set forth in this Section 3.25 and listed in Schedule 3.25,
attached to this Agreement, are referred to throughout this Agreement as the
"Contracts." Each such Contract is in full force and effect as of the date of
this Agreement and as of the Closing Date, except as described in Schedule
3.25, Piper has performed and shall have performed in all material respects
all of the obligations under each Contract required to be performed by it as
of the date of this Agreement and as of the Closing Date and no such Contract
is in default, nor has any event occurred, which with the passage of time or
giving of notice or both, will result in the occurrence of a default under any
such Contract.
3.26 Employees. Piper is not a party to any agreement, Contract,
arrangement, plan, commitment or understanding which has resulted or would
result, upon the consummation of the transactions contemplated under this
Agreement or otherwise, separately or in the aggregate, in the payment of any
"excess parachute payment" within the meaning of Code Sec. 280G nor is Piper
obligated to pay any severance arrangements with any current or former
employees of Piper. ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇ is the only employee of Piper. There
are no employees of Piper who have employment contracts or employee benefit
rights which cannot be terminated upon reasonable notice, except to the extent
employment benefit rights must be continued as required by state and federal
law.
3.27 Environmental Matters. Except as set forth in Schedule 3.27
attached to this Agreement, Piper, as to those properties and interests
therein operated, owned or controlled by Piper, and to the best knowledge of
Piper and the Principal Shareholder of Piper as to those properties and
interests therein which Piper does not operate, own or control, as of the date
of this Agreement, has duly complied with, and as of the Closing Date shall
have complied with, and the operation of its business, equipment and other
assets in, under, on or in connection with the facilities owned or leased by
Piper are in compliance with and on the Closing Date shall be in compliance
with the provisions of all applicable federal, state and local environmental,
health and safety laws, statutes, ordinances, rules and regulations of any
governmental or quasi governmental authority relating to (i) omissions or
failure to comply with environmental, health and safety laws, rules and
regulations, (ii) discharges, release or seepage to surface water or ground
water, (iii) solid or liquid waste disposal, (iv) the use, storage,
generation, handling, transport, discharge, release or disposal of toxic or
hazardous substances or waste, or (vi) other environmental, health or safety
matters, including, without limitation, the Comprehensive Environmental
Response Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Authorization Act of 1986; the Occupational Safety and Health
Act, as amended; the Resource Conservation and Recovery Act of 1976; the
Federal Water Pollution Control Act of 1970, as amended; the Safe Drinking
Water Act of 1974; the Toxic Substances Control Act of 1976; the Emergency
Planning and Community Right to Know Act of 1986, as amended; and the Clean
Air Act, as amended; the Federal Water Pollution Control Act, as amended; the
Oil Pollution Act of 1990, as amended; the Rivers and Harbors Act of 1899; the
Hazardous and Solid Waste Amendments Act of 1984, as amended; and the
Hazardous Materials Transportation Act, as amended (collectively
"Environmental and Health Laws"). To the best knowledge of Piper and the
Principal Shareholder of Piper, there are no investigations, administrative
proceedings, judicial actions, orders, claims or notices which are pending,
anticipated or threatened against Piper, relating to violations of the
Environmental and Health Laws. Except as set forth in Schedule 3.27 attached
to this Agreement, Piper has not received a notice of, and does not know or
have any reason to suspect, any facts which might constitute a violation of
any Environmental or Health Laws which relate to the use, ownership or
occupancy of any property or facilities used by Piper in connection with the
operation of its business or any activity of Piper's business which would
result in a violation or threatened violation of any Environmental or Health
Laws. Pipers oil and gas properties except the ▇▇▇▇▇ Lease in Kansas are not
operated by Piper and neither Piper nor the Principal Shareholder of Piper
have inspected or caused the properties to be inspected to determine if there
are any violations of Environmental or Health Laws.
3.28 Stock Representations. Subject to the rights of the
shareholders of Piper under Section 8.8 of this Agreement and as provided in
the Shareholder Certificate attached to this Agreement as Exhibit D, the
shareholders of Piper shall represent as of the Closing Date whether they (i)
are not "underwriters" within the meaning of Section 2(11) of the Securities
Act; (ii) are either accredited investors within the meaning of Rule 501(a) of
Regulation D as promulgated under the Securities Act of 1933, as amended
("Securities Act") or sophisticated investors within the meaning of the
judicial and regulatory rulings and interpretations of Section 4(2) of the
Securities Act and Rule 506(b)(2)(ii) of Regulation D as promulgated under the
Securities Act (or if any such shareholder is not sophisticated he or she is
represented by a "purchaser representative" within the meaning set forth in
Rule 501(h) of the Securities Act); (iii) agree and acknowledge with regards
to any offer or sale of the Delta Common Stock following the Closing Date to
(a) comply with Rule 144 and, in the case of the Principal Shareholder of
Piper who is an affiliate of Piper, with Rule 145(d), as shall be applicable,
(b) comply with any other exemption from registration under the Securities
Act, or (c) offer and sell their shares of Delta Common Stock pursuant to an
effective registration statement under the Securities Act as contemplated
under Section 8.8 of this Agreement; (v) agree that they will not offer, sell,
pledge, hypothecate, transfer, assign or otherwise dispose of any such shares
of Delta Common Stock unless such offer, pledge, hypothecation, transfer,
assignment or other disposition shall comply with either Rule 145 or Rule 144,
as the case may be, of the Securities Act or be registered or be exempt from
registration under the Securities Act and all applicable federal and state
securities laws; and (vi) agree and acknowledge that the stock certificates
representing the shares of Delta Common Stock which will be acquired by the
shareholders of Piper under this Agreement will contain a legend restricting
the transferability of the shares Delta Common Stock as provided herein and
that stop order instructions may be imposed by the Purchaser's transfer agent
restricting the transferability of such shares. Prior to seeking the approval
of its shareholders of this Agreement and the transaction contemplated hereby,
Piper shall prepare and deliver to its shareholders a disclosure statement
providing the information as required by Section 6.17 of this Agreement.
Piper and the Principal Shareholder of Piper represent that such information
concerning Piper shall be accurate, correct and complete in all material
respect to enable the shareholders of Piper to make an informed investment
decision as to the Merger and the transactions contemplated under this
Agreement.
3.29 Licenses, Facilities.
3.29.1 Material Licenses. To the extent Piper is the
operator of any oil and gas properties, it has obtained all necessary licenses
("Licenses") and authorizations to operate such properties and is operating
the oil and gas ▇▇▇▇▇ and other facilities in full compliance with the
Licenses and authorizations required by law and Piper is not required to
obtain any Licenses authorizations relating to such operated properties which
it has not obtained. To the best knowledge of Piper and the Principal
Shareholder of Piper, they are not aware of any Licenses or authorizations
required to be obtained by Piper or any of the operators of the oil and gas
properties in which Piper has an interest which have not been obtained.
Neither the Principal Shareholder of Piper nor Piper have any knowledge of any
matters which might result in the suspension or revocation of such Licenses
and authorizations, or the issuance of any citation to or forfeiture by Piper
related to the oil and gas properties in which Piper owns an interest. To the
best knowledge of Piper and the Principal Shareholder of Piper, there are no
unsatisfied citations or notices of apparent liability issued or
investigations ongoing, by any federal or state government agency, commission
or other authority with respect to the oil and gas ▇▇▇▇▇ and other facilities
owned, operated or leased by Piper or the third party operators of such ▇▇▇▇▇
or facilities.
3.29.2 Equipment Ownership and Operation. Piper, as to
properties operated by Piper, and to the best knowledge of Piper and the
Principal Shareholder of Piper, the operator or participants under the
operating agreements covering the oil and gas properties in which Piper owns
an interest, each operator of the well in which Piper owns an interest, owns
all of the equipment necessary or useful in the operation of the oil and gas
▇▇▇▇▇ and other facilities in which it owns an interest in accordance with
their Licenses and with Piper's obligations under any agreements now in effect
(the "Equipment"). All of the Equipment owed by Piper or with respect to
which Piper is actin gas the operator, or in the case where Piper is not the
operator to the best knowledge of Piper or the Principal Shareholder of Piper
all Equipment on the properties owned by a third party or third parties, has
been as of the date of this Agreement, and shall have been as of the Closing
Date, operated in accordance with the Licenses, Permits and authorizations,
for such oil and gas ▇▇▇▇▇ and facilities.
3.29.3 Cooperation to Obtain Licenses. Purchaser, Merger
Sub, the Principal Shareholder of Piper and Piper will cooperate in seeking
Licenses, Permits, authorizations or consents to the transfer of control to
the Surviving Corporation, and but Purchaser and Merger Sub will bear all
expenses incurred in requesting such Licenses, Permits, authorizations or
consents required to be obtained under the provisions of this Agreement by
such party. Purchaser, Merger Sub, the Principal Shareholder of Piper and
Piper shall cooperate fully in responding promptly to any inquiries or
objections related to such requests for authorizations or consents.
3.30 Accounts Receivable. All of the accounts receivable of Piper
as disclosed in the Financial Statements constitute valid receivables deemed
collectible, have been incurred in the ordinary course of business consistent
with past practices and, to the knowledge of Piper and the Principal
Shareholder of Piper are collectible in the ordinary course of Piper's
business. Except to the extent of the reserve for bad debts or doubtful
accounts as set forth in the Financial Statements attached to the Agreement as
Schedule 3.8, such accounts receivable are not subject to any setoffs or
counterclaims. No part of such accounts receivable is contingent upon the
performance by Piper of any obligation, and no agreements for deduction or
discounts have been made with respect to any part of such receivables.
