UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the
Registrant x
Filed by a Party other than the Registrant ¨
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Apco Oil
and Gas International Inc.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s)
Filing Proxy Statement, if other than the Registrant)
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APCO OIL AND GAS INTERNATIONAL INC.
One Williams Center, 35th Floor
Tulsa, Oklahoma 74172
[], 2014
Dear Shareholder:
You are cordially invited to
attend an extraordinary general meeting of the shareholders of Apco Oil and Gas International Inc. (the Company) to be held at [] a.m., local time, on [], 2014, at One Williams Center, 720 level, Community Room, Tulsa, Oklahoma, 74172.
On
October 2, 2014, the Company entered into an Agreement and Plan of Merger (as it may be amended from time to time, the Merger Agreement) with Pluspetrol Resources Corporation, a company incorporated under the laws of the Cayman
Islands (Parent) and Pluspetrol Black River Corporation, a Cayman Islands exempted company limited by shares and a wholly-owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will be merged with and into the
Company, upon the terms and subject to the conditions set forth in the Merger Agreement, with the Company surviving as a wholly-owned subsidiary of Parent (the Merger). The Merger Agreement was unanimously approved by the Companys
board of directors (the Board). At the extraordinary general meeting, you will be asked to consider and vote upon a proposal to adopt the Merger Agreement (and the plan of merger exhibited thereto) and a proposal to approve, on a
non-binding advisory basis, the golden parachute compensation that certain executive officers of the Company will or may receive in connection with the Merger. The Merger Agreement (including the plan of merger exhibited thereto) is
attached as Annex A to the enclosed proxy statement.
If our shareholders approve and adopt the Merger Agreement (and the plan of merger
exhibited thereto) and the Merger is subsequently completed, you will be entitled to receive $14.50 in cash, for each share of the Company you own immediately prior to the effective time of the Merger (unless you have properly and validly perfected
your statutory dissenter rights with respect to the Merger) without interest and less any applicable withholding taxes.
After
careful consideration, our Board determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, are advisable, fair to, and in the best interest of, the Company and its shareholders, and
unanimously recommended that our shareholders adopt the Merger Agreement (and the plan of merger exhibited thereto) at the extraordinary general meeting. Our Board unanimously recommends that you vote FOR the proposal to adopt the
Merger Agreement to be voted on by the Company shareholders at the extraordinary general meeting, as described in this proxy statement.
In considering the recommendation of the Board, you should be aware that some of the Companys directors and executive officers have
interests in the Merger that are different from, or in addition to, the interests of shareholders generally.
The Securities and Exchange
Commission has adopted rules that require us to seek a non-binding advisory vote with respect to certain payments that will or may be made to the Companys executive officers in connection with the Merger. Accordingly, at the extraordinary
general meeting, you will be asked to consider and vote upon a proposal to approve, on a non-binding advisory basis, the golden parachute compensation that certain executive officers of the Company will or may receive in connection with
the Merger. Our Board recommends that you vote FOR the proposal to approve, the golden parachute compensation that will or may be received by certain executive officers of the Company in connection with the
Merger.
The Merger cannot be consummated unless the Merger Agreement is adopted by the affirmative vote of the holders
of at least two-thirds of all shares attending and voting at the extraordinary general meeting either in person or by proxy. Our majority shareholder, WPX Energy, Inc. (WPX), the holder of approximately 69% of
the shares of the Company, has entered into a Power of Attorney pursuant to which it has instructed Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs shares of the Company in
favor of the approval and adoption of the Merger Agreement and the plan of merger and to vote against approvals of any proposal made in opposition to, competition with, or that would result in a breach of the Merger Agreement. The power of attorney
automatically terminates upon the termination of the Merger Agreement pursuant to its terms. The number of Company shares held by WPX and underlying the Power of Attorney is sufficient to adopt the Merger Agreement (and the plan of merger exhibited
thereto). The Company is nonetheless soliciting your vote and distributing the attached proxy statement because (i) the laws of the Cayman Islands require the Merger to be approved by way of a special resolution of the shareholders of the Company
and do not permit the Merger to be approved by written resolution unless the resolution is adopted unanimously by all shareholders (therefore the Company is required to hold a shareholders meeting to approve the Merger), (ii) the NASDAQ listing
rules require that the Company solicit proxies and provide proxy statements for all meetings of shareholders, and (iii) in consideration of the foregoing clauses (i) and (ii), the Company agreed to do so in the Merger
Agreement.
Your vote is requested, regardless of the number of shares of the Company you own. Whether or not you attend the
meeting, please complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope prior to the meeting. If you mark abstain on your proxy card or attend the meeting and vote to
abstain, it will have the same effect as a vote AGAINST the adoption of the Merger Agreement and AGAINST the proposal regarding golden parachute compensation. If you fail to vote your shares or do
not attend the meeting, it will have no effect on the adoption of the Merger Agreement and no effect on the proposal regarding golden parachute compensation. If you attend the meeting and vote in person, your vote by ballot will revoke
any proxy previously submitted.
If your shares are held in street name by your broker, bank or other nominee, your broker,
bank, or other nominee will be unable to vote your shares without instructions from you. You should instruct your broker, bank or other nominee how to vote your Company shares in accordance with the instructions provided by your broker, bank or
other nominee. The failure to instruct your broker, bank or other nominee to vote your Company shares FOR the approval of the proposal to adopt the Merger Agreement (and the plan of merger exhibited thereto) will have no effect
on the adoption of the Merger Agreement.
The proxy statement attached to this letter provides you with information about the
proposed Merger and the extraordinary general meeting. We encourage you to read the entire proxy statement carefully, including the annexes thereto and any documents incorporated by reference. You may also obtain more information about the Company
from the documents we have filed with the Securities and Exchange Commission. If you have any questions about the extraordinary general meeting or the Merger after reading the proxy statement, you may contact the Companys proxy solicitor,
Morrow & Co., LLC, at (888) 681-0976.
Thank you for your cooperation and continued support.
Sincerely,
Richard E. Muncrief
Chairman of the Board
APCO OIL AND GAS INTERNATIONAL INC.
One Williams Center, 35th Floor
Tulsa, Oklahoma 74172
NOTICE OF EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
TO BE HELD []
An extraordinary general meeting of shareholders of Apco Oil and Gas International Inc., a Cayman Islands exempted company limited by shares
(the Company), will be held at [] a.m., on [], 2014 at One Williams Center, 720 level, Community Room, Tulsa, Oklahoma, 74172 for
the following purposes:
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To vote on a proposal to adopt the Agreement and Plan of Merger, dated as of October 2, 2014 (as it may be amended from time to time, the Merger Agreement) and the plan of merger exhibited thereto, by
and among Pluspetrol Resources Corporation, a company incorporated under the laws of the Cayman Islands (Parent), Pluspetrol Black River Corporation, a Cayman Islands exempted company limited by shares and a wholly-owned subsidiary of
Parent (Merger Sub), and the Company, as more fully described in the accompanying proxy statement, pursuant to which Merger Sub will be merged with and into the Company, upon the terms and subject to the conditions set forth in the
Merger Agreement, with the Company surviving as a wholly-owned subsidiary of Parent (the Merger); |
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To consider and vote on a proposal to approve, on a non-binding and advisory basis, certain executive compensation matters. See The Merger Interests of the Companys Directors and Officers in the
Merger beginning on page 47; and |
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To transact such other business as may properly come before the extraordinary general meeting, or any adjournment or postponement of the extraordinary general meeting, by or at the direction of the Board of Directors of
the Company. |
Only holders of record of the Companys Ordinary Shares, par value $0.01, and the Companys
Class A Shares, par value $0.01, (collectively, the Company Shares) at the close of business on [], 2014 are entitled to notice of and to vote at the extraordinary general meeting
and any adjournment or postponement therefor. A list of shareholders of record is available for inspection at the Companys corporate headquarters, located at One Williams Center, 35th Floor, Tulsa, Oklahoma 74172.
Your vote is requested, regardless of the number of shares of the Company you own.
The adoption of the Merger Agreement requires the affirmative vote of the holders of two-thirds of the Company Shares attending and voting at
the extraordinary general meeting either in person or by proxy. Our majority shareholder, WPX Energy, Inc. (WPX), the holder of approximately 69% of the Company Shares, has entered into a Power of Attorney pursuant to which it has
instructed Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs Company Shares in favor of the approval and adoption of the Merger Agreement and the plan of merger and to vote against approvals of any proposal made in opposition to,
competition with, or that would result in a breach of the Merger Agreement. The Power of Attorney automatically terminates upon the termination of the Merger Agreement pursuant to its terms. The number of Company Shares held by WPX and underlying
the Power of Attorney is sufficient to adopt the Merger Agreement (and the plan of merger exhibited thereto). The Company is nonetheless soliciting your vote and distributing the attached proxy statement because (i) the laws of the Cayman Islands
require the Merger to be approved by way of a special resolution of the shareholders of the Company and do not permit the Merger to be approved by written resolution unless the resolution is adopted unanimously by all shareholders (therefore the
Company is required to hold a shareholders meeting to approve the Merger), (ii) the NASDAQ listing rules require that the Company solicit proxies and provide proxy statements for all meetings of shareholders, and (iii) in consideration of the
foregoing clauses (i) and (ii), the Company agreed to do so in the Merger Agreement. The adoption of the proposal to approve golden parachute compensation requires the affirmative vote of the holders of a majority
of the Company Shares present in person or represented by proxy at the extraordinary general meeting and voting on the matter.
Under Cayman Islands law, the Companys shareholders who comply with the applicable
requirements of section 238 of the Cayman Companies Law may have the right, under certain circumstances, to object to the Merger and exercise dissenter rights, including rights to seek payment of the fair value of their Company Shares as
described on page 76 of the accompanying proxy statement.
Whether or not you plan to attend the extraordinary general meeting, please
complete, date, sign and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope prior to the extraordinary general meeting to ensure that your Company Shares will be represented at the extraordinary
general meeting if you are unable to attend. If you mark abstain on your proxy card or attend the meeting and vote to abstain, it will have the same effect as a vote AGAINST the adoption of the Merger Agreement and
AGAINST the proposal regarding golden parachute compensation. If you fail to vote your shares or do not attend the meeting, it will have no effect on the adoption of the Merger Agreement and no effect on the proposal
regarding golden parachute compensation. If your Company Shares are held in street name by your broker, bank or other nominee, you should instruct your broker, bank or other nominee how to vote your Company Shares in
accordance with the instruction provided by your broker, bank or other nominee. Shareholders may submit their vote by proxy or by mail. For further details, see the discussion on page 22 of the enclosed proxy statement. To ensure that your vote
is recorded promptly, please vote by proxy as soon as possible, whether or not you plan to attend the extraordinary general meeting.
Our Board unanimously recommends that you vote FOR the adoption of the Merger Agreement and FOR the approval, on a
non-binding advisory basis, of certain execution compensation matters
The proxy statement attached to this letter provides you with
information about the proposed Merger and the extraordinary general meeting. We encourage you to read the entire proxy statement carefully, including the annexes thereto and any documents incorporated by reference. You may also obtain more
information about the Company from the documents we have filed with the Securities and Exchange Commission. If you have any questions about the extraordinary general meeting or the Merger after reading the proxy statement, would like additional
copies of the proxy statement or need help voting your Company Shares, you may contact the Companys proxy solicitor, Morrow & Co., LLC, at (888) 681-0976.
By Order of the Board of Directors
Stephen E. Brilz
Corporate Secretary
Table of Contents
SUMMARY TERM SHEET
This Summary Term Sheet, together with the Questions and Answers About the Merger and the Extraordinary General
Meeting, highlights selected information in this proxy statement and may not contain all the information that may be important to you. We encourage you to read carefully this entire proxy statement, including
its annexes and the documents we refer to or incorporate by reference in this proxy statement. Each item in this Summary Term Sheet includes a page reference directing you to a more complete description of that topic. You may obtain the information
incorporated by reference in this proxy statement without charge by following the instructions under Where You Can Find More Information beginning on page 82.
In this proxy statement, the terms Apco, the Company, we, our and us refer to
Apco Oil and Gas International Inc. and its subsidiaries, unless the context requires otherwise. We refer to Pluspetrol Resources Corporation as Parent, and Pluspetrol Black River Corporation as Merger Sub. When we refer to
the Merger Agreement, we mean the Agreement and Plan of Merger, dated as of October 2, 2014, as it may be amended from time to time, by and among Parent, Merger Sub and the Company, pursuant to which Merger Sub will be merged with
and into the Company, upon the terms and subject to the conditions set forth in the Merger Agreement, with the Company surviving as a wholly-owned subsidiary of Parent (the Merger). Ordinary shares and Class A shares of the Company
are referred to, collectively, as the Company Shares.
Parties to the Merger (page 19)
The Company, a Cayman Islands exempted company limited by shares, is an international oil and gas exploration and production company with a
focus on South America. The Companys corporate offices are located at One Williams Center, 35th Floor, Tulsa, Oklahoma, 74172 and its telephone number is (539) 573-2164. The Company Shares are currently listed on the NASDAQ Global Select
Market (NASDAQ) under the trading symbol APAGF.
Parent, through its affiliates, develops oil and gas exploration
and exploitation activities in Latin America and Angola. Merger Sub is a wholly-owned subsidiary of Parent and was formed solely for the purpose of entering into the Merger Agreement and consummating the transactions contemplated by the Merger
Agreement. Merger Sub has not engaged in any business except activities incidental to its formation and in connection with the transactions contemplated by the Merger Agreement. Parent and Merger Subs principal executive offices are located at
Muiderstraat 7/A, 101 1PZ Amsterdam, The Netherlands and their telephone number is +31 20 662 2199. Parent and Merger Subs registered offices are located at Clifton House 75 Fort Street, Grand Cayman KY-1104, Cayman Islands and their telephone
number is +1 345 949 4900.
Certain Effects of the Merger (page 46)
The Merger Agreement provides that, at the time that (i) the plan of merger required under the Cayman Islands Companies Law (the
Companies Law) and (ii) a declaration by both a director of Merger Sub and a director of the Company made in accordance with the Companies Law (collectively, the Merger Filing Documents) are filed with the Registrar of
Companies of the Cayman Islands (or at such later time as may be jointly designated by Parent and the Company and specified in the Merger Filing Documents), which we refer to as the Effective Time, Merger Sub will, upon the terms and
subject to the conditions set forth in the Merger Agreement, merge with and into the Company with the Company surviving the Merger as a wholly-owned subsidiary of Parent. We sometimes use the term Surviving Company in this proxy
statement to refer to the Company as the surviving entity following the Merger. As a result of the Merger, the Company will become a wholly-owned subsidiary of Parent, will cease to be an independent, publicly-traded company and you will cease to
have any rights in the Company as a shareholder.
If the Merger is completed, each outstanding Company Share outstanding owned immediately
prior to the Effective Time (other than any Company Share held by the Company, any subsidiary of the Company (as
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treasury shares (if applicable) or otherwise), Parent or Merger Sub, in each case, immediately prior to the Effective Time or other than any Company Share held by any holder who properly
exercises dissenter rights under Section 238 of the Companies Law) will be converted into the right to receive $14.50 in cash, without interest and less any applicable withholding taxes. As a result of the Merger, Company shareholders will no
longer have any interest in, and will no longer be shareholders of, the Company, and will not participate in any of the Companys future earnings or growth, if any. Company Shares will no longer be listed on the NASDAQ, and the registration of
such shares under the Securities Exchange Act of 1934, as amended (the Exchange Act), will be terminated.
Merger Consideration (page 54)
If the Merger is completed, each Company Share outstanding immediately prior to the Effective Time (other than shares owned by the
Company, its wholly-owned subsidiaries, Parent, Merger Sub or any other direct or indirect wholly-owned subsidiary of Parent, shares held in the Companys treasury and shares held by any shareholders who have properly and validly perfected
their statutory dissenter rights with respect to the Merger in accordance with the Companies Law) will be cancelled and extinguished and converted into the right to receive $14.50 in cash (the Merger Consideration), without interest and
less any applicable withholding taxes.
When the Merger is Expected to be Completed
We currently anticipate that the Merger will be completed in the first quarter of 2015. However, there can be no assurances that the Merger
will be completed at all or, if completed, that it will be completed in the first quarter of 2015.
The Extraordinary General Meeting (page 20)
The extraordinary general meeting will be held at [] a.m., local time, on [], at One Williams Center, 720 level, Community Room, Tulsa, Oklahoma, 74172. At the extraordinary general meeting, you will be asked (i) to consider and vote upon a proposal to adopt the Merger
Agreement (and the plan of merger exhibited thereto), thereby approving the Merger (the merger proposal), (ii) to consider and vote on a proposal to approve, on a non-binding advisory basis, certain executive compensation matters, which
we refer to as the compensation proposal, and (iii) to act upon other business as may properly come before the extraordinary general meeting or any adjournment or postponement thereof. See Questions and Answers About the
Merger and the Extraordinary General Meeting beginning on page 11 and The Extraordinary General Meeting beginning on page 20.
