AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JANUARY 31, 2001
BY AND AMONG
SAN XXXXXXX RESOURCES INC.,
NAMPA OIL & GAS LTD.,
AND
PANNONIAN ENERGY, INC.
TABLE OF CONTENTS
ARTICLE I.........................................................................................................2
THE MERGER........................................................................................................2
1.1 THE MERGER.................................................................................................2
(A) THE PARTIES..............................................................................................2
(B) BYLAWS OF SURVIVING CORPORATION..........................................................................3
1.2 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION........................................................3
1.3 SUBSEQUENT ACTIONS.........................................................................................3
ARTICLE II........................................................................................................4
CONVERSION OF SECURITIES..........................................................................................4
2.1 CONVERSION OF COMMON STOCK OF MERGING ENTITIES.............................................................4
(A) CONVERSION OF PANNONIAN COMMON STOCK.....................................................................4
(B) EFFECT ON PANNONIAN STOCK................................................................................4
(C) SAN XXXXXXX STOCK........................................................................................5
2.2 THE MERGING COMPANIES......................................................................................5
(A) ACQCORP COMMON STOCK.....................................................................................5
(B) PANNONIAN COMMON STOCK...................................................................................5
2.3 WARRANTS...................................................................................................5
(A) $1.00 WARRANTS...........................................................................................6
(B) $2.00 WARRANTS...........................................................................................6
2.4 DISSENTING SHARES..........................................................................................6
(A) RIGHTS OF DISSENTERS.....................................................................................6
(B) EFFECT OF DISSENT........................................................................................6
(C) NOTICE OF DISSENT........................................................................................6
2.5 EXCHANGE OF SHARES AND CERTIFICATES........................................................................7
(A) EXCHANGE AGENT...........................................................................................7
(B) EXCHANGE PROCEDURES; TRANSFER OF SHARES..................................................................7
(C) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.........................................................8
(D) NO FURTHER OWNERSHIP RIGHTS IN PANNONIAN COMMON STOCK; NO TRANSFER FOLLOWING THE CLOSING DATE............8
(E) FRACTIONAL SHARES........................................................................................9
(F) NO LIABILITY.............................................................................................9
ARTICLE III......................................................................................................10
COVENANTS OF PANNONIAN...........................................................................................10
3.1 CONDUCT OF BUSINESS PENDING THE CLOSING...................................................................10
(A) CHANGE IN CAPITAL STOCK; ISSUANCE OF SHARES.............................................................10
(B) OPTIONS, WARRANTS, AND RIGHTS...........................................................................10
(C) DIVIDENDS...............................................................................................10
(D) PURCHASE OF SHARES......................................................................................11
(E) BENEFIT PLANS...........................................................................................11
(F) CONDUCT OF BUSINESS.....................................................................................11
(G) ACQUISITIONS AND MERGERS................................................................................11
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(H) LIENS; INDEBTEDNESS; INCREASE IN COMPENSATION, ETC......................................................11
(I) AMENDMENTS TO CHARTER, ETC..............................................................................12
3.2 INVESTIGATION; ACCESS.....................................................................................12
3.3 REGULATORY APPROVALS......................................................................................12
3.4 INFORMATION FOR INFORMATION STATEMENT.....................................................................13
3.5 NOTIFICATION OF ACTIONS...................................................................................13
3.6 PROXIES...................................................................................................13
ARTICLE IV.......................................................................................................14
REPRESENTATIONS AND WARRANTIES OF PANNONIAN......................................................................14
4.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC....................................................................14
4.2 CAPITALIZATION............................................................................................14
4.3 OPTIONS, SARS, WARRANTS, ETC..............................................................................15
4.4 AUTHORIZATION; VALIDITY OF AGREEMENT......................................................................15
4.5 PANNONIAN FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES................................................15
4.6 ENVIRONMENTAL MATTERS.....................................................................................16
(A) NO PRESENT PROBLEMS.....................................................................................17
(B) NO PAST PROBLEMS........................................................................................17
(C) NO NOTICE OF PROBLEMS...................................................................................17
(D) PERMITS COMPLIED WITH...................................................................................17
(E) NO STORAGE TANK OR HAZARDOUS SUBSTANCES.................................................................18
4.7 TITLE TO PROPERTIES.......................................................................................18
4.8 ABSENCE OF DEFAULTS.......................................................................................18
4.9 ABSENCE OF MATERIAL ADVERSE CHANGES.......................................................................19
4.10 ACTIONS, PROCEEDINGS AND INVESTIGATIONS..................................................................19
4.11 ABSENCE OF BROKERAGE COMMISSIONS, ETC....................................................................20
4.12 MATERIAL CONTRACTS.......................................................................................20
4.13 COMPLIANCE WITH LAWS; DOCUMENTATION......................................................................20
4.14 EMPLOYEE BENEFITS........................................................................................21
(A) DISCLOSURE OF PLANS.....................................................................................21
(B) NO AGREEMENTS...........................................................................................21
(C) DISCLOSURE OF DOCUMENTS.................................................................................21
(D) CONTRIBUTIONS MADE......................................................................................21
(E) OPERATION OF PLANS......................................................................................22
(F) NO ONGOING OBLIGATIONS..................................................................................22
(G) NO CLAIMS...............................................................................................22
(H) NO SEVERANCE PAY........................................................................................22
4.15 TAXES AND TAX RETURNS....................................................................................22
4.16 CONSENTS AND APPROVALS...................................................................................23
4.17 INSURANCE................................................................................................23
4.18 SECTION 280G.............................................................................................23
4.19 DISCLOSURE...............................................................................................23
ARTICLE V........................................................................................................24
COVENANTS, REPRESENTATIONS AND WARRANTIES OF SAN XXXXXXX AND ACQCORP.............................................24
5.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC....................................................................24
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT...................................................................25
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5.3 SAN XXXXXXX REPORTS.......................................................................................25
5.4 SAN XXXXXXX FINANCIAL STATEMENTS; TAX RETURNS.............................................................25
5.5 ABSENCE OF MATERIAL ADVERSE CHANGES.......................................................................26
5.6 ENVIRONMENTAL MATTERS.....................................................................................26
(A) NO PRESENT PROBLEMS.....................................................................................27
(B) NO PAST PROBLEMS........................................................................................27
(C) NO NOTICE OF PROBLEMS...................................................................................27
(D) PERMITS COMPLIED WITH...................................................................................28
(E) NO STORAGE TANK AND HAZARDOUS SUBSTANCES................................................................28
(F) NO RECLAMATION WORK.....................................................................................28
5.7 TITLE TO PROPERTIES.......................................................................................28
5.8 ABSENCE OF DEFAULTS UNDER AGREEMENTS......................................................................29
5.9 ACTIONS, PROCEEDINGS, AND INVESTIGATIONS..................................................................29
5.10 REGULATORY APPROVALS.....................................................................................29
5.11 SAN XXXXXXX COMMON STOCK; OPTIONS; WARRANTS..............................................................30
5.12 REGISTRATION OF SHARES...................................................................................30
5.13 NOTIFICATION OF ACTIONS..................................................................................31
5.14 NASDAQ LISTING...........................................................................................31
5.15 INDEMNIFICATION..........................................................................................31
5.16 LIMITATIONS ON SAN JOAQUIN'S CONDUCT PRIOR TO THE EFFECTIVE TIME.........................................32
5.17 ACCESS TO INFORMATION....................................................................................32
5.18 BOARD POSITIONS AND EXECUTIVE OFFICER ELECTIONS..........................................................33
5.19 CONFIDENTIALITY..........................................................................................33
ARTICLE VI.......................................................................................................33
INFORMATION STATEMENT; SHAREHOLDER MEETINGS......................................................................34
6.1 INFORMATION STATEMENT.....................................................................................34
6.2 PANNONIAN SHAREHOLDERS MEETING............................................................................34
6.3 ACQCORP ACTION BY UNANIMOUS WRITTEN CONSENT...............................................................34
ARTICLE VII......................................................................................................35
CONDITIONS OF CLOSING............................................................................................35
7.1 CONDITIONS OF CLOSING FOR ALL PARTIES.....................................................................35
(A) NO INJUNCTION, ETC......................................................................................35
(B) TAX OPINIONS............................................................................................35
(C) SECTION 280G............................................................................................35
7.2 CONDITIONS OF CLOSING FOR SAN XXXXXXX AND ACQCORP.........................................................36
(A) SHAREHOLDER APPROVAL....................................................................................36
(B) PANNONIAN RESOLUTIONS; CORPORATE DOCUMENTS..............................................................36
(C) PANNONIAN REPRESENTATIONS AND WARRANTIES................................................................36
(D) OPINION OF PANNONIAN COUNSEL............................................................................37
(E) CONDITION OF PANNONIAN..................................................................................37
(F) EMPLOYMENT AGREEMENTS...................................................................................37
(G) WARRANTS................................................................................................37
(H) SPIN OFF OF NON RIVERBEND ASSETS IN PANNONIAN...........................................................37
(I) FINANCIAL STATEMENTS OF PANNONIAN.......................................................................38
(J) DISSENTING SHAREHOLDERS.................................................................................38
7.3 CONDITIONS OF CLOSING FOR PANNONIAN.......................................................................38
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(A) SAN XXXXXXX AND ACQCORP REPRESENTATIONS AND WARRANTIES..................................................38
(B) OPINION OF SAN XXXXXXX COUNSEL..........................................................................39
(C) SAN XXXXXXX RESOLUTIONS; CORPORATE DOCUMENTS............................................................39
(D) SHAREHOLDER APPROVAL....................................................................................39
(E) NAME CHANGE AND NASDAQ LISTING..........................................................................39
(F) CASH ON HAND............................................................................................40
ARTICLE VIII.....................................................................................................40
CLOSING OF MERGER................................................................................................40
8.1 CLOSING...................................................................................................40
8.2 FILING OF ARTICLES OF MERGER..............................................................................40
(A) PANNONIAN DUTY..........................................................................................40
(B) SAN XXXXXXX DUTY........................................................................................40
(C) EFFECTIVE TIME..........................................................................................41
ARTICLE IX.......................................................................................................41
TERMINATION......................................................................................................41
9.1 TERMINATION...............................................................................................41
(A) BY MUTUAL CONSENT.......................................................................................41
(B) BY PASSAGE OF TIME......................................................................................41
(C) MATERIAL MISREPRESENTATION BY SAN XXXXXXX...............................................................41
(D) MATERIAL MISREPRESENTATION BY PANNONIAN.................................................................42
(E) FAILURE OF SHAREHOLDER NOTE.............................................................................42
9.2 EFFECT OF TERMINATION.....................................................................................42
ARTICLE X........................................................................................................42
ADDITIONAL COVENANTS.............................................................................................42
10.1 EMPLOYEE MATTERS.........................................................................................42
10.2 COSTS....................................................................................................43
10.3 INSTRUMENTS OF TRANSFER, ETC.............................................................................43
10.4 NOTICES..................................................................................................43
10.5 AMENDMENTS...............................................................................................45
10.6 ENTIRE AGREEMENT.........................................................................................45
10.7 ASSIGNMENT...............................................................................................46
10.8 COUNTERPARTS.............................................................................................46
10.9 EXCLUSIVE MERGER AGREEMENT...............................................................................46
10.10 PUBLIC STATEMENTS.......................................................................................46
10.11 CONFIDENTIALITY.........................................................................................47
10.12 ALTERNATIVE STRUCTURE...................................................................................47
10.13 THIRD PARTIES...........................................................................................47
10.14 SEVERABILITY............................................................................................48
10.15 CAPTIONS................................................................................................48
10.16 DEFINITION OF MATERIAL ADVERSE EFFECT...................................................................48
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of the 31st day of
January, 2001 (this "AGREEMENT"), is made and entered into by and among SAN
XXXXXXX RESOURCESINC., a Nevada corporation ("SAN XXXXXXX"), NAMPA OIL & GAS,
LTD., a Nevada corporation ("ACQCORP"), and PANNONIAN ENERGY, INC., a Delaware
corporation ("PANNONIAN").
