SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): October 14, 2004
IMPERIAL PETROLEUM, INC.
(Exact name of registrant as specified in Charter)
Nevada 0-9923 95-3386019
(State or other (Commission File No.) (IRS Employee
jurisdiction of Identification No.)
incorporation or
organization)
329 Main Street, Suite 801
Evansville, IN 47708
(Address of Principal Executive Offices)
812-867-1433
(Issuer Telephone number)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the Registrant under any of the
following provisions (see General Instruction A.2 below).
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b)).
[ ] Pre-commencement communications pursuant to Rule 13e-4(C) under the Exchange
Act (17 CFR 240.13(e)-4(c)) [GRAPHIC OMITTED] ii
This Form 8-K and other reports filed by Imperial Petroleum, Inc. (the
"Registrant") from time to time with the Securities and Exchange Commission
(collectively, the "Filings") contain forward looking statements and information
that are based upon beliefs of, and information currently available to, the
Registrant's management as well as estimates and assumptions made by the
Registrant's management. When used in the Filings, the words "anticipate",
"believe", "estimate", "expect", "future", "intend", "plan" or the negative of
these terms and similar expressions as they relate to the Registrant or the
Registrant's management identify forward looking statements. Such statements
reflect the current view of the Registrant with respect to future events and are
subject to risks, uncertainties, assumptions and other factors relating to the
Registrant's industry, operations and results of operations and any businesses
that may be acquired by the Registrant. Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect,
actual results may differ significantly from those anticipated, believed,
estimated, expected, intended or planned.
Although the Registrant believes that the expectations reflected in the
forward looking statements are reasonable, the Registrant cannot guarantee
future results, levels of activity, performance or achievements. Except as
required by applicable law, including the securities laws of the United States,
the Registrant does not intend to update any of the forward-looking statements
to conform these statements to actual results.
Item 1.01 Entry Into A Material Definitive Agreement
On October 14, 2004 the Registrant entered into an Agreement and Plan of
Merger (the "Agreement") with United Heritage Corporation ("UHC") as announced
in the attached press release. UHC's common stock is publicly traded under the
symbol "UHCP." Other than the Agreement, there is no relationship between the
Registrant and its affiliates and UHC and its affiliates.
Pursuant to the Agreement, UHC will create a new subsidiary that will merge
into the Registrant. The Registrant will survive the merger and become a wholly
owned subsidiary of UHC. Each holder of the Registrant's common stock will
receive one share of UHC's common stock, $0.001 par value, for every three
shares of the Registrant's common stock, $0.006 par value per share. The merger
is subject to approval of the Registrant's shareholders, UHC's shareholders, and
the Registrant's lenders, and an effective Registration Statement on Form S-4
filed with the Securities and Exchange Commission. The share exchange shall be
accomplished through Computershare Trust Company, UHC's stock transfer agent.
Holders of warrants to purchase the Registrant's common stock will be asked
to relinquish the warrants in exchange for shares of UHC's common stock. The
number of shares granted to each warrant holder who agrees to relinquish his
warrant shall be computed by multiplying the number of shares subject to the
warrant by the amount by which the "Per Share Amount Value" (designated as
$0.25) for each share of the Registrant's common stock exceeds the exercise
price per share of the shares of the Registrant's common stock subject to the
warrant, divided by $0.75. Warrant holders who decline to relinquish their
warrants will receive, upon exercise of the warrant, one share of UHC's common
stock for every three shares of the Registrant's common stock represented by the
warrant.
No fractional shares of the UHC's common stock will be issued as a result
of the share exchange.
Upon completion of the merger, Jeffrey T. Wilson, the President and Chief
Executive Officer, Chairman of the Board of Directors and a significant
shareholder of the Registrant, will become UHC's President and Chief Executive
Officer. In addition, UHC will take the actions necessary to cause the Board of
Directors of UHC to consist of not more than ten directors, three of whom shall
be Jeffrey T. Wilson, Greg Thaggard and Aaron Wilson, who is Jeffrey Wilson's
son. UHC will cause one of these three individuals to be appointed to the Audit
Committee of the Board of Directors of UHC.
Subject to the terms of the Agreement, the Board of Directors of the
Registrant approved the material terms of the merger and the Agreement, and
recommended that the shareholders of the Registrant approve the merger.
On July 23, 2004, the Registrant filed a Form 8-K disclosing the terms of a
letter of intent signed by UHC and the Registrant. Among other things, the Form
8-K indicated that Jeffrey T. Wilson intended to purchase shares of UHC's common
stock at a price of $0.75 per share. The stock purchase by Mr. Wilson described
in such letter of intent will no longer take place and the terms of the merger
described in the letter of intent have been superseded by the terms of the
Agreement.
The information above is qualified in its entirety by reference to the
Agreement, including all annexes, exhibits and schedules attached thereto.
Item 9.01 Financial Statements and Exhibits
Exhibit 10. Agreement and Plan of Merger between United Heritage
Corporation, a Utah corporation, and Imperial Petroleum, Inc., a
Nevada corporation, dated as of October 14, 2004.
Exhibit 99. Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 20, 2004
IMPERIAL PETROLEUM, INC.
By:/s/ Jeffrey T. Wilson
---------------------------------------
Jeffrey T. Wilson, President
Exhibit Index
Exhibit
Number Description
10 Agreement and Plan of Merger between Imperial Petroleum, Inc.
and United Heritage Corporation
99 Press Release
EXHIBIT 10
AGREEMENT AND PLAN OF MERGER
Between
UNITED HERITAGE CORPORATION,
a Utah corporation
and
IMPERIAL PETROLEUM, INC.,
a Nevada corporation,
Dated as of October 14, 2004
TABLE OF CONTENTS
ARTICLE I DEFINITIONS.................................................1
SECTION 1.01 Definitions.............................................1
ARTICLE II THE MERGER.................................................5
SECTION 2.01 The Merger..............................................5
SECTION 2.02 Effective Time; Closing.................................5
SECTION 2.03 Effect of the Merger....................................5
SECTION 2.04 Conversion of Securities................................5
SECTION 2.05 Surrender of Shares; Stock Transfer Books...............6
SECTION 2.06 Outstanding Options.....................................7
SECTION 2.07 Outstanding Warrants....................................7
SECTION 2.08 Fractional Shares.......................................8
SECTION 2.09 Action By Each Board of Directors.......................8
SECTION 2.10 Dissenting Shares.......................................8
ARTICLE III CERTAIN GOVERNANCE MATTERS................................9
SECTION 3.01 Articles of Incorporation; By-laws......................9
SECTION 3.02 Directors and Officers..................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............10
SECTION 4.01 Organization and Qualification; Subsidiaries...........10
SECTION 4.02 Articles of Incorporation and By-laws..................10
SECTION 4.03 Capitalization.........................................10
SECTION 4.04 Authority Relative to This Agreement...................11
SECTION 4.05 No Conflict; Required Filings and Consents.............12
SECTION 4.06 Permits; Compliance....................................12
SECTION 4.07 SEC Filings; Financial Statements......................13
SECTION 4.08 Absence of Certain Changes or Events...................14
SECTION 4.09 Absence of Litigation..................................14
SECTION 4.10 Employee Benefit Plans.................................14
SECTION 4.11 Labor and Employment Matters...........................16
SECTION 4.12 Form S-4...............................................17
SECTION 4.13 Oil and Gas Operations.................................17
SECTION 4.14 Gas Imbalances.........................................17
SECTION 4.15 Oil and Gas Agreements.................................17
SECTION 4.16 Properties.............................................18
SECTION 4.17 Oil and Gas Reserves...................................19
SECTION 4.18 Take-or-Pay Deliveries.................................19
SECTION 4.19 Hedging................................................19
SECTION 4.20 Intellectual Property..................................19
SECTION 4.21 Taxes..................................................19
SECTION 4.22 Environmental Matters..................................20
SECTION 4.23 Material Contracts.....................................21
SECTION 4.24 Insurance..............................................22
SECTION 4.25 Brokers................................................22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER................23
SECTION 5.01 Corporate Organization.................................23
SECTION 5.02 Authority Relative to This Agreement...................23
SECTION 5.03 Capitalization.........................................24
SECTION 5.04 No Conflict; Required Filings and Consents.............24
SECTION 5.05 Form S-4...............................................25
SECTION 5.06 Brokers................................................25
SECTION 5.07 Absence of Litigation..................................25
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER....................25
SECTION 6.01 Conduct of Business by the Company Pending the Merger..25
SECTION 6.02 Conduct of Business By Purchaser Pending the Merger....28
ARTICLE VII ADDITIONAL AGREEMENTS....................................29
SECTION 7.01 Stockholder Meetings...................................29
SECTION 7.02 Preparation of Proxy Statement.........................30
SECTION 7.03 [Intentionally Omitted]................................31
SECTION 7.04 Access to Information; Confidentiality.................31
SECTION 7.05 Other Offers...........................................31
SECTION 7.06 Employee Matters.......................................34
SECTION 7.07 Directors' and Officers' Indemnification...............36
SECTION 7.08 Notification of Certain Matters........................36
SECTION 7.09 Further Action; Reasonable Best Efforts................37
SECTION 7.10 Public Announcements...................................37
SECTION 7.11 Certain Filings........................................38
ARTICLE VIII CONDITIONS TO THE MERGER................................38
SECTION 8.01 Conditions to the Merger...............................38
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.........................38
SECTION 9.01 Termination............................................38
SECTION 9.02 Effect of Termination..................................39
SECTION 9.03 Fees...................................................39
SECTION 9.04 Amendment..............................................39
SECTION 9.05 Waiver.................................................40
ARTICLE X GENERAL PROVISIONS.........................................40
SECTION 10.01 Notices...............................................40
SECTION 10.02 Severability..........................................40
SECTION 10.03 Entire Agreement; Assignment..........................41
SECTION 10.04 Parties in Interest...................................41
SECTION 10.05 Governing Law.........................................41
SECTION 10.06 Waiver of Jury Trial..................................41
SECTION 10.07 Construction..........................................41
SECTION 10.08 Counterparts..........................................42
SECTION 10.09 Time of the Essence...................................42
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 14, 2004 (this
"Agreement"), between United Heritage Corporation, a Utah corporation
("Purchaser"), and Imperial Petroleum, Inc., a Nevada corporation (the
"Company").
WHEREAS, the respective Boards of Directors of Purchaser and the Company
have approved this Agreement, and deem that it is in the best interests of their
respective stockholders for Purchaser to establish a new subsidiary entity under
Nevada law (the "Merger Subsidiary") and merge the Merger Subsidiary into the
Company (the "Merger") upon the terms and subject to the conditions set forth
herein so that the Company will become a wholly-owned subsidiary of Purchaser
following the Merger;
WHEREAS, pursuant to the Merger, the shares of common stock, par value
$0.006 per share, of the Company ("Shares") that are issued and outstanding
shall, as part of the Merger, be exchanged for shares of common stock, par value
$0.001 per share, of Purchaser (the "Purchaser Common Stock"), on the basis of
one share of Purchaser Common Stock for each three Shares (the "Per Share
Amount" or the "Merger Consideration"), upon the terms and subject to the
conditions set forth herein. For the purposes of this Agreement and in
connection with the provisions below for the relinquishment of Outstanding
Warrants, the "Per Share Amount Value" shall be deemed to be $0.25 per share;
WHEREAS, the Board of Directors of the Company (the "Board") and the Board
of Directors of Purchaser have approved the Merger and resolved to recommend
that holders of Shares and Purchaser Common Stock approve this Agreement and the
Merger; and
WHEREAS, the Board of Directors of Purchaser and the Board have each
approved this Agreement and declared its advisability and approved the Merger in
accordance with the General Corporation Law of the State of Nevada ("Nevada
Law") and the Business Corporation Act of the State of Utah ("Utah Law"), upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Purchaser and the Company hereby agree as follows:
ARTICLE I...
DEFINITIONS
SECTION 1.01 ....Definitions. (a) For purposes of this Agreement:
"Acquisition Proposal" means any offer from any third party to acquire by
any means all or substantially all of the assets or the shares of capital stock
of the Company or of any Subsidiary.
"affiliate" of a specified person means a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person.
"beneficial owner", with respect to any Shares, has the meaning ascribed to
such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of the SEC in
Washington, D.C. are open to accept filings; or, in the case of determining a
date when any payment is due, any day (other than a Saturday or Sunday) on which
banks are not required or authorized to close in the City of New York.
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities, by contract or otherwise;
"Environmental Law" means any United States federal, state, or local law or
non-United States law relating to (i) releases or threatened releases of
Hazardous Substances or materials containing Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (iii)
pollution or protection of the environment.
"ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with the Company or any Subsidiary and which, together with
the Company or any Subsidiary, is treated as a single employer within the
meaning of Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Hazardous Substances" means (i) those substances defined in or regulated
under the following United States federal statutes and their state counterparts,
and all regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking
Water Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and
Rodenticide Act and the Clean Air Act; (ii) polychlorinated biphenyls, and (iii)
any substance, material or waste regulated by any Governmental Authority
pursuant to any Environmental Law.
"knowledge of the Company" or "Company's knowledge" means the actual
knowledge, without investigation, of any of the officers of the Company.