Vote Required for Approval (page 21)
The
adoption of the Merger Agreement requires the affirmative vote of the holders of two-thirds of the Company Shares attending and voting at the extraordinary general meeting either in person or by proxy. Each outstanding Company Share on the record
date entitles the holder to one vote at the extraordinary general meeting. WPX Energy, Inc. (WPX), the holder of approximately 69% of the Company Shares, has entered into a power of attorney (the Power of Attorney) pursuant
to which it has instructed Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs Company Shares in favor of the approval and adoption of the Merger Agreement and the plan of merger and to vote against approvals of any proposal made
in opposition to, competition with, or that would result in a breach of the Merger Agreement. The Power of Attorney terminates upon the termination of the Merger Agreement pursuant to its terms. The number of Company Shares held by WPX and
underlying the Power of Attorney is sufficient to adopt the Merger Agreement (and the plan of merger exhibited thereto). The Company is nonetheless soliciting your vote and distributing this proxy statement because (i) the laws of the Cayman Islands
require the Merger to be approved by way of a special resolution of the shareholders of the Company and do not permit the Merger to be approved by written resolution unless the resolution is adopted unanimously by all shareholders (therefore the
Company is required to hold a shareholders
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meeting to approve the Merger), (ii) the NASDAQ listing rules require that the Company solicit proxies and provide proxy statements for all meetings of shareholders, and (iii) in
consideration of the foregoing clauses (i) and (ii), the Company agreed to do so in the Merger Agreement. The adoption of the proposal to approve golden parachute compensation requires the affirmative vote of the
holders of a majority of the Company Shares present in person or represented by proxy at the extraordinary general meeting and voting on the matter.
Record Date and Quorum (page 20)
You are
entitled to vote at the extraordinary general meeting if you owned Company Shares at the close of business on [], 2014, the record date for the extraordinary general meeting. The presence at the
meeting, in person or by proxy, of the holders of a majority of the Company Shares issued and outstanding as of the close of business on the record date will constitute a quorum. On the record date, there were 29,441,243 Company Shares outstanding.
WPX has agreed in the Power of Attorney to have its shares represented at the extraordinary general meeting and, as a result, there is
expected to be a quorum of the holders of the majority of the outstanding Company Shares at the extraordinary general meeting.
Voting of Proxies (page
22)
Any Company shareholder entitled to vote, whose Company Shares are registered in such shareholders name, may submit a proxy
by returning the enclosed proxy card by mail, which must be received by [], or may vote in person by appearing at the extraordinary general meeting.
If your Company Shares are held in street name by a broker, bank or other nominee, you should instruct your broker, bank or other
nominee on how to vote your Company Shares using the instructions provided by your broker, bank or other nominee. If you do not provide your broker, bank or other nominee with instructions, your Company Shares will not be voted and that will no
effect on the merger proposal and no effect on the proposal regarding golden parachute compensation proposal.
Revocability of Proxies
(page 22)
Any shareholder who executes and returns a proxy card may revoke or change their proxy at any time before it is voted at the
extraordinary general meeting by:
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attending the extraordinary general meeting and voting in person; |
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properly submitting a later-dated proxy by mail; or |
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sending us a written notice of revocation prior to the extraordinary general meeting. |
Please
note that if you hold your Company Shares in street name through a broker, bank or other nominee and you have instructed your broker, bank or other nominee to vote your shares, the above-described options for changing your vote do not
apply, and instead you must follow the instructions received from your broker, bank or other nominee to change your vote.
Recommendation of the Board
of Directors (page 20)
The Companys board of directors (the Board), at a meeting on October 2, 2014,
unanimously (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of the Company and the Companys shareholders,
(ii) approved the Merger Agreement, (iii) approved the Merger and the other transactions contemplated by the Merger Agreement and (iv) subject to the terms and conditions of the Merger Agreement, resolved to recommend that the Company
shareholders approve the adoption of the Merger Agreement. The Board
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unanimously recommends that you vote FOR the merger proposal and FOR the compensation proposal.
For a discussion of the material factors considered by our Board in making its recommendation, see The Merger
Purpose of and Reasons for the Merger; Recommendation of the Board beginning on page 34.
Interests of the Companys
Directors and Executive Officers in the Merger (page 47)
In considering the recommendation of our Board, you should be aware that some
of our directors and executive officers have interests in the Merger that may be different from, or in addition to, your interests as a shareholder and that may present actual or potential conflicts. These interests include, among others:
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continued indemnification obligations applicable to the period six years after completion of the Merger; and |
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severance payments and benefits if a qualifying termination of employment were to occur following the completion of the Merger. |
Our Board was aware of these interests and considered them, among other matters, in reaching its decision to approve the Merger
Agreement and to recommend that the Companys shareholders vote in favor of adopting the Merger Agreement and the compensation proposal. For the approximate value of the potential benefits that could be received by the officers and the
directors, see The Merger Interests of the Companys Directors and Executive Officers in the Merger beginning on page 47.
Golden Parachute Compensation (page 48)
Certain compensation will be paid or may become payable by WPX to certain of the Companys named executive officers in connection with the
Merger pursuant to arrangements entered into with WPX.
Shares Held by Company Directors, Executive Officers and WPX (page 21)
As of the close of business on [], the record date, the Companys directors and
executive officers held and are entitled to vote, in the aggregate, 884 Company Shares, representing less than 1% of the aggregate Company Shares outstanding as of the record date. The directors and executive officers of the Company intend to vote
their shares FOR the merger proposal and FOR the compensation proposal.
As of the close of business
on [], 2014, the record date, WPX held and is entitled to vote, in the aggregate, 20,301,592 Company Shares, representing approximately 69% of the aggregate Company Shares outstanding as of the
record date. These Company Shares are subject to a Power of Attorney pursuant to which WPX has instructed Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs Company Shares in favor of the approval and adoption of the Merger
Agreement and the plan of merger and to vote against approvals of any proposal made in opposition to, competition with, or that would result in a breach of the Merger Agreement. The number of Company Shares held by WPX and underlying the Power of
Attorney is sufficient to adopt the Merger Agreement (and the plan of merger exhibited thereto). The Power of Attorney automatically terminates upon the termination of the Merger Agreement pursuant to its terms.
Opinion of Jefferies LLC (page 36)
In connection with the Merger, the Companys financial advisor, Jefferies LLC, which we refer to as Jefferies,
delivered a written opinion, dated October 2, 2014, to the Board to the effect that, based upon and subject to the qualifications, limitations and assumptions stated therein and as of the date of the opinion, from a financial point of view, the
Merger Consideration to be offered to the shareholders of the Company pursuant to the Merger Agreement was fair to such shareholders. The full text of the written opinion, which describes the
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assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached to this proxy statement as Annex B and is incorporated herein by reference. You
should read the opinion carefully in its entirety. Jefferiess opinion was provided to the Board in connection with its evaluation of the Merger Consideration provided for in the Merger from a financial point of view. Jefferiess opinion
does not address any other aspects or implications of the Merger and does not constitute a recommendation to any holders of shares of the Company as to how such holder should vote or act on any matters with respect to the proposed Merger. See
The Merger Opinion of Jefferies LLC beginning on page 36.
Regulatory Matters (page 51)
The Merger will require approval from Argentine antitrust authorities and the parties will file, within one week following the consummation of
the Merger, the requisite filings under Argentine antitrust laws. The approval of Argentine antitrust authorities is not a condition to the closing of the Merger and the approval process will take place after the Merger has closed. The closing of
the Merger is not subject to the receipt of any regulatory or governmental approvals.
Certain Material United States Federal Income Tax Consequences
(page 49)
The receipt of cash in exchange for Company Shares pursuant to the Merger generally will be a taxable transaction for U.S.
federal income tax purposes. Generally, shareholders will recognize gain or loss equal to the difference between the amount of cash received and the adjusted tax basis of the Company Shares surrendered. Company shareholders who are U.S. holders
generally will be subject to U.S. federal income tax on any gain recognized in connection with the Merger. Company shareholders who are non-U.S. holders generally will not be subject to U.S. income tax on any gain recognized in connection with the
Merger unless the shareholder has certain connections to the United States. However, the tax consequences of the Merger to a Company shareholder will depend on the shareholders particular circumstances, and Company shareholders should consult
their own tax advisors to determine the tax consequences to them of the Merger based on their particular circumstances.
You are urged
to read the discussion in the section entitled The Merger Certain Material United States Federal Income Tax Consequences beginning on page 49 and to consult your tax advisor as to the United States federal
income tax consequences of the Merger, as well as the effects of state, local and non-United States tax laws or any other United States federal tax laws.
Restrictions on Solicitations of Other Offers and Change in Recommendation (page 61)
The Merger Agreement restricts our ability to solicit or engage in discussion or negotiations with third parties regarding specified
transactions involving the Company or its assets or subsidiaries. Notwithstanding these restrictions, if, at any time prior to the adoption of the Merger Agreement by the Companys shareholders, (i) the Board receives an unsolicited,
written acquisition proposal (as defined below in The Merger Agreement Restrictions on Solicitations of Other Offers) that the Board or any committee of the Board determines in good faith to be bona
fide, (ii) the Board or any committee of the Board determines in its good faith judgment, based on information then available and after consulting with outside counsel and a nationally recognized third-party financial advisor, that such
acquisition proposal constitutes or would reasonably be expected to lead to a superior offer (as defined below in The Merger Agreement Restrictions on Solicitations of Other Offers), and
(iii) after consultation with outside counsel, the Board or any committee of the Board determines in good faith that the failure to take certain actions would reasonably be expected to be inconsistent with the Boards fiduciary duties
under law, then the Company may, subject to the terms and conditions of the Merger Agreement, at any time prior to the adoption of the Merger Agreement by the Companys shareholders, furnish information to the person or persons making such
acquisition proposal, participate in discussions or negotiations with such person or persons and take such actions as more fully described in The Merger Agreement Restrictions on Solicitations of Other
Offers. Notwithstanding the restrictions set forth above, the Company was entitled substantially contemporaneously with the public announcement of the Merger Agreement to waive the dont ask/dont waive
provisions of any standstill
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provisions contained in any confidentiality agreement in effect on the date of the Merger Agreement. The Company waived such provisions on October 3, 2014 and, as required by the terms of
the Merger Agreement, notified Parent of the identity of the parties receiving the benefit of such waiver.
In addition, our Board is not
permitted to: (i) (A) withdraw (or qualify, amend or modify in a manner adverse to Parent), or propose publicly to withdraw (or to qualify, amend or modify, in a manner adverse to Parent), the Board recommendation in favor of adoption of
the Merger Agreement, (B) fail to publicly reaffirm the Board recommendation in favor of adoption of the Merger Agreement within five business days after Parent so requests in writing (provided however that Parent shall only be entitled to
request such reaffirmation no more than three times), (C) fail to recommend, in a Solicitation/Recommendation Statement on Schedule 14D-9, against any tender offer or exchange offer by a third party for 15% or more of the outstanding Company
Shares within ten business days after the commencement of such tender offer or exchange offer; (D) approve, adopt or recommend any acquisition proposal or propose publicly to approve, adopt or recommend, any acquisition proposal or
(E) approve, adopt, recommend or enter into any alternative acquisition agreement or propose publicly to approve, adopt, recommend or enter into, any alternative acquisition agreement (any such action being referred to as an adverse
recommendation change). However, at any time prior to obtaining the Company shareholder approval, the Board may, if the Board determines in its good faith judgment, after consulting with outside counsel, that the failure to effect an adverse
recommendation change would reasonably be expected to be inconsistent with the Boards fiduciary duties under law (x) make an adverse recommendation change in response to an intervening circumstance (as defined below in
The Merger Agreement Restrictions on Solicitations of Other Offers) and subject to the matching rights of Parent or (y) in response to a superior offer, make an adverse recommendation change and
cause the Company to terminate the Merger Agreement and enter into one or more definitive alternative acquisition agreements with respect to a superior offer, subject to certain conditions, including paying a $15,450,000 termination fee to Parent
and subject to the matching rights of Parent, as more fully described in The Merger Agreement Restrictions on Solicitations of Other Offers and The Merger Agreement Company Board
Recommendation; Termination in Connection with a Superior Offer.
Conditions to the Completion of the Merger (page 66)
Each partys obligation to consummate the Merger is subject to the satisfaction (or to the extent permitted by law) waiver of the
following conditions:
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the Companys shareholders shall have voted to adopt the Merger Agreement (and the plan of merger exhibited thereto); and |
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no governmental authority shall have enacted, issued, promulgated, enforced or entered into any law or order, or threatened or commenced any proceeding, which is then pending or in effect and seeks to enjoin or
otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the Merger. |
Parents
and Merger Subs obligation to consummate the Merger is subject to the satisfaction (or to the extent permitted by law) waiver of the following conditions:
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each of the representations and warranties of the Company contained in the Merger Agreement being accurate as of the date of the Merger Agreement and as of the date of the closing (except where such representation
specifies otherwise), subject to the materiality standards described in The Merger Agreement Conditions to the Completion of the Merger; |
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the Company shall have performed or complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by it on or prior to the closing date;
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since the date of the Merger Agreement, there shall not have occurred any change, event, effect or circumstance that, individually or in the aggregate, has had a material adverse effect (as defined below in
The Merger Agreement Representations and Warranties); |
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the Company shall have delivered to Parent a certificate, dated as of the closing date, and signed by an executive officer of the Company certifying that the closing conditions described in the bullet points above have
been satisfied; |
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all consents of the Companys secured creditors required under the Companies Law have been made, given or obtained on terms acceptable to the Parent, acting reasonably; and |
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the transactions contemplated by the Irrevocable Offer, dated October 2, 2014, from Parent to WPX (the Irrevocable Offer) shall have been consummated or will be consummated concurrently with the closing
of the Merger. |
The Companys obligation to consummate the merger is subject to the satisfaction (or to the extent
permitted by law) waiver of the following conditions:
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each of the representations and warranties of the Parent and Merger Sub contained in the Merger Agreement being accurate as of the date of the Merger Agreement and as of the date of the closing (except where such
representation specifies otherwise), subject to the materiality standards described in The Merger Agreement Conditions to the Completion of the Merger; |
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Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by them on or prior to the closing
date; and |
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Parent shall have delivered to the Company a certificate, dated as of the closing date, and signed by an executive officer of Parent certifying that the closing conditions described in the bullet points above have been
satisfied. |
Termination of the Merger Agreement (page 68)
The Merger Agreement may be terminated and the Merger may be abandoned (before or after the adoption of the Merger Agreement by the
Companys shareholders):
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by mutual consent of the Company and Parent; |
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by Parent or the Company, if: |
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the Effective Time shall not have occurred before 5:00 p.m. (New York City time) on July 2, 2015 (the Termination Date); provided, that the right to terminate the Merger Agreement shall not be available
to a party if such party has breached or violated any of its covenants, agreements or other obligations hereunder and such breach or violation has been the principal cause of or directly resulted in (1) the failure to satisfy the conditions to
the obligations of the terminating party to consummate the Merger prior to the Termination Date or (2) the failure of the Merger Closing to occur by the Termination Date; |
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any governmental authority shall have enacted, issued, promulgated, enforced or entered into any law or order, or threatened or commenced any proceeding, which is then pending or in effect and seeks to enjoin or
otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the Merger , and such law or order or injunction shall have become final and non-appealable; provided, however, that the party seeking to terminate this
Agreement shall have used reasonable best efforts to prevent, oppose or remove such law or order or injunction; or |
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if the shareholders meeting for the purpose of voting upon the adoption of the Merger Agreement has occurred and the Company shareholders vote against the adoption of the Merger Agreement; |
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Parent or Merger Sub shall have breached or failed to perform any of their respective representations, warranties, covenants or other agreements set
forth in the Merger Agreement, |
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subject to certain cure rights, which breach or failure to perform, individually or in the aggregate, would give rise to a failure of certain conditions to the closing of the Merger so long as
certain other conditions are satisfied; or |
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at any time prior to the adoption of the Merger Agreement by the Companys shareholders, (A) the Board has determined to enter into one or more definitive agreements with respect to a superior offer;
(B) the Company shall have complied with the terms and conditions of the non-solicitation provisions with respect to such superior offer; (C) concurrently with the termination of the Merger Agreement the Company enters into one or more
definitive agreements with respect to such superior offer; and (D) the Company pays to Parent a termination fee of $15,450,000; and |
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the Company shall have breached or failed to perform any of its representations, warranties, covenants or other agreements set forth in the Merger Agreement, subject to certain cure rights, which breach or failure to
perform, individually or in the aggregate, would give rise to a failure of certain conditions to the closing of the Merger so long as certain other conditions are satisfied; or |
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at any time prior to the meeting of the Companys shareholders to adopt the Merger Agreement (and the plan of merger exhibited thereto), if (A) the Board makes an adverse recommendation change or (B) the
Company commits an Intentional Breach (as defined below) of its obligations under the non-solicitation provisions or provisions with respect to the meeting of the Companys shareholders to adopt the Merger Agreement (and the plan of merger
exhibited thereto) and file this proxy statement. |
Termination Fees; Expenses (page 69)
The Company has agreed to pay the Parent a termination fee of $15,450,000, which we refer to as the Termination Fee, if the Merger
Agreement is terminated by:
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(i) (A) by either Parent or the Company because the Effective Time has not occurred prior to the Termination Date or (B) by Parent because the Company has breached or failed to perform any of its
representations, warranties, covenants or other agreements set forth in the Merger Agreement and (ii) (A) the Company receives or has received an acquisition proposal from a third party after the date of the Merger Agreement or an
acquisition proposal becomes publicly known at or prior to such termination and (B) within 12 months of termination, (1) the Company enters into a definitive agreement with respect to an acquisition proposal (whether or not the same
acquisition proposal described in clause (ii)(A) above) or (2) an acquisition proposal (whether or not the same acquisition proposal described in clause (ii)(A) above) is consummated by the Company; |
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by the Company, in order to enter into an acquisition agreement with respect to a superior offer; or |
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by Parent, because of an adverse recommendation change made by the Board or because the Company has committed an Intentional Breach (as defined below) of its obligations under the non-solicitation provisions or of its
obligations with respect to calling or holding the extraordinary general meeting and with respect to preparing or filing this proxy statement. |
Limitations on Remedies (page 70)
The
Merger Agreement permits both Parent and the Company to obtain an injunction, decree of specific performance or other equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger
Agreement.