R E C I T A L S:
A. San Xxxxxxx is a corporation duly organized and existing under the laws
of the State of Nevada, with its principal place of business located in Calgary,
Alberta, Canada. San Xxxxxxx is authorized by its Articles of Incorporation, as
amended, to issue (i) 5,000,000 shares of preferred stock, each of $0.001 par
value ("SAN XXXXXXX PREFERRED STOCK"), none of which are issued and outstanding,
and (ii) 100,000,000 shares of common stock, each of $0.0001 par value ("SAN
XXXXXXX COMMON STOCK"), of which as of January 31, 2001, there were 11,788,930
shares issued and outstanding.
B. AcqCorp is a company incorporated under the laws of the State of
Nevada. AcqCorp is authorized by its Articles of Incorporation to issue 10,000
shares of common stock, each of One Dollar par value ("ACQCORP COMMON STOCK").
San Xxxxxxx owns all of the issued and outstanding shares of AcqCorp Common
Stock.
C. Pannonian is a corporation duly organized and existing under the laws
of the State of Delaware, with its principal place of business located in
Denver, Colorado. Pannonian is authorized by its Certificate of Incorporation to
issue 20,000,000 shares of common stock, $.001 par value ("PANNONIAN COMMON
STOCK"), of which, as of January 30, 2001, there were (i) 7,925,000 shares
issued and outstanding, (ii) options outstanding for no shares as of such date
(the "OPTIONS") and (iii) warrants outstanding for 4,925,000 shares (the
"WARRANTS").
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D. The parties hereto desire that AcqCorp be merged with and into
Pannonian (the "MERGER") pursuant to this Agreement and the Articles of Merger
in the form attached hereto as Exhibit A (the "ARTICLES OF MERGER").
A G R E E M E N T:
NOW, THEREFORE, in consideration of foregoing and the respective
representations, warranties, covenants, agreements and conditions set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, covenant and agree as follows:
ARTICLE I
THE MERGER
1.1 THE MERGER.
(a) THE PARTIES. Pursuant to the laws of the States of Delaware
and Nevada, and subject to the terms and conditions of this Agreement, at the
effective time of the Articles of Merger (the "EFFECTIVE TIME"), Pannonian and
AcqCorp (sometimes referred to herein as the "MERGING ENTITIES") shall
consummate the Merger pursuant to which (a) AcqCorp shall be merged with and
into Pannonian, and the separate corporate existence of AcqCorp shall thereupon
cease; (b) Pannonian shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the laws of the State of Delaware
(the "SURVIVING CORPORATION"); and (c) the separate corporate existence of
Pannonian with all its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger, except as set forth in this Article I.
Pannonian, as the Surviving Corporation, shall thereupon and thereafter possess
all the rights, privileges, powers and franchises, of a public as well as a
private nature, and shall be subject to all restrictions, disabilities and
duties of the Merging Entities; and all property, real, personal and mixed and
all debts due to the Merging Entities on whatever account, including
subscriptions for shares and all other things in action or belonging to the
Merging Entities shall be taken and deemed to be vested in Pannonian without
further act or
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deed. Pannonian shall thenceforth be responsible for all the debts, liabilities
and duties of each of the Merging Entities and may be prosecuted to judgment as
if the Merger had not taken place, or Pannonian may be substituted in place of
the Merging Entities and neither the rights of creditors nor any liens upon any
property of either shall be impaired by the Merger.
(b) BYLAWS OF SURVIVING CORPORATION. As of the Effective Time, the
certificate of incorporation of Pannonian as in effect immediately prior to the
Merger shall be the certificate of incorporation of the Surviving Corporation
until thereafter amended as provided by law and such certificate of
incorporation. As of the Effective Time, the bylaws of Pannonian as in effect
immediately prior to the Effective Time shall be the bylaws of the Surviving
Corporation until thereafter amended as provided by law and such bylaws of the
Surviving Corporation.
1.2 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors
and officers of Pannonian at the Effective Time shall serve in their respective
positions until their successors shall have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the certificate of incorporation and the bylaws of Pannonian.
1.3 SUBSEQUENT ACTIONS. If, at any time after the Merger, Pannonian shall
consider or be advised that any deeds, bills of sale, assignments, assurances,
or any other actions or things are necessary or desirable to vest, perfect, or
confirm of record or otherwise in Pannonian its right, title, or interest in,
to, or under any of the rights, properties, or assets of AcqCorp acquired or to
be acquired by Pannonian as a result of or in connection with the Merger, or
otherwise to carry out this Agreement, the officers and directors of Pannonian
shall be authorized to execute and deliver, in the name and on behalf of AcqCorp
or otherwise, all such deeds, bills of sale, assignments, and assurances, and to
make and do, in the name and on behalf of AcqCorp or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect, or confirm
any right, title, and interest in, to, and under such rights, properties, or
assets in Pannonian or otherwise to carry out this Agreement.
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ARTICLE II
CONVERSION OF SECURITIES
2.1 CONVERSION OF COMMON STOCK OF MERGING ENTITIES.
(a) CONVERSION OF PANNONIAN COMMON STOCK. In accordance with this
Agreement, as of the Effective Time, by virtue of the Merger and without any
further action on the part of the holders of any shares of Pannonian Common
Stock, each issued and outstanding share of Pannonian Common Stock (of which
there shall be no more than 7,925,000 shares other than shares as to which
dissenters' rights are perfected ("Dissenting Shares"), and all rights in
respect thereof, shall be converted, ipso facto, into the right to receive the
Merger Consideration.
(b) EFFECT ON PANNONIAN STOCK. As of the Effective Time, all such
shares of Pannonian Common Stock, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist. Each holder of a
certificate representing any shares of Pannonian Common Stock shall cease to
have any rights with respect thereto, except the right to receive, upon the
surrender of any such certificates, the Merger Consideration upon the terms and
subject to the conditions set forth herein.
(i) "EXCHANGE RATIO" shall mean (in each case, rounded to four
digits to the right of the decimal point) 14,000,000 divided by
8,039,500,.
(ii) THE "MERGER CONSIDERATION" for each share of Pannonian Common
Stock being converted into shares of San Xxxxxxx Common Stock shall
mean that number of duly authorized, validly issued, fully paid and
nonassessable shares of San Xxxxxxx Common Stock equal to the Exchange
Ratio; provided, however, if, prior to the Effective Time, San Xxxxxxx
should split, reclassify or combine the San Xxxxxxx Common Stock, or
pay a stock dividend or other stock distribution in San Xxxxxxx Common
Stock, as of a record date prior to the Effective Time, appropriate
adjustment or adjustments (rounded to four digits to the right of the
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decimal point) will be made to the Exchange Ratio and the total number
of shares of San Xxxxxxx Common Stock to be issued in the transaction
so as to maintain the proportional interest in San Xxxxxxx Common Stock
which the shareholders of Pannonian would otherwise have received; and
provided that the 14,000,000 shares of San Xxxxxxx Common Stock
issuable under this Agreement shall include the shares of San Xxxxxxx
Common Stock to be issued to the holders of Pannonian Warrants as
provided in Section 2.3. In other words, the Exchange Ratio will be
adjusted as needed to accommodate the issue of San Xxxxxxx shares in
settlement of the outstanding Pannonian warrants.
(c) SAN XXXXXXX STOCK. All shares of San Xxxxxxx Common Stock that
are outstanding immediately prior to the Merger shall continue to be outstanding
after the Merger.
2.2 THE MERGING COMPANIES.
(a) ACQCORP COMMON STOCK. All shares of AcqCorp Common Stock which
are outstanding immediately prior to the Pannonian Merger shall continue to be
outstanding immediately after the Pannonian Merger
(b) PANNONIAN COMMON STOCK. As of the Effective Time, each issued and
outstanding share of Pannonian Common Stock and all rights in respect thereof
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, except as a right to receive the Merger Consideration
determined by the Exchange Ratio.
2.3 WARRANTS. Each then outstanding Pannonian Warrant shall be deemed
exchanged for a portion of the Merger Consideration as follows:
(a) $1.00 WARRANTS. Each $1.00 Warrant will be cancelled and
converted as part of the Merger to the equivalent of 0.01 share of Pannonian
common stock, and the equivalent right to receive a portion of the Merger
Consideration applicable to such share ownership according to this Agreement.
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(b) $2.00 WARRANTS. Each $2.00 Warrant will be cancelled and
converted as part of the Merger to the equivalent of 0.10 share of Pannonian
common stock, and the equivalent right to receive a portion of the Merger
Consideration applicable to such share ownership according to this Agreement.
2.4 DISSENTING SHARES.
(a) RIGHTS OF DISSENTERS. Notwithstanding any provision of this
Agreement to the contrary, Dissenting Shares shall not be converted into or
represent a right to receive the Merger Consideration pursuant to Section 2.1
hereof, but the holder thereof shall be entitled to only such rights as are
granted by Delaware law.
(b) EFFECT OF DISSENT. Notwithstanding the provisions of Section 2.4.
(a) above, if any holder of shares of Pannonian Common Stock who demands
appraisal of such holder's shares of Pannonian Common Stock under Delaware law
effectively withdraws or loses (through failure to perfect or otherwise) his or
her right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever later occurs, such holder's shares of Pannonian Common Stock
shall automatically be converted into and represent only the right to receive
the Merger Consideration as provided in Section 2.1. hereof, without interest,
upon surrender of the certificate or certificates representing such shares of
Pannonian Common Stock pursuant to Section 2.5 hereof.
(c) NOTICE OF DISSENT. Pannonian shall give San Xxxxxxx (i) prompt
notice of any written demands for appraisal or payment of the fair value of any
shares of Pannonian Common Stock, withdrawals of such demands, and any other
instruments served on Pannonian pursuant to Delaware law in connection with the
Merger. Except with the prior written consent of San Xxxxxxx, Pannonian shall
not voluntarily make any payment with respect to any demands for appraisal,
settle or offer to settle any such demands.
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2.5 EXCHANGE OF SHARES AND CERTIFICATES.
(a) EXCHANGE AGENT. As of the Effective Time, San Xxxxxxx shall
deposit with Interwest Transfer in Salt Lake City, Utah or such other bank or
trust company as may be designated by San Xxxxxxx (the "EXCHANGE AGENT"), for
the benefit of the holders of shares of Pannonian Common Stock, for exchange in
accordance with this Article II, through the Exchange Agent, certificates
representing the shares of San Xxxxxxx Common Stock issuable pursuant to Section
2.1. hereof in exchange for outstanding shares of Pannonian Common Stock.