3.31 Payables. The list of itemized accounts payable of Piper, as
shown on Schedule 3.31 as of November 30, 2001 attached to this Agreement,
represent a complete list of all of Piper's accounts payable to its creditors,
are accurate, correct and complete, and except as set forth in Schedule 3.18.2
attached to this Agreement are not currently in default, as of the date of
this Agreement and shall be accurate, correct and complete, and shall not be
in default, as of the Closing Date. Piper shall not incur any additional
accounts payable between the date of this Agreement and the Closing Date,
other than in the ordinary course of business, without Purchaser's express
written consent, except fees and expenses of professionals performing services
in connection with this Agreement and the transactions contemplated under this
Agreement which shall not exceed $60,000.
3.32 Permits. Piper, or to the best knowledge of Piper and the
Principal Shareholder of Piper the third party operator of each oil and gas
property in which Piper owns or has an interest, has obtained all permits and
any other approvals or authorizations (collectively "Permits") in connection
with the ownership, operation, or leasing of the oil and gas ▇▇▇▇▇ and
facilities in which Piper has an interest and the drilling and completion, or
proposed drilling and completion, of oil and gas ▇▇▇▇▇ and the extraction,
removal, transportation and gathering of oil and gas under any existing oil
and gas leases or other Leases, Licenses or Contracts relating to the
operation of its oil and gas properties or leasehold interests which are
presently being operated or which are currently in effect. All Permits
relating to oil and gas ▇▇▇▇▇ and facilities on properties operated by Piper,
and to the best knowledge of Piper and the Principal Shareholder of Piper all
such Permits relating to oil and gas ▇▇▇▇▇ and facilities on oil and gas
properties in which Piper owns or has an interest which are operated by third
party operators, are presently valid and in full force and effect and no
revocation, cancellation, or withdrawal thereof has been effective or to the
best of the knowledge of Piper and the Principal Shareholder of Piper,
threatened. Except as disclosed herein, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, will not result in the termination of, or change in, any
such Permits.
3.33 Employee Benefit Matters. ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ is the only
employee of Piper, and upon the payment to him required under this Agreement,
Piper will not owe him any amounts for salary or other benefits. Piper has no
employee benefit plans, agreements, arrangements or understandings of any
kind, whether written or oral, which would require Piper to fund, reserve or
provide benefits or payments of any kind or nature to ▇▇. ▇▇▇▇▇▇ or any former
employee or agent of Piper.
3.34 Directors and Officers. Schedule 3.33attached to this
Agreement is an accurate, correct and complete list as of the date of this
Agreement and as of the Closing Date showing the names of each of the Officers
and Directors of Piper, each of whom has been duly elected or appointed.
3.35 Subsidiaries. Except as set forth in Schedule 3.34, Piper
does not have any subsidiaries and does not own shares of common stock or
capital stock in any other corporation or a participating interest or other
interest in any limited liability company, partnership, joint venture,
strategic alliance or any other entity, association or business arrangement.
3.36 Full Disclosure. None of the written information provided by
Piper and the Principal Shareholder of Piper to Purchaser and Merger Sub in
connection with the negotiation of this Agreement contains any intentionally
misleading statement of a material fact.
4. Representations and Warranties of Purchaser and Merger Sub.
Purchaser and Merger Sub, jointly and severally, represent to Piper and the
Principal Shareholder of Piper as follows:
4.1 Good Standing. Purchaser and Merger Sub are both corporations
duly organized, validly existing and in good standing under the laws of
Colorado, with full corporate power and authority to own, operate and lease
their properties and to carry on their respective businesses as now being
conducted. Purchaser and Merger Sub are both qualified to do business and in
good standing in all jurisdictions where their properties, assets and
operations so require. Purchaser and Merger Sub have all requisite power and
authority to enter into this Agreement and perform their obligations under
this Agreement. An accurate, correct and complete copy of Merger Sub's
Articles of Incorporation and all amendments thereto and restatements thereof,
certified by the Colorado Secretary of State and Merger Sub's Bylaws and all
amendments thereof and restatements thereto, certified as accurate, correct
and complete by the Secretary of Merger Sub are set forth in Schedule 4.1
attached hereto.
4.2 Binding Agreement. This Agreement, as executed and delivered
by each of Purchaser and Merger Sub, constitutes the valid and binding
obligation of Purchaser and Merger Sub enforceable in accordance with its
terms, except as such enforcement may be limited by applicable bankruptcy,
insolvency, moratorium, general principles of equity or similar laws affecting
the rights of creditors generally. This Agreement and the performance of this
Agreement by Purchaser and Merger Sub will not conflict with, breach, violate
or be in contravention of or result in a default under Purchaser's or Merger
Sub's Articles of Incorporation, Bylaws or any other organizational or
governing instrument of Purchaser or Merger Sub, or of any agreement, mortgage
or other instrument to which either Purchaser or Merger Sub is a party or by
which any of its assets or properties are bound or affected or, to the best of
Purchaser's or Merger Sub's knowledge, any law, rule, License, Permit,
regulation, judgment, decree or order of any court, agency or other authority
which has jurisdiction over the business, properties, assets and activities of
Purchaser or Merger Sub. All corporate action necessary for the approval
and/or ratification of this Agreement has been taken as of the date of this
Agreement.
4.3 Litigation; Compliance with Laws. Except as set forth in
Schedule 4.3, attached to this Agreement, there are no existing or pending, or
to the best of Purchaser's and Merger Sub's knowledge, threatened, suits,
actions, claims, arbitrations, administrative or legal or other proceedings or
governmental investigations or inquires pending against either Purchaser or
Merger Sub, nor to the best of Purchaser's and Merger Sub's knowledge in any
failure to comply in any material respect with, nor any default under, any
law, ordinance, requirement, regulation or order applicable to Purchaser or
Merger Sub and their respective businesses and properties nor to the best of
Purchaser's and Merger Sub's knowledge any violation of or default with
respect to any law, ordinance, requirement, regulation applicable to their
respective operations and businesses nor in violation of, or in default under,
any order, writ, injunction, judgment or decree of any court, arbitrator, or
federal, state or local department, official, commission, authority, board,
bureau, agency or other instrumentality, issued or pending against Purchaser
or Merger Sub which might adversely affect Purchaser's or Merger Sub's ability
to execute, deliver and perform its obligations under this Agreement or to
consummate the transactions contemplated hereby or which challenges or seeks
to prevent, enjoin, alter or materially delay any such transaction. Neither
Purchaser nor Merger Sub has received any notice, or otherwise has any reason
to know, of any claimed default or violation with respect to any of the
foregoing. There have been no illegal payments, kickbacks, bribes or
political contributions made by Purchaser or Merger Sub to any Person, entity,
governmental or regulatory body in the United States or in any foreign or
political subdivision.
4.4 Current Filings With SEC. Purchaser has filed all Annual
Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and other
applications and reports (including all amendments and supplemental
information) required to be filed by Purchaser with the Commission under the
Securities Exchange Act of 1934, as amended ("Exchange Act"). Piper and the
shareholders of Piper have access to all documents electronically filed with
the Commission on the Commission's ▇▇▇▇▇ (Electronic Data Gathering, Analysis
and Retrieval) system and, to the extent requested by the shareholders of
Piper, Purchaser shall furnish, at its expense, copies to them of any
documents filed with the Commission, including (a) each registration
statement, report on Form 8-K, proxy statement or information statement
prepared by it since June 30, 2001, and (b) Purchaser's Quarterly Report on
Form 10-QSB for the quarterly period ended September 30, 2001, each in the
form (including exhibits), filed with the Commission on or before November 15,
2001 (collectively, the "Purchaser's SEC Reports"). As of the respective
dates of such filed documents, to the best of Purchaser's knowledge, the
Purchaser's SEC Reports did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
in which they were made, not misleading. Each of the consolidated balance
sheets included in the Purchaser's SEC Reports (including the related notes
and schedules) fairly presents the consolidated financial position of
Purchaser and its Subsidiary as of its date and each of the consolidated
statements of income, of stockholders' equity and of cash flows included in or
incorporated by reference into the Purchaser's SEC Reports (including any
related notes and schedules) fairly presents the results of operations,
stockholders' equity and cash flows, of Purchaser and its Subsidiary for the
periods set forth therein (subject, in the case of unaudited statements, to
normal year-end audit adjustments which will not be material to Purchaser and
its subsidiaries taken as a whole in amount or effect), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein. Purchaser has
provided, and to the extent requested will provide to any shareholders of
Piper making such request, a copy of Purchaser's registration statement on
Form S-1, as amended, previously been electronically filed with the Commission
on its ▇▇▇▇▇ system and which has not been declared effective by the
Commission. Other than the Purchaser's SEC Reports and any amendments to its
registration statement on Form S-1, Purchaser has not filed any other
definitive reports or statements with the Commission since December 21, 2001.
However, nothing contained in this Section 4.4 will preclude Purchaser or its
officers, directors or affiliates from filing such SEC Reports and other
filings as shall be required under the securities laws or as Purchaser shall
determine, in its sole discretion, is necessary or appropriate. Purchaser is
eligible to register the shares of Delta Common Stock, which will be acquired
by the shareholders of Piper as contemplated under this Agreement, for a
secondary offering for the account of such shareholders for their reoffer or
resale of such shares by use and the filing of a registration statement on
Form S-3 and otherwise has met all conditions required of an issuer under Rule
144(c) of the Securities Act.