Other than Parent and Merger Subs ability to recover damages in respect of an Intentional Breach, the Termination Fee
constitutes the maximum aggregate liability of the Company and its subsidiaries for damages in connection with the Merger Agreement or any of the transactions contemplated by the Merger Agreement.
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For purposes of the Merger Agreement, Intentional Breach means, with respect to any
representation, warranty, agreement or covenant, an action or omission (including a failure-to-cure circumstance) taken or omitted to be taken on or after the date of the Merger Agreement that the breaching Person intentionally takes (or fails to
take) and knows would, or would reasonably be expected to, cause or constitute a material breach of such representation, warranty, agreement or covenant.
Market Price (page 78)
The Company
Shares are listed on NASDAQ under the trading symbol APAGF. On October 2, 2014, which was the last full trading day before the Company announced the transaction, the Companys shares closed at $12.64 per share. On November 24,
2014, which was the last trading day before the date of this proxy statement, the Companys shares closed at $14.19 per share.
Power of Attorney
(page 71)
In connection with the Company and Parent entering into the Merger Agreement, WPX entered into the Power of Attorney. The
Power of Attorney instructs Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs Company Shares in favor of the approval and adoption of the Merger Agreement and the plan of merger and to vote against approvals of any proposal made
in opposition to, competition with, or that would result in a breach of the Merger Agreement. The number of Company Shares held by WPX and underlying the Power of Attorney comprise approximately 69% of the Company Shares and is sufficient to adopt
the Merger Agreement (and the plan of merger exhibited thereto).
The Power of Attorney automatically terminates upon the termination of
the Merger Agreement pursuant to its terms.
Irrevocable Offer (page 72)
In connection with the Merger Agreement, WPX accepted an Irrevocable Offer, dated October 2, 2014, from Parent, pursuant to which WPX will
sell to Parent all of the Companys interests in Apco Argentina, S.A., an Argentine corporation in which WPX owns a five percent interest, and Northwest Argentina Corporation, a Utah corporation, which is a wholly-owned subsidiary of WPX. One
of the conditions to the Merger is that the transactions contemplated by the Irrevocable Offer shall have been consummated or will be consummated concurrently with the closing of the Merger.
The Irrevocable Offer may be terminated and the transactions contemplated by the Irrevocable Offer may be abandoned at any time prior to the
closing of such transactions by the mutual written consent of WPX and Parent. The Irrevocable Offer will automatically be terminated if the Merger Agreement has been terminated in accordance with its terms.
As described below in Irrevocable Offer, the Irrevocable Offer restricts WPXs ability to solicit or engage in
discussion or negotiations with third parties regarding specified transactions involving the Company or its assets or subsidiaries and there are certain circumstances following termination of the Irrevocable Offer in which WPX will be obligated to
pay Parent a fee.
Dissenter Rights (page 76)
Under Cayman Islands law, the Companys shareholders who comply with the applicable requirements of Section 238 of the Companies Law
may have the right, under certain circumstances, to object to the Merger and exercise dissenter rights, including rights to seek payment of the fair value of their Company Shares. It is possible that if you exercise your dissenter rights, the fair
value of your Company Shares determined under Section 238 of the Companies Law could be more than, the same as, or less than the $14.50 in cash, without
- 9 -
interest and less any applicable withholding taxes, for each Company Share that you would otherwise receive as consideration in the Merger. You need not vote against any of the proposals at the
extraordinary general meeting in order to exercise your dissenter rights under the Companies Law. However, in the event you exercise Dissenter Rights, a vote by you in favor of the approval and adoption of the Merger Agreement and the plan of merger
exhibited thereto at the extraordinary general meeting could deprive you of standing to seek a determination from the Grand Court (defined below) of whether the fair value for your Company Shares exceeds the Merger Consideration.
Litigation Related to the Merger (page 52)
Following the October 3, 2014 announcement that the Company had entered into the Merger Agreement, three putative class actions were filed in
the District Court of Tulsa County in the State of Oklahoma on behalf of purported shareholders of the Company against the Company, its directors and WPX and one putative class action was filed in the United States District Court for the Northern
District of Oklahoma on behalf of purported shareholders of the Company against the Company, its directors, Parent and Merger Sub. Each of the actions alleges that the Companys directors breached their fiduciary duties to the Companys
shareholders by agreeing to sell the Company for inadequate consideration, by engaging in a flawed sales and negotiation process, by agreeing to improper deal-protection terms in the Merger Agreement and by approving this proxy statement as filed
with the SEC on October 31, 2014, which allegedly contained material misrepresentations and omissions. Additionally, each of the actions alleges that certain of our directors had conflicts of interest in approving the Merger due to their respective
affiliations with WPX. The action naming Parent and Merger Sub as defendants further alleges that Parent and Merger Sub aided and abetted the Companys directors breaches of fiduciary duties to the Companys shareholders and that the
Companys directors violated certain provisions of the Exchange Act. Each of the actions seeks, among other relief, declaratory and injunctive relief against the Merger and costs and fees.
The Company believes the allegations in all of these actions are without merit and intends to vigorously defend these matters.
One of the conditions to the closing of the Merger is that no governmental authority shall have issued any order which seeks to enjoin or
otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the Merger. If the plaintiffs are successful in obtaining an injunction prohibiting the completion of the Merger on the terms contained in the Merger
Agreement, then such injunction may prevent or delay the Merger from becoming effective.
Additional Information (page 82)
You can find more information about the Company in the periodic reports and other information we file with the United States Securities and
Exchange Commission, or the SEC. The information is available at the SECs public reference facilities and at the website maintained by the SEC at www.sec.gov. For a more detailed description of the additional information available,
see Where You Can Find More Information beginning on page 82.
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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE EXTRAORDINARY GENERAL
MEETING
The following questions and answers address briefly some questions you may have regarding the extraordinary general
meeting and the proposed Merger. These questions and answers may not address all questions that may be important to you as a shareholder of the Company. Please refer to the more detailed information contained elsewhere in this proxy statement,
including the annexes and the documents we refer to or incorporate by reference in this proxy statement.
Q: |
Why am I receiving these materials? |
A: |
You are receiving this proxy statement and the proxy card because you own Company Shares as of the record date. Our Board is providing these proxy materials to give you information for use in determining how to
vote your Company Shares in connection with the extraordinary general meeting. |
The Merger and Related Transactions
Q: |
What is the proposed transaction? |
A: |
The proposed transaction is the acquisition of the Company by Parent pursuant to the Merger Agreement. Under the terms of the Merger Agreement, if the Merger Agreement is adopted by the Companys
shareholders and the other closing conditions under the Merger Agreement have been satisfied or waived, Merger Sub will be merged with and into the Company, with the Company continuing as the Surviving Company as a wholly-owned subsidiary of Parent.
After the Merger, the Company Shares will cease to be traded on NASDAQ and we will no longer be subject to the periodic reporting requirements under the Exchange Act. |
Q: |
As a shareholder, what will I receive in the Merger? |
A: |
Upon completion of the Merger, you will be entitled to receive the Merger Consideration in cash without interest and less any required withholding taxes, for each Company Share that you own, unless you have properly and
validly perfected your statutory dissenter rights under the Companies Law with respect to the Merger. For example, if you own 100 Company Shares at the Effective Time, you will be entitled to $1,450 in cash in exchange for your Company Shares, less
any required withholding taxes. You will not own shares in the Surviving Company. |
Q: |
What vote of our shareholders is required to adopt the Merger Agreement (and the plan of merger exhibited thereto), thereby approving the Merger? |
A: |
Adoption of the Merger Agreement requires the affirmative vote of the holders of two-thirds of the Company Shares attending and voting at the extraordinary general meeting either in person or by proxy.
Accordingly, a failure to vote will have no effect on the adoption of the Merger Agreement but an abstention will have the same effect as a vote AGAINST adoption of the Merger Agreement. For the purpose of the vote on the Merger,
each Company Share will carry one vote. |
Q: |
Are any shareholders already committed to vote in favor of approving and adopting the Merger Agreement? |
A: |
Yes. WPX, the holder of approximately 69% of the Company Shares, has entered into a Power of Attorney pursuant to which it has instructed Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs Company
Shares in favor of the approval and adoption of the Merger Agreement and the plan of merger and to vote against approvals of any proposal made in opposition to, competition with, or that would result in a breach of the Merger Agreement. The number
of Company Shares held by WPX and underlying the Power of Attorney is sufficient to adopt the Merger Agreement (and the plan of merger exhibited thereto). The Power of Attorney automatically terminates upon the termination of the Merger Agreement
pursuant to its terms. |
Accordingly, we expect the Merger Agreement (and the plan of merger exhibited thereto) to be adopted
at the extraordinary general meeting unless the Merger Agreement is terminated prior to such meeting.
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Q: |
Why am I being asked to vote on the approval and adoption of the Merger Agreement if a sufficient number of Company Shares for passage have already been committed to vote in favor of approval and adoption?
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The Company is soliciting your vote and distributing this proxy statement because (i) the laws of the Cayman Islands require the Merger to be approved by way of a special resolution of the shareholders of the Company
and do not permit the Merger to be approved by written resolution unless the resolution is adopted unanimously by all shareholders (therefore the Company is required to hold a shareholders meeting to approve the Merger), (ii) the NASDAQ listing
rules require that the Company solicit proxies and provide proxy statements for all meetings of shareholders, and (iii) in consideration of the foregoing clauses (i) and (ii), the Company agreed to do so in the Merger
Agreement. |
Q: |
When is the Merger expected to be completed? |
A: |
We are working toward completing the Merger as quickly as possible, and we anticipate that it will be completed in the first quarter of 2015. However, the exact timing and likelihood of completion of the Merger
cannot be predicted because the Merger is subject to certain conditions, including adoption of the Merger Agreement by our shareholders. Neither we nor Parent nor Merger Sub are obligated to complete the Merger unless and until the applicable
closing conditions in the Merger Agreement have been satisfied or waived. See The Merger Agreement Conditions to the Completion of the Merger beginning on page 66. |
Q: |
What effects will the proposed Merger have on the Company? |
A: |
Upon completion of the proposed Merger, the Company will cease to be a publicly-traded company and will be a wholly-owned subsidiary of Parent. As a result, you will no longer have any interest in our future
earnings or growth, if any. Following completion of the Merger, shares of the Company will no longer be listed on NASDAQ and the registration of such shares under the Exchange Act will be terminated. |
Q: |
What are the material U.S. federal income tax consequences of the Merger to me? |
A: |
The receipt of cash in exchange for Company Shares pursuant to the Merger generally will be a taxable transaction for U.S. federal income tax purposes. Generally, you will recognize gain or loss equal to the
difference between the amount of cash you receive and the adjusted tax basis of your Company Shares. If you are a U.S. holder (as defined in the section entitled The Merger Certain Material U.S. Federal Income Tax Considerations
with Respect to the Merger), you generally will be subject to U.S. federal income tax on any gain recognized in connection with the Merger. If you are a non-U.S. holder, you generally will not be subject to U.S. federal income tax on
any gain recognized in connection with the Merger unless you have certain connections to the United States. However, the tax consequences of the Merger to you will depend on your particular circumstances, and you should consult your own tax advisor
to determine how the Merger will affect you. For a more detailed summary of the tax consequences of the Merger, see The Merger Certain Material U.S. Federal Income Tax Considerations with Respect to the Merger
beginning on page 49. |
Q: |
What happens if the Merger is not completed? |
A: |
If the Merger Agreement is not adopted by our shareholders, or if the Merger is not completed for any other reason, our shareholders will not receive any payment for their Company Shares pursuant to the Merger
Agreement. Instead, we will remain as a public company and the Company Shares will continue to be registered under the Exchange Act and listed and traded on NASDAQ. Under specified circumstances, we may be required to pay Parent the Termination Fee
and/or reimburse Parent for certain fees and expenses. See The Merger Agreement Effect of Termination; Termination Fee beginning on page 69 and The Merger Agreement
Remedies beginning on page 70. |
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The Extraordinary General Meeting
Q: |
When and where is the extraordinary general meeting of our shareholders? |
A: |
The extraordinary general meeting of shareholders will be held at [] a.m., local time, on [], at One
Williams Center, 720 level, Community Room, Tulsa, Oklahoma, 74172. |
Q: |
What matters will be voted on at the extraordinary general meeting? |
A: |
You will be asked to consider and vote on the following proposals: |
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adoption of the Merger Agreement (and the plan of merger exhibited thereto), which we refer to as the merger proposal; |
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a proposal to approve, on a non-binding and advisory basis, certain executive compensation matters which we refer to as the compensation proposal; and |
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any other proposal as may properly come before the extraordinary general meeting or any adjournments or postponements of the extraordinary general meeting by or at the direction of the Board. |
Q: |
How does the Board recommend that I vote? |
A: |
Our Board unanimously recommends that our shareholders vote FOR the merger proposal and FOR the compensation proposal. You should read The Merger
Purpose of and Reasons for the Merger; Recommendation of the Board beginning on page 34 for a discussion of the factors that our Board considered in deciding to recommend the adoption of the Merger Agreement. In addition, in
considering the recommendation of our Board with respect to the Merger Agreement, you should be aware that some of the Companys directors and executive officers have interests in the Merger that may be different from, or in addition to, the
interests of shareholders generally. See The Merger Interests of the Companys Directors and Executive Officers in the Merger beginning on page 47. |
Q: |
Who can attend and vote at the extraordinary general meeting? |
A: |
All shareholders of record as of the close of business on [], the record date for the extraordinary general meeting, are entitled to receive notice of and to
attend and vote at the extraordinary general meeting, or any adjournment or postponement thereof. If you wish to attend the extraordinary general meeting and your Company Shares are held in an account at a broker, bank or other nominee (i.e.,
in street name), you will need to bring a copy of your voting instruction card or statement reflecting your share ownership as of the record date. Street name holders who wish to vote at the extraordinary general meeting will
need to obtain a proxy from the broker, bank or other nominee that holds their Company Shares. |
Q: |
What happens if I sell or otherwise transfer my Company Shares after the record date but before the extraordinary general meeting? |
A: |
The record date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and the date the Merger is expected to be completed. If you sell or otherwise transfer your
Company Shares after the record date but before the extraordinary general meeting, you will retain your right to vote at the extraordinary general meeting, but you will transfer the right to receive the Merger Consideration. Even if you sell or
otherwise transfer your Company Shares after the record date, we urge you to complete, sign, date and return the enclosed proxy. |
A: |
The presence at the extraordinary general meeting, in person or by proxy, of the holders of a majority of the outstanding Company Shares at the
close of business on the record date and entitled to vote constitutes a |
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quorum for the purposes of the extraordinary general meeting. Abstention and broker non-votes (if any) are counted as present for the purpose of determining whether a quorum is present.
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WPX has agreed in the Power of Attorney to have its Company Shares represented at the extraordinary general meeting and, as
a result, there is expected to be a quorum of the holders of the majority of the outstanding Company Shares at the extraordinary general meeting.
Q: |
Why am I being asked to cast a non-binding advisory vote to approve the golden parachute compensation that certain executive officers of the Company will or may receive in connection with the Merger?