(b) EXCHANGE PROCEDURES; TRANSFER OF SHARES. As soon as reasonably
practicable after the Effective Time, the Exchange Agent shall mail to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Pannonian Common Stock (the
"CERTIFICATES") whose shares were converted into the right to receive shares of
San Xxxxxxx Common Stock pursuant to Section 2.1. hereof (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as San Xxxxxxx may reasonably specify and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for certificates
representing shares of San Xxxxxxx Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such other agent or agents as may
be appointed by San Xxxxxxx, together with documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor a certificate representing that whole number of
shares which such holder has the right to receive pursuant to the provisions of
this Article II , and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Pannonian Common Stock
which is not registered in the transfer records of Pannonian, a certificate
representing the proper number of shares of San Xxxxxxx Common Stock may be
issued to a person other than the person in whose name the Certificate so
surrendered is registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or the taxes required by reason of the issuance of shares
of San Xxxxxxx Common Stock
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to a person other than the registered holder of such Certificate or establish to
the satisfaction of San Xxxxxxx that such tax has been paid or is not
applicable. Until surrendered as contemplated by this Section 2.5, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration as
contemplated by this Section 2.5.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions with respect to San Xxxxxxx Common Stock with a record date
after the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of San Xxxxxxx Common Stock represented
thereby, until the surrender of such Certificate in accordance with this Article
II.
(d) NO FURTHER OWNERSHIP RIGHTS IN PANNONIAN COMMON STOCK; NO
TRANSFER FOLLOWING THE CLOSING DATE. All shares of San Xxxxxxx Common Stock
issued upon the surrender for exchange of Certificates in accordance with the
terms of this Article II shall be deemed to have been issued (and paid) in full
satisfaction of all rights pertaining to the shares of Pannonian Common Stock
theretofore represented by such Certificates, and there shall be no further
registration of transfers on the stock transfer books of Pannonian with respect
to shares outstanding prior to the Effective Time. If, after the Effective Time,
Certificates are presented to Pannonian or the Exchange Agent for any reason,
they shall be canceled and exchanged as provided in this Article II, except as
otherwise provided by law.
(e) FRACTIONAL SHARES.
(i) No certificates representing fractional shares of San Xxxxxxx
Common Stock shall be issued upon the surrender for exchange of
Certificates or the cancellation of Warrants, and such fractional share
interests shall not entitle the owner thereof to vote or to any other
rights of a stockholder of San Xxxxxxx.
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(ii) Notwithstanding any other provision of this Agreement, each
person who otherwise would have been entitled to receive a fraction of
a share of San Xxxxxxx Common Stock (after taking into account all
Certificates delivered by such holder) shall have such fraction rounded
to the nearest whole share. For example, if a Pannonian shareholder
would be entitled to a fractional .33 share of San Xxxxxxx Common Stock
based on the application of the Exchange Ratio as adjusted for
cancelled Warrants, that fraction would be rounded down to 0, and no
additional Merger Consideration would be allowed. Alternatively, a
fraction of .5 or larger would result in rounding to 1, resulting in
one additional San Xxxxxxx share allocated to that person.
(f) NO LIABILITY. None of Pannonian, AcqCorp, San Xxxxxxx or the
Exchange Agent shall be liable to any person in respect of any shares of San
Xxxxxxx Common Stock delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to seven years after the Effective Time, or immediately
prior to such earlier date on which any shares of San Xxxxxxx Common Stock, or
any dividends or distributions with respect to San Xxxxxxx Common Stock in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental Entity, any such shares, cash, dividends or distributions in
respect of such Certificate shall, to the extent permitted by applicable law,
become the property of Pannonian free and clear of all claims or interest of any
person previously entitled thereto.
ARTICLE III
COVENANTS OF PANNONIAN
3.1 CONDUCT OF BUSINESS PENDING THE CLOSING. Except as otherwise
contemplated hereby, between the date hereof and the Effective Time, or the time
when this Agreement terminates as provided herein, Pannonian shall conduct its
operations and business in the usual and ordinary course of business and
consistent with past practice and will use commercially reasonable efforts to
retain for the benefit of San Xxxxxxx the continuing services of the present
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officers and employees of Pannonian, to preserve the goodwill of customers and
others having business relations with Pannonian, to preserve the properties of
Pannonian, to preserve the benefits of all contractual relationships with others
and to keep in force at least at their present limits all policies of insurance
currently in effect. Without limiting the generality of the foregoing, and
except as otherwise specifically permitted by this Agreement, during the period
from the date hereof to the Effective Time, Pannonian shall not, without the
prior written authorization of the President of San Xxxxxxx:
(a) CHANGE IN CAPITAL STOCK; ISSUANCE OF SHARES. Make any change in
authorized capital stock, or issue, agree to issue or permit Pannonian to become
obligated to issue any shares of their capital stock, or securities convertible
into their capital stock;
(b) OPTIONS, WARRANTS, AND RIGHTS. Grant or issue any options,
warrants or other rights, including stock appreciation rights, of any kind
relating to the purchase of shares of capital stock, or securities convertible
into capital stock;
(c) DIVIDENDS. Declare or pay any dividends or other distributions on
any shares of capital stock; provided, however, that Pannonian may distribute to
its shareholders pro rata any equity interests it receives in its own
contemplated reorganization into two companies prior to the Effective Time;
(d) PURCHASE OF SHARES. Purchase or otherwise acquire, or agree to
acquire, any shares of stock, other than in a fiduciary capacity;
(e) BENEFIT PLANS. Except as required by law, or, with the consent of
San Xxxxxxx, terminate any employee benefit plans or enter into or amend any
pension, retirement, stock option, stock appreciation, profit sharing, deferred
compensation, consultant, bonus, group insurance or similar benefit plan in
respect of any of their directors, officers or other employees;
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(f) CONDUCT OF BUSINESS. Except as contemplated by this Agreement,
take or omit to take any action which (i) causes Pannonian not to conduct
business in a manner consistent with normal business practices, including with
respect to the hydrocarbon assets of Pannonian, or (ii) has a Material Adverse
Effect on the financial condition (present or prospective), businesses,
properties, assets or operations of Pannonian (the parties hereto recognize that
the operation of Pannonian until the Effective Time is the responsibility of
Pannonian and its Board of Directors and officers; nevertheless, Pannonian shall
keep San Xxxxxxx advised of all important changes in the financial condition
(present or prospective), business, properties, assets or operations of
Pannonian);
(g) ACQUISITIONS AND MERGERS. Acquire or merge with any other company
or acquire any branch or other significant part of the assets of any other
company;
(h) LIENS; INDEBTEDNESS; INCREASE IN COMPENSATION, ETC. Except in the
ordinary course of business, (i) mortgage, pledge or subject to a lien or any
other encumbrance any of assets, dispose of any assets, incur or cancel any
indebtedness or claims, purchase or lease any assets having a purchase price or
lease cost, in the aggregate, of more than $20,000.00, increase any compensation
or benefits payable to officers or employees, except to pay routine merit
increases in accordance with past practices and costs associated with the
transactions contemplated under this Agreement.
(i) AMENDMENTS TO CHARTER, ETC. Amend its Certificate of
Incorporation or make any material amendments to Bylaws that would interfere in
any manner with the transactions contemplated by this Agreement.
3.2 INVESTIGATION; ACCESS. Pannonian shall diligently endeavor to (i) take
or cause to be taken all action required under this Agreement on its part to be
taken as promptly as practicable so as to permit the consummation of the
transactions contemplated by this Agreement at the earliest possible date and
cooperate fully with San Xxxxxxx and AcqCorp to that end, including, without
limitation, providing to San Xxxxxxx and AcqCorp, and their respective
employees, accountants and counsel, access to Pannonian's books, records,
reports, tax returns
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and facilities and to its employees, accountants, and counsel; provided,
however, that such investigation to be conducted by San Xxxxxxx and AcqCorp
shall be performed in such a manner which will not unreasonably interfere with
the normal operations, or customer or employee relations, of Pannonian and shall
be in accordance with procedures established by the parties having due regard
for the foregoing, and (ii) furnish all necessary information for inclusion in
any applications relating to the consents, approvals and permissions of
regulatory authorities referred to in Article VII.
San Xxxxxxx for itself and its officers and agents, covenants to hold
confidential any and all information received concerning Pannonian and its
business or assets. If the Merger fails to close, San Xxxxxxx and its agents
will promptly return or destroy any and all materials about Pannonian in their
possession.
3.3 REGULATORY APPROVALS. Pannonian shall (i) use best efforts in good
faith to assist San Xxxxxxx in obtaining all necessary regulatory approvals and
taking or causing to be taken all other action required under this Agreement on
its or their part to be taken as promptly as practicable so as to permit the
consummation of the transactions contemplated by this Agreement at the earliest
possible date, and cooperate fully with San Xxxxxxx and AcqCorp to that end, and
(ii) furnish all necessary information for inclusion in any applications
relating to the consents, approvals, and permissions of regulatory authorities.
Pannonian shall have the right to review all applications to such regulatory
authorities before the filing thereof and to comment upon the form of such
applications and the information contained therein. Pannonian knows of no
reasons why the transactions contemplated by this Agreement should not be
approved by any applicable regulatory authorities.
3.4 INFORMATION FOR INFORMATION STATEMENT. Upon request by San Xxxxxxx,
Pannonian shall timely prepare and deliver to San Xxxxxxx, in such form required
by rules and regulations of the United States Securities and Exchange Commission
(the "SEC"), all information, descriptions, accounting reports and schedules
(including audited financial statements in the form
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required by Regulation S-X of the SEC, as may be required) and other materials
required for preparation and filing of the Information Statement contemplated by
this Agreement.
3.5 NOTIFICATION OF ACTIONS. Pannonian will immediately notify San Xxxxxxx
and AcqCorp in the event of any action or occurrence that materially affects any
of the covenants set forth in this Article III.
3.6 PROXIES. At the time of signing of this Agreement, Pannonian shall
deliver to San Xxxxxxx written proxies from shareholders of Pannonian holding in
excess of a majority of all issued and outstanding shares of Pannonian Common
Stock. Said proxies shall provide for a YES vote in favor of the Merger as
contemplated in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PANNONIAN
As an inducement to San Xxxxxxx and AcqCorp to enter into this Agreement,
and in addition to any representations and warranties made elsewhere in this
Agreement, Pannonian represents and warrants to and agrees with San Xxxxxxx and
AcqCorp as of the date of this Agreement and as of the Closing Date as follows:
4.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. Pannonian (i) is duly organized
and validly existing and in good standing under the laws of the State of
Delaware, (ii) has all requisite power and authority (corporate and other) to
own its properties and conduct its business as now being conducted, (iii) is
duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it therein or in which
the transaction of its business makes such qualification necessary, except where
failure to so qualify would not have a Material Adverse Effect, as defined in
Section 10.16, below, on Pannonian or its businesses, operations, properties,
assets or condition (financial or otherwise), and (iv) is not transacting
business, or operating any properties owned or leased by it in violation of any
provision of federal or state law or any rule or regulation promulgated
thereunder, which
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violation would have a Material Adverse Effect on Pannonian or its businesses,
operations, properties, assets or condition (financial or otherwise). Other than
with respect to Pannonian's planned reorganization of its properties as
described in Section 7.2(h), Pannonian does not own any equity interest in any
other business organization and Pannonian is not a party to any joint venture or
similar enterprise other than in the ordinary course of business in connection
with the exploration and development of hydrocarbon resources.
4.2 CAPITALIZATION. The authorized capital stock of Pannonian consists of
20,000,000 shares of Pannonian Common Stock and 5,000,000 shares of Pannonian
Preferred Stock. As of the date hereof, there are 7,925,000 shares of Pannonian
Common Stock issued and outstanding and no shares of Pannonian Preferred Stock
issued and outstanding. The outstanding shares of Pannonian Common Stock and the
holders of record thereof are identified on Schedule 4.2 hereto. All of the
outstanding shares of capital stock of Pannonian have been duly authorized and
are validly issued, fully paid and nonassessable.
4.3 OPTIONS, SARS, WARRANTS, ETC. Schedule 4.2 identifies the holders of
each of the Warrants, the number of Warrants held by each holder of Warrants and
the Warrant exercise price with respect thereto. Except for the Warrants, there
are no outstanding stock appreciation rights or options, warrants, calls, units
or commitments of any kind relating to the issuance, sale, purchase or
redemption of, or securities convertible into, capital stock of Pannonian.