4.5 Purchaser's Stock. The only authorized capital stock of
Purchaser are (a) three hundred million (300,000,000) shares of its $.01 par
value voting common stock, which is the Delta Common Stock and (b) three
million (3,000,000) shares of its $.10 par value preferred stock, of which no
shares are issued and outstanding. All outstanding shares of capital stock of
the Purchaser have been duly authorized and validly issued and are fully paid
and nonassessable. Except as specifically stated above in this Section 4.5 or
disclosed in the Purchaser's SEC Reports or other filings by Purchaser or
Purchaser's officers, directors and affiliates with the Commission, there are
outstanding (i) no shares of capital stock or other voting securities of
Purchaser, (ii) no securities of Purchaser convertible into or exchangeable
for shares of capital stock or voting securities of Purchaser, and (iii) no
options, warrants or other rights to acquire from Purchaser, and no preemptive
or similar rights, subscription or other rights, convertible securities,
agreements, arrangements or commitments of any character, relating to the
capital stock of Purchaser, obligating Purchaser to issue, transfer or sell,
any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Purchaser or obligating
Purchaser to grant, extend or enter into any such option, warrant,
subscription or other right, convertible security, agreement, arrangement or
commitment (the items in clauses 4.5(i), 4.5(ii) and 4.5(iii) being referred
to collectively as the "Purchaser Securities"). Except as provided in the
employment agreements between Purchaser and its executive officers, there are
no outstanding obligations of Purchaser to repurchase, redeem or otherwise
acquire any Purchaser Securities. Upon issuance of (a) up to one million
three hundred eighty thousand (1,380,000) shares of Delta Common Stock to the
Shareholders of Piper as contemplated under Section 2.1 of this Agreement and
(b) fifty-one thousand (51,000) shares of Delta Common Stock to ▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇ as contemplated under Sections 2.1.2 and 9.2.3 of this Agreement,
such shares of Delta Common Stock will be validly issued, fully paid and
nonassessable. The Delta Common Stock is currently listed on the Nasdaq Small
Cap Market under the symbol "DPTR." As of December 21, 2001, there were
11,444,802 shares of Delta Common Stock which are issued and outstanding.
5. Activities Prior to the Closing Date.
5.1 Operation of Piper's Business. Piper and the Principal
Shareholder of Piper agree that from and after the date of this Agreement
until the Closing Date, except as otherwise contemplated by this Agreement,
Piper shall, and the Principal Shareholder of Piper shall cause Piper to,
conduct its business solely in the ordinary course consistent with past
practices, and Piper shall, and the Principal Shareholder of Piper shall cause
Piper to:
5.1.1 Organizational Documents. Not amend its Certificate
of Incorporation or Charter or Bylaws, except as may be necessary to carry out
this Agreement or as required by law;
5.1.2 Corporate Name. Not change its corporate name or
permit the use thereof by any other corporation or Person;
5.1.3 Compensation. Not pay or agree to pay any employee,
officer, or director, without the consent of Purchaser, compensation which is
in excess of the current compensation level of each employee, officer or
director of Piper, except for standard periodic increases to non-management
employees consistent with past practices in terms of timing and amount;
5.1.4 Management. Not make any changes in management
without the prior written consent of Purchaser;
5.1.5 Reorganizations or Other Related Transactions. Not
merge or consolidate with any other corporation, or acquire, agree to acquire
or be acquired by any corporation, association, partnership, joint venture or
other Person, without the prior written consent of Purchaser;
5.1.6 Disposition or Abandonment of Assets. Not sell,
transfer or otherwise dispose of any of its properties or assets of whatever
kind or nature or of any of its interests in oil and gas properties or other
mineral properties nor abandon any of its oil and gas ▇▇▇▇▇, Equipment or
other facilities without the prior written consent of Purchaser, except in the
ordinary course of business;
5.1.7 Indebtedness. Not create, incur, assume or guarantee
any indebtedness for money borrowed except for trade and other indebtedness
incurred in the ordinary course of business, unless Piper first advises
Purchaser and receives Purchaser's written consent thereto; provided, however,
that nothing contained in the foregoing to the contrary shall prohibit Piper
from borrowing funds to pay obligations under existing agreements so long as
Piper informs Purchaser of such payments;
5.1.8 Encumbrances. Not create or suffer to exist any
Encumbrance on any of its properties or assets, including without limitation
its interests in oil and gas properties or other mineral properties, Equipment
or other facilities, except for Permitted Encumbrances;
5.1.9 Increase of Indebtedness. Not increase the amount of
any indebtedness outstanding under any loan agreement, mortgage or borrowing
arrangement in existence on the date of this Agreement, unless Piper first
advises Purchaser and receives Purchaser's written consent to any such
increase except for additional borrowings required to fund the working capital
needs of Piper in the ordinary course of business under any line of credit
loan identified in Piper's Financial Statements to the extent permitted by the
documentation relating to such loan in effect as of the date of this Agreement
and then only to the extent that Piper has first notified Purchaser of any
such borrowings under the line of credit subsequent to the date of this
Agreement and Purchaser gives its prior written approval to such borrowings;
5.1.10 Payables. Pay when due, in accordance with past
practices consistent with good management practices, all of its accounts
payables and trade obligations;
5.1.11 Maintenance of Assets. Maintain its facilities,
assets and properties, including without limitation the Equipment in good
operating repair, order and condition, reasonable wear and tear excepted, and
notify Purchaser promptly upon any loss of, damage to or destruction of any of
its facilities, properties or assets;
5.1.12 Insurance. Not allow to lapse and maintain in full
force and effect all insurance coverage of the types and in the amounts set
forth in Schedule 3.19, attached to this Agreement, and apply the proceeds
received under any insurance policy or as a result of any loss of, damage to,
or destruction of any of its facilities, properties or assets, including the
Equipment, to the repair or replacement of such facilities, properties or
assets, including the Equipment;
5.1.13 Contracts and Permits. Maintain in full force and
effect all Licenses, Permits, Leases and Contracts for which Piper is
responsible which are related to the operation of its business in all
respects and in all places as its business is now conducted;
5.1.14 Goodwill. Use its best efforts to preserve its
business organization in tact, to keep available the services of its present
employees and to preserve the goodwill of its customers, suppliers and others
having business relations with it;
5.1.15 Issuance of Securities. Not issue any additional
capital stock, options, warrants, or other rights to purchase capital stock or
securities convertible into or exchangeable for capital stock of Piper;
5.1.16 Dividends and Distributions. Except as provided in
Schedule 5.1.16 attached to this Agreement, declare, set aside or pay any
dividend or make any other distributions in respect of any of Piper's shares
of capital stock;
5.1.17 Repurchase of Securities and Repayment of
Indebtedness. Except as approved in writing by Purchaser after first being
notified of any such event, not make any direct or indirect redemption,
purchase or other acquisition of shares of Piper's capital stock or make any
direct or indirect repurchase, repayment or retirement of any principal of, or
interest on, any indebtedness other than regularly scheduled payments of
principal and interest as provided in the promissory note evidencing any of
Piper's indebtedness;
5.1.18 Litigation. Promptly advise Purchaser in writing of
the commencement of, and of any known threat to commence, any suit, claim,
action, arbitration, legal or administrative proceedings, governmental
investigation or tax audit against Piper;
5.1.19 Monthly Financial Statements. Deliver to Purchaser as
soon as available monthly financial statements ("Monthly Financial
Statements") of Piper commencing with the month of October, 2001, and for each
calendar month thereafter prior to the Closing Date; and
5.1.20 Miscellaneous. Not enter into any agreement or
otherwise agree to take any action in violation of the negative covenants set
forth in this Section 5 or take, agree to take or omit to take any action that
would make any representation or warranty inaccurate.
5.2 Access to Information. Piper and the Principal Shareholder of
Piper will cooperate fully with Purchaser and Merger Sub, and Piper shall
provide, and the Principal Shareholder of Piper shall cause Piper to provide,
to Purchaser and its accountants, counsel and other representatives
(collectively "Advisors"), and Purchaser will provide to Piper and the
Principal Shareholder of Piper and Piper's Advisors during normal business
hours, (i) full access to the books, records, Equipment, oil and gas Leases,
title opinions and other information concerning the oil and gas properties and
other real estate owned or leased by the other party to this Agreement or in
which such other party has an interest, oil and gas marketing contracts,
current oil and gas prices to which such other party is entitled under such
marketing contracts as well as full and complete information concerning
curtailments, pre-payments and any oil and/or gas balancing agreement under
such contracts, and all other Contracts, Leases, Permits and Licenses relating
to the assets and operations of such other party's oil and gas business and
properties and all work papers relating to Piper of Piper's independent
accountants and (ii) full opportunity to discuss such other party's business
affairs and assets with its officers, employees, agents and independent
accounts ("Representatives") and furnish to such other party and their
Advisors copies of such documents, records and information with respect to the
affairs of such other party as Purchaser, Merger Sub or its Advisors or Piper,
the Principal Shareholder of Piper or Piper's Advisors may reasonably request
of such other party. The terms and provisions of such oil and gas marketing
contracts and other contracts to which Piper is a party must be acceptable to
Purchaser and Merger Sub.
5.3 Confidentiality. Except to the extent that disclosure is
required by law and this Agreement, Purchaser, Merger Sub, their respective
officers, directors and employees and Piper, the Principal Shareholder of
Piper and the officers, directors and employees of Piper shall retain in
confidence and shall cause their Advisors to retain in confidence, all
information obtained by them pursuant to the investigations made by Purchaser,
Merger Sub or their Advisors pursuant to Section 5.2 that is deemed by Piper
to be confidential in nature as so indicated by Piper to Purchaser (the
"Confidential Information"). The Principal Shareholder of Piper, Piper, its
officers, directors and employees and Piper's Advisors shall retain in
confidence, all information obtained by them in connection with any
investigation undertaken by such Persons as a result of Purchaser or Merger
Sub providing such Persons such access to information of the Purchaser or
Merger Sub that is deemed by Purchaser to be confidential (the "Confidential
Information") pursuant to Section 5.2 of this Agreement. The parties agree
that Confidential Information of either Piper, Purchaser or Merger Sub shall
not include information which (a) was or becomes generally available to the
public other than as a result of a disclosure by a party to another party to
this Agreement or any officers, directors or employees or any representatives
or Advisors of any such party, of their Advisors, (b) was or becomes available
to any party to this Agreement or the officers, directors or employees or the
Advisors of such party on a non-confidential basis from a source other than a
party to this Agreement or such party's Advisors, provided that such source is
not bound by a confidential agreement or (c) was, or in the future is,
developed independently by a party to this Agreement or an Advisor to such
party without reference to the information furnished by the other party to
this Agreement or an Advisor to such party. The parties understand and agree
that all of the Confidential Information supplied to a party to this Agreement
by the other party is provided on the understanding that such Confidential
Information shall remain the property of the party disclosing or furnishing
such Confidential Information, and that all copies and originals of any
Confidential Information furnished pursuant to this Agreement from one party
to the other party will be returned to the party furnishing such Confidential
Information promptly upon its request after termination of this Agreement as
provided under Section 10 hereof. Pending the Closing of the transactions
contemplated under this Agreement or if this Agreement is terminated as
provided in Section 10 of this Agreement, a party receiving the Confidential
Information of another party shall not use such information to its economic or
financial advantage or benefit.