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A: |
The SEC has adopted rules that require us to seek a non-binding advisory vote with respect to certain payments that will or may be made to the Companys named executive officers in connection with the
Merger. Certain of our named executive officers are entitled to receive such payments from WPX pursuant to arrangements entered into with WPX. See The Merger - Interests of the Companys Directors and Executive Officers in the
Merger beginning on page 47. |
Q: |
What vote of our shareholders is required to approve the non-binding proposal regarding the golden parachute compensation that certain executive officers of the Company will or may receive in connection
with the Merger? |
A: |
Approval of the non-binding proposal regarding the golden parachute compensation that certain executive officers of the Company will or may receive in connection with the Merger requires the
affirmative vote of the holders of a majority of the Company Shares present in person or represented by proxy at the extraordinary general meeting and voting on the matter at the extraordinary general meeting. Accordingly, a failure to vote or an
abstention will have no effect on this proposal. |
Q: |
What will happen if our shareholders do not approve the golden parachute compensation at the extraordinary general meeting? |
A: |
Approval of the golden parachute compensation payable under existing agreements that certain executive officers of the Company will or may receive in connection with the Merger is not a
condition to completion of the Merger. The vote with respect to the golden parachute compensation is an advisory vote and will not be binding on the Company. Therefore, if the Merger is approved by our shareholders and completed, the
golden parachute compensation will still be paid to the named executive officers if and when due. |
Q: |
How do I cast my vote if I am a holder of record? |
A: |
If you were a holder of record as of the close of business on [], you may vote in person at the extraordinary general meeting or by submitting a proxy for the
extraordinary general meeting. You can submit your proxy to [] by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed, postage-paid envelope.
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If you properly sign and transmit your proxy, but do not indicate how you want to vote, your proxy will be voted
FOR the merger proposal and FOR the compensation proposal.
Q: |
How do I cast my vote if my Company Shares are held in street name by my broker, bank or other nominee? |
A: |
If you hold your Company Shares in street name, which means your Company Shares are held of record on [] by a broker, bank or other nominee, you must provide the record holder of your Company Shares with instructions on how to vote your Company Shares by completing the enclosed voting instruction form or
by submitting voting instructions using the Internet or telephone if your bank, broker or other nominee |
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makes those methods available. If you do not provide voting instructions to your broker, bank or other nominee, your Company Shares will not be voted on any proposal on which your broker, bank or
other nominee does not have discretionary authority to vote. This is called a broker non-vote. In these cases, the broker, bank or other nominee can register your Company Shares as being present at the extraordinary general meeting for
purposes of determining the presence of a quorum but will not be able to vote on matters for which specific authorization is required. Organizations who hold Company Shares in street name for customers may not exercise their voting
discretion with respect to the approval of non-routine matters, such as the proposal to adopt the Merger Agreement (and the plan of merger exhibited thereto) and the compensation proposal. If you do not instruct your broker, bank or other nominee
how to vote, or do not attend the extraordinary general meeting and vote in person with a legal proxy from your broker, bank or other nominee, it will have no effect on the merger proposal and no effect on the compensation proposal. Please refer to
the instructions you receive from your broker, bank or other nominee to see if you may submit voting instructions using the Internet or telephone. |
Q: |
Should I send in my share certificates now? |
A: |
NO. PLEASE DO NOT SEND YOUR STOCK CERTIFICATES NOW. Promptly after the completion of the Merger, the paying agent will mail to you a letter of transmittal with instructions for exchanging your Company Share certificates
for the Merger Consideration. Please do not send in your share certificates with your proxy card. If you do not have share certificates that is, if you hold your Company Shares in street name, then your broker, bank, or
other nominee will contact you regarding payment of the Merger Consideration. |
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Can I change my vote after I have delivered my proxy? |
A: |
Yes. If you are a record holder, you can change your vote at any time before your proxy is voted at the extraordinary general meeting by properly submitting a later-dated proxy by mail or attending the
extraordinary general meeting in person and voting. You may also revoke your proxy by delivering a notice of revocation to the Companys Corporate Secretary at One Williams Center, 35th Floor, Tulsa, Oklahoma, 74172, Attention: Corporate
Secretary, prior to the vote at the extraordinary general meeting. If your Company Shares are held in street name, you must contact your broker, bank or other nominee to revoke your proxy. |
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What should I do if I receive more than one set of voting materials? |
A: |
You may receive more than one set of voting materials, including multiple copies of this proxy statement or multiple proxy or voting instruction cards. For example, if you hold your Company Shares in more than
one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold Company Shares. If you are a holder of record and your Company Shares are registered in more than one name, you will receive more
than one proxy card. Please submit each proxy and voting instruction card that you receive. |
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Am I entitled to exercise dissenter rights under the Companies Law instead of receiving the Merger Consideration for any Company Shares? |
A: |
Yes. As a holder of Company Shares, you are entitled to exercise dissenter rights under the Companies Law in connection with the Merger if you take certain actions and meet certain conditions. See
Dissenter Rights beginning on page 76. |
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Do I have to vote against the approval and adoption of the Merger Agreement in order to exercise dissenter rights under the Companies Law? |
A: |
No. You need not vote against any of the proposals at the extraordinary general meeting in order to exercise your dissenter rights under the Companies Law. |
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Q: |
When can I expect to receive the Merger Consideration for my Company Shares? |
A: |
After the completion of the Merger, you will be sent, in a separate mailing, a letter of transmittal and other documents to be completed and delivered to the paying agent for the Merger in order to receive the
Merger Consideration. Once you have submitted your properly completed documents to the paying agent, including an executed letter of transmittal and stock certificates, if applicable, the paying agent will send you the Merger Consideration payable
in respect of Company Shares held by you. |
Q: |
What happens if I return my proxy card but I do not indicate how to vote? |
A: |
If you properly return your proxy card, but do not include instructions on how to vote, your Company Shares will be voted FOR the approval of the merger proposal and FOR the
compensation proposal. We do not currently intend to present any other proposals for consideration at the extraordinary general meeting. If other proposals requiring a vote of shareholders are brought before the extraordinary general meeting in a
proper manner, the persons named in the enclosed proxy card, if properly authorized, will have discretion to vote the shares they represent in accordance with their best judgment. |
Q: |
What happens if I abstain from voting? |
A: |
If you mark abstain on your proxy card or attend the meeting and vote to abstain, it will have the same effect as a vote AGAINST the merger proposal and AGAINST the
compensation proposal. |
Q: |
Will any proxy solicitors be used in connection with the extraordinary general meeting? |
A: |
Yes. To assist in the solicitation of proxies, the Company has engaged Morrow & Co., LLC, 470 West Avenue, Stamford, Connecticut, 06902 (Morrow). |
Q: |
Who will count the votes? |
A: |
The votes will be counted by Morrow who will act as the inspector of election appointed for the extraordinary general meeting. |
Q: |
What do I need to do now? |
A: |
We urge you to read this proxy statement carefully, including its annexes and the documents we refer to or incorporate by reference into this proxy statement, and then mail your completed, dated and signed proxy
card in the enclosed prepaid return envelope as soon as possible in accordance with the instructions provided on the enclosed proxy card, so that your shares can be voted at the extraordinary general meeting of shareholders. |
PLEASE DO NOT SEND YOUR STOCK CERTIFICATES WITH YOUR PROXY CARD. YOU WILL RECEIVE DETAILED INSTRUCTIONS AND A LETTER OF TRANSMITTAL
CONCERNING EXCHANGE OF YOUR STOCK CERTIFICATES IF THE MERGER IS CONSUMMATED.
Q: |
Who can help answer my questions? |
A: |
If you have any questions about the Merger or how to submit your proxy, or if you need additional copies of the proxy statement or the enclosed proxy card, you should contact Morrow, the Companys proxy
solicitor toll free at (888) 681-0976. If you hold Company Shares in street name through a broker, bank or other nominee, you should also contact your broker, bank or other nominee. |
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements that involve numerous risks and uncertainties. The statements contained in this
communication that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, including, without limitation, statements
regarding the expected benefits and closing of the Merger, the management of the Company and the Companys expectations, beliefs and intentions. All forward-looking statements included in this document are based on information available to the
Company on the date hereof. It should not be assumed that the statements made herein remain accurate as of any future date. In some cases, you can identify forward-looking statements by terminology such as may, can,
will, should, could, expects, plans, anticipates, intends, believes, estimates, predicts, potential,
targets, goals, projects, outlook, continue, preliminary, guidance, or variations of such words, similar expressions, or the negative of these terms or other
comparable terminology. No assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what impact they will have on our results of operations or financial condition.
Accordingly, actual results may differ materially and adversely from those expressed in any forward-looking statements. Neither the Company nor any other person can assume responsibility for the accuracy and completeness of forward-looking
statements.
There are various important factors that could cause actual results to differ materially from those in any such
forward-looking statements, many of which are beyond the Companys control. These factors include, but are not limited to, the following:
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failure of the shareholders to adopt the Merger Agreement (and the plan of merger exhibited thereto); |
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failure to consummate the Merger or any delay in consummating the Merger; |
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competitive responses to the proposed Merger; |
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changes in laws or regulations; |
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changes in general economic conditions |
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the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement and the possibility that the Company could be required to pay a $15,450,000 fee in connection
therewith; |
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the failure to satisfy the conditions to the consummation of the Merger; |
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business uncertainty and contractual restrictions during the pendency of the Merger; |
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adverse outcomes of pending or threatened litigation or government investigations; |
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the failure of the Merger to close for any other reason; |
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the amount of the costs, fees and expenses related to the Merger; |
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diversion of managements attention from ongoing business concerns; |
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the effect of the announcement of the Merger on our business and customer relationships, operating results and business generally, including our ability to retain key employees; |
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risks that the proposed transaction disrupts current plans and operations; and |
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the possible adverse effect on our business and the price of our common stock if the Merger is not completed in a timely fashion or at all. |
The foregoing review of important factors that could cause actual events to differ from expectations should not be construed as exhaustive and
should be read in conjunction with statements that are included herein and elsewhere, including the other risks detailed in the section entitled Risk Factors in our most recent filing on Forms 10-Q and 10-K (See Where You Can
Find More Information beginning on page 82). All subsequent
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written and oral forward-looking statements concerning the proposed transaction or other matters attributable to the Company or any other person acting on its behalf are expressly qualified in
their entirety by the cautionary statements referenced above. The Company undertakes no obligation (and expressly disclaims any obligation) to publicly update or revise any forward-looking statement, whether as a result of new information, future
events or otherwise. For additional information please refer to the Companys most recent Form 10-K, 10-Q and 8-K reports filed with the SEC.
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PARTIES TO THE MERGER
The Company
Apco Oil and Gas
International Inc.
One Williams Center 35th Floor
Tulsa,
Oklahoma 74172
(539) 573-2164
The Company
is an international oil and gas exploration and production company with a focus on South America. The Company began exploration and production activities in Argentina in the late 1960s. The Company is an exempted company limited by shares under the
laws of the Cayman Islands.
Our shares are publicly traded on NASDAQ under the symbol APAGF.
The Companys principal executive offices are located at One Williams Center 35th Floor, Tulsa, Oklahoma 74172, our telephone number is
(539) 573-2164, and our website address is www.apcooilandgas.com. The information provided on our website is not part of this proxy statement, and therefore is not incorporated by reference. Detailed descriptions about our business and
financial results are contained in our annual report on Form 10-K for the year ended December 31, 2013, and our more recent reports filed with the SEC, which we incorporate into this proxy statement by reference. See Where
You Can Find More Information beginning on page 82.
Parent
Pluspetrol Resources Corporation
Muiderstraat 7/A, 101 1PZ
Amsterdam
The Netherlands
+31 20 662 2199
Parent, through its affiliates, develops oil and gas exploration and exploitation activities in Latin America and Angola. Parent is
incorporated under the laws of the Cayman Islands.
Parents principal executive offices are located at Muiderstraat 7/A, 101 1PZ,
Amsterdam, The Netherlands and its telephone number is +31 20 662 2199. Parents registered offices are located at Clifton House 75 Fort Street, Grand Cayman KY-1104, Cayman Islands and its telephone number is +1 345 949 4900.
Merger Sub
Pluspetrol Black River Corporation
Muiderstraat 7/A, 101 1PZ Amsterdam
The Netherlands
+31 20 662 2199
Merger Sub is a wholly-owned
subsidiary of Parent and was formed solely for the purpose of entering into the Merger Agreement and consummating the transactions contemplated in the Merger Agreement. Merger Sub has not engaged in any business except activities incidental to its
formation and in connection with the transactions contemplated by the Merger Agreement. Merger Sub will be merged with and into the Company, upon the terms and subject to the conditions set forth in the Merger Agreement, with the Company continuing
as the Surviving Company and a wholly-owned subsidiary of Parent.
Merger Subs principal executive offices are located at
Muiderstraat 7/A, 101 1PZ, Amsterdam, The Netherlands and its telephone number is +31 20 662 2199. Merger Subs registered offices are located at Clifton House 75 Fort Street, Grand Cayman KY-1104, Cayman Islands and its telephone number is +1
345 949 4900.
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THE EXTRAORDINARY GENERAL MEETING
This proxy statement is being provided to the holders of the Company Shares as part of a solicitation of proxies by the Board for use at the
extraordinary general meeting to be held at the date, time and place specified below.
Date, Time, Place and Purpose of
the Extraordinary General Meeting
This proxy statement is being furnished to our shareholders in connection with the solicitation of
proxies by our Board for use at our extraordinary general meeting of shareholders to be held at [] [a.m.], local time, on [], 2014, at One
Williams Center, 720 level, Community Room, Tulsa, Oklahoma 74172, and at any adjournments or postponements of the meeting. The purpose of the extraordinary general meeting is to:
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consider and vote on the adoption of the Merger Agreement (and the plan of merger exhibited thereto), which we refer to as the merger proposal; and |
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consider and vote on a proposal to approve, on a non-binding and advisory basis, certain executive compensation matters, which we refer to as the compensation proposal. |
At this time, the Company knows of no other matters to be submitted to our shareholders at the extraordinary general meeting. If any other
matters properly come before the extraordinary general meeting or any adjournment or postponement of the extraordinary general meeting, it is the intention of the persons named in the enclosed proxy card to vote the Company Shares they represent in
accordance with their judgment.
Our shareholders must adopt the Merger Agreement (and the plan of merger exhibited thereto) for the
Merger to occur. If our shareholders fail to adopt the Merger Agreement (and the plan of merger exhibited thereto), the Merger will not occur. A copy of the Merger Agreement is attached to this proxy statement as Annex A. This proxy statement and
the enclosed form of proxy are first being mailed to our shareholders on or about [], 2014.
Recommendation of the Board of Directors
The Board, at a meeting described above on October 2, 2014, unanimously
(i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of the Company and the Companys shareholders, (ii) approved the
Merger Agreement, (iii) approved the Merger and the other transactions contemplated by the Merger Agreement and (iv) subject to the terms and conditions of the Merger Agreement, resolved to recommend that the Company shareholders approve
the adoption of the Merger Agreement. For a discussion of the material factors considered by the Board in reaching its conclusions, see The Merger-Purpose of and Reasons for the Merger; Recommendation of the Board.
The Board unanimously recommends that you vote FOR the merger proposal and FOR the compensation proposal.
Record Date and Quorum
The holders of record of the Company Shares as of the close of business on [], 2014, the
record date for the extraordinary general meeting, are entitled to receive notice of, and to vote at, the extraordinary general meeting. On the record date, there were 29,441,243 Company Shares outstanding and held by [] holders of record.
A quorum of shareholders is necessary to hold a valid extraordinary
general meeting. The presence, in person or by proxy, of a majority of the aggregate outstanding Company Shares entitled to vote at the extraordinary general meeting will constitute a quorum for purposes of the extraordinary general meeting.
Abstentions are counted as present for determining a quorum. Each uninstructed broker or bank vote, also called broker non-vote, will also be counted as present for determining a quorum.
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As a result of the Power of Attorney entered into by WPX, there is expected to be a quorum of
shareholders at the extraordinary general meeting.
Required Vote for Approval
The merger proposal requires for its approval the affirmative vote of the holders of two-thirds of the Company Shares attending and voting at
the extraordinary general meeting either in person or by proxy.
The compensation proposal requires for its approval the affirmative vote
of the holders of a majority of the Company Shares attending and voting at the extraordinary general meeting either in person or by proxy.