"Liens" mean liens, security interests, charges, mortgages or other
encumbrances of any kind other than Permitted Liens.
"Material Adverse Effect" means, when used in connection with the Company
or any Subsidiary, any event, circumstance, change or effect that is or is
reasonably likely to be materially adverse to the business or financial
condition of the Company and its Subsidiaries taken as a whole, except to the
extent resulting from (a) any changes in general United States or global
economic conditions, (b) any changes affecting the oil and gas industry in
general, (c) matters whose significance or impact would reasonably be expected
to be primarily short-term (under 12 months), or (d) any matters disclosed in
this Agreement or in the Disclosure Schedule.
"Oil and Gas Agreements" means the following types of agreements or
contracts to which the Company or a Subsidiary is a party, whether as an
original party, by succession or assignment or otherwise: oil and gas leases,
farm-in and farm-out agreements, agreements providing for an overriding royalty
interest, agreements providing for a royalty interest, agreements providing for
a net profits interest, crude oil or natural gas sales or purchase contracts,
joint operating agreements, unit operating agreements, unit agreements, field
equipment leases, and agreements restricting the Company or a Subsidiary's
ability to operate, obtain, explore for or develop interests in a particular
geographic area.
"Permitted Liens" means (a) Liens for taxes, assessments, and other
governmental charges that are not delinquent and (b) general transfer
restrictions under law.
"person" means an individual (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), corporation, partnership,
limited partnership, limited liability company, syndicate, trust, association or
entity or government, political subdivision, agency or instrumentality of a
government.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"subsidiary" or "subsidiaries" of the Company, Purchaser, or any other
person means any and all corporations, partnerships, joint ventures,
associations, limited liability companies and other entities controlled by such
person, directly or indirectly, through one or more intermediaries.
"Superior Proposal" means any Acquisition Proposal which the Board or the
Board of Directors of Purchaser, as the case may be, determines, in its good
faith judgment, to be more favorable to the stockholders of the Company or
Purchaser, as the case may be, than the Merger.
"Suspension Event" means the occurrence of any of the following: (i) any
general suspension of trading in, or limitation on prices for, securities on any
national securities exchange, NASDAQ or in the over-the-counter market in the
United States, (ii) a declaration of a general banking moratorium or any
suspension of payments in respect of banks in the United States, or (iii) any
limitation (whether or not mandatory) by any Governmental Authority on, or other
event that materially and adversely affects, the extension of credit by banks or
other lending institutions.
"Tax" or "Taxes" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation: taxes or other charges on or with respect to
income, franchise, windfall or other profits, gross receipts, property, sales,
use, capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes;
license, registration and documentation fees; and customers' duties, tariffs and
similar charges.
(b) The following terms have the meaning set forth in the Sections set
forth below:
Defined Term Location of Definition
Action 4.09
AFE 6.01(j)
Agreement Preamble
Articles of Merger Section 2.02
Blue Sky Laws Section 4.05(b)
Board Recitals
Certificates Section 2.05(b)
Code Section 4.10(b)
Company Preamble
Company Stockholder Meeting Section 7.01(a)
Company's Oil and Gas Interests Section 4.16(a)
Disclosure Schedule Section 4.01(b)
Dissenting Shares Section 2.10
Effective Time Section 2.02
ERISA Section 4.10(a)
Form S-4 Section 7.02
GAAP Section 4.07(b)
Good and Marketable Title Section 4.16(b)
Governmental Authority Section 4.05(b)
Hydrocarbons Section 4.13(b)
IRS Section 4.10(a)
Material Contracts Section 4.23(a)
Merger Recitals
Merger Consideration Recitals
Most Recent Balance Sheet Section 4.07(c)
Multiemployer Plan Section 4.10(b)
Multiple Employer Plan Section 4.10(b)
Nevada Law Recitals
Outstanding Options Section 2.06
Outstanding Warrants Section 2.07
Paying Agent Section 2.05
Permits Section 4.06
Per Share Amount Recitals
Plans Section 4.10(a)
Purchaser Preamble
Purchaser Stockholder Meeting Section 7.01(b)
Reserve Report Section 4.17
SEC Reports Section 4.07(a)
Securities Act Section 4.07(a)
Shares Recitals
Subsidiary Section 4.01(a)
Surviving Corporation Section 2.01
Transactions Section 2.09(a)
Utah Law Recitals
ARTICLE II
THE MERGER
SECTION 2.01 ....The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions set forth in Article VIII, and in accordance with
Nevada Law, at the Effective Time, the Merger Subsidiary shall be merged with
and into the Company where upon the separate existence of the Merger Subsidiary
shall cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
SECTION 2.02 ....Effective Time; Closing. As promptly as practicable (but
not later than two business days) after the satisfaction or, if permissible,
waiver of the conditions set forth in Article VIII, the parties hereto shall
cause the Merger to be consummated by the filing of Articles of Merger
("Articles of Merger") with the Secretary of State of the State Nevada, in such
form as is required by, and executed in accordance with, the relevant provisions
of Nevada Law (the date and time of such filing being the "Effective Time").
Prior to such filing, a closing shall be held at the offices of Purchaser
located at 2 North Caddo Street, Cleburne, Texas or such other place as the
parties shall agree, for the purpose of confirming the satisfaction or waiver,
as the case may be, of the conditions set forth in Article VIII.
SECTION 2.03 ....Effect of the Merger. Following the Merger, the Company
will be a wholly-owned subsidiary of Purchaser. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of Nevada
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time, all the property, rights, privileges, powers and franchises
of the Merger Subsidiary and the Company shall vest in the Company as the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of the Merger Subsidiary and the Company shall become
the debts, liabilities, obligations, restrictions, disabilities and duties of
the Company as the Surviving Corporation.
SECTION 2.04 ....Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company, the
Merger Subsidiary or the holders of any of the following securities:
(a) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section
2.04(b) and any Dissenting Shares) shall be canceled and shall be converted
automatically into the right to receive the Merger Consideration payable to
the holder of such Share, upon surrender, in the manner provided herein, of
the Certificate that formerly evidenced such Share; and
(b) each Share held in the treasury of the Company or owned by
Purchaser or any subsidiary of Purchaser or by any Subsidiary immediately
prior to the Effective Time shall be canceled without any conversion
thereof and no payment or distribution shall be made with respect thereto.
SECTION 2.05 ....Surrender of Shares; Stock Transfer Books.
(a) Purchaser hereby designates Computershare Trust Company to act as
agent (the "Paying Agent") for the holders of Shares to receive the shares
of Purchaser Common Stock to which holders of Shares shall become entitled
pursuant hereto and Purchaser shall make such shares available to the
Paying Agent.
(b) Promptly after the Effective Time, Purchaser shall cause to be
mailed to each person who was, at the Effective Time, a holder of record of
Shares entitled to receive the Merger Consideration a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk
of loss and title to the certificates evidencing such Shares (the
"Certificates") shall pass, only upon proper delivery of the Certificates
to the Paying Agent) and instructions for use in effecting the surrender of
the Certificates pursuant to such letter of transmittal. The letter of
transmittal shall be in such form as the Company and Purchaser may
reasonably agree. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other
documents as may be required pursuant to such instructions, the holder of
such Certificate shall be entitled to receive and Purchaser shall cause
Paying Agent to deliver in exchange therefor the Merger Consideration for
each Share formerly evidenced by such Certificate, and such Certificate
shall then be canceled. If the Merger Consideration is to be delivered to a
person other than the person in whose name the surrendered Certificate
formerly evidencing Shares is registered on the stock transfer books of the
Company, it shall be a condition of delivery of the Merger Consideration
that the Certificate so surrendered shall be endorsed properly or otherwise
be in proper form for transfer and that the person requesting such delivery
shall have paid all transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or shall have established to the
satisfaction of Purchaser that such taxes either have been paid or are not
applicable. If any holder of Shares is unable to surrender such holder's
Certificates because such Certificates have been lost, mutilated or
destroyed, such holder may deliver in lieu thereof an affidavit and
indemnity bond in a reasonable amount in form and substance and with surety
reasonably satisfactory to Purchaser and the Company.
(c) At any time following the sixth month after the Effective Time,
Purchaser shall be entitled to require the Paying Agent to deliver to it
any shares of Purchaser Common Stock which had been made available to the
Paying Agent and not disbursed to holders of Shares and, thereafter, such
holders shall be entitled to look to Purchaser (subject to abandoned
property, escheat and other similar laws) only as general creditors thereof
with respect to any Merger Consideration that may be payable upon due
surrender of the Certificates held by them. Notwithstanding the foregoing,
neither Purchaser nor the Paying Agent shall be liable to any holder of a
Share for any Merger Consideration delivered in respect of such Share to a
public official pursuant to any abandoned property, escheat or other
similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there
shall be no further registration of transfers of Shares on the records of
the Company. From and after the Effective Time, the holders of Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to such Shares except as otherwise provided herein or
by applicable law.
(e) The Company shall promptly cause its transfer agent to furnish
Purchaser with mailing labels containing the names and addresses of all
record holders of Shares and with security position listings of Shares held
in stock depositories, each as of a recent date, together with all other
available listings and computer files containing names, addresses and
security position listings of record holders and beneficial owners of
Shares. The Company shall promptly furnish Purchaser with such additional
information, including, without limitation, updated listings and computer
files of stockholders, mailing labels and security position listings, and
such other assistance as Purchaser may reasonably request. Subject to the
requirements of applicable law, and except for such steps as are necessary
to disseminate any documents necessary to consummate the Merger, Purchaser
shall hold in confidence the information contained in such labels, listings
and files, shall use such information only in connection with the
Transactions, and, if this Agreement shall be terminated in accordance with
Section 9.01, shall deliver and shall cause their agents to deliver to the
Company all copies of such information then in their possession or control.
SECTION 2.06 ....Outstanding Options. Other than Outstanding Warrants, the
Company has no outstanding options to purchase Shares ("Outstanding Options").
SECTION 2.07 ....Outstanding Warrants. Following the execution of this
Agreement, the Company shall send to holders of warrants to purchase Shares
("Outstanding Warrants") written notice of the Merger and such other information
as may be required by the terms of each such Outstanding Warrant. The Company
shall send to all such persons a Warrant Relinquishment and Release Agreement
(herein so called) in a form to be agreed upon by Purchaser and the Company and
shall use its reasonable best efforts to cause all holders of Outstanding
Warrants (and such holders' spouses) to execute prior to the Effective Time a
Warrant Relinquishment and Release Agreement. From and after the Effective Time,
Purchaser shall cause the Paying Agent to deliver to such holders who have
previously delivered a Warrant Relinquishment and Release Agreement the number
of shares of Purchaser Common Stock equal to (i) the product of (A) the number
of Shares subject to such Outstanding Warrant and (B) the amount by which the
Per Share Amount Value exceeds the exercise price per share of Shares subject to
such Outstanding Warrant divided by (ii) $0.75. In the event that a holder of an
Outstanding Warrant fails to deliver a Warrant Relinquishment and Release
Agreement prior to the Effective Time, such holder's Outstanding Warrant shall,
in accordance with the terms and conditions of each Outstanding Warrant be
converted without any action on the part of the holder thereof into the right to
receive Merger Consideration upon the exercise of such holder's Outstanding
Warrant in accordance with the warrant agreement(s). Purchaser shall deliver, or
cause the Paying Agent to deliver, to each holder of Outstanding Warrants, the
number of shares of Purchaser Common Stock issuable pursuant hereto, as promptly
as practicable after receiving a valid exercise of such Outstanding Warrant by
the holder thereof. To the extent that the Outstanding Warrants are exercised by
holders prior to the Effective Time, such holders shall receive Certificates
evidencing the Shares underlying the Outstanding Warrants and may surrender such
Certificates to the Paying Agent from and after the Effective Time in exchange
for shares of Purchaser Common Stock as provided herein.
SECTION 2.08 ....Fractional Shares. The Per Share Amount shall be in whole
shares of Purchaser Common Stock or rounded to the nearest whole share. No
fractional shares of Purchaser Common Stock will be issued pursuant to this
Agreement.
SECTION 2.09 ....Action By Each Board of Directors.
(a) The Board, at a meeting duly called and held on October 14, 2004,
has (i) determined that this Agreement and the transactions contemplated
hereby, including the Merger (collectively, the "Transactions"), are fair
to, and in the best interests of, the holders of Shares, (ii) approved,
adopted and declared advisable this Agreement and the Transactions (such
approval and adoption having been made in accordance with Nevada Law), and
(iii) resolved to recommend that the holders of Shares approve and adopt
this Agreement and the Merger.
(b) Purchaser's Board of Directors, by unanimous written consent dated
as of October 14, 2004, has (i) determined that this Agreement and the
Transactions are fair to, and in the best interests of the holders of
shares of Purchaser Common Stock, (ii) approved, adopted and declared
advisable the Merger(such approval and adoption having been made in
accordance with Utah Law), and (iii) resolved to recommend that the holders
of shares of Purchaser Common Stock approve and adopt the Merger and
authorize the issuance of all of the shares of Purchaser Common Stock
issuable pursuant to this Agreement as required by NASDAQ rules and
regulations.