5.4 Benefit Plans. Between the date of this Agreement and the
Closing Date, Piper will not establish or implement a new Benefit Plan of any
kind whatsoever.
5.5 Best Efforts and Standstill. Subject to the other provisions
of this Agreement, the Principal Shareholder of Piper and Piper will use their
best efforts to cause the conditions listed in Section 6 of this Agreement to
be satisfied on or before the Closing Date. Subject to the other provisions
of this Agreement, Purchaser and Merger Sub will use their best efforts to
cause the conditions listed in Section 7 of this Agreement to be satisfied on
or before the Closing Date. Principal Shareholder of Piper and Piper further
agree that they will not enter into, request, solicit or engage in any
discussions, negotiations, understandings or agreements with any Person other
than Purchaser and Merger Sub relating to the merger, consolidation or sale of
Piper or the sale or disposition of their shares of Piper Stock or the
properties and assets of Piper (other than in the ordinary course of business)
unless this Agreement is terminated pursuant to Section 10 hereof. Piper has
participated in discussions regarding an initial public offering involving the
properties in Australia in which Piper owns an interest. Following the
execution of this Agreement and continuing until the Closing Date, Piper may
continue the discussions but will not commit to any sale or any other
transaction, including, without limitation, an initial public offering of the
Australian properties, without Purchaser's prior written consent.
5.6 Listing of Purchaser Common Stock. Purchaser shall notify The
Nasdaq Stock Market of the issuance of the shares of Delta Common Stock in
connection with the consummation of the Merger and shall use its reasonable
best efforts to cause such shares of Delta Common Stock to be issued to the
shareholders of Piper to be eligible for trading on the Nasdaq Small Cap
Market as soon as legally practicable following their registration pursuant to
Section 8.7 of this Agreement.
5.7 Meeting of Piper's Shareholders. Piper and the Principal
Shareholder of Piper shall cause a special meeting of Piper's shareholders
(the "Company's Shareholder Meeting") to be duly called and held as soon as
reasonably practicable, for the purpose of voting on the approval and adoption
of this Agreement and the Merger (the "Company's Shareholder Approval"). The
board of directors of Piper shall recommend approval and adoption of this
Agreement by the shareholders of Piper. In connection with Piper's Shareholder
Meeting, Piper and the Principal Shareholder of Piper will use their best
efforts, subject to the immediately preceding sentence, to obtain Piper's
Shareholder Approval and will otherwise comply with all legal requirements
applicable to Piper's Shareholder Meeting. The Principal Shareholder of Piper
agree to vote in favor of the Merger at Piper's Shareholder Meeting.
5.8 Compliance with Laws. Purchaser shall timely file all
applications and reports, including all amendments and supplemental
information, required to be filed by Purchaser with the Commission under the
Act and the Exchange Act, and take no action that would cause Purchaser not to
meet its obligations under the Registration Rights Agreement attached to this
Agreement as Exhibit F, or fail to meet the conditions of Rule 144(c).
5.9 Contract with Third Parties. After the execution of this
Agreement and prior to the release of a public announcement of the execution
of this Agreement by the parties hereto and the proposed Merger as
contemplated under this Agreement, Purchaser shall not contact any party to an
agreement with Piper without Piper's prior consent. Immediately following
such announcement, Purchaser may contact any such third party without
restriction.
6. Conditions Precedent to the Purchaser's and Merger Sub's
Obligations. The obligations of Purchaser and Merger Sub to be performed
under this Agreement on or before the Closing Date are subject to each and all
of the following conditions, any one or more of which may, however, be waived
in whole or in part by Purchaser.
6.1 Representations and Warranties. The representations and
warranties of Piper herein contained shall be accurate, correct and complete
on and as of the date of this Agreement and as of the Closing Date in all
material respects with the same force and effect as though made on and as of
each such date.
6.2 Performance of Obligations. Piper shall have performed in all
of Piper's covenants, undertakings, obligations, conditions and agreements
required to be performed by it under this Agreement.
6.3 Performance at Closing. Piper shall have performed each of
the acts it is required to perform under this Agreement and shall have
delivered or tendered delivery of each of the certificates and other documents
it is required to deliver.
6.4 Dissenter's Rights. Piper shall provide a list of those
shareholders of Piper who have elected to exercise their dissenters' rights
under Delaware law; provided that the total number of shares of Piper Stock
held by such shareholders shall not exceed one hundred shares (100) of the
total issued and outstanding shares of Piper Stock.
6.5 Absence of Litigation or Restraining Action. No suit, action
or other proceeding shall be pending, or threatened, before any court or
governmental agency in which it will be, or it is, sought to restrain or
prohibit or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated under this
Agreement or which, if adversely determined, would have a material adverse
effect on the value of the business, assets or properties of Piper or the
value of the Piper Stock.
6.6 No Attachment. None of Piper's assets or properties shall
have been attached or levied upon or passed into the hands of a receiver or
assignee for the benefit of creditors. No petition or similar instrument
shall have been filed with respect to Piper under any bankruptcy or insolvency
law, and no injunction or restraining order shall have been instituted against
Piper.
6.7 No Liens, Indebtedness. Except as set forth in Schedule 3.9
attached to this Agreement, Piper shall not be subject to any indebtedness nor
its properties or assets subject to liens or encumbrances of any kind, other
than (a) indebtedness and liens for current taxes, wages and operating
expenses in the normal course of business, payment of which at the time of
Closing shall not yet be due; or (b) indebtedness identified in Piper's
Financial Statements as set forth in Schedule 3.8 attached to this Agreement;
(c) any accounts payable incurred by Piper subsequent to the Financial
Statement Date in the ordinary course of its business as disclosed to Piper on
or before the Closing Date; (d) any other indebtedness approved in writing by
Purchaser; or (e) Permitted Encumbrances or indebtedness as disclosed in
Schedule 3.17 attached to this Agreement which Purchaser agrees to assume or
acquire Piper's properties subject to such indebtedness.
6.8 Resignations and Employee Terminations. Purchaser and Merger
Sub shall have received the resignation dated as of the Closing Date of each
director of Piper and the officers of Piper in the form as set forth in
Exhibit C attached to this Agreement. Piper shall have terminated the
employment of all employees effective as of midnight on the day immediately
preceding the Closing Date and at the time of such termination shall have paid
all amounts due to its employees, including, without limitation, all salaries,
bonuses, sick leave, accrued vacations and any other employment benefits to
which such employees are entitled at the time of their terminations, save and
except the payment to ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ to be made by Purchaser under this
Agreement. Notwithstanding such termination, Merger Sub, as the Surviving
Corporation, may, in its sole discretion without any Commitment to do so, hire
such terminated employees or any of them at any time after the Closing Date.
6.9 Corporate Records. Purchaser and Merger Sub shall have
received the stock record books, minute books, files, documents, papers,
Leases, Contracts, Licenses, Permits and other agreements or authorizations,
books of account and other records pertaining to Piper's business operations
and affairs and the corporate seal (if any) of Piper.
6.10 Consents and Waivers. All consents and Approvals from third
parties, including without limitation the Notification and Report Form only to
the extent required to be filed under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the regulations thereunder ("HSR
Act"), as well as any other Approval, consent or waiver required under any
other Leases, Contracts, Permits, Licenses, as listed in Schedules 3.18, 3.25,
3.29and 3.32 attached to this Agreement and any other Person or governmental
bodies, necessary for the consummation of the transactions contemplated hereby
shall have been obtained.
6.11 Legal Compliance. All statutory and other legal requirements
for the valid consummation of the transactions contemplated under this
Agreement shall have been satisfied.
6.12 Absence of Adverse Changes. Piper shall not have suffered
any material adverse change in its financial condition, business, property or
assets since the Financial Statement Date.
6.13 Opinion of Counsel. Purchaser and Merger Sub shall have
received an opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇, as counsel for Piper dated as
of the Closing Date in the form of the opinion as set forth in Exhibit E
attached to this Agreement.
6.14 Certificates. Purchaser and Merger Sub shall have received
the certificates and other closing documents required to be received under
Section 9.1 of this Agreement on or prior to the Closing Date.
6.15 Shareholder Approval. The board of directors of Piper shall
have approved this Agreement and the consummation of the Merger and other
transactions contemplated under this Agreement and the shareholders of Piper
holding two-thirds (2/3rds) of the issued and outstanding Piper Stock shall
have approved the Merger and the other transactions contemplated by this
Agreement in accordance with the Delaware General Corporation Law.
6.16 Marketing Contracts. Purchaser shall have all gas purchase
contracts and oil and gas marketing contracts to which Piper is a party and
the current prices, curtailments, prepayments, balancing obligations and all
other terms and provisions of such Contracts shall be made available for
Purchaser's review and shall be acceptable to Purchaser and Purchaser shall be
satisfied, in its sole discretion, that all obligations under the gas purchase
contracts to which Piper is a party can be fulfilled over the life of such
Contracts.