Pursuant to the Power of Attorney, WPX, who holds approximately 69% of the Company Shares, granted to a designee of Parent the power to vote
WPXs Company Shares in favor of the merger proposal unless the Merger Agreement is terminated pursuant to its terms. The number of Company Shares held by WPX and underlying the Power of Attorney is sufficient to adopt the Merger Agreement (and
the plan of merger exhibited thereto). Accordingly, we expect the Merger Agreement (and the plan of merger exhibited thereto) to be adopted at the extraordinary general meeting unless the Merger Agreement is terminated prior to such meeting. The
Company is nonetheless soliciting your vote and distributing this proxy statement because (i) the laws of the Cayman Islands require the Merger to be approved by way of a special resolution of the shareholders of the Company and do not permit the
Merger to be approved by written resolution unless the resolution is adopted unanimously by all shareholders (therefore the Company is required to hold a shareholders meeting to approve the Merger), (ii) the NASDAQ listing rules require that the
Company solicit proxies and provide proxy statements for all meetings of shareholders, and (iii) in consideration of the foregoing clauses (i) and (ii), the Company agreed to do so in the Merger Agreement.
Effect of Abstentions and Broker Non-Votes
It is important that you vote your shares. If you mark abstain on your proxy card or attend the meeting and vote to abstain with
respect to the merger proposal or the compensation proposal, it will have the same effect as a vote AGAINST the merger proposal and AGAINST the compensation proposal. If you fail to vote with respect to the
merger proposal or the compensation proposal, it will have no effect on the merger proposal and no effect on the compensation proposal. A failure to return a proxy card will have no effect on the merger proposal and no effect on the compensation
proposal. A failure to instruct your broker, bank or other nominee to vote will have no effect on the merger proposal and no effect on the compensation proposal.
If the merger proposal is not approved by holders of the requisite number of Company Shares, then the transaction will not occur. If the
compensation proposal is not approved by holders of the requisite number of Company Shares, then such compensation will still be payable, subject only to the conditions applicable thereto, if the Merger is completed.
Shares Held by Company Directors, Executive Officers and WPX
As of the close of business on [], 2014, the record date, the Companys directors and
executive officers held and are entitled to vote, in the aggregate, 884 Company Shares, representing less than 1% of the aggregate Company Shares outstanding as of the record date. The directors and executive officers of the Company intend to vote
their shares FOR the merger proposal and FOR the compensation proposal.
As of the close of business
on [], 2014, the record date, WPX held and is entitled to vote, in the aggregate, 20,301,592 Company Shares, representing approximately 69% of the aggregate Company Shares outstanding as of the
record date. Pursuant to the Power of Attorney, WPX granted to a designee of Parent the power to vote WPXs Company Shares FOR the merger proposal unless the Merger Agreement is terminated pursuant to its terms. The number of
Company Shares held by WPX and underlying the Power of Attorney is sufficient to adopt the Merger Agreement (and the plan of merger exhibited thereto).
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Power of Attorney
In connection with the Company and Parent entering into the Merger Agreement, WPX entered into the Power of Attorney. The Power of Attorney
instructs Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs Company Shares in favor of the approval and adoption of the Merger Agreement and the plan of merger and to vote against approvals of any proposal made in opposition to,
competition with, or that would result in a breach of the Merger Agreement. The number of Company Shares held by WPX and underlying the Power of Attorney comprise approximately 69% of the Company Shares and is sufficient to adopt the Merger
Agreement (and the plan of merger exhibited thereto).
The Power of Attorney automatically terminates upon the termination of the Merger
Agreement pursuant to its terms. Accordingly, we expect the Merger Agreement (and the plan of merger exhibited thereto) to be adopted at the extraordinary general meeting unless the Merger Agreement is terminated prior to such meeting.
Proxies and Revocation
If you are a shareholder of record of your Company Shares and you submit a proxy by returning a signed and dated proxy card by mail that is
received by the Company at any time prior to the closing of the polls at the extraordinary general meeting, your shares will be voted at the extraordinary general meeting as you indicate. If you sign your proxy card without indicating your vote,
your shares will be voted FOR the merger proposal and FOR the compensation proposal and in accordance with the recommendations of the Board on any other matters properly brought before the extraordinary general
meeting, or at any adjournment or postponement thereof, for a vote.
If your Company Shares are held in street name, you will
receive instructions from your brokerage firm, bank, trust or other nominee that you must follow in order to have your Company Shares voted. If you have not received such voting instructions or require further information regarding such voting
instructions, contact your broker. Brokers who hold Company Shares in street name for a beneficial owner of those shares typically have the authority to vote in their discretion on routine proposals when they have not
received instructions from beneficial owners. However, brokers are not allowed to exercise their voting discretion with respect to the approval of matters that are non-routine, such as adoption of the Merger Agreement or the compensation
proposal, without specific instructions from the beneficial owner. Broker non-votes are shares held by a broker or other nominee that are represented at the extraordinary general meeting, but with respect to which the broker or other nominee is not
instructed by the beneficial owner of such shares to vote on the particular proposal and the broker does not have discretionary voting power on such proposal. If your broker or other nominee holds your Company Shares in street name, your
broker or other nominee will vote your shares only if you provide instructions on how to vote by filling out the voter instruction form sent to you by your broker with this proxy statement.
Proxies received by the Company at any time prior to the closing of the polls at the extraordinary general meeting that have not been revoked
or superseded before being voted, will be voted at the extraordinary general meeting.
You have the right to change or revoke your proxy
at any time before the vote taken at the extraordinary general meeting by:
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attending the extraordinary general meeting and voting in person; |
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properly submitting a later-dated proxy by mail; or |
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delivering a written notice to the Company Corporate Secretary at One Williams Center, 35th Floor, Tulsa, Oklahoma, 74172, Attention: Corporate Secretary, prior to the vote at the extraordinary general meeting.
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Please note that if you hold your shares in street name through a broker, bank or
other nominee and you have instructed your broker, bank or other nominee to vote your shares, the above-described options for changing your vote do not apply, and instead you must follow the instructions received from your broker, bank or other
nominee to change your vote.
Adjournment and Postponements
Although it is not currently expected, the Company may adjourn, postpone or recess the extraordinary general meeting (i) with the consent
of Parent, (ii) in the absence of quorum or (iii) once, for no more than 30 days to allow reasonable additional time for the filing and distribution of supplemental or amended disclosure which the Board has determined in good faith (after
consultation with its outside legal counsel) is required under Section 14(a) of the Exchange Act and the related rules and regulations promulgated by the SEC for the purpose of soliciting additional proxies. If adjourned, postponed or recessed,
the Company will publicly announce the new meeting date. Any adjournment, postponement or recess of the extraordinary general meeting will allow shareholders who have already sent in their proxies to revoke them at any time prior to their use at the
extraordinary general meeting as adjourned or postponed.
Dissenter Rights
Shareholders are entitled to dissenter rights under the Companies Act in connection with the Merger. This means that a dissenting registered
shareholder of the Company is entitled to payment of the fair value of his or her Company Shares upon dissenting to the Merger. You may vote at the extraordinary general meeting, and you need not vote against any of the proposals at the
extraordinary general meeting in order to exercise your Dissenter Rights under the Companies Law. However, in the event you exercise Dissenter Rights, a vote by you in favor of the approval and adoption of the Merger Agreement and the plan of merger
exhibited thereto at the extraordinary general meeting could deprive you of standing to seek a determination from the Grand Court (defined below) of whether the fair value for your Company Shares exceeds the Merger Consideration. To exercise your
Dissenter Rights, the following procedures must be followed:
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you must give written notice of objection (Notice of Objection) to the Company prior to the vote to approve the Merger. The Notice of Objection must include a statement that you propose to demand payment for
your Company Shares if the Merger is authorized by the resolution at the extraordinary general meeting; |
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within 20 days immediately following the date on which the vote approving the Merger is made, the Company must give written notice of the authorization (Approval Notice) to each dissenting shareholder who
has served a Notice of Objection; |
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within 20 days immediately following the date on which the Approval Notice is given (the Dissent Period), the dissenting shareholder must give a written notice of his or her decision to dissent (a
Notice of Dissent) to the Company stating his or her name and address, the number and class of the Company Shares with respect to which he or she dissents, and a demand for payment of the fair value of his or her Company Shares. A
dissenting shareholder must dissent in respect of all the Company Shares which he or she holds; |
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within seven days immediately following (a) the date of expiry of the Dissent Period or (b) the date on which the plan of merger is filed with the Registrar of Companies of the Cayman Islands, whichever is
later, the Surviving Company, must make a written offer (a Fair Value Offer) to each dissenting shareholder to purchase their Company Shares at a price determined by the Company to be the fair value of such Company Shares;
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if, within 30 days immediately following the date of the Fair Value Offer, the Company and a dissenting shareholder agree upon the price to be paid for such dissenters Company Shares, the Company shall pay such
amount to such dissenting shareholder forthwith; |
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if, within 30 days immediately following the date of the Fair Value Offer, the Company and a dissenting shareholder fail to agree on the price to be
paid for the Company Shares owned by such dissenting |
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shareholder, then, within 20 days immediately following the date of the expiry of such 30-day period, the Company must, and the dissenting shareholder may, file a petition with the Grand Court of
the Cayman Islands (the Grand Court) for a determination of the fair value of the Company Shares held by all dissenting shareholders who have served a Notice of Dissent and who have not agreed the fair value of their Company Shares with
the Company. The petition by the Company must be accompanied by a verified list containing the names and addresses of all members who have filled a Notice of Dissent and who have not agreed the fair value of their Company Shares with the Company;
and |
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at the hearing of a petition at which the dissenting shareholders are entitled to participate, the Grand Court will determine, (a) the fair value of the Company Shares of such dissenting shareholders as it finds
are involved together with a fair rate of interest (if any) and (b) the costs of the proceeding and the allocation of such costs among the parties. |
Notwithstanding the foregoing, at the Effective Time, such dissenters Company Shares shall no longer be outstanding and shall automatically be cancelled
and shall cease to exist, and such dissenter shall cease to have any rights with respect thereto, except the right to receive the fair value of such Company Shares in accordance with the provisions of section 238 of the Companies Law.
Your failure to follow exactly the procedures specified under the Companies Law will result in the loss of your dissenter rights. See
Dissenter Rights and the text of the Cayman Islands dissenter rights statute, section 238 of the Companies Law attached as Annex C. In view of the complexity of the Companies Law, shareholders who may wish to pursue
dissenter rights should consult their legal and financial advisors.
Solicitation of Proxies
This proxy solicitation is being made by and paid for by the Company on behalf of the Board. In addition to soliciting shareholders by mail,
the Company may request banks, brokers and other custodians, nominees and fiduciaries to solicit their customers who have Company Shares registered in the names of a nominee and, if so, will reimburse such banks, brokers and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket costs. Solicitation by our directors, officers and employees, without additional compensation, may also be made of some shareholders in person or by mail, telephone or email following the
original solicitation. The Company has retained Morrow to assist it in the solicitation of proxies for the extraordinary general meeting and will pay Morrow a fee of approximately $5,500 plus certain costs associated with additional services, if
required. The Company also has agreed to reimburse Morrow for out-of-pocket expenses and to indemnify them against certain losses arising out of its proxy solicitation services.
Other Matters
The Board knows of no other matters to be brought before the extraordinary general meeting. If any other matters are properly brought before
the extraordinary general meeting, the persons appointed in the accompanying proxy intend to vote the Company Shares represented thereby in accordance with their best judgment on such matters, under applicable laws.
You should not return your share certificate or send documents representing Company Shares with the proxy card. If the Merger is completed,
the paying agent for the Merger will send you a letter of transmittal and instructions for exchanging your Company Shares for the Merger Consideration.
Questions and Additional Information
If you have more questions, need assistance in submitting your proxy or voting your Company Shares, or need additional copies of this proxy
statement or the enclosed proxy card, you should contact the Company in writing at Apco Oil and Gas International Inc., One Williams Center, 35th Floor, Tulsa, Oklahoma, 74172, Attention: Corporate Secretary, or by telephone at (539) 573-2164.
You may also contact the Companys proxy solicitor, Morrow, toll free at (888) 681-0976.
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THE MERGER
Background of the Merger
The Board and the Companys senior management in the ordinary course periodically review and assess strategic alternatives available to
the Company to enhance shareholder value. Pursuant to an existing administrative services agreement between WPX and the Company, WPX employees provide management services to the Company at all times, including during such reviews and assessments. As
part of such reviews and assessments over the past few years, the Board took into consideration its views on the challenges facing the Company including, among others, the political environment in both Argentina and Colombia, the capital
expenditures that would be required for future growth and the challenges facing the Company in financing those capital expenditures, as well as upcoming renewal dates for certain concessions from the Argentine government, particularly in Río
Negro.
In early March 2013, representatives from WPX, the holder of approximately 69% of the Company Shares, informed Mr. Keith
Bailey, an independent director on the Board, that WPX was considering the potential benefits of various alternatives associated with its equity ownership of the Company, including pursuing a sale of its Company Shares. As part of such discussion,
the representatives from WPX requested that, should WPX proceed with a sale of its Company Shares, the Company assist in providing certain confidential information about the Company to potential purchasers of such Company Shares.
Subsequently, on March 6, 2013, the Board held a meeting at which WPXs interest in pursuing a sale of its Company Shares was
discussed. The Board discussed the need for Mr. Bailey and Messrs. Robert J. LaFortune, Piero Ruffinengo and John H. Williams, the independent directors of the Company at that time (the Independent Directors), to interact directly
with WPX on behalf of the Company and to assist in responding to WPXs request that the Company agree to provide certain confidential information about the Company to potential buyers in connection with the sale process for WPXs Company
Shares.
On March 12, 2013, the Independent Directors convened to discuss WPXs request that the Company provide certain
confidential information about the Company to potential buyers of WPXs Company Shares. The Independent Directors identified certain threshold issues to be discussed with WPX, including whether the Companys minority shareholders would
have the opportunity to participate in WPXs sale of its Company Shares, prior to agreeing to disclose non-public information about the Company to potential buyers of WPXs Company Shares.
Following the March 12, 2013 meeting, the Independent Directors held conference calls with representatives of WPX to discuss the issues
identified at their earlier meeting. During such calls, representatives from WPX informed the Independent Directors that WPX had no interest in, and would not support, a sale of all of the outstanding Company Shares (as opposed to a sale of only the
Company Shares held by WPX).
On March 21, 2013, the Independent Directors convened to further discuss the potential sharing of
non-public information about the Company with potential buyers of WPXs Company Shares. At the meeting, the Independent Directors decided to engage Paul Hastings LLP (Paul Hastings) to assist it in responding to WPXs requests
during the sale process for WPXs Company Shares.
On April 2, 2013 and April 8, 2013, the Independent Directors held
meetings with a representative of Paul Hastings to further discuss WPXs request that the Company provide certain confidential information about the Company to potential buyers of WPXs Company Shares. The representative from Paul Hastings
later consulted with special Cayman Islands counsel concerning the directors obligations with respect to the Companys confidential information. Following such discussions, the Independent Directors concluded that the Company should be
party to the confidentiality agreements that would be used to protect the Companys confidential information in connection with the sale of WPXs Company Shares.
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On April 22, 2013, Party A, a privately-held oil and gas company, along with its financial
advisor, approached WPX on an unsolicited basis expressing its desire to purchase all of WPXs Company Shares.
On May 7, 2013,
the Board held a meeting at which WPXs interest in pursuing a sale of its Company Shares was discussed. In connection therewith, the Board determined it was necessary to form a special committee (the Special Committee) to interact
directly with WPX on behalf of the Company to address any matters that may arise with respect to the potential sale by WPX of its Company Shares including, but not limited to (i) the disclosure of non-public Company information to prospective
purchasers or their advisors; (ii) the method of or process for the disclosure of non-public Company information and the preservation of the confidentiality of such information that is or may be disclosed; (iii) the compliance by the
Company with all applicable laws and regulations regarding the potential sale by WPX of its Company Shares and/or the disclosure of Company information and (iv) the publication of any press release, market dissemination or announcement by the
Company in connection with the potential sale by WPX of its Company Shares. Messrs. Bailey and LaFortune, two of the Independent Directors, were appointed as the sole members of the Special Committee with Mr. Bailey appointed to serve as the
Chairman. Following its formation, the Special Committee continued to consult with Paul Hastings.
On May 8, 2013, the Special
Committee, with the assistance of Paul Hastings, reviewed and approved a form confidentiality agreement to govern the sharing of confidential Company information with potential buyers of WPXs Company Shares. The confidentiality agreements were
drafted such that they were entered into by and among WPX, the Company and the potential acquirer.
From May 15, 2013 to May 23,
2013, WPX negotiated changes to the form confidentiality agreement with Party A. On May 23, 2013, WPX and the Company executed a confidentiality agreement with Party A. Party A subsequently commenced its due diligence process.
On May 21, 2013 and May 30, 2013, the Special Committee held meetings to further discuss WPXs potential sale of its Company
Shares and the sharing of confidential information concerning the Company with potential buyers of WPXs Company Shares.