SECTION 2.10 ....Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the contrary,
Shares that are outstanding immediately prior to the Effective Time and
that are held by stockholders who shall have neither voted in favor of the
Merger nor consented thereto in writing and who shall have demanded
properly in writing payment for such Shares in accordance with Nevada Law
(collectively, the "Dissenting Shares") shall not be converted into, or
represent the right to receive, the Merger Consideration. Such stockholders
shall be entitled to receive payment of the amount the Company estimates to
be the fair value of such Shares held by them in accordance with the
provisions of Nevada Law, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to receive payment for such Shares under
Nevada Law shall thereupon be deemed to have been converted into, and to
have become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration, without any interest thereon, upon
surrender, in the manner provided herein, of the Certificate or
Certificates that formerly evidenced such Shares.
(b) The Company shall give Purchaser (i) prompt notice of any demands
for appraisal received by the Company, withdrawals of such demands, and any
other instruments served pursuant to Nevada Law and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Nevada Law. The Company shall not,
except with the prior written consent of Purchaser, make any payment with
respect to demands for appraisal or offer to settle or settle any such
demands.
ARTICLE III
CERTAIN GOVERNANCE MATTERS
SECTION 3.01 Articles of Incorporation; By-laws.
- -
(a) At the Effective Time, the Articles of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Articles of Incorporation; and
(b) The By-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation until
thereafter amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such By-laws.
SECTION 3.02 ....Directors and Officers.
(a) Jeffrey T. Wilson shall be elected the President and Chief
Executive Officer of Purchaser as of the Effective Time. Purchaser shall
cause the Board of Directors of Purchaser to consist of not more than ten
(10) directors, three of whom shall be Jeffrey T. Wilson, Greg Thaggard,
and Aaron Wilson (the "Company Board Designees"). If any Company Board
Designee other than Jeffrey T. Wilson shall die or decline to serve as a
director of Purchaser, then Jeffrey T. Wilson shall select a successor to
serve in such person's position as a Company Board Designee. Prior to the
Effective Time, the Board of Directors of Purchaser shall take all action
necessary to amend the by-laws of Purchaser to make ten (10) the maximum
number of directors on the Board of Directors of Purchaser and to elect the
Company Board Designees to the Board of Directors of Purchaser, in each
case as of the Effective Time. Purchaser shall cause there to be at least
one Company Board Designee on the Audit Committee of the Board of Directors
of Purchaser as of the Effective Time. If the Effective Time occurs on a
date which is less than nine months before the next regularly scheduled
annual meeting of stockholders of Purchaser, Purchaser further agrees to
use all reasonable best efforts necessary to (i) nominate the Company Board
Designees for election as directors, and (ii) cause at least one Company
Board Designee to be on the Audit Committee of the Board of Directors of
Purchaser, in each case in connection with and as of such next regularly
scheduled annual meeting.
(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Purchaser to enter into this Agreement, the Company
hereby represents and warrants to Purchaser that:
SECTION 4.01 Organization and Qualification; Subsidiaries.
(a) Except as disclosed in Section 4.01 of the Disclosure Schedule,
each of the Company and each subsidiary of the Company (a "Subsidiary") is
a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. The Company and each
Subsidiary is duly qualified or licensed as a foreign corporation to do
business and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except where such
failure to be qualified or licensed would not have a Material Adverse
Effect.
(b) A true and complete list of all the Subsidiaries, together with
the jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each
other Subsidiary and the names of the directors and officers of each
Subsidiary, is set forth in Section 4.01(b) of the Disclosure Schedule,
which has been prepared by the Company and delivered by the Company to
Purchaser prior to the execution and delivery of this Agreement (the
"Disclosure Schedule"). Except as disclosed in Section 4.01(b) of the
Disclosure Schedule, the Company does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity.
(c) All names by which the Company previously conducted business or
was known as are listed in Section 4.01(c) of the Disclosure Schedule.
SECTION 4.02 ....Articles of Incorporation and By-laws. The Company has
heretofore furnished to Purchaser a complete and correct copy of the Articles of
Incorporation and the By-laws or equivalent organizational documents, each as
amended to date, of the Company and each Subsidiary. Such Articles of
Incorporation, By-laws or equivalent organizational documents are in full force
and effect. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its Articles of Incorporation, By-laws or equivalent
organizational documents.
SECTION 4.03 ....Capitalization. The authorized capital stock of the
Company consists of 50,000,000 shares of common stock, par value $0.006 per
share. As of the date hereof, (a) 39,873,103 Shares were issued and outstanding,
all of which are validly issued, fully paid and non-assessable, (b) 119,167
Shares are held in the treasury of the Company, (c) 1,720,000 Shares are held by
the Subsidiaries, (d) no Shares are reserved for future issuance pursuant to
Outstanding Options, (e) 10,842,434 Shares are reserved for future issuance
pursuant to Outstanding Warrants (including the TEC Warrant), and (f) the TEC
Shares are to be issued pursuant to the terms hereof. Except as set forth in
this Section 4.03 or in Section 4.25 or in Section 4.03 of the Disclosure
Schedule, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of the Company or any Subsidiary or obligating the Company or any
Subsidiary to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary. There are no Outstanding Options.
Section 4.03 of the Disclosure Schedule sets forth the following information
with respect to Outstanding Warrants: (i) the name of the holder of each
Outstanding Warrant; (ii) the agreement pursuant to which each Outstanding
Warrant was granted; (iii) the number of Shares subject to each Outstanding
Warrant; (iv) the exercise price of each Outstanding Warrant; (v) the date on
which each Outstanding Warrant was granted or issued; (vi) the applicable
vesting schedule; (vii) the date on which each Outstanding Warrant expires; and
(viii) whether the exercisability of any Outstanding Warrant will be accelerated
in any way by the Transactions. All Shares subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the instruments pursuant
to which they are issuable, will be duly authorized, validly issued, fully paid
and non-assessable. There are no outstanding contractual obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any Shares
or any capital stock of any Subsidiary or to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
Subsidiary or any other person. Except as disclosed in Section 4.03 of the
Disclosure Schedule, each outstanding share of capital stock of each Subsidiary
is duly authorized, validly issued, fully paid and non-assessable, and each such
share is owned by the Company or another Subsidiary free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or any Subsidiary's voting rights,
charges and other encumbrances of any nature whatsoever.
SECTION 4.04 ....Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and adoption
of this Agreement by the holders of a requisite number of the then outstanding
Shares and the filing and recordation of appropriate merger documents as
required by Nevada Law). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery of this Agreement by Purchaser, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. At a meeting duly called and held on October 14, 2004, the Board
approved this Agreement and the Transactions, and such approvals are sufficient
so that the restrictions on business combinations set forth in the Nevada Law
shall not apply to the Merger.
SECTION 4.05 ....No Conflict; Required Filings and Consents.
- -
(a) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, (i)
conflict with or violate the Articles of Incorporation or By-laws or
equivalent organizational documents of the Company or any Subsidiary, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 4.05(b) have been obtained and all filings and
obligations described in Section 4.05(b) have been made, conflict with or
violate any United States or non-United States national, state, provincial,
municipal, county or local statute, law, ordinance, regulation, rule, code,
executive order, injunction, judgment, decree or other order ("Law")
applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected, or (iii) other
than as described in Section 4.05(a) of the Disclosure Schedule, result in
any breach of or constitute a default (or an event which, with notice or
lapse of time or both, would become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of
the Company or any Subsidiary pursuant to or under, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any Subsidiary is
a party or by which any property or asset of the Company or any Subsidiary
is bound or affected, except, with respect to clause (ii) or (iii), for any
such conflicts, violations, breaches, defaults or other occurrences which
would not prevent or materially delay consummation of the Merger, or
otherwise prevent or materially delay the Company from performing its
obligations under this Agreement and would not have a Material Adverse
Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any United States or non-United States national, state,
provincial, municipal, county or local government, governmental, regulatory
or administrative authority, agency, instrumentality or commission or any
court, tribunal, or judicial or arbitral body (a "Governmental Authority"),
except (i) for applicable requirements, if any, of the Securities Act,
Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and
state takeover laws, (ii) filing and recordation of appropriate merger
documents as required by Nevada Law, and (iii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement and would not
have a Material Adverse Effect.
SECTION 4.06 ....Permits; Compliance. Each of the Company and the
Subsidiaries is in possession of all material franchises, grants,
authorizations, licenses, permits, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Authority necessary for
each of the Company or the Subsidiaries to own, lease and operate its properties
or to carry on its business as it is now being conducted, or as presently
contemplated to be conducted (the "Permits"), except where the failure to have,
or the suspension or cancellation of, any of the Permits would not prevent or
materially delay consummation of the Merger or otherwise prevent or materially
delay the Company from performing its obligations under this Agreement and would
not have a Material Adverse Effect. No suspension or cancellation of any of the
Permits is pending or, to the knowledge of the Company, threatened, which
suspension or cancellation would have a Material Adverse Effect. Neither the
Company nor any Subsidiary is in conflict with, or in default, breach or
violation of, (a) any Law applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (b) any note, bond, mortgage, indenture, contract, agreement,
lease, license, Permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is bound, except for
any such conflicts, defaults, breaches or violations that would not prevent or
materially delay consummation of the Merger or otherwise prevent or materially
delay the Company from performing its obligations under this Agreement and would
not have a Material Adverse Effect.
SECTION 4.07 ....SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports and documents required to
be filed by it with the SEC since August 1, 2000, including (i) all proxy
statements relating to the Company's meetings of stockholders (whether
annual or special) held since August 1, 2000 and (ii) all other forms,
reports and other registration statements (the forms, reports and other
documents referred to in clauses (i) - (ii) above being, collectively, the
"SEC Reports"). The SEC Reports (i) were prepared in accordance with either
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and
regulations promulgated thereunder, and (ii) did not, at the time they were
filed, or, if amended, as of the date of such amendment, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto, and those contained in the SEC Reports) was
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto) and each fairly
presents, in all material respects, the consolidated financial position,
results of operations and cash flows of the Company and its consolidated
Subsidiaries as at the respective dates thereof and for the respective
periods indicated therein except as otherwise noted therein and for normal,
recurring year-end adjustments.
(c) Except as and to the extent set forth on the unaudited
consolidated balance sheet of the Company and the consolidated Subsidiaries
as at April 30, 2004 including the notes thereto (the "Most Recent Balance
Sheet") neither the Company nor any Subsidiary has any liability or
obligation of any nature (whether accrued, absolute, contingent or
otherwise), except for liabilities and obligations incurred in the ordinary
course of business consistent with past practice since April 30, 2004, none
of which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect.
(d) The Company has heretofore furnished to Purchaser complete and
correct copies of all amendments and modifications that have not been filed
by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and
are currently in effect.
SECTION 4.08 ....Absence of Certain Changes or Events. Since April 30,
2004, except as set forth in Section 4.08 of the Disclosure Schedule, or as
expressly contemplated by this Agreement, (a) the Company and the Subsidiaries
have conducted their businesses only in the ordinary course and in a manner
consistent with past practice, and (b) there has not been any Material Adverse
Effect.
SECTION 4.09 ....Absence of Litigation. Except as set forth in Section 4.09
of the Disclosure Schedule, there is no litigation, suit, claim, action,
proceeding or investigation (an "Action") pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary, or any property or
asset of the Company or any Subsidiary, before any Governmental Authority that
could reasonably be expected to have a Material Adverse Effect if determined
adversely to the Company. Neither the Company nor any Subsidiary nor any
property or asset of the Company or any Subsidiary is subject to any continuing
order of, consent decree, settlement agreement or similar written agreement
with, or continuing investigation by, any Governmental Authority, or any order,
writ, judgment, injunction, decree, determination or award of any Governmental
Authority.
SECTION 4.10 ....Employee Benefit Plans.
(a) Section 4.10(a) of the Disclosure Schedule lists (i) all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other
benefit plans, programs or arrangements, and all employment, termination,
severance or other contracts or agreements, whether legally enforceable or
not, to which the Company or any Subsidiary is a party, with respect to
which the Company, any Subsidiary or any ERISA Affiliate has any obligation
or which are maintained, contributed to or sponsored by the Company or any
Subsidiary for the benefit of any current or former employee, officer or
director of, or any current or former consultant to, the Company or any
Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Section 4069 of ERISA in the event
such plan has been or were to be terminated, (iii) any plan in respect of
which the Company or any Subsidiary could incur liability under Section
4212(c) of ERISA, and (iv) any contracts, arrangements or understandings
between the Company or any Subsidiary and any employee of the Company or
any Subsidiary including, without limitation, any contracts, arrangements
or understandings relating in any way to a sale of the Company or any
Subsidiary (collectively, the "Plans"). Each Plan is in writing (or a
written summary exists) and the Company has made available to Purchaser a
true and complete copy of each Plan and has made available to Purchaser a
true and complete copy of each material document, if any, prepared in
connection with each such Plan, including, without limitation, (i) a copy
of each trust or other funding arrangement, if such a trust or funding
arrangement exists, (ii) each summary plan description and summary of
material modifications thereto, (iii) the most recent three years' Internal
Revenue Service ("IRS") Forms 5500, if applicable (iv) the most recently
received IRS determination letter for each such Plan, if applicable, and
(v) the most recent three years' actuarial reports and financial statements
in connection with each such Plan, if applicable.