6.17 Piper's Disclosure Statement. Piper shall have prepared and
delivered a disclosure statement to all of the shareholders of Piper which
shall contain sufficient information with respect to Piper, its business
operations, assets and properties, financial condition, prospects and such
other information relating to Piper, the Merger and this Agreement to enable
each such shareholder to make an informed investment decision with respect to
the Merger and the terms and provisions of this Agreement and the information
provided in such disclosure statement provided to the shareholders of Piper
shall be accurate, correct and complete in all material respects, shall not
contain a misstatement of a material fact or omit to state a material fact
necessary to make the statements made in such disclosure statement not
misleading. Purchaser and Merger Sub represent, jointly and severally, that
all information contained or incorporated in the disclosure statement
concerning Purchaser and Merger Sub and their respective business operations,
assets and properties, financial condition, prospects and other information
supplied to Piper by Purchaser or Merger Sub, shall be accurate, correct and
complete in all material respects.
6.18 Audit of Piper's Financial Statements. If Purchaser is
required to or elects to audit the Financial Statements provided to Purchaser
and Merger Sub, the statements shall have been audited by a reputable,
independent accounting firm, at Purchaser's expense, and the results of such
Financial Statements shall be acceptable to Purchaser, in its sole and
exclusive judgment, by so indicating its acceptance in writing furnished to
Piper on or prior to the Closing Date.
6.19 General Due Diligence Review. Purchaser shall have completed
its due diligence review of Piper and based on such review shall be satisfied,
in its sole discretion, as to the nature, condition and profitability of the
Leases, Contracts and all other assets and properties of Piper and the
liabilities and potential liabilities of Piper and shall have indicated such
satisfaction and approval in a writing delivered to Piper four (4) days prior
to the Closing Date.
7. Conditions Precedent to Piper's and Piper Shareholders' Obligations.
The obligations of Piper and the shareholders of Piper, including the
Principal Shareholder of Piper, to be performed under this Agreement at
Closing are subject to each and all of the following conditions, any one or
more of which may, however, be waived in whole or in part by Piper or the
Principal Shareholder of Piper.
7.1 Representations and Warranties. The representations and
warranties of Purchaser and Merger Sub set forth in this Agreement shall be
true, correct and complete in all material respects on and as of the date of
this Agreement and as of the Closing Date with the same effect as if made on
and as of the said date.
7.2 Performance of Obligations. Purchaser and Merger Sub shall
have performed or complied with all of Purchaser's and Merger Sub's covenants,
undertakings, obligations, conditions and agreements herein to be performed on
or before Closing as contained in this Agreement.
7.3 Performance at Closing. Purchaser and Merger Sub shall have
performed each of the acts each such corporation is required to perform under
this Agreement and shall have delivered or tendered delivery of each of the
certificates and other documents each such corporation is required to deliver.
7.4 Absence of Restraining Action. No suit, action or other
proceeding shall be pending, or threatened, before any court or governmental
agency in which it will be, or it is, sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated under this Agreement or would
have a material adverse effect on the value of the business, assets, or
properties of Purchaser or Merger Sub or the value of the Delta Common Stock.
7.5 Nasdaq Listing of Shares. Purchaser shall have made a filing
with Nasdaq to request the listing of the shares of Delta Common Stock to be
issued to the shareholders of Piper on The Nasdaq Stock Market such that upon
the effectiveness of the registration statement as contemplated under Section
8.8 of this Agreement will be available for trading on The Nasdaq Stock
Market.
7.6 Market Price of Delta Stock. The average daily closing price
of the shares of Delta Common Stock as quoted on the National Association of
Securities Dealers Automatic Quotation system ("NASDAQ") for the four (4) week
period preceding the Closing Date, determined without retail ▇▇▇▇-up,
▇▇▇▇-down or commission, shall not have been less than $2.50; provided,
however, that if the average daily closing price of Delta Common Stock as
quoted on NASDAQ for the four (4) week period preceding the Closing Date,
determined without retail ▇▇▇▇-up, ▇▇▇▇-down or commission, is more than $4.00
per share, Purchaser shall have the right to terminate this Agreement as
provided in Section 10.1.5 of this Agreement in which event it shall not be
obligated to close or deliver the documents as required under Section 9.2 of
this Agreement, unless it elects in a writing delivered to Piper to perform
its obligation to close under this Agreement within two (2) days prior to the
scheduled Closing Date.
7.7 Due Diligence Review. Piper shall have completed its due
diligence review of Purchaser and Merger Sub and based on such review shall be
satisfied, in its sole discretion, as to the nature, condition and
profitability of the business, assets, and properties of Delta and the
liabilities and potential liabilities of Delta and shall have indicated such
satisfaction and approval in a writing delivered to Purchaser four (4) days
prior to the Closing Date.
8. Post-Closing Covenants. Piper, the Principal Shareholder of Piper,
Purchaser and Merger Sub agree as follows with respect to the period following
the Closing:
8.1 Cooperation of The Principal Shareholders and Former Officers
of Piper. The Principal Shareholder of Piper and the current officers and
directors of Piper, will reasonably cooperate upon and after the Closing Date
in effecting the Merger and the orderly transfer of the assets and properties
as well as the transfer of control of Piper to Merger Sub by using their best
efforts to cause any federal, state or local governmental body, and any
agency, department and instrumentality thereof, to have Contracts between such
government, agency, department and instrumentality and Piper, to the extent
required under any existing Contracts between Piper and such governmental
body, as a result of the change of control of Piper, to be approved and
transferred into the name of Merger Sub as such name may be changed following
the Closing. To the extent that any other Contract between Piper and any
other third parties require approval as a result of the Merger, the Principal
Shareholder of Piper and the current officers and directors of Piper will
reasonably cooperate in effecting any such approval such that the Contracts
will remain intact and enforceable in accordance with the terms thereof. To
the extent required to effect any such approval and transfer, the Principal
Shareholder of Piper and the current officers and directors of Piper will
execute any appropriate and reasonable documents or instruments required to
accomplish such result.
8.2 Litigation Support. If and to the extent that Piper is
actively contesting or defending against any charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand (collectively
"Proceedings") in connection with:
(a) any transaction contemplated under this Agreement, or
(b) any fact, situation, circumstance, status, condition,
activity, practice, planning, occurrence, event, incident, action, failure to
act, or transaction on or prior to the Closing Date involving Piper,
Piper, the Principal Shareholder of Piper and the current officers and
directors of Piper will reasonably cooperate with Purchaser, Merger Sub and
their counsel in contesting or defending any such Proceedings, making
available any personnel of Piper, and providing such testimony and access to
their books and records as shall be reasonably necessary in connection with
contesting or defending against such Proceedings. The Principal Shareholder
of Piper shall indemnify Purchaser and the Surviving Corporation in
contesting, or defending against, any such Proceedings to the extent of the
obligation to indemnify Purchaser and Merger Sub under the terms of this
Agreement. Otherwise, Purchaser and Merger Sub shall bear the cost and
expense of contesting or defending against any such Proceedings.
8.3 Other Transitional Matters. The Principal Shareholder of
Piper and the current officers and directors of Piper will not take any action
which primarily is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of, or
Person having a business relationship with, Piper from maintaining the same
business relationships with Piper after the Closing as it maintained with
Piper prior to the Closing, or in any manner prior to or after the Closing
interfering with or disrupting such relationships to Purchaser's detriment.
The Principal Shareholder of Piper and the current officers and directors of
Piper will refer all inquiries by lessors, licensors, customers suppliers,
business associates or other Persons having a relationship with Piper relating
to the business as conducted by Piper prior to the Merger to Purchaser from
and after the Closing Date.
8.4 Cooperation After Closing. In case at any time after the
Closing Date any further action is necessary or desirable to carry out and
accomplish the purposes of this Agreement and the transactions contemplated
hereunder, the Principal Shareholder of Piper and the current officers and
directors of Piper, in the case of the performance by Piper and the Principal
Shareholder of Piper as contemplated under this Agreement, and Purchaser, in
the case of the performance of Purchaser and Merger Sub as contemplated under
this Agreement, will take such further action as the party seeking or
requesting such performance ("Requesting Party") may reasonably request,
including executing and delivering such further instruments and documents as
shall be necessary or appropriate to accomplish and effectuate the
transactions contemplated under this Agreement. Except as to costs and
damages associated with the indemnification of Purchaser and Merger Sub, as
provided in this Agreement, all costs and expenses relating to any such
matters after the Closing Date will be borne by Purchaser and Merger Sub.
8.5 Confidential Information. The current officers and directors
of Piper and the Principal Shareholder of Piper will treat and hold as such
all of the Confidential Information relating to Piper, Purchaser and Merger
Sub which was acquired or obtained by them in connection with or during their
involvement with Piper in any capacity, whether as a shareholder, officer,
director, employee or agent. For purposes of this Section 8.6, the term
"Confidential Information" means any and all documents or information, either
oral or in writing, including without limiting the generality thereof any and
all reports, charts, graphs, photographs, diagrams, drawings, technical
specifications, financial statements, customer and supplier information,
pricing information, financial projections, business plans and strategies and
trade secrets of every kind, known to or in the possession or which came to
the attention of such Person in the course of his involvement with or
employment by Piper or as a result of the negotiations, investigation and due
diligence review of Purchaser's and Merger Sub's records, documents,
instruments, data and any and all other information of a confidential nature,
which has not been previously made public by Piper, Purchaser or Merger Sub.
The Principal Shareholder of Piper and the current officers and directors of
Piper will refrain from using any of the Confidential Information except as
contemplated under this Agreement and shall deliver promptly to Purchaser and
Merger Sub, or destroy at the request and option of Purchaser and Merger Sub,
all tangible correspondence, documents, instruments, memoranda and all other
writings (and all copies thereof) which embody the Confidential Information
which are in such Person's possession.
8.6 Disclosure Required in Legal Proceedings. If the Principal
Shareholder of Piper or the current officers and directors of Piper are
requested or required (by oral question or request for information or document
in any legal proceeding, interrogatory, subpoena, civil investigative demand
or similar process) to disclose any Confidential Information, the Principal
Shareholder of Piper and the current officers and directors of Piper will
notify Purchaser and Merger Sub, as the Surviving Corporation, promptly of any
such request or requirement to enable Purchaser and Merger Sub, as the
Surviving Corporation, to seek an appropriate remedy to enjoin the disclosure
of the Confidential Information or in their sole discretion waive compliance
with the provisions of Section 8.6 of this Agreement.