Throughout
June, July and August 2013, Party A performed due diligence and held meetings with WPX and the Companys management. However, by the end of August 2013, Party A had not yet been able to secure financing for the potential purchase of WPXs
Company Shares. In light of Party As inability to secure financing, WPX advised the Board that WPX had elected to proceed with a full marketing process for its Company Shares. WPX, with the assistance of Merrill Lynch, Pierce,
Fenner & Smith Incorporated, WPXs financial advisor in connection with the potential sale of WPXs Company Shares (WPXs Financial Advisor), and input from the Company, subsequently began developing marketing
materials for the sale of WPXs Company Shares (the Marketing Materials). WPX also included in the sale process, separate and apart from its Company Shares, its interests (the WPX Argentine Interests) in Apco Argentina,
S.A., a subsidiary of the Company of which WPX owns 5%, and Northwest Argentina Corporation, an entity in which WPX owns 100% of the equity interests and whose operations are complementary to those of the Company. WPX estimated the value of the WPX
Argentine Interests to range from $5 million to $10 million.
Beginning in September 2013, the Marketing Materials were distributed to
approximately 80 parties, including private equity firms and oil and gas corporations from North and South America, Europe and Asia that were identified by WPX in consultation with WPXs Financial Advisor as being potential acquirers of
WPXs Company Shares. Ultimately, 19 of the recipients of the Marketing Materials, including an affiliate of Parent, expressed an interest in receiving further information about the potential acquisition of WPXs Company Shares.
Beginning in October 2013, the Company and WPX negotiated confidentiality agreements with interested parties, each of which also included
various negotiated standstill provisions prohibiting the prospective acquirer from acquiring any securities or assets of the Company or entering into certain other transactions or
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arrangements with respect to the Company without the consent of the Board. Throughout the process for the sale of WPXs Company Shares, the Special Committee was consulted with respect to
revisions to certain of the terms in the confidentiality agreements. The Special Committee was also regularly updated by representatives from WPX as to the identity of the parties that had executed confidentiality agreements.
Between October 1, 2013 and January 20, 2014, the Company and WPX entered into confidentiality agreements with 13 interested
parties, including an affiliate of Parent (such confidentiality agreement with an affiliate of Parent, the Parent CA).
Beginning in early November 2013, the interested parties who had executed confidentiality agreements and who had expressed a continued
interest in acquiring WPXs Company Shares were granted access to a virtual data room that contained key business, financial, regulatory, legal and other information concerning the Company, including financial projections. In addition, at the
Companys direction, certain additional non-public information was provided to certain interested parties in limited responses to specific diligence questions raised by such parties and their advisors. During this time, the Special Committee
was updated by representatives from WPX as to the identity of interested parties that were given access to the virtual data room.
Beginning in November 2013, representatives from WPX, with assistance from WPXs Financial Advisor and input from the Company, developed
marketing materials specifically highlighting the potential value in the Companys assets in the Vaca Muerta shale and the possibility that such assets, if fully developed, could significantly enhance the Companys financial performance
(the Vaca Muerta Materials). The Vaca Muerta Materials were sent to three targeted oil and gas corporations. In December 2013, WPX held meetings with each of the three oil and gas corporations to further discuss the potential of the
Companys assets in the Vaca Muerta, the scientific data available, as well as the capital expenditures required to fully develop the assets. Following the meetings, one of the corporations expressed an interest in further discussions. The
interested corporation later executed a confidentiality agreement and attended a presentation by WPX regarding the Vaca Muerta assets on February 3, 2014 at the offices of WPXs Financial Advisor in Houston, Texas.
On November 6, 2013, the Special Committee held a meeting to further discuss WPXs potential sale of its Company Shares and the
sharing of confidential information concerning the Company with potential buyers of WPXs Company Shares.
During the period from
December 4, 2013 to December 13, 2013, representatives from WPX gave presentations to five interested parties, including Party A, at the offices of WPXs Financial Advisor in Houston, Texas.
During the period from January 20, 2014 to January 22, 2014, representatives from WPX gave presentations to four interested parties,
including an affiliate of Parent, at the offices of WPXs Financial Advisor in Buenos Aires, Argentina.
In February 2014, at the
direction of WPX, WPXs Financial Advisor sent process letters to the seven remaining interested parties inviting each of them to submit written indications of interests for WPXs Company Shares by March 11, 2014. At this time, WPX
engaged Weil, Gotshal & Manges LLP (Weil) to draft a form share purchase agreement for bidders to use in connection with WPXs sale of its Company Shares and the WPX Argentine Interests.
By the March 11, 2014 deadline, each of Party A, Party B, a privately-held oil and gas company with operations in Latin America, Asia and
the Middle East, and Party C, a privately-held oil and gas company with operations in Argentina, submitted indications of interest to purchase all of WPXs Company Shares and the WPX Argentine Interests. Party A offered $316 million of total
consideration of which $304.7 million was attributed to WPXs Company Shares (equating to $15.00 per share) and the remainder attributed to the WPX Argentine Interests with 50% of the consideration in cash and the remaining 50% in the form of a
five-year note payable to WPX. Party B offered $300 million in cash in total consideration for WPXs Company Shares and the
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WPX Argentine Interests and did not indicate the portion of such consideration attributable to WPXs Company Shares. Party C offered total consideration of $162 million in cash of which $155
million was attributed to WPXs Company Shares (equating to $7.54 per share) and the remainder attributed to the WPX Argentine Interests. Parent did not provide an indication of interest and informed WPX that it was not yet prepared to submit
an offer.
Following receipt of the indications of interest, WPX informed the Special Committee that it had elected to continue
discussions with Party A and Party B. Following such discussions, on April 14, 2014, WPX entered into an exclusivity agreement with Party A pursuant to which WPX agreed to negotiate exclusively with Party A for the sale of WPXs Company
Shares until May 29, 2014. As of April 14, Party A increased the cash component of its offer to 70% with the remaining 30% of consideration in the form of a five-year note payable to WPX.
From April 2014 through July 2014, Party A conducted extensive due diligence on the Company and engaged numerous third-party advisors. On
May 26 and May 27, 2014, representatives from WPX and members of Company management and staff held meetings with Party A at the Companys offices in Buenos Aires, Argentina.
From May 2014 through July 2014, representatives from WPX and counsel to Party A exchanged drafts of a share purchase agreement and held
telephonic negotiations regarding the potential purchase of the Company Shares held by WPX. At WPXs request, Weil assisted in the negotiations with Party A. During this time, Party A and WPX elected to extend exclusivity until July 3,
2014 to allow for completion of due diligence items and negotiation of the stock purchase agreement. During the course of the negotiations, Party A revised its original offer to $312 million in total consideration for WPXs Company Shares and
the WPX Argentine Interests (with the amount attributable to the Company Shares held by WPX remaining at $15.00 per share) with 70% of the consideration in cash and the remaining 30% of consideration in the form of a five-year note payable to WPX.
WPX allowed its exclusivity period with Party A to expire on July 3, 2014, but agreed to continue to provide Party A with
information about the Company on a non-exclusive basis. Following the expiration of WPXs exclusivity period with Party A, WPX determined to engage in a limited and more focused marketing process for WPXs Company Shares. At the direction
of WPX, WPXs Financial Advisor contacted parties previously involved in the process as well as new parties that came forward and had indicated an interest in the potential purchase of Company Shares held by WPX. In response to the outreach
efforts, three new parties and four parties previously involved in the process (including Parent), expressed an interest in further discussions.
On July 7, 2014, Parent communicated to WPX that it was interested in acquiring WPXs Company Shares for $11.34 per share in cash.
WPX responded that it was not interested in a transaction at that price.
On July 11, 2014, a representative from Parent met with
representatives from WPX to discuss Parents offer of $11.34 per share. At such meeting, Parent also expressed its desire to purchase all of the Company Shares (and not just the Company Shares held by WPX) for $11.34 per share. WPX again
reiterated that it was not interested in a transaction at that price.
Between July 16, 2014 and August 7, 2014, the Company and
WPX negotiated and entered into confidentiality agreements with the three new interested parties.
On July 30, 2014, representatives
of the Argentine government announced that Argentina would imminently be in default on approximately $20 billion worth of sovereign debt obligations.
On August 5, 2014, the Board held a meeting at which it received an update from representatives of WPX regarding the process for the sale
of the Company Shares held by WPX.
Between August 5, 2014 and August 18, 2014, representatives from WPX gave presentations to
each of the three new interested parties at the offices of WPXs Financial Advisor in Houston, Texas.
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On August 8, 2014, Party A informed representatives from WPX that one of its equity partners
had elected to withdraw from the proposed transaction and that, while Party A had secured another equity partner, several more months of due diligence would be required by the new equity partner to assess the Company and the effects of the Argentine
governments default on its sovereign debt, prior to Party A being in a position to enter into a definitive agreement regarding the purchase of WPXs Company Shares. Representatives from WPX met with Party A and its new equity partner on
August 12, 2014 and they confirmed to WPX their desire to purchase WPXs Company Shares and reiterated the need for additional time.
Also on August 12, 2014, the Companys senior management held a conference call with representatives of Parent to discuss diligence
matters. Later that day, Parent submitted a non-binding offer to WPX (the August 12 Offer) to purchase all of the Company Shares (as opposed to solely the Company Shares held by WPX) for $15.00 per share in cash and to purchase the WPX
Argentine Interests for $2.00, which equated to total consideration of approximately $442 million of which approximately $305 million would be payable in respect of the Company Shares held by WPX. On August 12, 2014, the Nasdaq closing sale
price of the Company Shares was $13.46 per share.
In August 2014, WPX received non-binding offers for its Company Shares and the WPX
Argentine Interests from each of Party B, Party D, a publicly-traded oil and gas company with operations in Argentina, Party E, a publicly-traded integrated energy company with oil and gas assets in Argentina, Party F, a privately-held investment
fund with investments in financial, telecommunications and industrial assets primarily in Latin America, and Party G, a publicly-traded conglomerate with oil and gas exploration activities in the United States and other businesses primarily focused
in North and South America. Party B submitted a revised non-binding offer of $310 million in cash in total consideration for WPXs Company Shares and the WPX Argentine Interests with 70% of the consideration in cash and the remaining 30% in a
five-year note payable to WPX. Party D indicated a non-binding offer in the range of $270 million to $300 million in cash in total consideration for WPXs Company Shares and the WPX Argentine Interests. Party E submitted a non-binding offer of
$200 million in cash in total consideration for WPXs Company Shares and the WPX Argentine Interests. None of Party B, D or E indicated the portion of their non-binding offer attributable solely to WPXs Company Shares. Each of Party F and
Party G made verbal indications of a non-binding offer for WPXs Company Shares at or around the then-current Nasdaq trading price for the Company Shares. Party G noted that its non-binding offer was contingent upon the Companys extension
of the Río Negro concession.
Late in August 2014, WPX determined that Parents offer represented the best offer, in that the
offer contemplated the highest price per share without the need for financing and free of other contingencies and that, as a result, it had the best chance of being consummated. Thereafter, Mr. Bryan Guderian, the Chief Executive Officer of the
Company, a member of the Board and the Senior Vice President of Business Development for WPX, informed Mr. Bailey of Parents offer. Mr. Guderian indicated to Mr. Bailey that WPX had determined that Parents offer
represented the best offer for the Company Shares and despite its earlier desire not to participate in a transaction for a sale of all of the Company Shares, it was supportive of the potential transaction. Subsequently, Mr. Bailey informed the
other member of the Special Committee of Parents offer and the committee members agreed that the offer should be presented to the entire Board. On August 22, 2014, the members of the Special Committee also consulted with Paul Hastings
regarding Parents offer and determined that it was advisable for the Company to engage its own financial advisor to provide advice on the fairness of Parents offer from a financial point of view.
On August 29, 2014, WPX entered in an exclusivity agreement with Parent pursuant to which WPX agreed to negotiate exclusively with Parent
until September 28, 2014. On August 29, 2014, the Company and an affiliate of Parent entered into an amendment to the Parent CA. Among other things, the amendment provided that any negotiations with respect to the August 12 Offer and any
transaction arising thereunder would not be subject to the standstill provisions of the Parent CA.
In early September 2014,
the Company engaged Weil to serve as its counsel with respect to the potential sale of all of the Company Shares to Parent. Thereafter, WPX had separate internal counsel representing its
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interests throughout the remainder of the process for the sale of all of the Company Shares to Parent. The Company also engaged Maples and Calder (Maples) to serve as the
Companys special Cayman Islands counsel. Pursuant to the existing administrative services agreement between WPX and the Company, WPX employees continued to provide administrative, legal, and management services to the Company and, as a result
thereof, employees of WPX also served as representatives of the Company throughout the negotiations for the potential sale of all of the Company Shares to Parent.
On September 4, 2014, the Board held a meeting at the Companys offices in Tulsa, Oklahoma to receive an update from WPX regarding
the offer from Parent and to discuss the Companys views with respect to such offer. Representatives from WPXs Financial Advisor, WPX, Weil and Maples also attended portions of the meeting. During this meeting, a representative from
WPXs Financial Advisor summarized potentially interested parties that were identified and solicited in the potential sale of WPXs Company Shares, and the responses received from such potentially interested parties.
A representative from WPX then made a presentation to the Board summarizing the terms of Parents offer and informed the Board that WPX
was willing to sell the WPX Argentine Interests to Parent for the de minimis consideration of $2.00, an amount which was significantly below WPXs own valuation for the WPX Argentine Interests and the amounts offered for the WPX Argentine
Interests by previously interested parties. The representative from WPX advised the Board that WPX had concluded that Parents offer was a compelling one and recommended that the Board move forward with respect to a potential transaction
between the Company and Parent as contemplated by Parents offer.
A representative from Maples then reviewed with the Board its
fiduciary duties under Cayman Islands law and under the Companys governing documents in connection with its consideration of a sale of all of the Company Shares. Representatives from Weil also reviewed with the Board its views as to the
typical process for transactions of this nature and provided advice with respect to public company sale transactions generally. The members of the Board then engaged in a discussion expressing their views on Parents offer and whether it was in
the best interests of the Companys shareholders to engage in a transaction at the current time. As part of the discussion, the Board considered the risks and challenges facing the Company including the increasingly volatile economic and
political conditions in Argentina and the significant capital expenditures that would be required to explore and develop the Companys assets in the Vaca Muerta. The Board also considered WPXs desire to sell its Company Shares and, that,
in the event WPX sold its Company Shares on its own, the Companys minority shareholders would not benefit from the transaction. The Board acknowledged and recognized that the earlier sale process undertaken by WPX was a process solely for
WPXs Company Shares and discussed whether such process was an adequate proxy for a process for the sale of all of the Company Shares as opposed to just WPXs Company Shares. The Board concluded that none of the parties contacted in
the earlier process for the sale of WPXs Company Shares was prohibited from making an offer for all of the Company Shares and that the limited interest from potential buyers in the earlier process stemmed from the fact that the Company is a
non-operated business and that interest in the business from potential buyers would not increase based on whether all of the Company Shares were for sale or only WPXs Company Shares. The Board also discussed that the only offer for the
entire Company that had been received was Parents offer and expressed concern that if the Company pursued other offers, Parent would withdraw its offer. The Board also noted that Parents offer did not have a debt financing component or
any funding contingencies that would potentially disrupt closing of the transaction. The Board further discussed the fact that Parents offer was not contingent upon the Companys extension of the Río Negro concession and that it
provided the same consideration to the minority shareholders as to WPX. The Board then determined it was in the best interests of all of the Companys shareholders to move forward with Parents offer. In connection with that determination,
the Board appointed an ad-hoc transaction advisory group (the TAG) to oversee discussions and negotiations with Parent, it being understood, however, that the potential transaction would remain subject to approval by the Board. The Board
appointed Messrs. Bailey and Guderian and Mr. J. Kevin Vann, a director of the Company and Senior Vice President and Chief Financial Officer of WPX, to the TAG. The Board also determined it advisable and appropriate to engage an independent
financial advisor to advise the Board with respect to the transaction proposed by Parent. Accordingly, the Board resolved
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to engage Jefferies to act as its financial advisor with respect to the transaction proposed by Parent. Jefferies was recommended to the Board by Mr. Bailey due to its expertise and
independence as it had not done any work for the Company, WPX or Parent in the previous two years.
Later that day on September 4,
2014, Parent sent a draft merger agreement to the Company. From September 4, 2014 until the execution of the Merger Agreement, Weil and Cleary Gottlieb Steen & Hamilton LLP (Cleary), counsel to Parent, exchanged various
drafts of, and continued to negotiate the terms of, the merger agreement and the ancillary agreements to the merger agreement.