(b) None of the Plans is a multi-employer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) (a "Multi-employer Plan") or a
single-employer plan (within the meaning of Section 4001(a)(15) of ERISA)
for which the Company or any Subsidiary could incur liability under Section
4063 or 4064 of ERISA (a "Multiple Employer Plan"). Except as listed in
Section 4.10(a) of the Disclosure Schedule, none of the Plans (i) provides
for the payment of separation, severance or similar-type benefits to any
person, (ii) obligates the Company or any Subsidiary to pay separation,
severance or similar-type benefits solely or partially as a result of any
Transaction, or (iii) obligates the Company or any Subsidiary to make any
payment or provide any benefit as a result of a "change in control", within
the meaning of such term under Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"). Except as listed in Section 4.10(a) of the
Disclosure Schedule, none of the Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Subsidiary.
(c) Each Plan is now and always has been operated in all material
respects in accordance with its terms and the requirements of all
applicable Laws including, without limitation, ERISA and the Code. The
Company and the Subsidiaries have performed all obligations required to be
performed by them under, are not in any material respect in default under
or in violation of, and have no knowledge of any material default or
violation by any party to, any Plan. No Action or any audit or
investigation by any Governmental Authority is pending or, to the knowledge
of the Company, threatened with respect to any Plan (other than claims for
benefits in the ordinary course) and no fact or event exists that could
reasonably be expected to give rise to any such Action.
(d) Each Plan that is intended to be qualified under Section 401(a) of
the Code has timely received a favorable determination, opinion, advisory
or notification letter from the IRS that the Plan is so qualified and each
trust established in connection with any Plan which is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received an opinion, advisory or modification letter from the IRS that it
is so exempt, and no fact or event has occurred since the date of such
letter or letters from the IRS that could reasonably be expected to
adversely affect the qualified status of any such Plan or the exempt status
of any such trust.
(e) There has not been to the best of Company's knowledge any
prohibited transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) with respect to any Plan. Neither the Company nor
any Subsidiary has incurred any liability under, arising out of or by
operation of Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course),
including, without limitation, any liability in connection with (i) the
termination or reorganization of any employee benefit plan subject to Title
IV of ERISA, or (ii) the withdrawal from any Multi-employer Plan or
Multiple Employer Plan, and no fact or event exists which could reasonably
be expected to give rise to any such liability.
(f) All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority
and no fact or event exists to the best of Company's knowledge which could
reasonably be expected to give rise to any such challenge or disallowance.
(g) None of the Plans is subject to the laws of any country other than
the United States.
SECTION 4.11 ....Labor and Employment Matters.
Section 4.11 of the Disclosure Schedule sets forth a list of all employees
of the Company and each Subsidiary, together with their dates of hire, and any
employees currently on leave of absence, indicating the nature of and length of
such leave and whether such employees have employment agreements. The Company
has previously provided to Purchaser a schedule setting forth current base
salary and total wages paid in the prior year for all employees listed in
Section 4.11 of the Disclosure Schedule. Except as set forth in Section 4.11 of
the Disclosure Schedule, (i) there are no controversies pending or, to the
knowledge of the Company, threatened between the Company or any Subsidiary and
any of their respective employees; (ii) neither the Company nor any Subsidiary
is a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary, nor, to the
knowledge of the Company, are there any activities or proceedings of any labor
union to organize any such employees; (iii) there are no unfair labor practice
complaints pending against the Company or any Subsidiary before the National
Labor Relations Board or any current union representation questions involving
employees of the Company or any Subsidiary; (iv) there is no strike, slowdown,
work stoppage or lockout, or, to the knowledge of the Company, threat thereof,
by or with respect to any employees of the Company or any Subsidiary; and (v)
there are no currently effective agreements relating to severance or similar
payments or other benefits to be provided to directors, officers, employees,
consultants or former employees of the Company or any Subsidiary in connection
with or after termination of such director, officer, consultant or employee's
employment or other relationship with the Company or that may otherwise be owing
as a result of the Transactions.
(a) The Company and the Subsidiaries are in material compliance with
all applicable laws relating to the employment of labor, including those
related to wages, hours, collective bargaining and the payment and
withholding of Taxes and other sums as required by the appropriate
Governmental Authority, and have withheld and paid to the appropriate
Governmental Authority or are holding for payment not yet due to such
Governmental Authority all amounts required to be withheld from employees
of the Company or any Subsidiary and are not liable for any arrears of
wages, Taxes, penalties or other sums for failure to comply with any of the
foregoing. The Company and the Subsidiaries have paid in full to all
employees or adequately accrued for in accordance with GAAP consistently
applied all wages, salaries, commissions, bonuses, benefits and other
compensation due to or on behalf of such employees, and there is no claim
with respect to payment of wages, salary or overtime pay that has been
asserted or is now pending or threatened before any Governmental Authority
with respect to any persons currently or formerly employed by the Company
or any Subsidiary. Neither the Company nor any Subsidiary is a party to, or
otherwise bound by, any consent decree with, or citation by, any
Governmental Authority relating to employees or employment practices. There
is no charge of discrimination in employment or employment practices, for
any reason, including, without limitation, age, gender, race, religion or
other legally protected category, which has been asserted or is now pending
or, to the knowledge of the Company, threatened before the United States
Equal Employment Opportunity Commission, or any other Governmental
Authority in any jurisdiction in which the Company or any Subsidiary have
employed or employ any person, except as would not have a Material Adverse
Effect.
(b) The Company and the Subsidiaries are in compliance with the
provisions of the WARN Act and any similar state laws. Section 4.11 of the
Disclosure Schedule lists all employees who have been terminated in the
90-day period ending as of the date hereof.
SECTION 4.12 ....Form S-4. No information supplied by the Company for
inclusion in the Form S-4 shall, at the time the Form S-4 or any amendments or
supplements thereto are filed with the SEC or are first published, sent or given
to stockholders of the Company, as the case may be, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Purchaser, or Purchaser's representatives for inclusion
in the Form S-4.
SECTION 4.13 ....Oil and Gas Operations. Except as set forth in Section
4.13 of the Disclosure Schedule, proceeds from the sale of crude oil, natural
gas liquids and other hydrocarbons produced from crude oil or natural gas
("Hydrocarbons") produced from the Company's Oil and Gas Interests are being
received by the Company and the Subsidiaries in a timely manner and are not
being held in suspense for any reason (except in the ordinary course of business
or which would not have a Material Adverse Effect).
SECTION 4.14 ....Gas Imbalances. Except as set forth in Section 4.14 of the
Disclosure Schedule, none of the Company or the Subsidiaries has received any
material deficiency payment under any gas contract for which any person has a
right to take deficiency gas from the Company or a Subsidiary, nor has the
Company or any Subsidiary received any material payment for production which is
subject to refund or recoupment out of future production.
SECTION 4.15 ....Oil and Gas Agreements. The Company has previously
provided or made available to Purchaser true and complete copies of all the Oil
and Gas Agreements together with all amendments, extensions and other
modifications thereof.
SECTION 4.16 ....Properties.
(a) Except for items disclosed in Section 4.16 of the Disclosure
Schedule and goods and other property sold, used or otherwise disposed of
since April 30, 2004 in the ordinary course of business, the Company and
the Subsidiaries have Good and Marketable Title, for oil and gas purposes,
in and to all oil and gas properties set forth in the Reserve Report as
owned by the Company and the Subsidiaries (the "Company's Oil and Gas
Interests"), and defensible title for oil and gas purposes to all other
properties, interests in properties and assets, real and personal,
reflected on the balance sheet of the Company for the period ended April
30, 2004, as owned by the Company and the Subsidiaries, free and clear of
any Liens, except: (i) Liens associated with obligations reflected in the
Most Recent Balance Sheet; (ii) Liens for current Taxes not yet due and
payable, (iii) materialman's, mechanic's, repairman's, employee's,
contractors, operator's, and other similar liens, charges or encumbrances
arising in the ordinary course of business (A) if they have not been
perfected pursuant to Law, (B) if perfected, they have not yet become due
and payable or payment is being withheld as provided by Law, or (C) if
their validity is being contested in good faith by appropriate action, (iv)
all rights to consent by, required notices to, filings with, or other
actions by governmental entities in connection with the sale or conveyance
of oil and gas leases or interests if they are customarily obtained
subsequent to the sale or conveyance, and (v) such imperfections of title,
easements and Liens which have not had, or would not, individually or in
the aggregate, reasonably be expected to have, a Material Adverse Effect.
To the knowledge of the Company, all leases and other agreements pursuant
to which the Company or any of the Subsidiaries leases or otherwise
acquires or obtains operating rights affecting any real or personal
property are in good standing, valid and effective and all royalties,
rentals and other payment due by the Company to any lessor of any such oil
and gas leases have been paid, except in each case, as has not had, and
would not, individually or in the aggregate, reasonably be expected to
have, a Material Adverse Effect. All major items of operating equipment of
the Company and the Subsidiaries used in connection with the Company's Oil
and Gas Interests over which the Company has operating rights are in good
operating condition and in a state of reasonable maintenance and repair,
ordinary wear and tear excepted, except as has not had, and would not
reasonably be expected to have, a Material Adverse Effect.
(b) The term "Good and Marketable Title" will, for purposes of this
Section 4.16, with respect to the Company and the Subsidiaries, mean such
title that: (i) is deducible of record (from the records of the applicable
parish or county or (A) in the case of federal leases, from the records of
the applicable office of the Minerals Management Service or Bureau of Land
Management, (B) in the case of Indian leases, from the applicable office of
the Bureau of Indian Affairs, (C) in the case of state leases, from the
records of the applicable state land office) or is assignable to the
Company or the Subsidiaries out of an interest of record (as so defined) by
reason of the performance by the Company or the Subsidiaries of all
operations required to earn an enforceable right to such assignment; (ii)
entitles the Company or the Subsidiaries to receive not less than the
interest set forth in the Reserve Report with respect to each proved
property evaluated therein under the caption "Net Revenue Interest" or
"NRI" without reduction during the life of such property except as stated
in the Reserve Report; (iii) obligates the Company or the Subsidiaries to
pay costs and expenses relating to each such proved property in an amount
not greater than the interest set forth under the caption "Working
Interest" or "WI" in the Reserve Report with respect to such property
without increase over the life of such property except as shown on the
Reserve Report; and (iv) does not restrict the ability of the Company or
the Subsidiaries to utilize the properties as currently intended; except in
each case where deficiencies referenced in clauses (i) through (iv),
individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.
SECTION 4.17 ....Oil and Gas Reserves. The Company has furnished Purchaser
prior to the date of this Agreement with the Company's estimates of its and the
Subsidiaries' oil and gas reserves as of April 30, 2004 (the "Reserve Report").
To the knowledge of the Company, except as have not had, and would not,
individually or in the aggregate, reasonably be expected to have, a Material
Adverse Effect, the production volumes and pressure data used to prepare the
Reserve Report were accurate.
SECTION 4.18 ....Take-or-Pay Deliveries. Except as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect,
there are no calls (exclusive of market calls) on the Company's oil or gas
production and the Company has no obligation to deliver oil or gas pursuant to
any take-or-pay, prepayment or similar arrangement without receiving full
payment therefor, excluding gas imbalances disclosed in Section 4.14 of the
Disclosure Schedule.
SECTION 4.19 ....Hedging. Section 4.19 of the Disclosure Schedule sets
forth all futures, hedge, swap, collar, put, call, floor, cap, option or other
contracts that are intended to benefit from, relate to or reduce or eliminate
the risk of fluctuations in the price of commodities, including Hydrocarbons or
securities, to which the Company or any of the Subsidiaries is bound.
SECTION 4.20 ....Intellectual Property. The Company and the Subsidiaries
own or possess all material licenses or other rights to use all patents, patent
rights, trademarks, trademark rights and proprietary information used or held
for use in connection with their respective businesses as currently being
conducted, free and clear of Liens, and to the knowledge of the Company, there
are no assertions or claims challenging the validity of any of the foregoing
which would have, or would reasonably be expected to have, a Material Adverse
Effect. Except in the ordinary course of business, neither the Company nor any
of the Subsidiaries has granted to any other person any license to use any of
the foregoing. To the knowledge of the Company, the conduct of the Company's and
the Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in a way which would have, or
would be reasonably expected to have, a Material Adverse Effect. To the
knowledge of the Company, there is no infringement of any proprietary right
owned by the Company or any of the Subsidiaries in a way which would have, or
would be reasonably expected to have, a Material Adverse Effect.
SECTION 4.21 ....Taxes.
(a) Each of the Company, the Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such
corporation or entity is or was a member has (i) duly filed (or there has
been filed on its behalf) on a timely basis (taking into account any
extensions of time to file before the date hereof) with appropriate
Governmental Authorities all Tax returns, statements, reports,
declarations, estimates and forms ("Returns") required to be filed by or
with respect to it, except to the extent that any failure to file would not
have, or reasonably be expected to have, a Material Adverse Effect, and
(ii) duly paid or deposited in full on a timely basis or made adequate
provisions in accordance with generally accepted accounting principles (or
there has been paid or deposited or adequate provision has been made on its
behalf) for the payment of all Taxes required to be paid by it other than
those being contested in good faith by the Company or a Subsidiary and
except to the extent that any failure to pay or deposit or make adequate
provision for the payment of such Taxes would not have, or reasonably be
expected to have, a Material Adverse Effect.