Except for the stock option plans disclosed on Schedule 4.14, Pannonian
maintains no plan relating to the issuance, sale, purchase or redemption of
capital stock of Pannonian.
4.4 AUTHORIZATION; VALIDITY OF AGREEMENT. Pannonian has the corporate power
and authority to execute and deliver this Agreement. This Agreement has been
duly and validly approved by the Board of Directors of Pannonian, has been duly
executed and delivered on behalf of Pannonian, and, subject to approval by the
shareholders of Pannonian, constitutes a valid and binding agreement of
Pannonian, enforceable in accordance with its terms, except as
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the enforceability thereof may be limited by bankruptcy, liquidation,
receivership, conservatorship, insolvency, moratorium or other similar laws
affecting the rights of creditors generally and by general equitable principles.
4.5 PANNONIAN FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. Pannonian's
audited Balance Sheets as of December 31, 1999 and December 31, 1998, and its
audited Statements of Income and Statements of Cash Flow for the years ended
December 31, 1999 and December 31, 1998, and Pannonian's unaudited Balance Sheet
for the period ended December 31, 2000 (hereinafter the "FINANCIAL STATEMENTS"),
were prepared in accordance with generally accepted accounting principles
consistently applied (except for such interim statement which requires year-end
adjustments) and present fairly Pannonian's financial condition, results of
operations and changes in cash flow as of such dates. Except as and to the
extent stated in the Financial Statements delivered or to be delivered pursuant
to this Section 4.5 and in Schedule 4.5, and except for those liabilities
incurred in the normal course of Pannonian's business or as contemplated by this
Agreement, Pannonian has no material liabilities or obligations, secured or
unsecured (whether accrued, absolute, contingent or otherwise), and whether due
or to become due, including but not limited to liabilities on account of taxes,
other governmental charges or lawsuits subsequently brought. Except as set forth
on Schedule 4.5, there are no suits, actions or proceedings pending or, to the
knowledge of Pannonian or any of their directors or officers, threatened, or any
contingent liability which would give rise to any right of indemnification on
the part of any director or officer of Pannonian or his or her heirs, executors
or administrators, as against Pannonian or any successor to the business of
Pannonian.
4.6 ENVIRONMENTAL MATTERS. For purposes of this Section 4.6, the term
"environmental laws" shall include all state and federal laws designed to
protect human health or the environment, as amended from time to time, and all
regulations promulgated thereunder, including, without limitation, the Clean Air
Act, 42 U.S.C.A. xx.xx. 7401, ET SEQ., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 X.X.X.X.xx.xx. 9601, ET SEQ., the Federal
Water Pollution Control Act, 33 X.X.X.X.xx.xx. 1251, ET SEQ., the Resource
Conservation and Recovery Act, 42 X.X.X.X.xx.xx. 6901, ET SEQ., and the Toxic
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Substances Control Act, 15 X.X.X.X.xx.xx. 2601, ET SEQ. "Hazardous substance"
shall include all petroleum products as well as any toxic or hazardous material,
hazardous waste or other hazardous or regulated substance defined in or
regulated by any environmental law, provided that hazardous substance shall not
include commercially available consumer products reasonably appropriate for use
in or for routine maintenance or upkeep of an office of a financial institution
as long as such products are used in accordance with label instructions.
Except as set forth in Schedule 4.6, to the best knowledge of Pannonian
after due inquiry, neither Pannonian, nor any property of Pannonian, is subject
to any pending or potential claim, liability or obligation to any person arising
under any environmental law. With respect to the real property owned or leased
by Pannonian (including other real estate), to the best knowledge of Pannonian
after due inquiry:
(a) NO PRESENT PROBLEMS. No such property is presently contaminated
by, and no such property has ever been used or is presently being used by any
person to generate, manufacture, refine, transport, treat, store, handle or
dispose of, any hazardous substance in any regulated form or quantity.
(b) NO PAST PROBLEMS. No such property has ever contained or
presently contains, or has been used or is being used by any person for storage
of, asbestos, urea formaldehyde foam insulation, PCB's, dioxins, mercury, lead
or uranium (or other heavy metal) products or tailings, or any other hazardous
substance in any regulated form or quantity, whether contained in construction
or fill materials or used or stored thereon or therein.
(c) NO NOTICE OF PROBLEMS. Neither Pannonian nor any other tenant or
occupant of any such property has received a summons, citation, directive,
letter, notice of violation, request for information or other communication,
written or oral, from any local, state or federal agency concerning any possible
intentional or unintentional action or omission on the part of any person which
has resulted in the possible release of any hazardous substance affecting such
property or concerning any other possible violation of any environmental law
affecting the property.
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(d) PERMITS COMPLIED WITH. To the extent any permit, approval or
registration is or has been required to be obtained or maintained under any
environmental law with respect to any such property, any improvement of or on
any such property or any activity occurring on any such property, each such
permit, approval or registration has been obtained and is in good standing. In
addition, all such permits, approvals and registrations have been disclosed to
San Xxxxxxx in writing.
(e) NO STORAGE TANK OR HAZARDOUS SUBSTANCES. No such property
contains or has ever contained any storage tank used or intended for use to
store any hazardous substance.
4.7 TITLE TO PROPERTIES. Except as reflected in the Financial Statements
delivered or to be delivered pursuant to Section 4.5, and except as set forth on
Schedule 4.7, Pannonian owns, free and clear of any liens, claims, charges,
options, or other encumbrances, all of the property, real, personal or mixed,
reflected in the Financial Statements and all property acquired since such date,
provided that Pannonian's assets will materially change from that shown on the
Financial Statements as a result of the contemplated reorganization of Pannonian
as described in Section 7.2(h). Except as set forth in Schedule 4.7, Pannonian
has not received any notice of violation of any applicable zoning regulation,
ordinance or other law, order, regulation or requirement relating to its
operations or its properties. To Pannonian's knowledge, there are no such
violations of material nature, and all buildings and structures used by
Pannonian substantially conform to all applicable ordinances, codes and
regulations. Except as set forth in Schedule 4.7 hereto, in Pannonian's opinion,
all such properties which are material to the business or operations of
Pannonian are in a good state of maintenance and repair and are adequate for its
current uses and purposes. During each of the past three calendar years,
Pannonian and its properties have been insured for customary risks with
customary limits, deductibles, and exclusions, and such insurance protection
continues in effect as of the date hereof. Pannonian has delivered to San
Xxxxxxx true and correct copies of all deeds, title insurance policies and
surveys each has with respect to the real property owned by them and copies of
all leases with respect to real property leased by them.
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4.8 ABSENCE OF DEFAULTS. The execution of this Agreement and the Articles
of Merger does not and performance of the transactions contemplated by them will
not (assuming Pannonian shareholder approval and applicable regulatory approval)
(a) violate the provisions of the Certificate of Incorporation or Bylaws of
Pannonian, or (b), except as set forth in Schedule 4.8, violate the provisions
of or place Pannonian in default under any agreement, indenture, mortgage, lien,
lease, contract, instrument, order, judgment, decree, ordinance, statute, or
regulation to which Pannonian is subject, to which any property of Pannonian is
subject, or to which Pannonian is a party, which violations or defaults would in
the aggregate have a Material Adverse Effect on the business, operations,
properties, assets, or condition (financial or otherwise) of Pannonian.
4.9 ABSENCE OF MATERIAL ADVERSE CHANGES. Except as set forth on Schedule
4.9, since December 31, 1999, there has been no change, and no development
involving a reasonably foreseeable prospective change, in or affecting the
financial condition (present or prospective), businesses, properties, assets or
operations (present or prospective) of Pannonian that either individually or in
the aggregate has had or is likely to have a Material Adverse Effect on
Pannonian, other than the contemplated reorganization of Pannonian as described
in Section 7.2(h) . Since December 31, 1999, Pannonian has conducted its
business only in the ordinary course and consistent with good practices in its
industry.
4.10 ACTIONS, PROCEEDINGS AND INVESTIGATIONS. Set forth in Schedule 4.10
hereto is a complete and accurate listing of all litigation, administrative or
other proceedings to which Pannonian is a party, except for such proceedings in
which Pannonian is seeking to collect on a loan or lease transaction and no
counterclaim or similar claim has been filed against Pannonian. There are no
actions, proceedings or investigations pending, or, to the knowledge of the
executive officers of Pannonian, threatened or contemplated against or relating
to Pannonian or any of its properties or assets (and said officers are not aware
of any facts that would give rise to any such claim), which would have a
Material Adverse Effect on the financial condition (present or prospective),
businesses, properties, assets or operations (present or prospective) of
Pannonian, or the ability of Pannonian to consummate the Merger contemplated
hereby.
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4.11 ABSENCE OF BROKERAGE COMMISSIONS, ETC. Except as disclosed in Schedule
4.11, all negotiations relative to this Agreement and the transactions
contemplated hereby have been carried on by Pannonian directly with San Xxxxxxx
and AcqCorp without the participation or intervention of any other person, firm
or corporation employed or engaged by or on behalf of Pannonian in such a manner
as to give rise to any valid claim against Pannonian, or San Xxxxxxx or AcqCorp,
for a brokerage commission, finder's fee or like payment.
4.12 MATERIAL CONTRACTS. Except for those documents listed on Schedule 4.12
hereto, copies of which documents have been provided by Pannonian to San
Xxxxxxx, Pannonian is not a party to or bound by any commitment, agreement or
other instrument which (i) is material to the business, operations, properties,
assets or financial condition of Pannonian; (ii) limits the freedom of Pannonian
to compete in any line of business or with any person; or (iii) requires
Pannonian to transfer funds (other than in the ordinary course of business) to,
make an investment in or guarantee the debt of any entity. Except as set forth
in Schedule 4.12, Pannonian is not a party to any contract or agreement,
including but not limited to any lease, service contract or employment agreement
which (i) provides for a remaining term in excess of two (2) years from and
after the date hereof, and (ii) provides for a total payment thereunder in
excess of $20,000.00. Pannonian is not in default, and there has not occurred
any event that with the lapse of time or giving of notice or both would
constitute such a default, in any respect which has or may have a Material
Adverse Effect on the business, operations, properties, assets or financial
condition of Pannonian under any of the agreements or other instruments referred
to in this Section 4.12.
4.13 COMPLIANCE WITH LAWS; DOCUMENTATION. Except as set forth on Schedule
4.13, to the best knowledge of Pannonian, after due inquiry: the conduct by
Pannonian of its businesses does not violate or infringe any domestic or foreign
laws, statutes, ordinances, rules or regulations, the enforcement of which,
individually or in the aggregate, would have a Material Adverse Effect on the
business, operations, properties, assets or condition (financial or
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otherwise) of Pannonian; and Pannonian has complied in all material respects
with every local, state or federal law or ordinance, and every regulation or
order issued thereunder, now in effect and applicable to Pannonian.
4.14 EMPLOYEE BENEFITS.
(a) DISCLOSURE OF PLANS. Schedule 4.14 contains a true and complete
list of each employee benefit, compensation or welfare benefit plan, program or
agreement maintained or contributed to or required to be contributed to by
Pannonian (the "PLANS"). Pannonian has no formal plan or commitment, whether
legally binding or not, to create any additional Plan or modify or change any
existing Plan that would affect any employee or terminated employee of
Pannonian.
(b) NO AGREEMENTS. Except as set forth in Schedule 4.14, there are no
employment agreements entered into by Pannonian and no other deferred
compensation or salary continuation agreements or commitments maintained or
agreed to by Pannonian.