On
September 5, 2014, the TAG held a telephonic meeting, in which representatives from Weil and WPX also attended. Weil reviewed the key provisions of the draft merger agreement and, among other things, noted that the draft agreement did not
permit the Board to terminate the agreement to accept a superior offer. The TAG emphasized that it was important for the Company to have the ability to accept a superior offer post-signing and instructed Weil to negotiate for such a provision. Weil
also advised that in reviewing the confidentiality agreements entered into among the Company, WPX and the previously interested parties, it noted that the agreements contained dont ask/dont waive provisions in the standstill
obligations and, given the number of previously interested parties contacted, that it would be advisable for the Company to obtain the ability to waive such provisions in order to permit a post-signing market check from all potential bidders. The
TAG further discussed the merger agreement with Weil and instructed Weil to convey the TAGs views with respect to various aspects of the draft merger agreement.
Later in the day on September 5, 2014, Weil conveyed to Cleary the TAGs views with respect to various aspects of the draft merger
agreement.
On September 10, 2014, the Company engaged Jefferies to serve as its financial advisor and, if requested, to provide a
fairness opinion to the Board.
On September 15, 2014, the Board held a telephonic meeting in which representatives from Weil and
Maples participated. Representatives from Weil updated the Board on the status of negotiations with Parent, indicating that a revised draft of the merger agreement from Cleary was forthcoming. The Board discussed its concerns about shopping for a
competing offer and the risk that the Company would lose the offer from Parent. The Board agreed that it did not want to jeopardize a deal with Parent to pursue the remote possibility that there was a competing offer available, but that the Company
should negotiate for a right to terminate the merger agreement if an unsolicited superior offer was made.
From September 16, 2014
until the execution of the Merger Agreement, the parties and their respective counsel exchanged drafts of the Merger Agreement, the Power of Attorney and the Irrevocable Offer and discussed and negotiated proposals with respect to all three
documents. Through the course of negotiations the parties agreed to (i) include provisions making it clear that the Power of Attorney would terminate immediately upon the termination of the Merger Agreement (ii) a termination fee of
$15,450,000, which termination fee Parent had initially proposed would be $20,000,000, (iii) a tail period of 12 months following which a termination fee may, in certain circumstances, be payable to Parent, which period Parent initially
proposed as 18 months, (iv) revise the definition of material adverse effect in a manner that would limit the circumstances under which it could be invoked and (v) eliminate a provision initially proposed by Parent pursuant to
which the Company would be obligated to pay Parents expenses following a termination of the Merger Agreement by Parent as a result of breach by the Company of its representations, warranties or covenants under the Merger Agreement. Throughout
the negotiations, the TAG was consulted and provided guidance to the Companys representatives with respect to Parents proposals.
The Company and Weil participated in the negotiation of the Power of Attorney due to the impact of the Power of Attorney on the receipt of
shareholder approval and the ability of the Board to entertain and accept a
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superior offer should one arise. The Company and Weil also participated in the negotiation of the Irrevocable Offer, as the consummation of the transactions contemplated by the Irrevocable Offer
(concurrently with the Merger) was a condition to the closing of the Merger under the Merger Agreement and the Irrevocable Offer contained provisions regarding non-solicit obligations of WPX and post-termination fees payable by WPX to Parent in
certain circumstances where a sale of the Company, a material portion of its assets or WPXs Company Shares occurred.
On
September 19, 2014, Parent contacted the Company to suggest that both parties and their respective counsel hold in-person meetings the following week to finalize the Merger Agreement.
From September 24, 2014 to September 26, 2014, representatives from Parent, Cleary, the Company, WPX and Weil held meetings at the
offices of Weil in Dallas, Texas. The parties reviewed and negotiated the open points in the merger agreement and the ancillary agreements. Throughout the negotiations, representatives from the Company consulted with members of the TAG regarding
Parents proposals and received guidance from the TAG in addressing Parents proposals. During these negotiations, on the evening of September 24, 2014, Parent raised a diligence matter that materially affected its view of the value
of the Company. Parent requested protection for this matter and various proposals were discussed between the parties.
On the morning of
September 25, 2014, the parties reconvened their meeting. During that meeting, representatives of the Company and Parent further discussed various means of providing protection to Parent with respect to the diligence matter. Among the
proposals, Parent requested that the purchase price be reduced to $14.11 per share in cash. The parties negotiated throughout the morning, and ultimately agreed on a tentative adjustment to the purchase price resulting in a price of $14.50 per share
in cash, subject to review by the TAG and approval by the Board. As part of the negotiations regarding the reduced purchase price, WPX and Parent agreed that the provisions of the Irrevocable Offer relating to the IO Post-Termination Fees (as
defined below in Irrevocable Offer) would not be amended as a result of the reduction in price. The parties then finalized the remaining open points in the merger agreement through October 2, 2014.
On October 1, 2014, the TAG held a meeting in which representatives from WPX and Weil also participated. Weil reviewed with the members
of the TAG the discussions regarding the purchase price adjustment, as well as the proposed terms of the draft merger agreement, Power of Attorney and Irrevocable Offer. During this meeting, the TAG determined that, subject to the receipt of the
fairness opinion from Jefferies with respect to the fairness of the transaction from a financial point of view, it was willing to unanimously recommend that the Board move forward with the transactions contemplated by the merger agreement with
Parent.
Later that day on October 1, 2014, the Board held a meeting, in which representatives from WPX, Weil and Jefferies also
participated. A representative of Weil updated the Board on the status of negotiations with Parent and summarized in detail the terms of the merger agreement, including the material changes to the merger agreement since the last Board meeting on
September 15, 2014, as well as the reduction in the purchase price from $15.00 per share to $14.50 per share. Weil also noted that the terms of the proposed merger agreement permitted the Company to waive the dont ask/dont
waive provisions in the confidentiality agreements entered into with previously interested parties and to terminate the merger agreement in order to accept a superior offer. Weil also reviewed the provisions of the Irrevocable Offer relating
to the IO Post-Termination Fees. As part of its discussions with the Board, Weil also discussed the work it had done for WPX, which included the representation of WPX in its earlier negotiations with Party A regarding the sale of WPXs Company
Shares, and the fact that Weil was also representing a consortium that included Parent with respect to an unrelated matter.
Representatives from Jefferies then presented its financial analysis of the proposed transaction with Parent. Jefferies reviewed with the
Board the process undertaken by WPX beginning in May 2013 and described the process as being broad-based given that approximately 80 potential buyers had been contacted, although only a handful of indications of interest were received. Jefferies
noted that in the previous 18 months, the Companys share price had fluctuated quite a bit and that the premium represented by Parents offer was still high relative to historic
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prices. Jefferies also described to the Board a number of benchmarking points used in its analysis and noted that the Company is a non-operated business in that it has only non-operated interests
in the producing properties in which it participates. In response to an inquiry from the Board regarding comparisons of operating companies versus non-operating companies, Jefferies noted that, generally, non-operated companies are valued at a
discount compared to operating companies. The representatives from Jefferies stated that, in their preliminary view, Parents offer of $14.50 per share was within the range of fairness. Following its discussion with the Board, Jefferies stated
that it was prepared to deliver its opinion to the Company, upon request by the Board, that Parents offer of $14.50 per share was fair, from a financial point of view, to the Companys shareholders.
On October 2, 2014, the Board reconvened to review the final terms of the proposed transaction with Parent. Representatives from WPX,
Weil, Maples and Jefferies also participated in the meeting. A representative from Maples again reviewed with the Board its fiduciary duties to shareholders under Cayman Islands law. A representative from WPX reviewed with the Board the process
undertaken by WPX beginning in May 2013 with respect to the sale of the Company Shares held by WPX. The representative from WPX noted that marketing materials had been sent to approximately 80 potential buyers and that Parents offer was the
only offer received for all of the Company Shares. A representative from Weil also reviewed with the Board the terms of the final merger agreement, including the changes made since the meeting of the Board the previous day. A representative from
Jefferies then summarized its presentation from the previous days meeting regarding its financial analysis of Parents offer, and responded to certain questions posed by members of the Board. Jefferies noted that it understood a
broad-based process had been undertaken by WPX over the past 18 months and that there were risks associated with the Company and the Argentine economy. Jefferies then orally delivered its opinion, which was subsequently confirmed in writing, that,
as of October 2, 2014 and subject to the limitations and qualifications as more fully described below in the section entitled The Merger Opinion of our Financial Advisor Opinion of Jefferies, that
Parents offer of $14.50 per share was fair, from a financial point of view, to the Companys shareholders. The members of the Board then engaged in a discussion regarding the information presented by WPX, Weil and Jefferies. As part of
its discussion, the Board noted that WPXs agreement to pay to Parent an IO Post-Termination Fee in connection with certain transactions following termination of the Merger Agreement (including the sale of the Company or a material portion of
its assets) did not bind the minority shareholders. The Board also noted that the Power of Attorney terminated effective upon termination of the Merger Agreement, meaning that there was no restriction on WPXs ability to vote in favor of an
alternative transaction following termination of the Merger Agreement. The Board also noted that WPXs agreement to sell the WPX Argentine Interests for de minimis consideration as part of the proposed transaction represented additional value
that was foregone by WPX for the benefit of the Companys minority shareholders. Following the discussion, the Board determined that given the political and economic environment in both Argentina and Colombia, the capital expenditures that
would be required for future growth and the challenges facing the Company in financing those capital expenditures, the status of the Company as a non-operated company, the earlier process undertaken by WPX for a sale of its Company Shares, and that
the minority shareholders would receive the same consideration in the Merger as WPX, the Merger was in the best interests of all of the Companys shareholders. Following further discussion, the Board unanimously adopted resolutions which, among
other things (i) determined that the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of the Company and the Companys shareholders,
(ii) approved the Merger Agreement, (iii) approved the Merger, the plan of merger and the other transactions contemplated by the Merger Agreement and (iv) subject to the terms and conditions of the Merger Agreement, resolved to
recommend that the Company shareholders approve the adoption of the Merger Agreement and the plan of merger exhibited thereto.
Late in
the evening of October 2, 2014, the Company and Parent executed the Merger Agreement. At approximately 5:30 a.m. Central Time on October 3, 2014, the Company and WPX each issued a press release announcing the transaction.
On October 3, 2014, the Company and WPX sent notices to 12 previously interested parties that had executed confidentiality agreements
containing dont ask/dont waive provisions notifying such parties that the dont ask/dont waive provisions had been waived.
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Purpose of and Reasons for the Merger; Recommendation of the Board
The purpose of the Merger is to enable the Companys shareholders to realize the value of their investment in the Company through their
receipt of the $14.50 per share Merger Consideration in cash, without interest.
The Board
The Board, at a meeting described above on October 2, 2014, unanimously (i) determined that the Merger Agreement, the Merger and the
other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of the Company and the Companys shareholders, (ii) approved the Merger Agreement, (iii) approved the Merger and the other
transactions contemplated by the Merger Agreement and (iv) subject to the terms and conditions of the Merger Agreement, resolved to recommend that the Company shareholders approve the adoption of the Merger Agreement.
In connection with its determination, the Board considered the following substantive factors as being generally positive or favorable, each of
which the Board believed supported a decision to proceed with the Merger Agreement:
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its understanding of the business, operations, financial condition, earnings and prospects of the Company, including the Companys prospects as an independent company; |
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|
the risks inherent in the future operations of the Company, such as the capital expenditure requirements for growth in operations, the ability to finance such capital expenditures required, and the risks related to the
Companys negotiations with the province of Río Negro to obtain a ten-year non-operated concession extension for the portion of the Entre Lomas concession in that province; |
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the current state of the economic and political conditions in the countries in which the Company operates and general uncertainty surrounding forecasted economic conditions, both in the near term and in the long term,
within our industry; |
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that during the sale process conducted by WPX for a sale of its Company Shares, approximately 80 parties were contacted but only a few indications of interest were received and only Parent made an offer for all of the
Company Shares as opposed to only the Company Shares held by WPX and Parents offer represented the highest all-cash offer per share for the Company Shares received by either WPX or the Company; |
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that the all-cash Merger Consideration of $14.50 per share will provide the Companys shareholders with the ability to immediately monetize their investment in the Company at a certain value, while avoiding the
risks inherent in the Companys long-term business plan; |
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the fact that the Merger Consideration and the other terms of the Merger Agreement resulted from negotiations between the Transaction Advisory Group and the Board and the Companys legal and financial advisors with
Parent and its legal advisors, and the Boards belief that $14.50 per share in cash for each Company Share represented the highest per share consideration reasonably available; |
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the financial analyses and opinion of Jefferies addressed to the Board that, as of October 2, 2014, and based upon and subject to the qualifications, limitations and assumptions stated in its opinion, the Merger
Consideration of $14.50 per share to be received by the holders of Company Shares in the Merger was fair, from a financial point of view, to such shareholders as more fully described in Opinion of Jefferies LLC below and
Annex B; |
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that WPX, as the holder of approximately 69% of the Company Shares and as party to the Power of Attorney, would receive the same consideration for their Company Shares as will be received by all other holders of the
Company Shares and that all of the holders of the Company Shares would share equally in the control premium being paid by Parent even though WPX may have been in a position to demand a disproportionate share of the control premium;
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- 34 -
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the Boards belief that the Merger was more favorable to shareholders than the potential value that might result from other alternatives potentially available to the Company; |
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the inclusion in the Merger Agreement that, subject to compliance with the terms and conditions of the Merger Agreement, the Company is permitted to furnish information to and conduct negotiations with third parties
that make a bona fide, written, unsolicited alternative acquisition proposal; |
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that, subject to compliance with the terms and conditions of the Merger Agreement, the Company is permitted to terminate the Merger Agreement under certain circumstances in order to enter into an agreement with respect
to a superior offer upon payment of a $15,450,000 termination fee; |
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that the minority shareholders of the Company will receive the same consideration as WPX; |
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that WPX entered into the Power of Attorney, which among other things, grants to a designee of Parent the power to vote WPXs Company Shares in favor of the adoption of the plan of merger and the Merger Agreement
unless the Merger Agreement is terminated pursuant to its terms; |
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that WPX agreed to sell its interests in Apco Argentina, S.A. and Northwest Argentina Corporation to Parent concurrently with the consummation of the Merger; |
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that the end date of July 2, 2015 under the Merger Agreement allows for sufficient time to complete the Merger; |
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the likelihood that the Merger would be completed, and completed in a reasonably prompt time frame; |
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the other terms and conditions of the Merger Agreement, described under The Merger Agreement beginning on page 53 of this proxy statement, which the Transaction Advisory Group and the Board,
after consulting with legal counsel, considered to be reasonable and consistent with precedents deemed relevant; and |
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that Company shareholders who do not vote in favor of adoption of the Merger Agreement may exercise dissenter rights under Section 238 of the Companies Law. |
The Board was also aware of and considered the following risks and other factors concerning the Merger Agreement and the Merger as being
generally negative or unfavorable:
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that the Merger, while providing certainty of cash value to the Companys shareholders, would not allow the Companys shareholders to have any ongoing equity participation in the Surviving Company following
the closing of the Merger, meaning that the Companys shareholders will cease to participate in our potential future earnings or growth, and will not benefit from any increases in the value of the Company Shares following the closing of the
Merger; |
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that the announcement and pendency of the Merger could result in the disruption of our business, including the possible diversion of management and employee attention, potential employee attrition and potential adverse
effects on our business relationships; |
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that if the Merger is not completed, the Company may be adversely affected due to potential disruptions in its operations; |
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the requirement that the Company pay Parent a termination fee of $15,450,000 if the Company enters into an agreement related to a superior offer or the Merger Agreement is terminated under other circumstances;
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that the Company is subject to restrictions on the conduct of its business prior to the consummation of the Merger, which may delay or prevent the Company from undertaking business opportunities that may arise during
the pendency of the Merger, whether or not the Merger is completed; |
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that the proposed Merger will be a taxable transaction for U.S. federal income tax purposes for holders of Company Shares; |
- 35 -
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the risk that, while the Merger is expected to be completed, there can be no assurance that all conditions to the parties obligations to complete the Merger will be satisfied, and as a result, it is possible that
the Merger may not be completed even if approved by our shareholders; and |
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that the Merger is conditioned on the consummation of certain transactions pursuant to the Irrevocable Offer, dated October 2, 2014 (the Irrevocable Offer), from Parent to WPX, pursuant to which WPX has
agreed to sell its interests in Apco Argentina, S.A. and Northwest Argentina Corporation to Parent. |
In addition, the Board
was aware of and considered the interests that certain of the Companys directors and executive officers have with respect to the Merger that differ from, or are in addition to, their interests as shareholders of the Company, as described in
Interests of the Companys Directors and Executive Officers in the Merger beginning on page 47.
The
foregoing discussion of the factors considered by the Board is not intended to be exhaustive, but includes the material factors considered by the Board. In view of the large number of factors considered by the Board in connection with the evaluation
of the Merger Agreement and the Merger and the complexity of these matters, the Board did not consider it practicable to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors considered in reaching a
decision, nor did the Board evaluate whether these factors were of equal importance. In addition, each director may have given different weight to the various factors. The Boards determinations and recommendations were based upon the totality
of the information considered. The Board conducted discussions of, among other things, the factors described above, including asking questions of our management and our financial and legal advisors, and unanimously (i) determined that the
Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of the Company and the Companys shareholders, (ii) approved the Merger Agreement,
(iii) approved the Merger and the other transactions contemplated by the Merger Agreement and (iv) subject to the terms and conditions of the Merger Agreement, resolved to recommend that the Company shareholders approve the adoption of the
Merger Agreement.