(b) Except to the extent set forth in Section 4.21 of the Disclosure
Schedule, (i) none of the federal income Tax Returns of the Company or any
of the Subsidiaries have been examined by the IRS for all periods; (ii) as
of the date hereof, neither the Company nor any of the Subsidiaries has
granted any requests, agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any Taxes
with respect to any Returns of the Company or any of the Subsidiaries that
will be outstanding as of the Effective Time; (iii) neither the Company nor
any of the Subsidiaries is a party to, is bound by or has any obligation
under any Tax sharing, allocation or indemnity agreement or any similar
agreement or arrangement that would have, or would reasonably be expected
to have, a Material Adverse Effect; and (iv) there are no Liens for Taxes
on any assets of the Company or the Subsidiaries except for Taxes not yet
currently due, with respect to matters being contested by the Company in
good faith for which adequate reserves are reflected in the financial
statements and those which could not reasonably be expected to result in a
Material Adverse Effect.
SECTION 4.22 ....Environmental Matters.
(a) Except as would not, individually or in the aggregate, have, or
reasonably be expected to have, a Material Adverse Effect, to the knowledge
of the Company, there are not any present or past conditions or
circumstances at, or arising out of, any current or former businesses,
assets or properties of the Company or any Subsidiary, including but not
limited to, on-site or off-site disposal or release of any Hazardous
Substance, which constitute a violation under any Environmental Law or
could reasonably be expected to give rise to: (i) liabilities or
obligations for any notification, cleanup, remediation, disposal or
corrective action under any Environmental Law or (ii) claims arising for
damage to natural resources.
(b) Neither the Company nor any of the Subsidiaries has (i) received
any written notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law, (ii) received any written
notice regarding any existing, pending or threatened investigation or
inquiry related to alleged violations under any Environmental Law or
regarding any claims for remedial obligations or contribution under any
Environmental Law or (iii) entered into any consent decree or order or is
subject to any order of any court or governmental authority or tribunal
under any Environmental Law or relating to the cleanup of any Hazardous
Substance.
(c) Except as would not, individually or in the aggregate, have, or
reasonably be expected to have, a Material Adverse Effect, the Company and
the Subsidiaries have in full force and effect all Permits required by
Environmental Laws to conduct their operations and to operate and use any
of the Company's or the Subsidiaries' assets for their current purposes and
uses and are operating in material compliance thereunder.
(d) Except as would not have or reasonably be expected to have a
Material Adverse Effect, the Company does not know of any reason that would
preclude it from renewing or obtaining a re-issuance or transfer of the
Permits required pursuant to any applicable Environmental Law to conduct
their operations and to operate and use any of the Company's or the
Subsidiaries' assets for their current purposes and uses.
SECTION 4.23 ....Material Contracts.
(a) Other than the Oil and Gas Agreements, which have been previously
made available or provided to Purchaser, subsections (i) through (xii) of
Section 4.23 of the Disclosure Schedule contain a list of the following
types of contracts and agreements to which the Company or any Subsidiary is
a party (such contracts, agreements and arrangements as are required to be
set forth in Section 4.23(a) of the Disclosure Schedule, together with the
Oil and Gas Agreements, being the "Material Contracts"):
(i) each contract or agreement that contemplates an exchange of
consideration with a value of more than $10,000 net to the Company's
interest;
(ii) all management contracts (excluding contracts for
employment) and contracts with other consultants, including any
contracts involving the payment of royalties or other amounts
calculated based upon the revenues or income of the Company or any
Subsidiary or income or revenues related to any product of the Company
or any Subsidiary, which require continued payment thereunder and
cannot be terminated by the Company or Subsidiary, as the case may be,
with 30-day notice;
(iii) all contracts and agreements evidencing indebtedness for
borrowed money of the Company;
(iv) all contracts and agreements with any Governmental
Authority, excluding state leases or other governmental mineral
rights;
(v) all contracts and agreements providing for benefits under any
Plan, excluding individual stock option grant agreements and stock
subscription agreements;
(vi) all agreements related to professional services rendered to
the Company or any Subsidiary in connection with the Merger and this
Agreement;
(vii) all contracts providing for "earn-out" or similar
contingent payments in excess of $10,000 by the Company or any
Subsidiary;
(viii) all joint venture, partnership, and similar agreements;
(ix) all contracts for employment required to be listed in
Section 4.11 of the Disclosure Schedule;
(x) all contracts providing for indemnification of directors,
officers, employees, consultants or other persons other than normal
course indemnity provisions; and
(xi) all other contracts and agreements, whether or not made in
the ordinary course of business, which are material to the Company,
any Subsidiary or the conduct of their respective businesses, or the
absence of which would prevent or delay consummation of the Merger or
otherwise prevent or delay the Company from performing its obligations
under this Agreement or would have a Material Adverse Effect.
(b) Except as disclosed in Section 4.23(b) of the Disclosure Schedule
and except as would not prevent or delay consummation of the Merger or
otherwise prevent or delay the Company from performing its obligations
under this Agreement and would not have a Material Adverse Effect, (i) each
Material Contract is a legal, valid and binding agreement of the Company,
and none of the Material Contracts is in default by its terms or has been
canceled by the other party; (ii) to the Company's knowledge, no other
party is in breach or violation of, or default under, any Material
Contract; and (iii) the Company and the Subsidiaries are not in receipt of
any claim of default under any such agreement. The Company has furnished or
made available to Purchaser true and complete copies of all Material
Contracts, including any amendments thereto.
SECTION 4.24 ....Insurance.
(a) Section 4.24(a) of the Disclosure Schedule sets forth, with
respect to each insurance policy under which the Company or any Subsidiary
is insured (other than such policies contemplated in Section 4.10), a named
insured or otherwise the principal beneficiary of coverage which is
currently in effect, (i) the names of the insurer, the principal insured
and each named insured, (ii) the policy number, (iii) the period, scope and
amount of coverage and (iv) the premium charged.
(b) With respect to each such insurance policy: (i) the policy is
legal, valid, binding and enforceable against the Company in accordance
with its terms and, except for policies that have expired under their terms
in the ordinary course, is in full force and effect; (ii) neither the
Company nor any Subsidiary is in material breach or default (including any
such breach or default with respect to the payment of premiums or the
giving of notice), and no event has occurred which, with notice or the
lapse of time, would constitute such a breach or default, or permit
termination or modification, under the policy; and (iii) to the knowledge
of the Company, no insurer on the policy has been declared insolvent or
placed in receivership, conservatorship or liquidation.
SECTION 4.25 ....Brokers. TEC, LLC has acted as a broker, finder or
investment banker in the subject Transaction and is entitled to a brokerage,
finder's or other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company. TEC, LLC is entitled to
receive one million (1,000,000) Shares (the "TEC Shares") and a Common Stock
Purchase Warrant (the "TEC Warrant") to purchase two million (2,000,000) Shares
at an exercise price of $0.25 per Share. All of the TEC Shares and the TEC
Warrants shall have piggyback registration rights.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to the Company to enter into this Agreement, Purchaser
hereby represents and warrants to the Company that:
SECTION 5.01 ....Corporate Organization.
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under Utah Law and has the requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority
and governmental approvals would not prevent or materially delay
consummation of the Transactions, or otherwise prevent Purchaser from
performing its material obligations under this Agreement.
(b) Merger Subsidiary will be a corporation duly organized, validly
existing and in good standing under Nevada Law and will have the requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business, except where the failure to be so organized,
existing or in good standing or to have such power, authority and
governmental approvals would not prevent or materially delay consummation
of the Transactions, or otherwise prevent Merger Subsidiary from performing
its material obligations under this Agreement.
SECTION 5.02 ....Authority Relative to This Agreement. Purchaser has, and
the Merger Subsidiary will have, all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Purchaser and the consummation by Purchaser of the Transactions have been duly
and validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Purchaser are necessary to authorize this Agreement
or to consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a requisite number of
the then outstanding shares of Purchaser Common Stock and the filing and
recordation of appropriate merger documents as required by Nevada Law). This
Agreement has been duly and validly executed and delivered by Purchaser and,
assuming due authorization, execution and delivery by the Company, constitutes a
legal, valid and binding obligation of Purchaser enforceable against Purchaser
in accordance with its terms. At a meeting duly called or by way of unanimous
written consent, the Board of Directors of (a) Purchaser has unanimously
approved the material terms of this Agreement and the Transactions, and (b) the
Merger Subsidiary will unanimously approve this Agreement and the Transactions.
SECTION 5.03 ....Capitalization. The authorized capital stock of Purchaser
consists of 125,000,000 shares of Purchaser Common Stock and 5,000,000 shares of
preferred stock, par value $0.001 per share ("Purchaser Preferred Stock"). As of
the close of business on October 11, 2004, there were outstanding 15,224,950
shares of Purchaser Common Stock and no shares of Purchaser Preferred Stock. All
outstanding shares of capital stock of Purchaser have been duly authorized and
validly issued and are fully paid and non-assessable. Except as set forth in
this Section, Purchaser's Quarterly Report on Form 10-QSB for the quarterly
period ended June 30, 2004, Purchaser's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2003, and Purchaser's Registration Statement on
Form SB-2 filed with the SEC on May 4, 2004 (SEC file number 333-115121), as
amended, and the 678,058 shares of Purchaser Common Stock authorized and
issuable to Purchaser's legal counsel for legal services rendered to Purchaser
(consisting of 455,836 shares of Purchaser Common Stock owed and 222,222 warrant
shares exercisable at $0.50 per share of Purchaser Common Stock), and the
2,000,000 shares of Purchaser Common Stock authorized for issuance to Walter
Mize in the event Southwest Securities Bank (formerly First Savings Bank)
successfully forecloses on the 2,000,000 shares of Purchaser Common Stock
previously pledged by Mr. Mize as security for a loan to Purchaser, and except
for the shares of Purchaser Common Stock to be issued in connection with the
Merger, there are outstanding (a) no shares of capital stock or other voting
securities of Purchaser, (b) no securities of Purchaser convertible into or
exchangeable for shares of capital stock or voting securities of Purchaser, and
(c) 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 security 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 Sections 5.03(a), 5.03(b) and 5.03(c) being referred to collectively as
the "Purchaser Securities"). There are no outstanding obligations of Purchaser
or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Purchaser Securities.
SECTION 5.04 ....No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Purchaser do not,
and the performance of this Agreement by Purchaser will not, (i) conflict
with or violate the Articles of Incorporation of Purchaser or the By-laws
of Purchaser, (ii) assuming that all consents, approvals, authorizations
and other actions described in Section 5.04(b) have been obtained and all
filings and obligations described in Section 5.04(b) have been made,
conflict with or violate any Law applicable to Purchaser or by which any
property or asset of Purchaser is bound or affected, or (iii) result in any
breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, or give to others any right
of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of
Purchaser pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which Purchaser is a party or by which any property or asset
of Purchaser is bound or affected, except, with respect to clause (ii) or
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which would not prevent or materially delay consummation of the
Merger, or otherwise prevent or materially delay Purchaser from performing
its obligations under this Agreement.
(b) The execution and delivery of this Agreement by Purchaser do not,
and the performance of this Agreement by Purchaser will not, require any
consent, approval, authorization or permit of, or filing with, or
notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Securities Act, Exchange Act, Blue Sky Laws
and state takeover laws, (ii) filing and recordation of appropriate merger
documents as required by Nevada Law, and (iii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay
consummation of the Merger, or otherwise prevent or materially delay
Purchaser from performing its obligations under this Agreement.
SECTION 5.05 ....Form S-4. The Form S-4 shall not, at the time the Form S-4
is filed with the SEC or is first published, sent or given to stockholders of
the Company or Purchaser, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Purchaser makes no representation or warranty with respect to any
information supplied by the Company or any of its representatives for inclusion
in the Form S-4.
SECTION 5.06 ....Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Purchaser.