(c) DISCLOSURE OF DOCUMENTS. With respect to each of the Plans,
Pannonian has heretofore delivered to San Xxxxxxx true and complete copies of
each of the following documents: (i) each Plan and related trust, if any
(including all amendments thereto); and (ii) information which identifies (x)
all asserted or unasserted claims arising under any Plan, (y) all claims
presently outstanding against any Plan, and (z) a description of any future
compliance action required with respect to any Plan under ERISA, or federal or
state law.
(d) CONTRIBUTIONS MADE. All required contributions have been, or will
be, made with respect to each Plan on or prior to the date of this Agreement and
have been properly recorded on the Financial Statements.
(e) OPERATION OF PLANS. Except as disclosed on Schedule 4.14, each of
the Plans has been operated and administered since inception in all material
respects in accordance with applicable laws. The Plans are legally valid and
binding and in full force and effect.
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(f) NO ONGOING OBLIGATIONS. Except as set forth in Schedule 4.14, no
Plan provides benefits, including, without limitation, death or medical benefits
(whether or not insured), with respect to current or former employees beyond
their retirement or other termination of service (other than (A) coverage
mandated by applicable law, (B) death benefits or retirement benefits under any
"employee pension plan," as that term is defined in Section 3(2) of ERISA, (C)
deferred compensation benefits accrued as liabilities on the books of Pannonian,
or (D) benefits the full cost of which is borne by the current or former
employee (or his or her beneficiary)).
(g) NO CLAIMS. There are no pending or, to Pannonian's knowledge,
threatened or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Plans or any trusts related thereto.
(h) NO SEVERANCE PAY, ETC. Except as set forth in Schedule 4.14, the
consummation of the transactions contemplated by this Agreement will not (either
alone or upon the occurrence of any additional acts or events) (A) entitle any
current or former employee of Pannonian to severance pay, employment
compensation or any other payment, benefit or award, or (B) accelerate or modify
the time of payment or vesting, or increase the amount of any benefit, award or
compensation due any such employee.
4.15 TAXES AND TAX RETURNS. Pannonian has delivered (or will deliver within
five (5) days of execution of this Agreement) true and correct copies of all tax
returns filed for the years ending 1998 and 1999. Pannonian has filed all
federal, state and local tax returns and forms (including but not limited to
forms 1099), which are required by law to be filed or delivered as of the date
hereof and have paid all taxes which have become due.
4.16 CONSENTS AND APPROVALS. Except for (i) the filing of the Articles of
Merger with the respective Secretaries of State of Delaware and Nevada, and the
consents and approvals set forth in Schedule 4.16, no consents or approvals of,
or filings or registration with, any
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governmental entity or with any third party are necessary in connection with (A)
the execution and delivery by Pannonian of this Agreement or (B) the
consummation by Pannonian of the transactions contemplated by this Agreement.
4.17 INSURANCE. SCHEDULE 4.17 contains a true, complete and correct
description of all material policies of fire, liability, production, completion
bond, errors and omissions, workmen's compensation and other forms of insurance
owned or held by Pannonian, copies of which have previously been delivered to
San Xxxxxxx. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the Closing Date have
been paid, and no notice of cancellation or termination has been received with
respect to any such policy. During the last three years Pannonian has not been
refused any insurance with respect to its assets or operations, nor has its
coverage been limited, by any insurance carrier to which it has applied for any
such insurance or with which it has carried insurance.
4.18 SECTION 280G. No payment received by any person as a result of the
transactions contemplated hereby shall constitute an "excess parachute payment"
within the meaning of section 280G of the Code.
4.19 DISCLOSURE. No representation or warranty by Pannonian contained in
this Agreement, nor any statement or certificate furnished or to be furnished by
Pannonian to San Xxxxxxx or AcqCorp or their representatives in connection
herewith or pursuant hereto, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact required to make
the statements herein or therein contained not misleading or necessary in order
to provide a prospective purchaser of the business of Pannonian with adequate
information as to Pannonian and its condition (financial or otherwise),
properties, assets, liabilities, business and prospects, and Pannonian have
disclosed to San Xxxxxxx and AcqCorp in writing all material adverse facts known
to them relating to same.
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ARTICLE V
COVENANTS, REPRESENTATIONS AND WARRANTIES OF SAN XXXXXXX AND ACQCORP
As an inducement Pannonian to enter into this Agreement, and in addition to
any representations and warranties made elsewhere in this Agreement, San Xxxxxxx
covenants, represents and warrants to and agrees with Pannonian as of the date
of this Agreement, and San Xxxxxxx and AcqCorp jointly and severally covenant,
represent and warrant to and agree with Pannonian as of the Closing Date as
follows:
5.1 ORGANIZATION, CONDUCT OF BUSINESS, ETC. San Xxxxxxx and AcqCorp (i) are
each duly organized and validly existing and in good standing under the laws of
the State of Nevada, (ii) have all requisite power and authority (corporate and
other) to own their respective properties and conduct their respective
businesses as now being conducted, (iii) are each duly qualified to do business
and are in good standing in each jurisdiction in which the character of the
properties owned or leased by them therein or in which the transaction of their
respective businesses makes such qualification necessary, except when failure to
so qualify would not have a Material Adverse Effect on San Xxxxxxx and its
consolidated subsidiaries, and (iv) are not transacting business, or operating
any properties owned or leased by any of them, in violation of any provision of
federal or state law or any rule or regulation promulgated thereunder, which
violation would have a Material Adverse Effect on San Xxxxxxx and its
consolidated subsidiaries.
5.2 AUTHORIZATION AND VALIDITY OF AGREEMENT. San Xxxxxxx and AcqCorp each
have the corporate power and authority to execute and deliver this Agreement.
This Agreement has been duly and validly approved by the Board of Directors of
San Xxxxxxx and AcqCorp, has been duly executed and delivered on their behalf,
and constitutes a valid and binding agreement of each of San Xxxxxxx and
AcqCorp, enforceable in accordance with its terms.
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5.3 SAN XXXXXXX REPORTS. Since August 9, 1999, San Xxxxxxx and its
consolidated subsidiaries have filed all reports, registrations and statements,
together with any amendments required to be made with respect thereto, that were
required to be filed with (i) the SEC, including but not limited to Form 10-KSB,
Form 10-QSB, Form 8-K and proxy statements, (ii) and other applicable state
securities authorities. All such reports and statements filed with the SEC and
other applicable state securities authorities are collectively referred to
herein as the "SAN XXXXXXX REPORTS." As of their respective dates, to the best
knowledge of the officers of San Xxxxxxx, the San Xxxxxxx Reports complied in
all material respects with all the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed and did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
5.4 SAN XXXXXXX FINANCIAL STATEMENTS; TAX RETURNS. San Joaquin's
Consolidated Balance Sheets as of December 31, 1999 and December 31, 1998, and
its Consolidated Statements of Income and Consolidated Statements of Cash Flow
for the years then ended, heretofore delivered to Pannonian, were prepared in
accordance with generally accepted accounting principles consistently applied
and present fairly its consolidated financial condition, results of operations
and changes in financial position as of such dates and for such periods. San
Xxxxxxx will provide a copy of its Consolidated Balance Sheet and its
Consolidated Statement of Income and Consolidated Statement of Cash Flow as of
December 31, 2000 when available. San Xxxxxxx has filed all federal, state and
local tax returns and forms (including but not limited to Forms 1099), which are
required by law to be filed or delivered as of the date hereof and have paid all
taxes which have become due. Where payment of such taxes is not required to be
made as of the date hereof, San Xxxxxxx has set up an adequate reserve or
accrual for the payment of all taxes required to be paid in respect of the
periods covered by such returns.
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Except as and to the extent stated in the San Xxxxxxx Financial Statements
provided by San Xxxxxxx to Pannonian and except for those liabilities incurred
in the normal course of San Joaquin's or any of its subsidiaries' respective
businesses, San Xxxxxxx and its consolidated subsidiaries do not have any
material liabilities or obligations, secured or unsecured (whether accrued,
absolute, contingent or otherwise).
5.5 ABSENCE OF MATERIAL ADVERSE CHANGES. Since December 31, 1999, there has
been no change, and no development involving a reasonably foreseeable
prospective change, in or affecting the financial condition (present or
prospective), businesses, properties or operations of San Xxxxxxx and its
consolidated subsidiaries that either individually or in the aggregate has had
or is likely to have a Material Adverse Effect on San Xxxxxxx and its
consolidated subsidiaries.
5.6 ENVIRONMENTAL MATTERS. For purposes of this Section 5.6, the term
"environmental laws" shall include all state and federal laws designed to
protect human health or the environment, as amended from time to time, and all
regulations promulgated thereunder, including, without limitation, the Clean Air
Act, 42 U.S.C.A. xx.xx. 7401, ET SEQ., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 X.X.X.X.xx.xx. 9601, ET SEQ., the Federal
Water Pollution Control Act, 33 X.X.X.X.xx.xx. 1251, ET SEQ., the Resource
Conservation and Recovery Act, 42 X.X.X.X.xx.xx. 6901, ET SEQ., and the Toxic
Substances Control Act, 15 X.X.X.X.xx.xx. 2601, ET SEQ. "Hazardous substance"
shall include all petroleum products as well as any toxic or hazardous material,
hazardous waste or other hazardous or regulated substance defined in or
regulated by any environmental law, provided that hazardous substance shall not
include commercially available consumer products reasonably appropriate for use
in or for routine maintenance or upkeep of an office of a financial institution
as long as such products are used in accordance with label instructions.
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Except as set forth in Schedule 5.6, to the best knowledge of San Xxxxxxx
after due inquiry, neither San Xxxxxxx, nor any property of San Xxxxxxx, is
subject to any pending or potential claim, liability or obligation to any person
arising under any environmental law. With respect to the real property owned or
leased by San Xxxxxxx (including other real estate), to the best knowledge of
San Xxxxxxx after due inquiry:
(a) NO PRESENT PROBLEMS. No such property is presently contaminated
by, and no such property has ever been used or is presently being used by any
person to generate, manufacture, refine, transport, treat, store, handle or
dispose of, any hazardous substance in any regulated form or quantity.
(b) NO PAST PROBLEMS. No such property has ever contained or
presently contains, or has been used or is being used by any person for storage
of, asbestos, urea formaldehyde foam insulation, PCB's, dioxins, mercury, lead
or uranium (or other heavy metal) products or tailings, or any other hazardous
substance in any regulated form or quantity, whether contained in construction
or fill materials or used or stored thereon or therein.
(c) NO NOTICE OF PROBLEMS. Neither San Xxxxxxx nor any other tenant
or occupant of any such property has received a summons, citation, directive,
letter, notice of violation, request for information or other communication,
written or oral, from any local, state or federal agency concerning any possible
intentional or unintentional action or omission on the part of any person which
has resulted in the possible release of any hazardous substance affecting such
property or concerning any other possible violation of any environmental law
affecting the property.
(d) PERMITS COMPLIED WITH. To the extent any permit, approval or
registration is or has been required to be obtained or maintained under any
environmental law with respect to any such property, any improvement of or on
any such property or any activity occurring on any such property, each such
permit, approval or registration has been obtained and is in good standing. In
addition, all such permits, approvals and registrations have been disclosed to
Pannonian in writing.
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(e) NO STORAGE TANK AND HAZARDOUS SUBSTANCES. No such property
contains or has ever contained any storage tank used or intended for use to
store any hazardous substance.
(f) NO RECLAMATION WORK. No reclamation work is now required or
foreseen to be required with respect to any San Xxxxxxx property or lease.