8.7 Registration of Delta Stock Issued to Piper Shareholders.
Within thirty (30) days following the filing of the final amendment to
Purchaser's current report of Form 8-K relating to the Merger of Piper with
and into Merger Sub as contemplated under this Agreement or within the time
period as otherwise provided in the Registration Rights Agreement (which Form
8-K Report will be initially filed not later than 15 days following the
Closing Date), Purchaser shall file with the United States Securities and
Exchange Commission a registration statement on Form S-3 or any other
appropriate form of registration statement providing for the registration of
all shares of Delta Common Stock issued to the shareholders of Piper to the
extent they have received such shares ("Registered Delta Shares") for a
secondary offering by such shareholders for the reoffer and resale thereof.
The obligation of Purchaser to register such shares of Delta Common Stock for
reoffer and resale as Registered Delta Shares shall be subject to the terms
and provisions of the Registration Rights Agreement, attached to this
Agreement as Exhibit F and made a part of this Agreement by reference.
8.8 Cooperation on Filing of Amendment to Form 8-K. The Principal
Shareholder of Piper shall cause ▇▇▇▇▇▇ Exploration Company and its officers,
directors and other personnel to cooperate fully with preparing any audited
financial statements of Piper to the full extent requested by Purchaser to
enable Purchaser to file an amendment to such Form 8-K report, include such
audited financial statements of Piper if such financial statements are
required to be filed under Rule 310(c) of Regulation S-K or S-B as adopted
under the Securities Act, within 60 days following the filing of the Form 8-K
Report.
8.9 Continuity of Business. Following the Merger, the Surviving
Corporation will continue the historic business of Piper or use a significant
portion of Piper's business assets in a business similar to that conducted by
Piper prior to the Merger.
8.10 ▇▇▇▇▇▇ Exploration Company Duties. ▇▇▇▇▇▇ Exploration
Company currently handles the joint interest billing and revenue disbursement
and records maintenance on behalf of Piper and charges $9,000 per month for
performing such duties. The Principal Shareholder of Piper is President of
▇▇▇▇▇▇ Exploration Company and agrees to cause ▇▇▇▇▇▇ Exploration Company to
continue performing such services for the same consideration on behalf of
Merger Sub after the Closing Date for a period of up to three months and will
cause ▇▇▇▇▇▇ Exploration Company to cooperate in the delivery of the files and
records of Piper to the location designated by Purchaser, at Purchasers
expense.
9. Delivery of Closing Documents.
9.1 Delivery of Closing Documents to Purchaser and Merger Sub.
Subject to the fulfillment of all of the conditions set forth in Section 6 of
this Agreement, at the Closing, the following documents, agreements, and
instruments shall be duly delivered by Piper and the shareholders of Piper:
9.1.1 Piper Stock Certificates. Certificates representing
100% the shares of Piper Stock (less the shares of Piper Stock owned by those
exercising their dissenter's rights) which shall be duly executed in blank or
with a duly executed stock power attached thereto, endorsed in blank, in order
to effect the transfer of the shares of Piper Stock from the shareholders of
Piper to Merger Sub as the Surviving Corporation, with all stock transfer, tax
stamps, if any, affixed and cancelled;
9.1.2 Shareholder Certificates. The Shareholder
Certificates in the form of Exhibit D attached to this Agreement signed by
each shareholder, who in the aggregate shall constitute all of the
shareholders of Piper, who are not exercising their dissenter's rights under
Section 6.4 of this Agreement or electing to receive cash in lieu of shares of
Delta Common Stock under Section 2.1 of this Agreement subject to the
limitations thereunder;
9.1.3 Resignations. The Resignations of the Officers and
Directors of Piper as agreed upon in Exhibit C;
9.1.4 Piper Records. The books, records and other documents
referred to in Section 6.9 of this Agreement;
9.1.5 Counsel's Opinion. The opinion of ▇▇▇▇▇▇, ▇▇▇▇▇▇ and
▇▇▇▇▇, counsel for Piper in the form of Exhibit E attached to this Agreement,
such opinion letter to be in the form and substance satisfactory to Purchaser;
9.1.6 Good Standing Certificates. A certificate of good
standing from the States of Colorado, Delaware, Kansas, Louisiana,
Mississippi, Oklahoma and Texas, certified by the appropriate official of each
such state, dated as of the date not more than five (5) days prior to the
Closing Date evidencing that Piper is duly qualified and in good standing and
in effect indicating that Piper has filed all franchise tax returns due to the
date of such certificate, that all taxes shown on such returns to be due have
been paid in full, and that there are no outstanding franchise tax claims or
assessments against Piper as of the date of such certificate;
9.1.7 Approvals. All consents and Approvals referred to in
Section 3.23 of this Agreement;
9.1.8 Closing Certificate. Piper's closing certificate in
the form of Exhibit G attached to this Agreement;
9.1.9 Certificate of Merger. Certificate of Merger in the
Form of Exhibit B attached to this Agreement;
9.1.10 Releases. To the extent appropriate and only if any
secured loan, for which Piper is currently obligated is paid in whole or in
part on or prior to the Closing Date (which is not contemplated as of the date
hereof), documentation (including without limitation, duly executed releases
and UCC-3 termination statements) satisfactory in form and substance to
Purchaser and Merger Sub as requested by Purchaser and Merger Sub to release
all or a portion of such encumbrances to the extent of such loan repayment, if
any, or satisfaction of such loan in favor of any of the holders of any such
indebtedness which encumbers the property and assets of Piper;
9.1.11 Delivery of Notes. The promissory note issued by
Piper to ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ and ▇▇▇▇▇▇ Exploration Company shall have been
marked as "paid in full" and signed by the payees as provided in Section 2.1.2
of this Agreement.
9.1.12 Additional Documents. Such other documents or
instruments of further assurance or conveyance as shall be deemed necessary
and appropriate by the Purchaser and Merger Sub.
9.2 Delivery of Documents to Piper and the Piper Shareholders.
Subject to the fulfillment of all conditions set forth in Section 7 of this
Agreement, at the Closing, the following documents, agreements and instruments
shall be duly delivered by the Purchaser and Merger Sub to Piper and the
shareholders of Piper:
9.2.1 Delta Common Stock. Stock Certificates representing
shares of Delta Common Stock to be issued to each of the shareholders of Piper
in the amounts set forth in Exhibit A attached hereto;
9.2.2 Wire Transfer of Funds to Affiliates. The transfer of
funds, in accordance with the wire transfer instructions set forth in Exhibit
I attached to this Agreement, in the amount of seven hundred ninety-six
thousand eight hundred thirty-six dollars and fifty-eight cents ($796,836.58)
to ▇▇▇▇ ▇. ▇▇▇▇▇▇, II's depository account as designated by him and four
hundred four thousand five hundred seventy-five dollars and fifteen cents
($404,575.15), plus additional amounts owing hereunder, to the account
designated by ▇▇▇▇▇▇ Exploration Company as payment in full of Piper's
liabilities to them, which are being assumed by Purchaser and Merger Sub under
the provisions of Section 2.1.2 of this Agreement;
9.2.3 Additional Stock Certificate. Stock certificate
representing fifty-one thousand (51,000) shares of Delta Common Stock to be
issued in the name of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇ pursuant to Section 2.1.2 of this
Agreement;
9.2.4 Good Standing Certificate. A Certificate of good
standing from the Colorado Secretary of State, dated not more than five (5)
business days prior to the Closing Date evidencing that Purchaser and Merger
Sub are duly qualified and in good standing under the laws of such state and
in effect indicating that Merger Sub has filed all franchise taxes on the date
of such certificate, that all taxes shown on such returns to be due have been
paid in full, and that there are no outstanding franchise tax claims or
assessments against Merger Sub as of the date of such certificate;
9.2.5 Closing Certificate. Purchaser's and Merger Sub's
closing certificate in the form of Exhibit H attached to this Agreement;
9.2.6 Articles of Merger. Articles of Merger in the form of
Exhibit B attached to this Agreement;
9.2.7 Registration Rights Agreement. The Registration
Rights Agreement in the form of Exhibit F attached to this Agreement; and
9.2.8 Additional Documents. Such other documents and
instruments of further assurance and conveyance as shall be deemed necessary
and appropriate to the Closing of the transactions contemplated hereby.
10. Termination.
10.1 Events of Termination. Anything contained elsewhere in this
Agreement to the contrary notwithstanding, prior to the Closing Date, this
Agreement may be terminated by written notice of termination as follows:
10.1.1 Mutual Consent. Any time by mutual consent of Piper
and Purchaser or Merger Sub;
10.1.2 Prior to Closing Date. By Piper or Purchaser or
Merger Sub if the other party shall have (i) misstated any representation or
been in breach of any warranty contained herein, or (ii) breached any
covenant, undertaking or restriction contained herein, and such misstatement
or breach has not been cured by the earlier of (a) ten (10) days after the
giving of notice of such party of such misstatement or breach or (b) the
Closing Date;
10.1.3 Failure to Satisfy Condition of Closing. By
Purchaser or Merger Sub if Purchaser does not approve of the contracts as
specified in Section 6.16 of this Agreement or Purchaser's not satisfied with
the results of its due diligence review of the documents as provided in
Section 6.19 of this Agreement. By Piper if it is not satisfied with the
results of its due diligence review of the documents as provided in Section
7.7 of this Agreement.
10.1.4 Amendments of Exhibits. By the party ("Receiving
Party") receiving Exhibits and Schedules or amendments thereto from the other
party to this Agreement which disclose information which such Receiving Party
determines to materially, adversely affect the economic, financial or business
considerations previously determined by the Receiving Party in entering into
this Agreement and to which such Receiving Party gives written notice to the
other party within ten (10) days after such amendment setting forth its
objections.