SECTION 5.07 ....Absence of Litigation. Purchaser is not subject to any
continuing order of, consent decree, settlement agreement or similar written
agreement with, or continuing investigation by, any Governmental Authority, or
any order, writ, judgment, injunction, decree, determination or award of any
Governmental Authority that would prevent or materially delay consummation of
the Merger or otherwise prevent or materially delay Purchaser from performing
its obligations under this Agreement.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 ....Conduct of Business by the Company Pending the Merger. The
Company agrees that, between the date of this Agreement and the Effective Time,
unless Purchaser shall otherwise agree in writing and except for actions taken
or omitted for the purpose of complying with this Agreement, the businesses of
the Company and the Subsidiaries shall be conducted only in, and the Company and
the Subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and the Subsidiaries and to preserve the current
relationships of the Company and the Subsidiaries with customers, suppliers and
other persons with which the Company or any Subsidiary has significant business
relations. By way of amplification and not limitation, except as expressly
contemplated by this Agreement and Section 6.01 of the Disclosure Schedule,
neither the Company nor any Subsidiary shall, between the date of this Agreement
and the Effective Time, directly or indirectly, do any of the following without
the prior written consent of Purchaser:
(a) amend or otherwise change its Articles of Incorporation or By-laws
or equivalent organizational documents;
(b) split, combine, reclassify, subdivide or redeem, or purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(c) issue (other than upon the exercise of options or warrants
previously granted to current or former officers, employees or directors of
the Company), purchase, redeem, sell, pledge, dispose of, grant, encumber,
or authorize the issuance, sale, pledge, disposition, grant or encumbrance
of any shares of any class of capital stock of the Company or any
Subsidiary, or any options, warrants, convertible or exchangeable
securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of the Company or any Subsidiary, except
as provided in agreements already executed and as disclosed to Purchaser in
the Disclosure Schedule;
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except for dividends by any direct or indirect
wholly owned Subsidiary to the Company or any other Subsidiary;
(e) sell, transfer, assign, dispose of or encumber (except to the
extent that the Company's and the Subsidiaries' ability to so restrict
their right to encumber their assets is limited under the documentation
related to the indebtedness of the Company and certain Subsidiaries under
that certain Amended and Restated Credit Agreement dated as of January 15,
2004 between the Company, certain Subsidiaries, and the lenders listed
therein ("Credit Agreement") as may be amended, any assets of the Company
or any Subsidiary or enter into any agreement or commitment with respect to
assets of the Company or a Subsidiary, other than in the ordinary course
consistent with past good business practice and other than transfers
between the Company and its Subsidiaries;
(f) sell, transfer, assign, dispose of or encumber (except to the
extent that the Company's and the Subsidiaries' ability to so restrict
their right to encumber their assets is limited under the documentation
related to any of the Company's Oil and Gas Interests represented in the
Credit Agreement or in the Reserve Report) or enter into any agreement or
commitment with respect to any such sale, transfer, assignment, disposition
or encumbrance;
(g) other than in the ordinary course and consistent with past
business practice, incur or become contingently liable for any indebtedness
or guarantee any such indebtedness or redeem, purchase or acquire or offer
to redeem, purchase or acquire any debt;
(h) acquire or agree to acquire any assets other than in the ordinary
course and consistent with past business practice;
(i) modify or amend any existing agreement or enter into any new
agreement with the Company's financial advisors or other similar
consultants;
(j) elect not to participate in any well to which proven reserves (as
identified in the Reserve Report) have been attributed in the Reserve
Report proposed pursuant to any existing net profits agreement or joint
operating agreement; notwithstanding the foregoing, if the applicable
authorization for expenditure ("AFE") exceeds $50,000 net to the Company's
interest and Purchaser fails to approve such expenditure as contemplated by
Section 6.01(k)(iv) below, the Company shall not be deemed to be in default
of this Section 6.01(j) for its failure to participate in such well;
(i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any significant amount of assets, except
for purchases of inventory in the ordinary course of business
consistent with past practice; (ii) incur any indebtedness for
borrowed money other than draws under the Company's existing revolving
credit facility or issue any debt securities or assume, guarantee or
endorse, or otherwise become responsible for, the obligations of any
person, or make any loans or advances; (iii) except as provided in
Section 6.01(j), enter into any contract or agreement other than in
the ordinary course of business and consistent with past practice;
(iv) issue any AFE or authorize any other individual capital
expenditure in excess of $50,000 net to the Company's interest; or (v)
except as provided in Section 6.01(j), enter into or amend any
contract, agreement, commitment or arrangement with respect to any
matter set forth in this Section 6.01(k);
(k) increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past
practice in salaries or wages of employees of the Company or any Subsidiary
who are not directors or officers of the Company or any Material
Subsidiary, or establish, adopt, enter into or amend (except as may be
required by law) any collective bargaining, bonus, profit-sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any director, officer
or employee;
(l) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures;
(m) make any material Tax election or settle or compromise any
material Tax liability;
(n) discharge or satisfy any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against
in the Most Recent Balance Sheet or subsequently incurred in the ordinary
course of business and consistent with past practice or liabilities or
obligations owed to the Company or its Subsidiaries;
(o) amend, modify or consent to the termination of any Material
Contract, or amend, waive, modify or consent to the termination of the
Company's or any Subsidiary's material rights thereunder;
(p) commence or settle any material Action, except as previously
agreed; or
(q) publicly announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
SECTION 6.02 ....Conduct of Business By Purchaser Pending the Merger.
Purchaser agrees that from the date hereof until the Effective Time, Purchaser
and its subsidiaries shall conduct their business in the ordinary course
consistent with past practice and shall use their reasonable best efforts to
preserve intact their business organizations and relationships with third
parties; provided, however, the Company understands and agrees that, prior to
the Effective Time, Purchaser intends to transfer substantially all of the
assets of its wholly-owned Texas subsidiary, National Heritage Sales
Corporation, to a to-be-formed wholly-owned subsidiary of Purchaser that will
merge with and into BMW Holdings, Inc. ("BMW"), with BMW's shareholders
receiving a 92.5% interest in the surviving entity's stock and Purchaser
receiving a 7.5% interest in the surviving entity's stock, and all shares of the
surviving entity held by Purchaser to be distributed pro rata to Purchaser's
stockholders. Without limiting the generality of the foregoing, and except with
the prior written consent of the Company or as contemplated by this Agreement,
from the date hereof until the Effective Time:
Purchaser will not adopt or propose any change in its Articles of
Incorporation or by-laws, except as contemplated by this Agreement;
Purchaser will not adopt a plan or agreement of complete or partial
liquidation, dissolution, merger, consolidation, restructuring, recapitalization
or other material reorganization of Purchaser;
Except as set forth in Section 5.03, Purchaser will not issue, sell,
transfer, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class or
series of Purchaser, other than (i) issuances pursuant to the exercise of
convertible securities outstanding on the date hereof or issuances pursuant to
stock-based awards or options outstanding on the date hereof or that are granted
in accordance with clause (ii) below and (ii) additional options or stock-based
awards to acquire Purchaser Common Stock granted under the terms of any equity
compensation plan or arrangement of Purchaser as in effect as of the date hereof
in the ordinary course consistent with past practice;
Purchaser will not (i) split, combine, subdivide or reclassify its
outstanding shares of capital stock or (ii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to its capital stock other than, (x) regular quarterly cash dividends payable by
Purchaser on Purchaser Common Stock consistent with past practice (including
periodic dividend increases consistent with past practice), but which for the
sake of clarity shall not include any special dividend or (y) any required
dividends on preferred stock outstanding on the date hereof;
Purchaser will not, and will not permit any subsidiary of Purchaser to,
redeem, purchase or otherwise acquire directly or indirectly any of Purchaser `s
capital stock, except for repurchases, redemptions or acquisitions (x) required
by the terms of capital stock or any securities outstanding on the date hereof,
(y) required by or in connection with the respective terms, as of the date
hereof, of any employee stock option plan or compensation plan or arrangement of
Purchaser or any dividend reinvestment plan as in effect as of the date hereof
in the ordinary course of operations of such plan consistent with past practice
and only to the extent consistent with this Agreement or (z) effected in the
ordinary course consistent with past practice and only to the extent consistent
with this Agreement;
Except as set forth in the preamble of this Section 6.02, Purchaser will
not, and will not permit any of Purchaser's subsidiaries to, take any action
that would make any representation or warranty of Purchaser hereunder inaccurate
in any material respect at, or as of any time prior to, the Effective Time; and
Purchaser will not, and will not permit any of Purchaser's subsidiaries to,
agree or commit to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 ....Stockholder Meetings.
(a) The Company, acting through the Board, shall, in accordance with
applicable Law and the Company's Articles of Incorporation and By-laws, (i)
duly call, give notice of, convene and hold an annual or special meeting of
its stockholders as promptly as practicable for the purpose of considering
and taking action on this Agreement and the Merger (the "Company
Stockholder Meeting") and (ii) (a) include in the Joint Proxy
Statement/Prospectus, and not subsequently withdraw or modify in any manner
adverse to Purchaser (except as permitted hereby), the recommendation of
the Board that the stockholders of the Company approve and adopt this
Agreement and the Transactions and (b) use its best efforts to obtain such
approval and adoption. The Company will comply with all legal requirements
applicable to the Company Stockholder Meeting. At the Company Stockholders'
Meeting, Purchaser shall cause all Shares then owned by Purchaser and
Purchaser's subsidiaries to be voted in favor of the approval and adoption
of this Agreement and the Transactions.
(b) Purchaser, acting through the Board of Directors of Purchaser,
shall, in accordance with applicable Law and Purchaser's Articles of
Incorporation and By-laws, (i) duly call, give notice of, convene and hold
an annual or special meeting of its stockholders (the "Purchaser
Stockholder Meeting") on or about the same date as the Company Stockholder
Meeting, for the purpose of approving and the Merger, this Agreement and
the issuance of the Purchaser Common Stock in connection with the Merger
(the "Purchaser Stockholder Approval"). Except as provided in the next
sentence, the Board of Directors of Purchaser shall recommend approval of
the matters constituting the Purchaser Stockholder Approval. The Board of
Directors of Purchaser shall be permitted to (i) not recommend to
Purchaser's stockholders that they give the Purchaser Stockholder Approval
or (ii) withdraw or modify in a manner adverse to the Company its
recommendation to the Purchaser's stockholders that they give the Purchaser
Stockholder Approval, only if the Board of Directors of Purchaser by a
majority vote determines in its good faith judgment that it is necessary to
so withdraw or modify its recommendation to comply with its fiduciary duty
to stockholders under applicable Law, after receiving the advice of outside
legal counsel. Purchaser will otherwise comply with all legal requirements
applicable to the Purchaser Stockholder Meeting.
SECTION 7.02 ....Preparation of Proxy Statement. As promptly as reasonably
practicable following the date hereof, the Company and Purchaser will cooperate
in preparing and each will cause to be filed with the SEC mutually acceptable
proxy materials that constitute the joint proxy statement/prospectus relating to
the matters to be submitted to the stockholders of the Company at the Company
Stockholder Meeting and the matters to be submitted to the stockholders of
Purchaser at the Purchaser Stockholder Meeting (such proxy statement/prospectus,
and any amendments or supplements thereto, the "Joint Proxy
Statement/Prospectus") and Purchaser will prepare and file with the SEC a
registration statement on Form S-4 with respect to the issuance of Purchaser
Common Stock in the Merger (such Form S-4, and any amendments or supplements
thereto, the "Form S-4"). The Joint Proxy Statement/Prospectus will be included
as a prospectus in and will constitute a part of the Form S-4 as Purchaser's
prospectus. Each of Purchaser and the Company will use reasonable best efforts
to have the Joint Proxy Statement/Prospectus cleared by the SEC as promptly as
possible and the Form S-4 declared effective by the SEC as promptly as possible
and to keep the Form S-4 effective as long as is necessary to consummate the
Merger and the Transactions. Purchaser and the Company will, as promptly as
practicable after receipt thereof, provide the other party copies of any written
comments and advise the other party of any oral comments, with respect to the
Joint Proxy Statement/Prospectus or Form S-4, received from the SEC. The parties
will cooperate and provide the other with a reasonable opportunity to review and
comment on any amendment or supplement to the Joint Proxy Statement/Prospectus
and the Form S-4 prior to filing such with the SEC, and will provide each other
with a copy of all such filings made with the SEC. Notwithstanding any other
provision herein to the contrary, no amendment or supplement (including by
incorporation by reference) to the Joint Proxy Statement/Prospectus or the Form
S-4 shall be made without the approval of both parties, which approval will not
be unreasonably withheld or delayed; provided that with respect to documents
filed by a party which are incorporated by reference in the Form S-4 or Joint
Proxy Statement/Prospectus, this right of approval will apply only with respect
to information relating to the other party or its business, financial condition
or results of operations. Purchaser will use commercially reasonable efforts to
cause the Joint Proxy Statement/Prospectus to be mailed to Purchaser's
stockholders, and the Company will use commercially reasonable efforts to cause
the Joint Proxy Statement/Prospectus to be mailed to the Company's stockholders,
in each case as promptly as practicable after the Form S-4 is declared effective
under the Securities Act. Purchaser will also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified or to file a general consent to service of process) required to be
taken under any applicable Blue Sky Law in connection with the Merger and each
of the Company and Purchaser will furnish all information concerning it and the
holders of its capital stock as may be reasonably requested in connection with
any such action. Each party will advise the other party, promptly after it
receives notice thereof, of the time when the Form S-4 has become effective, the
issuance of any stop order, the suspension of the qualification of the Purchaser
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Joint Proxy
Statement/Prospectus or the Form S-4. If at any time prior to the Effective Time
any information relating to Purchaser or the Company, or any of their respective
affiliates, officers or directors, should be discovered by Purchaser or the
Company, which information should be set forth in an amendment or supplement to
either the Form S-4 or the Joint Proxy Statement/Prospectus so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and, to
the extent required by applicable Law, an appropriate amendment or supplement
describing such information shall be promptly filed with the SEC and
disseminated to the stockholders of Purchaser and the Company.
SECTION 7.03 ....[Intentionally Omitted].
SECTION 7.04 ....Access to Information; Confidentiality.