5.7 TITLE TO PROPERTIES. Except as reflected in the Financial Statements
delivered or to be delivered, and except as set forth on Schedule 5.7, San
Xxxxxxx owns, free and clear of any liens, claims, charges, options, or other
encumbrances, all of the property, real, personal or mixed, reflected in the
Financial Statements and all property acquired since such date, provided that
San Joaquin's assets will materially change from that shown on the Financial
Statements as a result of the contemplated reorganization of San Xxxxxxx with
Pannonian. Except as set forth in Schedule 5.7, San Xxxxxxx has not received any
notice of violation of any applicable zoning regulation, ordinance or other law,
order, regulation or requirement relating to its operations or its properties.
To San Joaquin's knowledge, there are no such violations of material nature, and
all buildings and structures used by San Xxxxxxx substantially conform to all
applicable ordinances, codes and regulations. Except as set forth in Schedule
5.7 hereto, in San Joaquin's opinion, all such properties which are material to
the business or operations of San Xxxxxxx are in a good state of maintenance and
repair and are adequate for its current uses and purposes. During each of the
past three calendar years, San Xxxxxxx and its properties have been insured for
customary risks with customary limits, deductibles, and exclusions, and such
insurance protection continues in effect as of the date hereof. San Xxxxxxx has
delivered to Pannonian true and correct copies of all deeds, title insurance
policies and surveys each has with respect to the real property owned by them
and copies of all leases with respect to real property leased by them.
5.8 ABSENCE OF DEFAULTS UNDER AGREEMENTS. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will conflict with or result in a breach of or constitute a default under
any provision of San Joaquin's or AcqCorp's respective Articles of
Incorporation, Bylaws, or any agreement to which San Xxxxxxx or AcqCorp is a
party or by which either of them is bound or to which any of their respective
properties
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is subject, or result in the creation of any liens or encumbrances upon their
respective assets, and no consents or waivers thereunder are required to be
obtained in connection with the transactions contemplated hereby.
5.9 ACTIONS, PROCEEDINGS, AND INVESTIGATIONS. Except as set forth in San
Joaquin's filings with the SEC, there are no actions, proceedings or
investigations pending, or to the knowledge of the executive officers of San
Xxxxxxx, threatened or contemplated, against or relating to San Xxxxxxx or any
of its consolidated subsidiaries, or any of their respective properties, which
would have a Material Adverse Effect on the financial condition (present or
prospective), businesses, properties or operations of San Xxxxxxx and its
consolidated subsidiaries, or the ability of San Xxxxxxx or AcqCorp to
consummate the Merger contemplated hereby.
5.10 REGULATORY APPROVALS. San Xxxxxxx and AcqCorp shall (i) use their best
efforts in good faith to take or cause to be taken all action required under
this Agreement on their part to be taken as promptly as practicable so as to
permit the consummation of the transactions contemplated by this Agreement at
the earliest possible date, and cooperate fully with Pannonian to that end, and
(ii) furnish all necessary information for inclusion in any applications or
disclosures contemplated by this Agreement. San Xxxxxxx shall give Pannonian
prompt notice of receipt of the regulatory approvals and shall provide Pannonian
with copies of any written comments by any regulatory authorities regarding or
relating to the non-confidential portions of the regulatory applications filed
in connection with the transactions contemplated hereby, including but not
limited to the NASDAQ.
5.11 SAN XXXXXXX COMMON STOCK; OPTIONS; WARRANTS. All of the outstanding
San Xxxxxxx Common Stock is duly authorized and validly issued, fully paid and
nonassessable. The San Xxxxxxx Common Stock to be issued and delivered pursuant
to the Merger, when issued as contemplated hereby, shall be duly authorized,
validly issued, fully paid and nonassessable. There are no options or warrants
issued or outstanding covering shares of San Xxxxxxx Common Stock other than an
option issued to Xxxx Xxxxxxxx for up to 1,000,000 shares at an exercise
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price of $1.00 per share; and no agreements to issue or grant options or
warrants except for agreements with Wet Coast Capital concerning financing and
consulting services, which options are to be issued following the Effective Time
of the Merger and at an exercise price equal to the then-prevailing market price
of San Xxxxxxx Common Stock.
5.12 REGISTRATION OF SHARES. Following the Effective Time, San Xxxxxxx will
use its best efforts to cause a Registration Statement on Form S-3 or other
appropriate form (the "REGISTRATION STATEMENT") to be filed and declared
effective under the Securities Act of 1933, as amended (the "1933 ACT"), with
respect to (a) all of the shares of San Xxxxxxx Common Stock issued and
outstanding as of the date of this Agreement, and (b) all shares of San Xxxxxxx
Common Stock to be issued in connection with an offering of shares for up to
$7.2 million of new capital to be conducted by San Joaquin's investment banker
pursuant to that certain Financing Agreement by and between San Xxxxxxx and Wet
Coast Capital, all of such shareholders to be listed on Schedule 5.12, (c) all
shares of San Xxxxxxx common stock issued in the Merger to Pannonian
shareholders who acquired their Pannonian stock for the purchase price of $1.80
per share, and (d) all of the shares of San Xxxxxxx common stock issued in
exchange for up to 100,000 shares of what are referred to as "701 Stock" of
Pannonian, which Registration Statement, at the time it becomes effective, shall
in all material respects conform to the requirements of the 1933 Act and the
General Rules and Regulations of the SEC under said Act (the "1933 RULES"); and
the San Xxxxxxx Common Stock to be issued by San Xxxxxxx in connection with the
Merger shall be duly qualified or exempted, as the case may be, under applicable
state Blue Sky securities laws in those states in which Pannonian has informed
San Xxxxxxx that its shareholders reside. San Xxxxxxx will furnish to Pannonian,
its counsel, investment banker and accountants drafts of Registration Statement
filings sufficiently in advance of filing so as to afford a reasonable
opportunity for review and comment.
5.13 NOTIFICATION OF ACTIONS. San Xxxxxxx and AcqCorp covenant and agree to
immediately notify Pannonian in the event of the breach of any of the covenants
set forth in this Article V.
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5.14 NASDAQ LISTING. On August 23, 2000, NASD Regulation, Inc. cleared the
request of Herzog, Heine, Geduld, Inc. for an unpriced quotation on the OTC
Bulletin Board for San Joaquin's common stock. San Xxxxxxx will take all needed
steps to establish and maintain a trading market in San Xxxxxxx Common Stock
with live bid and asked quotations through the time until the Effective Time.
5.15 INDEMNIFICATION. San Xxxxxxx agrees that all rights to indemnification
or exculpation now existing in favor of the directors and officers of Pannonian
as provided in its charters, bylaws, indemnification agreements or otherwise in
effect as of the date hereof with respect to matters occurring prior to the
Effective Time shall, to the greatest extent permitted by applicable law and the
organizational documents of San Xxxxxxx as in effect, survive the Merger and
shall continue in full force and effect for a period of three (3) years. If San
Xxxxxxx or any of its successors or assigns (i) shall consolidate with or merge
into any other corporation or entity and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii) shall
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then, and in each such case, San
Xxxxxxx shall use its commercially reasonable efforts to cause such successor
and assigns of San Xxxxxxx to assume the obligations set forth in this Section
5.15
Pannonian shall use its commercially reasonable efforts to cause the persons
serving as officers and directors of Pannonian immediately prior to the
Effective Time to be covered for a period of three (3) years after the Effective
Time by the current policies of directors' and officers' liability insurance
maintained by Pannonian with respect to acts or omissions occurring prior to the
Effective Time which were committed by such officers and directors in their
capacity as such (provided that San Xxxxxxx may substitute therefor policies of
at least the same coverage and amounts containing terms and conditions which are
no less advantageous to such officers and directors); provided, however, that
San Xxxxxxx shall not be obligated to make annual premium payments for such
insurance to the extent such premiums exceed 150% of the premiums paid as of the
date hereof by Pannonian for such insurance.
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5.16 LIMITATIONS ON SAN JOAQUIN'S CONDUCT PRIOR TO THE EFFECTIVE TIME.
Between the date hereof and the Effective Time or the time when this Agreement
terminates as provided herein, San Xxxxxxx shall not, without prior written
consent of Pannonian, take any action which would or is reasonably likely to (i)
adversely affect San Joaquin's ability to perform its covenants and agreements
under this Agreement; or (ii) result in any of the conditions to the performance
of San Joaquin's obligations hereunder not being satisfied.
5.17 ACCESS TO INFORMATION. Upon reasonable request by Pannonian, J. Xxxxxxx
Xxxxx, Chief Executive Officer of San Xxxxxxx shall be available to Pannonian ,
its representatives, counsel, accountants and agents to discuss San Joaquin's
operations, and San Xxxxxxx shall provide to Pannonian and its representatives,
at their request, copies of all filings made with the SEC between the date
hereof and the Closing. Pannonian covenants and agrees that it and its
representatives, counsel, accountants and agents will hold in strict confidence
all documents and information concerning San Xxxxxxx or any of its subsidiaries
so obtained (except to the extent that such documents or information are a
matter of public record or required to be disclosed by applicable law or
administrative rules), and if the transactions contemplated herein are not
consummated, such confidence shall be maintained and all such documents shall be
returned to San Xxxxxxx.
5.18 BOARD POSITIONS AND EXECUTIVE OFFICER ELECTIONS. San Xxxxxxx hereby
agrees to elect Xxxx Xxxxxx, Xxxx Xxxxxxxx and Xxxx Xxxxxxxxxxx to serve as
members of the Board of Directors of San Xxxxxxx for a term commencing as of the
signing of this Agreement and ending one (1) year from and after the Effective
Time. San Xxxxxxx further agrees obtain the resignations all of the current
members of its Board of Directors other than J. Xxxxxxx Xxxxx effective at the
signing of this Agreement, following the election of Messrs. Xxxxxx, Xxxxxxxx
and Xxxxxxxxxxx. Moreover, San Xxxxxxx shall obtain the resignations of all of
its current officers effective as of the signing of this Agreement following the
election of Xx. Xxxxxxxx and Xxxxxx Xxxxxx as officers of San Xxxxxxx.
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5.19 CONFIDENTIALITY. San Xxxxxxx covenants and agrees that San Xxxxxxx and
its representatives, counsel, accountants, agents and employees will hold in
strict confidence all documents and information concerning Pannonian received
from any of them (except to the extent that such documents or information are a
matter of public record or require disclosure in the Proxy Statement/Information
Statement, or any of the public information of any applications required to be
filed with any governmental or regulatory agency to obtain the approvals and
consents required to effect the transactions contemplated hereby), and if the
transactions contemplated herein are not consummated, such confidence shall be
maintained and all such documents shall be returned to Pannonian.
ARTICLE VI
INFORMATION STATEMENT; SHAREHOLDER MEETINGS
6.1 INFORMATION STATEMENT. Pannonian, with the assistance of San Xxxxxxx,
shall prepare an Information Statement and Proxy Statement to be used with
respect to providing the shareholders of Pannonian with notice of the Pannonian
shareholder meeting to approve the Merger. San Xxxxxxx and Pannonian represent
and warrant to each other that the information they provide for use in the
Information Statement will comply in all material respects with the requirements
of the Securities Exchange Act of 1934 (the "1934 ACT") and the applicable rules
and regulations promulgated by the SEC under such Act (the "1934 RULES"), and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading,
6.2 PANNONIAN SHAREHOLDERS MEETING. This Agreement shall be submitted for
approval, ratification and confirmation by the shareholders of Pannonian at a
meeting thereof to be called in accordance with the applicable provisions of law
and held as promptly as practicable after the execution of this Agreement and in
no event later than the expiration of forty-five (45)
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days from the date of signing this Agreement. Consistent with the exercise of
their fiduciary duties to shareholders, the Board of Directors of Pannonian
shall recommend to the shareholders of Pannonian that the shareholders approve
the Agreement and the transactions contemplated therein.