10.1.5 Delta Stock Price. By Piper and the Principal
Shareholder of Piper if the closing price of Delta Common Stock is below the
average price level as provided in Section 7.6 of this Agreement and by
Purchaser if the closing price of Delta Common Stock is above the average
price level as provided in Section 7.6 of this Agreement.
10.1.6 Delay. By either party by written notice to the
other party if the Closing shall not have occurred on or prior to February 15,
2001; provided, however, that the right to terminate this Agreement under this
Section 10.1.6 shall not be available to any party whose failure to fulfill or
perform any obligation under this Agreement has been a substantial cause of,
or has substantially resulted in, the failure of the Closing to occur on or
before such date.
10.1.7 Consequences of Termination. In the event of a
termination and abandonment of this Agreement pursuant to the provisions of
this Section 10, this Agreement shall become void and have no effect, without
any liability on any of the parties or their directors, or officers or
shareholders in respect of this Agreement. Notwithstanding anything contained
in the foregoing to the contrary, if this Agreement is terminated as provided
in Section 10.1.2 or due to a delay caused by the failure of a party to
perform under Section 10.1.6 of this Agreement, the defaulting party whose
misstatement or breach or failure to perform caused the termination of this
Agreement shall be obligated to pay the other party's costs and expenses
incurred in connection with this Agreement, including actual attorney's fees;
provided, however, that no such termination shall relieve the defaulting or
nonperforming party from any liabilities or damages resulting from a breach by
that party of its representations, warranties, covenants, agreements or other
obligations under this Agreement prior to such termination. Otherwise, if the
transactions contemplated hereunder cannot be consummated for reasons beyond
the control of the parties hereto, provided they have used their best efforts
to acquire the approvals and consents hereunder, or this Agreement is
terminated under the provisions of Sections 10.1.1, 10.1.3, 10.1.4, 10.1.5 or
10.1.6 (which delay is not caused by any party's failure to perform), then
each party to this Agreement will pay its own expenses, including without
limitation its attorneys' fees and costs.
11. Miscellaneous.
11.1 Notices. Any notices under this Agreement shall be in
writing, signed by the party giving the same and transmitted by registered or
certified United States Mail or by a generally accepted national courier
service providing confirmation of delivery, and addressed to the party to
receive the notice at the address set forth below or such other address as any
party may specify by notice to the other party, or by facsimile transmission
or electronic mail and shall be deemed properly given and received when
actually given and received:
If to Purchaser and Merger Delta Petroleum Corporation
Sub: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to: Clanahan, Tanner, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇@▇▇▇▇.▇▇▇
If to Piper Piper Petroleum Company
and Shareholders of Piper: ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
E-Mail Address: ▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇
11.2 Brokerage Commissions.
11.2.1 No Company Hired Brokers. Piper hereby represents
and warrants to Purchaser that Piper has not engaged or utilized the services
of any broker or finder in connection with this transaction and that no
commissions are payable with respect to this transaction. The Principal
Shareholder of Piper and Piper hereby agree to indemnify and hold Purchaser
and Piper harmless from and against any liability for any claims of any broker
or finder claiming by, through or under Piper or the shareholders of Piper.
11.2.2 No Purchaser Hired Brokers. Purchaser and Merger
Sub hereby represent and warrant to Piper and the shareholders of Piper that
neither the Purchaser nor Merger Sub have engaged or utilized the services of
any broker or finder in connection with this transaction and that no
commissions are payable with respect to this transaction. Purchaser and
Merger Sub hereby agree to indemnify and hold the shareholders of Piper and
Piper harmless from and against any liability for any claims of any other
broker or finder claiming by, through or under Purchaser and Merger Sub.
11.3 Successors and Assigns. This Agreement is personal to the
parties hereto and may not be assigned, transferred, delegated or nullified
without the prior written consent of all of the parties hereto. This
Agreement shall be binding upon and inure to the benefit of the parties to
this Agreement and their respective heirs, personal representatives,
successors and permitted assigns.
11.4 Arbitration. Any dispute arising pursuant to or in any way
related to this Agreement or the transactions contemplated hereby shall be
settled by arbitration at a mutually agreed upon location in Denver, Colorado.
All arbitration shall be conducted in accordance with the rules and
regulations of the American Arbitration Association, in force at the time of
any such dispute, by a panel of three (3) single arbitrators selected in
accordance with the procedures of the American Arbitration Association. Each
party shall pay its own expenses associated with such arbitration, including
50% of the expenses of the arbitrator; provided that the prevailing party in
any arbitration shall be entitled to reimbursement of reasonable attorney's
fees and expenses (including, without limitation, arbitration expenses)
relating to such arbitration. The award of the arbitrator, based upon written
findings of fact and conclusions of law, shall be binding upon the parties;
and judgment in accordance with that decision may be entered in any court
having jurisdiction thereof. The panel of arbitrators shall have the right to
grant injunctive or other equitable relief to any party to this Agreement to
the extent such remedy is appropriate under the circumstances as determined by
such arbitrators
11.5 No Oral Modifications. No amendments or modifications to
this Agreement shall be made or deemed to have been made unless in writing
executed and delivered by the party to be bound thereby. Any provision of
this Agreement may be waived, amended, supplemented or modified only by
agreement in writing of the parties hereto.
11.6 Waiver. The failure of any party to this Agreement to insist
upon strict performance of any of the terms of this Agreement will not
constitute a waiver of any of its rights under this Agreement or its right
subsequently to assert, rely upon, or enforce any provision of this Agreement.
11.7 Governing Law. This Agreement shall be interpreted, governed
by and enforced according to the laws of the State of Texas, except as to
matters involving corporate law, in which case this Agreement shall be
governed by the laws of Delaware.
11.8 Severability. If any provision of this Agreement shall be
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement will not in any
way be affected or impaired thereby.
11.9 Headings and Captions for Convenience. The headings and
captions contained in this Agreement are for convenience only and shall not be
considered in interpreting the provisions of this Agreement.
11.10 Counterparts. This agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, all of
which together shall constitute one and the same instrument.
11.11 Representations, Warranties and Covenants. Notwithstanding
any investigation made by or on behalf of Piper or Purchaser prior to or after
the Closing Date, all representations, warranties and covenants of the parties
to this Agreement contained herein shall survive and remain in full force and
effect for a period of one (1) years after the Closing Date.
11.12 Indemnification by Principal Shareholder of Piper. The
Principal Shareholder of Piper will indemnify, defend and save and hold
Purchaser, Merger Sub and the Surviving Corporation harmless from and against
any costs, expenses, damages, liabilities, losses or deficiencies, including,
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action or proceeding (singularly a "Loss" and
collectively "Losses") suffered or incurred by Purchaser, Merger Sub and the
Surviving Corporation arising out of or resulting from, and will pay
Purchaser, or the Surviving Corporation on demand the full amount of any such
amounts which Purchaser or the Surviving Corporation may pay or may become
obligated to pay in respect of:
(a) any inaccuracy in any representation or document
delivered under or pursuant to this Agreement or the breach of any warranty
made by the Principal Shareholder of Piper and Piper in or pursuant to this
Agreement;
(b) any misrepresentations in or omission from any
Exhibit, Schedule, or other attachment to this Agreement; or
(c) any failure by the Principal Shareholder of Piper and
Piper duly to perform or observe any material term, provision, covenant, or
agreement in this Agreement to be performed or observed on the part of the
Principal Shareholder of Piper and Piper; or
(d) any act or omission of Piper, or any employee,
predecessor, consultant or agent of Piper occurring on or prior to the Closing
Date of which the Principal Shareholder of Piper had knowledge but failed to
disclose to Purchaser and Merger Sub;
(e) any material misstatement or omission by Piper
concerning any matters pertaining to Piper, its business, properties, assets,
obligations, management, personnel, financial condition, prospects or other
information not furnished by or relating to Delta contained in the disclosure
statement to be prepared by Piper as contemplated under Section 6.17 of this
Agreement; or
(f) any action, suit, investigation, proceeding, demand,
assessment, audit, judgement and claim, including without limitation any
employment related claim against Piper or any of its subsidiaries, even though
such Claims may not be filed or come to light until after the Closing Date;
provided, however, Principal Shareholder of Piper's obligation to indemnify
under this subsection (f) shall not apply to any Loss related to a violation
of Environmental and Health Laws or claims relating to non-operated properties
unless the Principal Shareholder of Piper knew of the claim and failed to
disclose such claim to purchaser and Merger Sub. The matters set forth in
Sections 11.12(a) through (f) are collectively referred to as the "Claims."