(a) From the date hereof until the Effective Time, each of the Company
and Purchaser shall, and shall cause their Subsidiaries and their officers,
directors, employees, auditors and agents to, afford the officers,
employees and agents of the other party hereto and persons providing or
proposing to provide Purchaser with financing for the Transactions complete
access at all reasonable times to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of the
Company or Purchaser and each Subsidiary, and each shall furnish the other
party hereto and persons providing or proposing to provide Purchaser with
financing for the Transactions with such financial, operating and other
data and information as each party hereto, through their officers,
employees or agents, may reasonably request.
(b) All information obtained by Purchaser or the Company pursuant to
this Section 7.04 shall be kept confidential.
(c) No investigation pursuant to this Section 7.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto or any condition to the
Merger.
SECTION 7.05 ....Other Offers.
(a) The Company.
(i) The Company and its Subsidiaries will not, and the Company
will use its reasonable best efforts to cause the officers, directors,
employees, investment bankers, consultants and other agents of the
Company and its Subsidiaries not to, directly or indirectly, take any
action to solicit, initiate, encourage or facilitate the making of any
Acquisition Proposal or any inquiry with respect thereto or engage in
discussions or negotiations with any Person with respect thereto, or
disclose any non-public information relating to the Company or any
Subsidiary of the Company or afford access to the properties, books or
records of the Company or any Subsidiary of the Company to, any Person
that has made, or to the Company's knowledge, is considering making,
any Acquisition Proposal; provided, however, that nothing contained in
this Section 7.05(a) shall prevent the Company from furnishing
non-public information to, or entering into discussions or
negotiations with, or affording access to the properties, books or
records of the Company or its Subsidiaries to, any Person in
connection with an unsolicited bonafide Acquisition Proposal received
from such Person so long as prior to furnishing non-public information
to, or entering into discussions or negotiations with, such Person,
the Board by, a majority vote determines in its good faith judgment
that it is necessary to do so to comply with its fiduciary duty to
shareholders under applicable law, after receiving the advice of
outside legal counsel. Nothing contained in this Agreement shall
prevent the Board from complying with Rule 14e-2 under the Exchange
Act with regard to an Acquisition Proposal; provided, however, that
the Board shall not recommend that the shareholders of the Company
tender their shares in connection with a tender offer except to the
extent the Board by a majority vote determines in its good faith
judgment that such a recommendation is required to comply with the
fiduciary duties of the Board to shareholders under applicable law,
after receiving the advice of outside legal counsel. Unless the Board
by a majority vote determines in its good faith judgment that it is
necessary not to do so to comply with its fiduciary duty to
shareholders under applicable law, after receiving the advice of
outside legal counsel, the Company will (a) promptly (and in no event
later than 48 hours after receipt of any Acquisition Proposal) notify
(which notice shall be provided orally and in writing and shall
identify the Person making such Acquisition Proposal and set forth the
material terms thereof) Purchaser after receipt of any Acquisition
Proposal, any indication of which the Company has knowledge that any
Person is considering making an Acquisition Proposal or any request
for non-public information relating to the Company or any Subsidiary
of the Company or for access to the properties, books or records of
the Company or any Subsidiary of the Company by any Person that has
made, or to the Company's knowledge may be considering making, an
Acquisition Proposal, and (b) will keep Purchaser informed of the
status and material terms of any such Acquisition Proposal or request.
(ii) Except as set forth in this Section 7.05(a)(i), neither the
Board nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Purchaser, the
approval or recommendation by the Board or any such committee of this
Agreement, the Merger, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) enter into any
agreement with respect to any Acquisition Proposal. Notwithstanding
the foregoing, in the event that, prior to the Effective Time, the
Board determines in good faith that it is required to do so by its
fiduciary duties under applicable law after having received advice
from outside legal counsel, the Board may withdraw or modify its
approval or recommendation of the Merger.
(iii) The Company and its Subsidiaries will, and the Company will
use its reasonable best efforts to cause the officers, directors,
employees, investment bankers, consultants and other agents of the
Company and its Subsidiaries to, immediately cease and cause to be
terminated all discussions and negotiations, if any, that have taken
place prior to the date hereof with any parties with respect to any
Acquisition Proposal.
(b) Purchaser.
(i) Purchaser and its subsidiaries will not, and Purchaser will
use its reasonable best efforts to cause the officers, directors,
employees, investment bankers, consultants and other agents of
Purchaser and its subsidiaries not to, directly or indirectly, take
any action to solicit, initiate, encourage or facilitate the making of
any Acquisition Proposal or any inquiry with respect thereto or engage
in discussions or negotiations with any Person with respect thereto,
or disclose any non-public information relating to Purchaser or any
subsidiary of Purchaser or afford access to the properties, books or
records of Purchaser or any subsidiary of Purchaser to, any Person
that has made, or to Purchaser's knowledge, is considering making, any
Acquisition Proposal; provided, however, that nothing contained in
this Section 7.05(b) shall prevent Purchaser from furnishing
non-public information to, or entering into discussions or
negotiations with, or affording access to the properties, books or
records of Purchaser or its subsidiaries to, any Person in connection
with an unsolicited bonafide Acquisition Proposal received from such
Person so long as prior to furnishing non-public information to, or
entering into discussions or negotiations with, such Person, the Board
of Directors of Purchaser by, a majority vote determines in its good
faith judgment that it is necessary to do so to comply with its
fiduciary duty to shareholders under applicable law, after receiving
the advice of outside legal counsel. Nothing contained in this
Agreement shall prevent the Board of Directors of Purchaser from
complying with Rule 14e-2 under the Exchange Act with regard to an
Acquisition Proposal; provided, however, that the Board of Directors
of Purchaser shall not recommend that the shareholders of Purchaser
tender their shares in connection with a tender offer except to the
extent the Board of Directors of Purchaser by a majority vote
determines in its good faith judgment that such a recommendation is
required to comply with the fiduciary duties of the Board of Directors
of Purchaser to shareholders under applicable law, after receiving the
advice of outside legal counsel. Unless the Board of Directors of
Purchaser by a majority vote determines in its good faith judgment
that it is necessary not to do so to comply with its fiduciary duty to
shareholders under applicable law, after receiving the advice of
outside legal counsel, Purchaser will (a) promptly (and in no event
later than 48 hours after receipt of any Acquisition Proposal) notify
(which notice shall be provided orally and in writing and shall
identify the Person making such Acquisition Proposal and set forth the
material terms thereof) the Company after receipt of any Acquisition
Proposal, any indication of which Purchaser has knowledge that any
Person is considering making an Acquisition Proposal or any request
for non-public information relating to Purchaser or any subsidiary of
Purchaser or for access to the properties, books or records of
Purchaser or any subsidiary of Purchaser by any Person that has made,
or to Purchaser's knowledge may be considering making, an Acquisition
Proposal, and (b) will keep the Company informed of the status and
material terms of any such Acquisition Proposal or request.
(ii) Except as set forth in this Section 7.05(b)(ii), neither the
Board of Directors of Purchaser nor any committee thereof shall (i)
withdraw or modify, or propose to withdraw or modify, in a manner
adverse to the Company, the approval or recommendation by the Board of
Directors of Purchaser or any such committee of this Agreement, the
Merger, (ii) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal or (iii) enter into any agreement with
respect to any Acquisition Proposal. Notwithstanding the foregoing, in
the event that, prior to the Effective Time, the Board of Directors of
Purchaser determines in good faith that it is required to do so by its
fiduciary duties under applicable law after having received advice
from outside legal counsel, the Board of Directors of Purchaser may
withdraw or modify its approval or recommendation of the Merger.
(iii) Purchaser and its subsidiaries will, and Purchaser will use
its reasonable best efforts to cause the officers, directors,
employees, investment bankers, consultants and other agents of
Purchaser and its subsidiaries to, immediately cease and cause to be
terminated all discussions and negotiations, if any, that have taken
place prior to the date hereof with any parties with respect to any
Acquisition Proposal.
SECTION 7.06 ....Employee Matters.
(a) The Company and the Subsidiaries will cooperate with Purchaser in
making their employees available during regular business hours for
Purchaser to conduct interviews to determine the prospect of continuing
employment of such employees following the Effective Time. As soon as
practicable after the date hereof, Purchaser will provide to the Company a
list of the employees whom it intends to continue to employ, and a summary
of the material terms of such employment, which terms shall not be less
favorable than such employee's current employment terms. At any time after
receipt of the list, the Company may terminate any employees whose names
are not on such list and shall pay any severance to such employees to which
they may be entitled under the terms of any employment contract,
termination agreement or policies in existence or as described in Section
7.06 of the Disclosure Schedule. Nothing contained in this Section 7.06
shall change the nature of the "at will" employment relationship that
exists between the Company, the Subsidiaries, and their employees.
(b) From and after the Effective Time, Purchaser shall cause the
Surviving Corporation to honor in accordance with their terms all benefits
and obligations under the Plans, each as in effect on the date hereof (or
as amended with the prior written consent of Purchaser), to the extent that
entitlements or rights, actual or contingent (whether such entitlements or
rights are vested as of the Effective Time or become vested or payable only
upon the occurrence of a further event, including a discretionary
determination) exist in respect thereof as of the Effective Time. Purchaser
and the Company hereby agree that the consummation of the Merger shall
constitute a "Change in Control" for purpose of any employee arrangement
and all other Plans, pursuant to the terms of such plans in effect on the
date hereof. No provision of this Section 7.06 shall be construed as a
limitation on the right of Purchaser to amend or terminate any Plans which
the Company would otherwise have under the terms of such Plan, and no
provision of this Section 7.06 shall be construed to create a right in any
employee or beneficiary of such employee under a Plan that such employee or
beneficiary would not otherwise have under the terms of such Plan.
(c) Following the Effective Time, Purchaser shall continue to provide
to individuals who are employed by the Company and its Subsidiaries as of
the Effective Time who remain employed with Purchaser or any Subsidiary of
Purchaser ("Affected Employees"), for so long as such Affected Employees
remain employed by Purchaser or any Subsidiary of Purchaser, employee
benefits (other than salary or incentive compensation) (i) pursuant to the
Company's or its Subsidiaries' employee benefit plans, programs, policies
and arrangements as provided to such employees immediately prior to the
Effective Time or (ii) pursuant to employee benefit plans, programs,
policies or arrangements maintained by Purchaser or any Subsidiary of
Purchaser providing coverage and benefits which, in the aggregate, are no
less favorable than those provided to employees of Purchaser in positions
comparable to positions held by Affected Employees with Purchaser or its
Subsidiaries from time to time after the Effective Time. Following the
Effective Time, Purchaser shall continue to provide to former employees of
the Company or its Subsidiaries (and to employees of the Company or its
Subsidiaries whose employment terminates prior to the Effective Time)
("Affected Retirees") post retirement benefits (other than pensions) (i)
pursuant to the Plans applicable to such Affected Retirees, each as in
effect on the date hereof, or (ii) pursuant to employee benefit plans,
programs, policies or arrangements maintained by Purchaser or any
Subsidiary of Purchaser providing post retirement coverage and benefits
(other than pensions) which, in the aggregate, are no less favorable than
those provided to former employees of Purchaser.
(d) Purchaser will, or will cause the Surviving Corporation to, give
Affected Employees full credit for purposes of eligibility, vesting,
benefit accrual (including benefit accrual under any defined benefit
pension plans, provided that a participant's benefit under any such defined
benefit pension plan may be offset by such participant's accrued benefit
under the Company defined benefit pension plan) and determination of the
level of benefits under any employee benefit plans or arrangements
maintained by Purchaser or any Subsidiary of Purchaser for such Affected
Employees' service with the Company or any Subsidiary of the Company to the
same extent recognized by the Company immediately prior to the Effective
Time.
(e) Purchaser will, or will cause the Surviving Corporation to, (i)
waive all limitations as to preexisting conditions, exclusions and waiting
periods with respect to participation and coverage requirements applicable
to the Affected Employees under any welfare benefit plans that such
employees may be eligible to participate in after the Effective Time, other
than limitations or waiting periods that are already in effect with respect
to such employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Affected Employees immediately
prior to the Effective Time, and (ii) provide each Affected Employee with
credit for any co-payments and deductibles paid prior to the Effective Time
in satisfying any applicable deductible or out-of-pocket requirements under
any welfare plans that such employees are eligible to participate in after
the Effective Time.
(f) Purchaser agrees that the Plans shall be administered in
accordance with the past practices and interpretations of the Board
(including those past practices and interpretations previously disclosed by
the Company to Purchaser) with respect to eligibility, vesting, term and
payment, among other matters. Any question regarding the past practices and
interpretations of the Board and the application thereof to the type of
facts and circumstances in a given case shall be referred to Jeffrey T.
Wilson or his designee for a final decision with respect thereto, which
decision shall not be inconsistent with the intention of this Agreement and
the Merger.
(g) The previous sentence may not be amended or waived without the
consent of the persons for whom the Company is obligated to provide
coverage.
SECTION 7.07 ....Directors' and Officers' Indemnification.