6.3 ACQCORP ACTION BY UNANIMOUS WRITTEN CONSENT. This Agreement shall be
submitted to the sole shareholder of AcqCorp for approval, ratification and
confirmation pursuant to an Action by Unanimous Written Consent in accordance
with the applicable provisions of law as promptly as practicable after the
execution of this Agreement. San Xxxxxxx owns all of the issued and outstanding
shares of AcqCorp Common Stock and will vote all of such shares in favor of this
Agreement.
ARTICLE VII
CONDITIONS OF CLOSING
7.1 CONDITIONS OF CLOSING FOR ALL PARTIES.
The consummation of the transactions contemplated by this Agreement is
conditioned upon the following:
(a) NO INJUNCTION, ETC. There shall not have been instituted any
litigation, regulatory proceeding or other matter which challenges the legality
or effectiveness of the transactions contemplated hereby or seeks an order,
decree or injunction enjoining or prohibiting the consummation of the Merger.
(b) TAX OPINIONS. Pannonian and San Xxxxxxx shall have received from
Ray, Xxxxxxx & Xxxxxxx, counsel to Pannonian, an opinion reasonably satisfactory
to Pannonian and San Xxxxxxx to the general effect that the Merger shall not
result in the recognition of gain or loss for federal income tax purposes by San
Xxxxxxx or Pannonian, nor shall the issuance of the San Xxxxxxx Common Stock
result in the recognition of gain or loss by the holders of Pannonian
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Common Stock who receive such stock in connection with the Merger. The opinion
shall be dated prior to the date the Information Statement is first mailed to
the shareholders of Pannonian and such opinion shall not have been withdrawn or
modified in any material respect.
(c) SECTION 280G. There shall have been no payments received by any
person as a result of the transactions contemplated hereby that would constitute
an "excess parachute payment" within the meaning of Section 280G of the Code.
7.2 CONDITIONS OF CLOSING FOR SAN XXXXXXX AND ACQCORP. The obligation of
San Xxxxxxx and AcqCorp, respectively, to consummate the transactions
contemplated by this Agreement is conditioned upon the following:
(a) SHAREHOLDER APPROVAL. A majority of the issued and outstanding
shares of Pannonian shall have approved this Agreement and the Merger
contemplated hereby (unless a higher percentage of the outstanding shares of
Pannonian must approve the transaction under the Articles of Incorporation or
Bylaws of Pannonian, in which case such higher percentage will have approved).
San Xxxxxxx, as the sole shareholder of AcqCorp shall approve the Agreement and
the Merger.
(b) PANNONIAN RESOLUTIONS; CORPORATE DOCUMENTS. Pannonian shall have
delivered to San Xxxxxxx (i) a certified copy of its Articles of Incorporation;
(ii) a copy of its bylaws certified by its corporate secretary, (iii) a
certificate of good standing dated as of the Closing Date, issued by the
appropriate governmental agency, (iv) certified copies of resolutions duly
adopted by its Board of Directors approving this Agreement and directing the
submission thereof to a vote of the shareholders of Pannonian, and (v) certified
copies of resolutions duly adopted by the shareholders of Pannonian (owning the
outstanding shares as required by subparagraph (a) above) approving this
Agreement and the Merger, all as contemplated hereby.
(c) PANNONIAN REPRESENTATIONS AND WARRANTIES. Unless waived in
writing by AcqCorp and San Xxxxxxx, the representations and warranties of
Pannonian contained in this Agreement shall be true and correct on and as of the
Closing Date with the same effect as though
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made on and as of such date. Except as otherwise contemplated by this Agreement,
Pannonian shall have performed in all material respects all of its obligations
and agreements hereunder theretofore to be performed by it.
(d) OPINION OF PANNONIAN COUNSEL. Unless waived in writing by San
Xxxxxxx and AcqCorp, San Xxxxxxx and AcqCorp shall have received at the Closing
from Xxx Xxxxxxx & Xxxxxxx, counsel to Pannonian a written opinion, dated the
Closing Date in form acceptable to San Xxxxxxx.
(e) CONDITION OF PANNONIAN. San Xxxxxxx shall have determined, based
on an audit and review by its officers, accountants and legal counsel, conducted
prior to the execution of this Agreement and updated as of the Closing Date, as
provided below, that (i) the assets, books, records and operations of Pannonian
are in reasonably satisfactory condition and will not adversely impact San
Xxxxxxx after consummation of the Merger; (ii) based on the review of the
assets, books, records and operations of Pannonian by San Xxxxxxx, there are no
liabilities (existing, threatened or contingent) which San Xxxxxxx, in its
discretion, determines to be unacceptable, as determined by reference to this
Agreement; and (iii) the assets of Pannonian shall be as represented to San
Xxxxxxx.
(f) EMPLOYMENT AGREEMENTS. Each of Xx. Xxxxxx and Xx. Xxxxxxxx shall
have executed and delivered an Employment Agreement in form satisfactory to San
Xxxxxxx.
(g) WARRANTS. All Pannonian Warrants shall have been cancelled
and converted into rights to receive the Merger Consideration as provided in
Section 2.1 and no additional Options or Warrants shall have been issued as of
the Closing Date.
(h) SPIN OFF OF NON RIVERBEND ASSETS IN PANNONIAN. Prior to Closing,
Pannonian shall have transferred all non Riverbend acreage, assets and
liabilities out of Pannonian and to another entity, and shall have distributed
to its shareholders, pro rata, all of such interests in the other entity, all
such that the Pannonian entity that merges with AcqCorp
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shall contain only all of the Riverbend acreage and all liabilities associated
with the Riverbend acreage only. Pannonian shall have effected this transfer in
complete compliance with all applicable provisions of the Delaware corporate
statutes, its Certificate of Incorporation and its Bylaws.
(i) FINANCIAL STATEMENTS OF PANNONIAN. Pannonian shall have provided
to San Xxxxxxx financial statements in the form required by Regulation S-X of
the SEC and any other materials required for preparation and filing of the Form
8-K to report the consummation of the transactions contemplated by this
Agreement Moreover, Pannonian shall have produced to San Xxxxxxx a pro forma
balance sheet showing the financial condition of Pannonian following the spin
off transaction referenced above; and provided further that Pannonian shall have
no more than $250,000 in liabilities as of the Closing.
(j) DISSENTING SHAREHOLDERS. No more than 20% of the issued and
outstanding shares of Pannonian Common Stock dissent from the Merger as provided
under Delaware law.
7.3 CONDITIONS OF CLOSING FOR PANNONIAN. The obligation of Pannonian to
consummate the transactions contemplated by this Agreement is conditioned upon
the following:
(a) SAN XXXXXXX AND ACQCORP REPRESENTATIONS AND WARRANTIES. Unless
waived in writing by Pannonian, the representations and warranties of San
Xxxxxxx and AcqCorp contained in this Agreement shall be correct on and as of
the Closing Date with the same effect as though made on and as of such date,
except for changes which are not, in the aggregate, material and adverse to the
financial condition, businesses, properties or operations of San Xxxxxxx and its
consolidated subsidiaries, and, except as otherwise contemplated by this
Agreement, San Xxxxxxx and AcqCorp shall have performed in all material respects
all of their obligations and agreements hereunder theretofore to be performed by
them.
(b) OPINION OF SAN XXXXXXX COUNSEL. Unless waived in writing by
Pannonian, Pannonian shall have received at the Closing from counsel to San
Xxxxxxx, a written opinion, dated the Closing Date, substantially in a form
acceptable to Pannonian.
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(c) SAN XXXXXXX RESOLUTIONS; CORPORATE DOCUMENTS. San Xxxxxxx shall
have delivered to Pannonian a certified copy of resolutions duly adopted by the
Board of Directors of San Xxxxxxx approving this Agreement, the Merger, all as
contemplated hereby. San Xxxxxxx shall deliver to Pannonian (i) a copy certified
by the Nevada Secretary of State's Office of San Joaquin's Articles of
Incorporation; (ii) a copy of San Joaquin's Bylaws certified by the Corporate
Secretary, and (iii) a certificate of good standing dated as of a recent date,
issued by the Nevada Secretary of State's office.
(d) SHAREHOLDER APPROVAL. Under Nevada law, San Xxxxxxx shareholder
approval is not required for the Merger. San Xxxxxxx, as the sole shareholder of
AcqCorp, shall approve the Agreement. The required shareholder approval by
Pannonian shareholders shall have taken place.
(e) NAME CHANGE AND NASDAQ LISTING. Pannonian shall have received
acceptable evidence that San Xxxxxxx has legally changed its name to Gasco
Energy, Inc., and that shares of San Xxxxxxx Common Stock are trading over the
counter through the NASDAQ OTC Bulletin Board under a symbol acceptable to
Pannonian; provided that certain filings and notices pertaining to the name
change may be underway but not yet completed except that the vote of San Xxxxxxx
shareholders must have taken place to approve the name change, and the
availability and reservation of the name Gasco Energy, Inc. shall have been made
by San Xxxxxxx in the states of Nevada, California, Colorado, Utah and Wyoming.
(f) CASH ON HAND. Upon the signing of this Agreement, San Xxxxxxx
shall have at least $300,000 U.S. in cash in its bank accounts net of all
liabilities and payables, except that the following will be allowed as offsets
against this required $300,000 net cash required amount: (i) amounts paid or
payable to Wet Coast Capital not exceeding $30,000, and (ii) amounts paid or
payable to the law firm, accounting firm, and audit firm employed by San Xxxxxxx
in connection with reviewing this Agreement and implementing the required
actions of this Agreement not exceeding $25,000. At Closing San Xxxxxxx shall
have at least $1,500,000 U.S. in cash in its bank accounts.
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ARTICLE VIII
CLOSING OF MERGER
8.1 CLOSING. Unless the Agreement is earlier terminated in accordance with
Article IX, below, the closing of the transactions contemplated herein (the
"CLOSING") shall take place at 10:00 a.m. on a date to be agreed upon by the
parties, and if such date is not agreed upon by the parties, the Closing shall
occur on the fifth business day after satisfaction or waiver of all of the
conditions precedent set forth in Article VII , but in no event later than
thirty (30) days after the expiration of such period (the "CLOSING DATE"), at
the offices of Ray, Xxxxxxx & Xxxxxxx, 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx,
Xxxx 00000.
8.2 FILING OF ARTICLES OF MERGER.
(a) PANNONIAN DUTY. Pannonian shall execute a Certificate of Merger
in substantially the form attached hereto as Exhibit A and shall cause such
Certificate of Merger to be filed with the Delaware Secretary of State's Office,
on the Closing Date or as soon thereafter as practicable.
(b) SAN XXXXXXX DUTY. San Xxxxxxx and AcqCorp shall execute articles
of merger in substantially the form attached hereto as Exhibit B and shall cause
such articles of merger to be filed with the Nevada Secretary of State's office,
on the Closing Date or as soon thereafter as practicable.