Purchaser and Merger Sub hereby covenant and agree to immediately
provide to the Principal Shareholder of Piper any and all notifications or
other correspondence it receives related to matters which may affect this
indemnity and hereby agrees to allow the Principal Shareholder of Piper to
defend any and all actions affecting this indemnity and shall not settle any
action or dispute affecting this indemnity without obtaining the prior written
consent of the Principal Shareholder of Piper. Failure to provide any such
notifications or other correspondence in a timely manner will relieve the
Principal Shareholder of Piper of its obligations to indemnify Purchaser, and
the Surviving Corporation under this Section 11.12. The right of the
Principal Shareholder of Piper to defend Purchaser or Merger Sub or the
Surviving Corporation against any Losses or Claims with counsel of their
choice is contingent upon (i) the Principal Shareholder of Piper notifying
Purchaser in writing within fifteen (15) days after Purchaser or the Surviving
Corporation has given notice of such Claims that Seller will indemnify
Purchaser against the amount of the Claims; (ii) the Principal Shareholder of
Piper providing the Purchaser with evidence acceptable to Purchaser that the
Principal Shareholder of Piper have the financial resources to defend against
the Claims and fulfill their indemnification obligations under this Agreement;
(iii) settlement of, or any adverse judgment with respect to the Claims are
not, in the good faith judgment of Purchaser, Merger Sub or the Surviving
Corporation, likely to adversely affect the continuing business interests of
Purchaser or the Surviving Corporation; and (iv) the Principal Shareholder of
Piper conduct the defense of the Claims actively and diligently. Purchaser or
Surviving Corporation shall have the right to employ counsel of its own
choosing in such action, suit or proceeding but the fees and expenses of such
counsel incurred after receipt of notice from the Principal Shareholder of
Piper of the assumption by them of the defense thereof shall be at the expense
of Purchaser or Surviving Corporation unless (i) the employment of counsel by
Purchaser or Surviving Corporation has been specifically authorized by the
Principal Shareholder of Piper, (ii) representation by the same counsel of
both Purchaser or Surviving Corporation and the Principal Shareholder of Piper
would, in the reasonable judgment of Purchaser or Surviving Corporation and
the Principal Shareholder of Piper, be inappropriate due to an actual or
potential conflict of interest between the Principal Shareholder of Piper and
Purchaser or Surviving Corporation in the conduct of the defense of such
action, such conflict of interest to be conclusively established by an opinion
of counsel to the Principal Shareholder of Piper to such effect; (iii) the
counsel employed by the Principal Shareholder of Piper and reasonably
satisfactory to Purchaser or Surviving Corporation has advised such parties in
writing that such counsel's representation of Purchaser or Surviving
Corporation would likely involve such counsel in representing differing
interests which could adversely affect the judgment or loyalty of such counsel
to Purchaser or Surviving Corporation, whether it be a conflicting,
inconsistent, diverse or other interest; or (iv) the Principal Shareholder of
Piper shall not in fact have employed counsel to assume the defense of such
action, in each of which cases the fees and expenses of counsel shall be paid
by the Principal Shareholder of Piper.
11.13 Purchaser's Indemnification. Purchaser and Merger Sub agree
that notwithstanding the Closing and regardless of any investigation of any
time made by or on behalf of the Principal Shareholder of Piper or any
information the Principal Shareholder of Piper may have in respect thereof,
Purchaser or Merger Sub, jointly and severally, will indemnify and save and
hold the Principal Shareholder of Piper harmless from and against any Losses
suffered or incurred by the Principal Shareholder of Piper arising out of or
resulting from, and will pay the Principal Shareholder of Piper on demand the
full amount of any such amounts which the Principal Shareholder of Piper may
incur, pay or may become obligated to pay in respect of:
(a) any inaccuracy in any representation or the breach of
any warranty made by Purchaser or Merger Sub in or pursuant to this Agreement
or any Exhibit, Schedule or other attachment to this Agreement of Purchaser or
Merger Sub;
(b) any failure by Purchaser or Merger Sub of their duty
to perform or observe any material item, provision, covenant or agreement in
this Agreement to be performed or observed on the part of Purchaser or Merger
Sub;
(c) any claim for damages arising after the Closing Date
for any act or omission of Purchaser occurring after the Closing Date; or
(d) any material misstatement or omission contained in any
documents furnished by Purchaser to Piper or to the shareholders of Piper as
contemplated under this Agreement.
11.14 Limitation on Indemnification.
11.14.1 Mutual Indemnification Limitations.
Notwithstanding anything to the contrary to the foregoing, the Principal
Shareholder of Piper shall not have any obligation to indemnify Purchaser,
Merger Sub and the Surviving Corporation, and Purchaser and Merger Sub shall
not have any obligation to indemnify the Principal Shareholder of Piper, for
any single Loss except to the extent the Loss exceeds $200,000 (the
"Deductible Amount") unless all of the Losses paid or incurred by Purchaser,
Merger Sub and the Surviving Corporation collectively exceed $400,000
("Threshold Amount"), in which event the Principal Shareholder of Piper or
Purchaser and Merge Sub, as the case may be, shall be obligated for any single
or multiple Loss in excess of the Threshold Amount without regard to the
Deductible Amount for any single Loss.
11.14.2 Additional Limitation. In addition to the
foregoing, the liability of the Principal Shareholder of Piper, Purchaser and
Merger Sub shall never exceed the lesser of the value of the Delta Shares
delivered to the Principal Shareholder of Piper at Closing in exchange for the
Piper Shares of the Principal Shareholder of Piper (and not including the
shares delivered to compensate the Principal Shareholder of Piper for unpaid
salary), on the Closing Date or the value of the shares on the date the
Principal Shareholder of Piper or Purchaser or Merger Sub either agrees to pay
the Losses or is ordered to pay the Losses by the Arbitration Panel, or a
court of competent jurisdiction. Notwithstanding anything contained herein to
the contrary, neither the foregoing nor the limitations with respect to the
Deductible Amount or the Threshold Amount shall apply to Purchaser's
obligation to indemnify the Principal Shareholder of Piper resulting from any
misrepresentation of, or failure to state, a material fact relating to that
portion of the information contained in the disclosure statement to be
prepared by Piper for dissemination to its shareholders (as contemplated in
Section 6.17 of this Agreement) which is furnished by Purchaser to Piper or
any claims arising under the Registration Rights Agreement or otherwise
relating to Purchaser's or Merger Sub's obligations with respect to the
registration of the shares of Delta Common Stock (to be received by them under
this Agreement) in accordance with the Registration Rights Agreement;
provided, however, that in no event shall Purchaser's or Merger Sub's
liability for any information furnished by them and contained in the
disclosure statement exceed the value as of the Closing Date of the Delta
Shares delivered to the Principal Shareholder of Piper.
11.14.3 Exclusive Remedy. After the Closing Date, the
indemnification by Principal Shareholder of Piper, Purchaser, Merger Sub and
the Surviving Corporation provided in Sections 11.12 and 11.13 shall be the
sole and exclusive remedy of Purchaser, Merger Sub and the Surviving
Corporation for claims against the Principal Shareholder of Piper and for
claims of the Principal Shareholder against them or any of them arising under
this Agreement or in the instrument executed in connection herewith.
Furthermore, the indemnification by Principal Shareholder of Piper shall only
apply to claims asserted by Purchaser, Merger Sub, or the Surviving
Corporation within one year after the Closing Date and the indemnification by
Purchaser, Merger Sub or the Surviving Corporation shall only apply to claims
asserted by the Principal Shareholder of Piper within one year after the
Closing Date (except such one year period shall be co-terminus with the
limitation period applicable to a Claim under Section 10(b) of the Exchange
Act and Rule 10b-5 adopted thereunder in the case of a misrepresentation of,
or failure to state, a material fact furnished by Purchaser which is contained
in the disclosure statement as contemplated in Section 6.17 of this
Agreement). Nothing contained in this Section 11.14.3 shall limit the rights
of the shareholders of Piper other than those of the Principal Shareholder of
Piper as provided herein.
11.15 No Benefit To Others. The representations, warranties,
covenants and agreements contained in this Agreement are for the sole benefit
of the parties hereto, the shareholders of Piper and their respective heirs,
successors, assigns, and such representations, warranties, covenants and
agreements shall not be construed as conferring, and are not intended to
confer, any rights on any other persons.
11.16 Expenses.
11.16.1 Piper Expenses. Piper will pay and discharge all
liabilities and expenses incurred by them in connection with the preparation,
authorization, execution and performance of this Agreement, including without
limitation:
(a) all fees and expenses of agents,
representatives, attorneys and accountants engaged by them;
(b) any and all sales, use, transfer taxes or
other taxes and expenses arising out of or resulting from the Merger and the
receipt by them of the consideration as provided in this Agreement; and
(c) all amounts payable with respect to any
claim for brokerage or finder's fees or other commissions with respect to the
transactions contemplated by this Agreement as a consequence of any agreement,
arrangement or understanding entered into or made by Piper or the Principal
Shareholder of Piper.
11.16.2 Purchaser's Expenses. Purchaser will pay and
discharge all liabilities and expenses incurred by or on behalf of Purchaser
and Merger Sub in connection with the preparation, authorization, execution
and performance of this Agreement, including without limitation:
(a) all fees and expenses of agents,
representatives, attorneys and accountants, and
(b) all amounts payable with respect to any claim
for brokerage or finder's fees or other commissions with respect to the Merger
and the transactions contemplated under this Agreement as a consequence of any
agreement, arrangement or understanding entered into or made by Purchaser or
Merger Sub.
11.17 Publicity. Prior to the Closing Date, all notices to third
parties and all other publicity relating to the transactions contemplated by
this Agreement shall be jointly planned, coordinated and approved by Piper,
and Purchaser or Merger Sub; provided, however, that such approval shall not
be unreasonably withheld.
11.18 Exhibits. The Exhibits, Schedules and attachments referred
to herein are incorporated into this Agreement by reference. Such Exhibits,
Schedules and attachments may be amended or modified by a party provided that
the other party ("Receiving Party") has been furnished with a copy of the
Amendment or modification to such Exhibit, Schedule or Attachment; provided,
however, that if any such amendment shall materially adversely affect the
economics, financial or business considerations of the transactions
contemplated under this Agreement as determined by the Receiving Party, such
Receiving Party may terminate this Agreement in accordance with Section 10.1.4
of this Agreement.
11.19 Entire Agreement. This Agreement, together with Exhibits,
Schedules and attachments to this Agreement, represents the entire agreement
between the parties hereto with respect to the subject matter hereof and all
prior agreements, understandings or negotiations shall be deemed merged
herein. No representations, warranties, promises or agreements, express or
implied, shall exist between the parties, except as stated herein.
11.20 Currency Amounts. All references to dollar amounts in this
Agreement shall refer to, and be interpreted solely as referring to, the
dollar amount under the United States monetary system.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
DELTA PETROLEUM CORPORATION
a Colorado corporation
By:________________________________
Its:_______________________________
DELTA ACQUISITION COMPANY, INC.
a Colorado corporation
By:________________________________
Its:_______________________________
PIPER PETROLEUM COMPANY
a Delaware corporation
By:________________________________
Its:_______________________________
THE PRINCIPAL SHAREHOLDER OF PIPER
___________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
___________________________________
___________________________________
___________________________________
___________________________________
___________________________________