(a) With respect to indemnification provisions, the Articles of
Incorporation of the Company shall not be amended, repealed or otherwise
modified in any manner that would materially adversely affect the rights
thereunder of individuals who, at or prior to the Effective Time, were
directors, officers, employees, fiduciaries or agents of the Company,
unless such modification shall be required by Law.
(b) In the event the Company or Purchaser or any of their successors
or assigns (i) consolidates with or merges into any other person and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company
or Purchaser, as the case may be, or at its option, Purchaser shall assume
the obligations set forth in this Section 7.07.
(c) Purchaser shall cause the Surviving Corporation to honor all
indemnification agreements between the Company and officers, directors and
employees of the Company or its Subsidiaries (including under the Company's
Articles of Incorporation and by-laws) in effect as of the date hereof in
accordance with the terms thereof.
(d) The obligations of Purchaser under this Section 7.07 shall not be
terminated or modified in such a manner as to adversely affect any
Indemnitee to whom this Section 7.07 applies without the consent of such
affected Indenmitee (it being expressly agreed that the Indemnitees to whom
this Section 7.07 applies shall be intended third party beneficiaries of
this Section 7.07).
(e) Notwithstanding anything to the contrary in this Agreement, the
provisions of this Section 7.07 shall survive the consummation of the
Merger.
(f) The parties acknowledge that the provisions of this Section 7.07
are in addition to and not in lieu of the indemnification obligations of
the Company set forth in the agreements listed in Section 4.23 of the
Disclosure Schedule.
SECTION 7.08 ....Notification of Certain Matters. The Company shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any failure of the Company or Purchaser,
as the case may be, to comply with or satisfy any covenant or agreement to be
complied with or satisfied by it hereunder, and (c) any other material adverse
development (other than changes in general economic conditions or changes in oil
or natural gas prices) relating to the business, prospects, financial condition
or results of operations of the Company and the Subsidiaries; provided, however,
that the delivery of any notice pursuant to this Section 7.08 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 7.09 ....Further Action; Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the Transactions, including, without
limitation, using its reasonable best efforts to obtain all Permits,
consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Transactions and
to fulfill the conditions to the Merger; provided that Purchaser will not
be required by this Section 7.09 to take any action, including entering
into any consent decree, hold separate orders or other arrangements, that
(a) requires the divestiture of any assets of any of Purchaser, the Company
or any of their respective subsidiaries or (b) limits Purchaser's ability
to operate the Company and the Subsidiaries or any portion thereof or any
of Purchaser's or its affiliates' other assets or businesses in a manner
consistent with past practice. In case, at any time after the Effective
Time, any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party
to this Agreement shall use their reasonable best efforts to take all such
action.
(b) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action,
including administrative or judicial Action, and to have vacated, lifted,
reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and that
restricts, prevents or prohibits consummation of the Transactions,
including, without limitation, by vigorously pursuing all available avenues
of administrative and judicial appeal.
SECTION 7.10 ....Public Announcements. Purchaser and the Company agree that
no public release or announcement concerning the Transactions, the Merger shall
be issued by either party without the prior consent of the other party (which
consent shall not be unreasonably withheld), except as such release or
announcement may be required by Law or the rules or regulations of any United
States securities exchange or national market, in which case the party required
to make the release or announcement shall use its best efforts to allow the
other party reasonable time to comment on such release or announcement in
advance of such issuance.
SECTION 7.11 ....Certain Filings. The Company and Purchaser shall cooperate
with one another (a) in connection with the preparation of the Form S-4, (b) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the transactions
contemplated by this Agreement and (c) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith or with the Form S-4, and seeking timely to obtain any
such actions, consents, approvals or waivers.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 ....Conditions to the Merger. The obligations of each party to
effect the Merger shall be subject to the satisfaction, at or prior to the
Effective Time, of the following conditions:
(a) Stockholder Approval. This Agreement and the Transactions shall
have been approved and adopted by the affirmative vote of the stockholders
of the Company and the stockholders of Purchaser;
(b) No Order. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the
acquisition of Shares by Purchaser or any affiliate of Purchaser illegal or
otherwise restricting, preventing or prohibiting consummation of the
Transactions; and
(c) Consent of the Company's Lenders. Purchaser shall have received
the consent and approval of the Company's existing lenders,
Highbridge/Zwirn Capital Management LLC and Bank of Oklahoma, N A, to the
Merger.
(d) No Material Adverse Changes. Since the filing of the Company's
last Form 10-KSB with the SEC, there shall have been no material adverse
change in the assets, liabilities, or financial condition of the Company.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 ....Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the stockholders of the Company:
(a) by mutual written consent of each of Purchaser and the Company
duly authorized by the Board of Directors of Purchaser and the Board; or
(b) by either Purchaser or the Company if (i) the Effective Time shall
not have occurred on or before February 1, 2005; provided, however, that
the right to terminate this Agreement under this Section 9.01(b) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date or (ii) any Governmental
Authority shall have enacted, issued, promulgated, enforced or entered any
injunction, order, decree or ruling which has become final and
non-appealable and has the effect of making consummation of the Merger
illegal or otherwise preventing or prohibiting consummation of the Merger;
or
(c) by Purchaser, upon approval of Purchaser's Board of Directors, if
(i) the Company shall have committed a material breach of this Agreement,
(ii) prior to the Effective Time, the Board of Directors of Purchaser
determines in good faith that it is required to do so by its fiduciary
duties under applicable law after having received advice from outside legal
counsel, or (iii) the Board or any committee thereof shall have withdrawn
or modified in a manner adverse to Purchaser its approval or recommendation
of this Agreement, or the Merger, or shall have recommended or approved any
Superior Acquisition Proposal, or shall have resolved to do any of the
foregoing; or
(d) by the Company, upon approval of the Board, if (i) Purchaser shall have
committed a material breach of this Agreement, (ii) prior to the Effective Time,
the Board determines in good faith that it is required to do so by its fiduciary
duties under applicable law after having received advice from outside legal
counsel, or (iii) the Board of Directors of Purchaser or any committee thereof
shall have withdrawn or modified in a manner adverse to the Company its approval
or recommendation of this Agreement or the Merger, or shall have recommended or
approved any Superior Acquisition Proposal, or shall have resolved to do any of
the foregoing.
The time periods and deadlines in subsection (b) of this Section 9.01 may
be extended, at the option of either party as reasonably necessitated by the
occurrence of a Suspension Event for such period of time as may be reasonably
necessary (but not to exceed five (5) business days) following the conclusion of
a Suspension Event, but in no event to exceed a maximum of 30 days.
SECTION 9.02 ....Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 9.01(a) or 9.01(b), this Agreement shall
forthwith become void, and there shall be no liability on the part of either
party hereto. In the event of the termination of this Agreement pursuant to
Section 9.01(c)(i), then Purchaser shall be entitled to recover from the Company
all damages resulting from the Company's breach of this Agreement (including,
but not limited to, all expenses incurred by such party in connection with this
Agreement and the Transactions). In the event of the termination of this
Agreement pursuant to Section 9.02(d)(i), then the Company shall be entitled to
recover from Purchaser all damages resulting from Purchaser's breach of this
Agreement (including, but not limited to, all expenses incurred by such party in
connection with this Agreement and the Transactions).
SECTION 9.03 ....Fees. Except as otherwise provided in Section 9.02, all
costs and expenses incurred in connection with this Agreement and the
Transactions shall be paid by the party incurring such expenses, whether or not
any Transaction is consummated.
SECTION 9.04 ....Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after the
approval and adoption of this Agreement and the Transactions by the stockholders
of the Company, no amendment may be made that would reduce the amount or change
the type of Merger Consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
SECTION 9.05 ....Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties of any other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement of any other party
or any condition to its own obligations contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 ...Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by overnight
courier or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 10.01):
if to Purchaser or the Merger Subsidiary:
United Heritage Corporation
2 North Caddo
Cleburne, TX 76031
Attention: Walter G. Mize, President
if to the Company:
Imperial Petroleum, Inc.
329 Main Street, Suite 801
Evansville, IN 47708
Attention: Jeffrey T. Wilson, President
SECTION 10.02 ...Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 10.03 ...Entire Agreement; Assignment. This Agreement supercedes
the letter of intent dated July 9, 2004 between Purchaser and the Company and
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof. This Agreement shall not be assigned (whether pursuant to a
merger, by operation of law or otherwise).
SECTION 10.04 ...Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than Sections 7.06 and 7.07 (which are intended to be
for the benefit of the persons referred to therein and covered thereby and may
be enforced by any of such persons).
SECTION 10.05 ...Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal laws (and not the conflicts laws) of
the State of Utah applicable to contracts executed in and to be performed in
that State; provided, however, that Nevada Law shall govern the Articles of
Merger required to be filed under Nevada Law. All actions and proceedings
arising out of or relating to this Agreement shall be heard and determined
exclusively in any Texas state or federal court sitting in Johnson County,
Texas. The parties hereto hereby (a) submit to the exclusive jurisdiction of any
state or federal court sitting in the Johnson County, Texas for the purpose of
any Action arising out of or relating to this Agreement brought by any party
hereto, and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the
above-named courts.
SECTION 10.06 ...Waiver of Jury Trial. Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement or the Transactions.
SECTION 10.07 ...Construction. Whenever the context requires, the gender of
all words used in this Agreement includes the masculine, feminine and neuter.
The singular form of nouns, pronouns, and verbs shall include the plural and
vice versa. Use of "herein," "hereof," "hereby," "hereto," "hereunder" or
similar terms refer to this Agreement as a whole and not to any particular
provision or part of this Agreement. The Article and Section titles and captions
in this Agreement are for convenience of reference only, shall not be deemed
part of this Agreement, and shall in no way define, limit, extend, or describe
the scope or intent of any provision of this Agreement. Unless otherwise
specified, all references to an Article or a Section refer to articles and
sections of this Agreement, and all references to Exhibits are to Exhibits
attached hereto, each of which is made a part hereof for all purposes. This
Agreement shall not be construed against the Person responsible for, or
primarily responsible for, preparing this Agreement.
SECTION 10.08 ...Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
SECTION 10.09 ...Time of the Essence. Time is of the essence with respect
to all time periods set forth in, or referred to in, this Agreement.
IN WITNESS WHEREOF, Purchaser and the Company have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
Imperial Petroleum, Inc.
By: /s/Jeffrey T. Wilson
---------------------------------------
Jeffrey T. Wilson, President
United Heritage Corporation
By: /s/Walter G. Mize
---------------------------------
Walter G. Mize, President
EXHIBIT 99
Imperial and United Heritage Sign Definitive Merger Agreement October 20, 2004
09:00:00 AM ET
Imperial Petroleum, Inc. ("Imperial" or the "Company")IPTM announced it has
signed a Definitive Merger Agreement with United Heritage Corporation UHCP. The
Definitive Merger Agreement, which was executed pursuant to the letter of
intent, dated July 9, 2004 is materially different from the letter of intent in
that Mr. Mize and Christian Heritage Corporation will retain their shares in the
Company. The Definitive Merger Agreement provides that United Heritage will
issue 1 share of its common stock for each 3 shares of Imperial common stock and
that Mr. Jeffrey T. Wilson will become the new President and CEO of United
Heritage and Mr. Walter G. Mize will remain as the Chairman. The closing is
subject to shareholder approval by both companies and to approval by Imperial's
lenders.
"While we had planned to complete this Agreement in early August 2004, it has
taken a lot longer to reach a definitive agreement on this merger because of
issues involving attempts to settle litigation affecting United Heritage and Mr.
Mize and because of the subsequent decline in United Heritage's share price.
With the new terms of the Definitive Merger Agreement, we are pleased to finally
be able to move this process toward completion," said Jeffrey T. Wilson,
President of Imperial. "We have specific plans to exploit the huge reserve
potential offered by United Heritage's oil fields, including the use of new
enhanced recovery techniques, and with the strength in oil prices, the economics
of enhanced recovery have continued to improve. The combined Company will be
well positioned for future growth with a NASDAQ listing, a strong balance sheet,
good cash flow, an excellent reserve base and strong engineering management.
Through the application of our reserve-based line of credit financing, we will
have the funds available to continue our rapid growth. While completing this
Agreement, Imperial has remained focused on executing its business plan and has
increased its net oil production by about 70 Bopd through the development of its
Louisiana properties acquired earlier this year. We expect the Coquille Bay
acquisition to be online next month, adding another 55 Bopd and 500 Mcfpd of net
production to the Company. We completed the acquisition of the Kentucky natural
gas assets and pipeline previously announced and expect to place these wells
online early in 2005. We also sold our Duke Gold Mine claims and retained a 5%
net smelter royalty on future production, thus consolidating our focus on the
oil and gas business. We remain committed to exploiting our reserve base as
rapidly as possible to increase cash flow. We appreciate the loyalty of our
shareholders as we work through this merger process."
Imperial, through its subsidiaries and affiliates, is active in crude oil and
natural gas production and gold mining. Imperial is headquartered in Evansville,
IN.
This press release may contain "forward-looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. Such statements
are based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described herein. Although the Company believes that the expectations
in such statements are reasonable, there can be no assurance that such
expectations will prove to be correct.
Contact Information: Imperial Petroleum, Inc. Jeffrey T. Wilson, 812-867-1433
Email: jtwilsonx1@aol.com
(C) 2004 BusinessWire