(c) EFFECTIVE TIME. The Effective Time of the Merger shall be on such
date as the Delaware Secretary of State and the Nevada Secretary of State, under
their respective rules and regulations, deem the Merger effective
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ARTICLE IX
TERMINATION
9.1 TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time:
(a) BY MUTUAL CONSENT. By mutual consent of the Board of Directors of
San Xxxxxxx and AcqCorp, respectively, and the Board of Directors of Pannonian;
or
(b) BY PASSAGE OF TIME. By the Boards of Directors of San Xxxxxxx and
AcqCorp, respectively, or the Board of Directors of Pannonian at any time after
the expiration of three (3) months from the date hereof, if the Merger shall not
theretofore have been consummated by the failure to satisfy the conditions to
Closing not within the control of the electing party; or
(c) MATERIAL MISREPRESENTATION BY SAN XXXXXXX. By Pannonian, upon
written notice to San Xxxxxxx and AcqCorp at any time if any representation or
warranty of San Xxxxxxx and AcqCorp contained in this Agreement was materially
incorrect when made or becomes materially incorrect on or prior to the Closing
Date, or if San Xxxxxxx or AcqCorp fail to comply with any of their respective
covenants contained in this Agreement, and the same is not cured within thirty
(30) days after notice of such inaccuracy or noncompliance; or
(d) MATERIAL MISREPRESENTATION BY PANNONIAN. By San Xxxxxxx and
AcqCorp upon written notice to Pannonian at any time if any representation or
warranty of Pannonian contained in this Agreement was materially incorrect when
made or becomes materially incorrect on or prior to the Closing Date, or if
Pannonian fails to comply with any of their covenants contained in this
Agreement, and the same is not cured within thirty (30) days after notice of
such inaccuracy or noncompliance; or
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(e) FAILURE OF SHAREHOLDER NOTE. By San Xxxxxxx and AcqCorp, upon
written notice to Pannonian at any time if the needed approval by Pannonian
shareholders does not take place or if the Merger is disapproved by any
governmental authority.
9.2 EFFECT OF TERMINATION. In the event of termination and abandonment
hereof pursuant to the provisions of Section 9.1, this Agreement shall become
void and have no force or effect. Such termination shall not relieve any party
of any liability for damages arising out of its willful breach of any provision
of this Agreement for any default prior to such termination.
ARTICLE X
ADDITIONAL COVENANTS
10.1 EMPLOYEE MATTERS. No provision of this Agreement shall be construed to
prohibit Pannonian from having the right to terminate the employment of any
employee, with or without cause, or to amend or terminate after the Closing Date
any employee benefit plan established, maintained or contributed to by Pannonian
or its subsidiaries.
10.2 COSTS. Each of the parties to this Agreement shall pay its own charges
and costs incurred or to be incurred in connection with the execution and
performance of this Agreement.
10.3 INSTRUMENTS OF TRANSFER, ETC. Each of the parties hereto shall
cooperate with the other parties in every way in carrying out the transactions
contemplated herein, in delivering instruments to perfect the conveyances,
assignments and transfers contemplated herein, and in delivering all documents
and instruments reasonably deemed necessary or useful by counsel for any party
hereto.
10.4 NOTICES. All notices, requests, consents and demands shall be given to
or made upon the parties at their respective addresses set forth below, or at
such other address as a party may designate in writing delivered to the other
parties. Unless otherwise agreed in this Agreement, all notices, requests,
consents and demands shall be given or made by personal delivery, by confirmed
air courier, by facsimile transmission ("FAX"), with a copy to follow by
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first class mail, or by certified first class mail, return receipt requested,
postage prepaid, to the party or parties addressed as aforesaid. If sent by
confirmed air courier, such notice shall be deemed to be given upon the earlier
to occur of the date upon which it is actually received by the addressee or the
business day upon which delivery is made at such address as confirmed by the air
courier (or if the date of such confirmed delivery is not a business day, the
next succeeding business day). If mailed, such notice shall be deemed to be
given upon the earlier to occur of the date upon which it is actually received
by the addressee or the second business day following the date upon which it is
deposited in a first-class postage-prepaid envelope in the United States mail
addressed as aforesaid. If given by fax, such notice shall be deemed to be given
upon the date it is actually received by the addressee, as confirmed by the fax
activity report generated upon transmission of such fax.
(a) IF TO SAN XXXXXXX AND ACQCORP, TO:
J. Xxxxxxx Xxxxx
00 Xxxxxxxxx Xxxxx, XX
Xxxxxxx, Xxxxxxx, XXXXXX X0X 0X0
Fax: 000-000-0000
WITH A COPY TO:
Xxx Xxxxxxxxx, Esq.
XXXX XXXX XXXX XXXXXXXXXX & XXXXXXXXX, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax: 000 000 0000
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WITH A COPY TO:
Xxxxx Xxxxx, Esq.
Jeffs & Company
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX, XXXXXX X0X 0X0
Fax: 000-000-0000
(b) IF TO PANNONIAN, TO:
Pannonian Energy, Inc.
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxx X, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxx, President
Fax: (000) 000-0000
WITH A COPY TO:
A. Xxxxxx Xxxxxx
XXX XXXXXXX & XXXXXXX
5th Floor
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax: 000 000-0000
Each party hereto shall notify promptly the other in writing of the
occurrence of any event which will or may result in the failure to satisfy the
conditions specified in Article VII hereof. Between the date of this Agreement
and the Closing Date, each party hereto will advise the other of the
satisfaction of such conditions as they occur.
10.5 AMENDMENTS. Prior to the Effective Time, any provision of this
Agreement, except for Section 2.1 which establishes the Exchange Ratio, may be
amended or modified at any time, either before or after its approval, if any, by
the shareholders of any party to this Agreement, by an agreement in writing
between the parties hereto approved by their respective Boards of Directors and
executed in the same manner as this Agreement.
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10.6 ENTIRE AGREEMENT. This Agreement and all exhibits and schedules hereto
and other documents incorporated or referred to herein, contain the entire
agreement of the parties and there are no representations, inducements or other
provisions other than those expressed in writing. No modification, waiver or
discharge of any provision of or breach of this Agreement shall (i) be effective
unless it is executed in writing by the party effecting such modification,
waiver or discharge, or (ii) affect the right of either party hereto thereafter
to enforce any other provision or to exercise any right or remedy in the event
of a breach by a party hereto, whether or not similar.
10.7 ASSIGNMENT. This Agreement may not be assigned by any party hereto
except with the prior written consent of the other parties.
10.8 COUNTERPARTS. Any number of counterparts of this Agreement may be
signed and delivered and each shall be considered an original and together they
shall constitute one agreement.
10.9 EXCLUSIVE MERGER AGREEMENT. Pannonian, and the Board of Directors of
Pannonian covenant and agree that, between the date hereof and the date of the
meeting of the shareholders of Pannonian described in Article VI hereof, they
will not, either directly or indirectly, solicit or attempt to procure offers
relating to the merger or acquisition of Pannonian with or by any entity not a
party to this Agreement, or negotiate or enter into any agreements relating to
the merger or acquisition of Pannonian with or by any such third party, and such
persons further agree to use his or her best efforts to obtain the approval of
the Merger by the shareholders of Pannonian. Notwithstanding the foregoing,
neither Pannonian nor any of its respective officers or directors shall be
required by this Section 10.9 to take or refrain from taking any action if to do
so would, in the written opinion of Pannonian's legal counsel, violate the
duties imposed by law on the Pannonian directors or officers to the Pannonian
shareholders.
10.10 PUBLIC STATEMENTS. No party to this Agreement shall issue any press
release or other public statement concerning the transactions contemplated by
this Agreement without first providing the other parties hereto with a written
copy of the text of such release or statement and
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obtaining the consent of the other parties respecting such release or statement,
which consent will not be unreasonably withheld. The consent provided for in
this Section 10.10 shall not be required if the delay necessary to obtain such
consent would preclude the timely issuance of a press release or public
statement as required by law. The provisions of this Section 10.10 shall not be
construed as prohibiting the filing of copies of this Agreement or descriptions
of this Agreement with (i) regulatory agencies as to which regulatory approvals
are contemplated by this Agreement or (ii) the SEC consistent with San Joaquin's
obligations as a company whose shares are registered pursuant to the Securities
Exchange Act of 1934.
10.11 CONFIDENTIALITY. Each party shall use all information that it obtains
from the others pursuant to this Agreement solely for the effectuation of the
transactions contemplated by this Agreement or for other purposes consistent
with the intent of this Agreement and shall not use any of such information for
any other purpose, including, without limitation, the competitive detriment of
the other parties. Each party shall maintain as strictly confidential all
information it learns from the others and shall, upon expiration or termination
of this Agreement, return promptly to the other parties all documentation (and
copies thereof) provided by them or made available by third parties. Each party
may disclose such information to its respective affiliates, counsel,
accountants, tax advisors and consultants. This provision shall not prohibit the
use or disclosure of confidential information pursuant to court order or which
has otherwise become publicly available.
10.12 ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Closing, the parties may mutually
agree to revise the structure of the Merger and related transactions provided
that each of the transactions comprising such revised structure shall (i) not
change the amount or form of consideration to be received by the holders of
Pannonian Common Stock, (ii) be capable of consummation in as timely a manner as
the structure contemplated herein and (iii) not otherwise be prejudicial to the
interest of the stockholders of Pannonian. This Agreement and any related
documents shall be appropriately amended in order to reflect any such revised
structure.
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10.13 THIRD PARTIES. Except with respect to the consideration due to each
shareholder of Pannonian, each party hereto intends that this Agreement shall
not benefit or create any right or cause of action to any person other than
parties hereto. As used in this Agreement, the term "parties" shall refer only
to Pannonian, AcqCorp, or San Xxxxxxx as the context may require.
10.14 SEVERABILITY. Except to the extent that application of this Section
10.14 would have a Material Adverse Effect on either party, any term or
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provisions shall be interpreted to be only so broad as is
enforceable.
10.15 CAPTIONS. The captions contained in this Agreement are for convenience
of reference only and do not form a part of this Agreement.
10.16 DEFINITION OF "MATERIAL ADVERSE EFFECT". As used in this Agreement,
"Material Adverse Effect" shall mean with respect to a person, a Material
Adverse Effect upon (A) the business, financial condition, operations, or
prospects of such person, or (B) the ability of such person to timely perform
its obligations under the Agreement and to timely consummate the Merger;
provided, however, that in determining whether a Material Adverse Effect has
occurred there shall be excluded any effect on the referenced party the cause of
which is (i) any change in laws, rules or regulations of general applicability
or interpretations thereof by courts or governmental authorities, (ii) any
change in generally accepted accounting principles or regulatory accounting
principles applicable to companies or their holding companies generally, (iii)
any action or omission of Pannonian or any subsidiary taken with the prior
written consent of San Xxxxxxx, as applicable, or permitted by this Agreement,
and (iv) any changes in general economic conditions affecting natural gas
companies or their holding companies generally.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first set forth above.
SAN XXXXXXX RESOURCES, INC.
By /s/ J. Xxxxxxx Xxxxx
-------------------------------------
J. Xxxxxxx Xxxxx, President
NAMPA OIL & GAS, LTD.
By /s/ J. Xxxxxxx Xxxxx
-----------------------------------
J. Xxxxxxx Xxxxx, President
PANNONIAN ENERGY, INC.
By /s/ Xxxx Xxxxxxxx
--------------------------------------
Xxxx Xxxxxxxx, President
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SCHEDULE 4.14
1. Pannonian has a royalty pool in place containing all retained royalty
interests of Pannonian in all its properties, including on the Riverbend leases.
(The extent of the royalty on Riverbend leases being retained for the Pannonian
royalty pool is set out in the Xxxxxxxx Petroleum agreement provided to San
Xxxxxxx.
The founders of Pannonian are vested in this pool up to an aggregate 33%
interest. Employees, directors and officers can and have been made beneficiaries
of fixed percentages of the remaining aggregate 67% interest. This pool is set
up such that it constitutes a legal relationship independent of the existence of
Pannonian.
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