The Board unanimously recommends that you vote FOR the merger.
Opinion of Jefferies LLC
Summary
Jefferies has delivered
its opinion to the Board to the effect that, as of October 2, 2014, and based upon and subject to the various considerations and assumptions set forth therein, the Merger Consideration to be received by the holders of Company Shares pursuant to
the Merger Agreement was fair, from a financial point of view, to those holders. The full text of the written opinion of Jefferies, dated October 2, 2014, is attached to this proxy statement as Annex B. We urge you to read that opinion
carefully and in its entirety. Jefferies opinion was provided to the Board in connection with the Boards consideration of the Merger and addresses only the fairness, from a financial point of view and as of the date of Jefferies
opinion, of the Merger Consideration to be received by the holders of the Company Shares pursuant to the Merger Agreement and does not address any other aspect of the Merger. Jefferies opinion does not constitute a recommendation as to how any
holder of the Company Shares should vote on the Merger or any matter related thereto.
Opinion of Jefferies
Jefferies served as the Boards financial advisor in connection with the Merger. The Board selected Jefferies, an internationally
recognized investment banking and advisory firm, based on Jefferies qualifications, expertise and reputation. On October 2, 2014, Jefferies rendered to the Board its written opinion to the effect that, as of that date and based upon
and subject to the various considerations and assumptions set forth therein, the Merger Consideration of $14.50 per share in cash to be received by holders of the Company Shares pursuant to the Merger Agreement was fair, from a financial point
of view, to those holders.
- 36 -
The full text of Jefferies opinion, which sets forth the assumptions made, matters
considered and limitations on the scope of review undertaken by Jefferies in rendering its opinion, is attached to this proxy statement as Annex B and is incorporated by reference herein its entirety. The Company encourages shareholders to read
the Jefferies opinion carefully and in its entirety. Jefferies opinion was provided to the Board in connection with the Boards consideration of the Merger and addresses only the fairness, from a financial point of view and as of the date
of Jefferies opinion, of the Merger Consideration to be received by the holders of the Company Shares pursuant to the Merger Agreement and does not address any other aspect of the Merger. Jefferies opinion does not constitute a
recommendation as to how any holder of the Company Shares should vote on the Merger or any matter related thereto. The summary of Jefferies opinion is qualified in its entirety by reference to the full text of the opinion.
In arriving with its opinion, Jefferies, among other things:
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reviewed a draft dated September 30, 2014 of the Merger Agreement; |
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reviewed certain publicly available financial and other information about the Company; |
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reviewed certain information furnished to Jefferies by the Companys management, including financial forecasts and analyses, relating to the business, operations and prospects of the Company; |
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held discussions with members of senior management of the Company concerning the matters described in the preceding two bullet points; |
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reviewed the share trading price history and valuation multiples for the Company Shares and compared them with those of certain publicly-traded companies that Jefferies deemed relevant; |
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compared the proposed financial terms of the Merger with the financial terms of certain other transactions that Jefferies deemed relevant; |
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analyzed the discounted unlevered free cash flows of the Company; and |
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conducted such other financial studies, analyses and investigations as Jefferies deemed appropriate. |
In Jefferies review and analysis and in rendering its opinion, Jefferies assumed and relied upon, but did not assume any responsibility
to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available by the Company or that was publicly available (including, without limitation, the information
described above), or that was otherwise reviewed by Jefferies. Jefferies relied on assurances of the management of the Company that management was not aware of any facts or circumstances that would make such information inaccurate or misleading. In
its review, Jefferies did not obtain any independent evaluation or appraisal of any of the assets or liabilities of, nor did Jefferies conduct a physical inspection of any of the properties or facilities of, the Company. Jefferies was not furnished
with any such evaluations or appraisals and did not assume any responsibility to obtain any such evaluations or appraisals.
With respect
to the financial forecasts provided to and examined by Jefferies, Jefferies opinion noted that projecting future results of any company is inherently subject to uncertainty. The Company informed Jefferies, however, and Jefferies assumed, that
such financial forecasts were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of the Company as to the future financial performance of the Company. Jefferies expressed no
opinion as to the Companys financial forecasts or the assumptions on which they are made.
Jefferies opinion is based on
economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date of its opinion. Jefferies expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter
affecting Jefferies opinion of which Jefferies became aware after the date of its opinion.
- 37 -
Jefferies made no independent investigation of any legal or accounting matters affecting the
Company, and Jefferies assumed the correctness in all respects of all legal, tax and accounting advice given to the Company and the Board material to Jefferies analysis, including, without limitation, advice as to the legal, accounting and tax
consequences of the terms of, and transactions contemplated by, the Merger Agreement to the Company and its shareholders. In addition, in preparing its opinion, Jefferies did not take into account any tax consequences of the transaction to any
holder of Company Shares. In rendering its opinion, Jefferies assumed that the final form of the Merger Agreement would be substantially similar to the last draft reviewed by it in all respects material to Jefferies opinion. Jefferies also
assumed that in the course of obtaining the necessary regulatory or third-party approvals, consents and releases for the Merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on the Company, Parent
or the contemplated benefits of the Merger.
Jefferies was not requested to and did not provide advice concerning the structure, the
specific amount of the Merger Consideration, or any other aspects of the Merger, or to provide services other than the delivery of its opinion. Jefferies was not authorized to and did not solicit any expressions of interest from any other parties
with respect to the sale of all or any part of the Company or any other alternative transaction. Jefferies did not participate in negotiations with respect to the terms of the Merger and related transactions. Consequently, Jefferies assumed that
such terms are the most beneficial terms from the Companys perspective that could under the circumstances be negotiated among the parties to such transactions, and Jefferies expressed no opinion as to whether any alternative transaction might
result in consideration more favorable to the Companys shareholders than that contemplated by the Merger Agreement.
Jefferies opinion was solely for the use and benefit of the Board in connection with its consideration of the Merger, and
Jefferies opinion does not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to the Company, nor did it address the underlying
business decision by the Company to engage in the Merger or the terms of the Merger Agreement or the documents referred to therein. Jefferies opinion did not constitute a recommendation as to how any holder of the Company Shares should vote on
the Merger or any matter related thereto. Jefferies opinion did not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of the Company, other than the holders of
Company Shares. Jefferies expressed no opinion as to the price at which Company Shares will trade at any time. Jefferies did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any
compensation payable or to be received by any of the Companys officers, directors or employees, or any class of such persons, in connection with the Merger relative to the consideration to be received by holders of Company Shares.
In preparing its opinion, Jefferies performed a variety of financial and comparative analyses. The preparation of a fairness opinion is a
complex process involving various determinations as to the most appropriate and relevant quantitative and qualitative methods of financial analysis and the applications of those methods to the particular circumstances and, therefore, is not
necessarily susceptible to partial analysis or summary description. Jefferies believes that its analyses must be considered as a whole. Considering any portion of Jefferies analyses or the factors considered by Jefferies, without considering
all analyses and factors, could create a misleading or incomplete view of the process underlying the conclusion expressed in Jefferies opinion. In addition, Jefferies may have given various analyses more or less weight than other analyses, and
may have deemed various assumptions more or less probable than other assumptions, so that the range of valuation resulting from any particular analysis described below should not be taken to be Jefferies view of the Companys actual
value. Accordingly, the conclusions reached by Jefferies are based on all analyses and factors taken as a whole and also on the application of Jefferies own experience and judgment.
In performing its analyses, Jefferies made numerous assumptions with respect to industry performance, general business, economic, monetary,
regulatory, market and other conditions and other matters, many of which are beyond the Companys and Jefferies control. The analyses performed by Jefferies are not necessarily indicative of actual values or actual future results, which
may be significantly more or less favorable than
- 38 -
suggested by such analyses. In addition, analyses relating to the per share value of the Company Shares do not purport to be appraisals or to reflect the prices at which the Company Shares may
actually be sold. The analyses performed were prepared solely as part of Jefferies analysis of the fairness, from a financial point of view, of the Merger Consideration to be received by holders of the Company Shares pursuant to the Merger,
and were provided to the Board in connection with the delivery of Jefferies opinion.
The following is a summary of the material
financial and comparative analyses performed by Jefferies in connection with Jefferies delivery of its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand
Jefferies financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data described below without considering the
full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies financial analyses.
Comparable Public Company Analysis
Using publicly-available information and information provided by the Companys management, Jefferies analyzed the trading multiples of the
Company and the corresponding trading multiples of the following exploration and production, energy, or oil and gas companies with a focus in Argentina or in other parts of Latin America. Although none of the selected publicly-traded companies are
directly comparable to the Company, the companies were chosen because they have certain characteristics that are similar to those of the Company. These are referred to as the Apco Selected Comparable Companies:
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Argentina Focused |
|
Other Latin America Focused |
Americas Petrogas
Andes Energia PLC
Crown Point Energy Inc.
Madalena Energy Inc.
Petrobras Argentina
YPF SA |
|
BPZ Resources
Canacol Energy Ltd.
Ecopetrol S.A.
GeoPark Holdings Ltd.
Gran Tierra Energy
Pacific Rubiales |
|
Parex Resources Inc.
Petroamerica
QGEP Participacoes SA |
In its analysis, Jefferies derived and compared multiples for the Company and the Apco Selected Comparable
Companies, calculated as follows:
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the total enterprise value divided by proved and probable reserves, which is referred to as Enterprise Value/2P; |
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the total enterprise value divided by proved reserves, which is referred to as Enterprise Value/Proved; and |
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the total enterprise value divided by barrels of oil equivalent per day, which is referred to as Enterprise Value/Boe/D. |
This analysis indicated the following:
Comparable Public Company Multiples
Argentina Focused
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|
|
|
Benchmark |
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Mean |
|
|
Median |
|
Enterprise Value/2P |
|
$ |
12.48 |
|
|
$ |
12.46 |
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Enterprise Value/Proved |
|
$ |
21.75 |
|
|
$ |
13.06 |
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Enterprise Value/Boe/D |
|
$ |
85,010 |
|
|
$ |
28,190 |
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- 39 -
Other Latin America Focused
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Benchmark |
|
Mean |
|
|
Median |
|
Enterprise Value/2P |
|
$ |
16.73 |
|
|
$ |
15.38 |
|
Enterprise Value/Proved |
|
$ |
29.66 |
|
|
$ |
26.68 |
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Enterprise Value/Boe/D |
|
$ |
64,150 |
|
|
$ |
64,025 |
|
Using a reference range of $5.00 to $15.00 per barrel of oil equivalent for the Companys Enterprise
Value/2P, Jefferies determined an implied enterprise value for the Company, then subtracted negative net debt of approximately $24 million to determine an implied equity value. This analysis indicated a range of implied values per share of the
Company Shares of $12.78 to $36.76 using Enterprise Value/2P, compared to the Merger Consideration of $14.50 per Company Share.
Using a reference range of $10.00 to $25.00 per barrel of oil equivalent for the Companys Enterprise Value/Proved, Jefferies determined
an implied enterprise value for the Company, then subtracted negative net debt of approximately $24 million to determine an implied equity value. This analysis indicated a range of implied values per share of the Company Shares of $12.45 to $29.93
using Enterprise Value/Proved, compared to the Merger Consideration of $14.50 per Company Share.
Using a reference range of $20,000
to $60,000 per barrel of oil equivalent per day for the Companys Enterprise Value/Boe/D, Jefferies determined an implied enterprise value for the Company, then subtracted negative net debt of approximately $24 million to determine an implied
equity value. This analysis indicated a range of implied values per share of the Company Shares of $9.37 to $26.52 using Enterprise Value/Boe/D, compared to the Merger Consideration of $14.50 per Company Share.
No company utilized in the comparable company analysis is identical to the Company. In evaluating the selected companies, Jefferies made
judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the Companys and Jefferies control. Mathematical analysis, such as
determining the mean or median, is not in itself a meaningful method of using comparable company data.
Selected Comparable Transactions Analysis
Using publicly-available information and other information, Jefferies examined the following 18 transactions involving exploration
and production, energy, or oil and gas companies with transaction values greater than $10,000,000 since January 1, 2011. While none of the companies that participated in the selected transactions is directly comparable to the Company, and none
of the transactions in the selected transactions analysis is directly comparable to the Merger, Jefferies selected these transactions because each involved exploration and production, energy, or oil and gas assets or operations located within
Argentina. The transactions considered and the month and year each transaction was announced were as follows:
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|
|
Date Announced |
|
Acquiror |
|
Seller |
Shale / Tight Gas |
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|
|
|
8/29/2014 |
|
Petronas |
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YPF |
4/10/2014 |
|
Chevron |
|
YPF |
4/5/2014 |
|
Shell |
|
Total |
12/13/2013 |
|
Pluspetrol |
|
YPF |
9/27/2013 |
|
Wintershall |
|
GyP |
9/24/2013 |
|
DOW |
|
YPF |
6/16/2013 |
|
Chevron |
|
YPF |
1/31/2012 |
|
Shell |
|
Medanito S.A. |
8/30/2011 |
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ExxonMobil |
|
Americas Petrogas |
- 40 -
|
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|
Date Announced |
|
Acquiror |
|
Seller |
Conventional / Other |
|
|
|
|
6/13/2014 |
|
Medanito S.A |
|
Chanares |
6/1/2014 |
|
Petrobras Argentina |
|
Petroleo Brasileiro |
5/29/2014 |
|
Madalena Energy |
|
Gran Tierra Energy |
2/13/2014 |
|
YPF |
|
Apache |
1/31/2014 |
|
YPF |
|
Petrobras Argentina |
11/19/2013 |
|
New Times Energy |
|
Pluspetrol |
3/26/2012 |
|
Crown Point Energy |
|
Antrim Energy |
6/27/2011 |
|
President Energy |
|
Tripetrol Petroleum |
1/18/2011 |
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Gran Tierra Energy |
|
Petrolifera Petroleum |
Using publicly-available estimates and other information for each of these transactions, Jefferies reviewed
the enterprise value as a multiple of the target companys (i) transaction value divided by proven and probable reserves, which is referred to as Transaction Value/2P, and (ii) transaction value divided by barrels of oil
equivalent per day, which is referred to as Transaction Value/Boe/D.
This analysis indicated the following:
Selected Comparable Transactions Multiples
|
|
|
|
|
|
|
|
|
Benchmark |
|
Mean |
|
|
Median |
|
Transaction Value/2P |
|
$ |
11.86 |
|
|
$ |
9.67 |
|
Transaction Value/Boe/D |
|
$ |
37,557 |
|
|
$ |
34,551 |
|
Using a reference range of $5.00 to $10.00 per barrel of oil equivalent for the Companys Transaction
Value/2P, Jefferies determined an implied enterprise value for the Company, then subtracted negative net debt of approximately $24 million to determine an implied equity value. This analysis indicated a range of implied values per share of the
Company Shares of $12.78 to $24.77 using Transaction Value/2P, compared to the Merger Consideration of $14.50 per Company Share.
Using a reference range of $20,000 to $40,000 per barrel of oil equivalent per day for the Companys Transaction Value/Boe/D, Jefferies
determined an implied enterprise value for the Company, then subtracted negative net debt of approximately $24 million to determine an implied equity value. This analysis indicated a range of implied values per share of the Company Shares of $9.37
to $17.95 using Transaction Value/Boe/D, compared to the Merger Consideration of $14.50 per Company Share.
No transaction utilized
as a comparison in the comparable transaction analysis is identical to the Merger. In evaluating the Merger, Jefferies made numerous judgments and assumptions with regard to industry performance, general business, economic, market, and financial
conditions and other matters, many of which are beyond the Companys and Jefferies control. Mathematical analysis, such as determining the average or the median, is not in itself a meaningful method of using comparable transaction data.
Life-of-Field Net Asset Value Analysis
Jefferies performed a Life-of-Field net asset value analysis (which is a discounted cash flow analysis of the Companys 3P
reserve report provided to Jefferies which report included the Companys 2013 audited proved reserve report (the Reserves Report)) to estimate the present value of the free cash flows of the Company using financial projections from
the Reserves Report plus internally generated forecasted cash flows for the recent Colombia discovery and discount rates ranging from 18.0% to 20.0%. The Companys 3P reserve report provided to Jefferies assumed the successful extension of
certain concessions in Argentina, including the Río Negro concession, on acceptable terms. The range of discount rates applied in the Life-of-Field net asset value is based on Jefferies analysis of the Companys weighted average
cost of capital, which was based on industry-
- 41 -
accepted methodologies including the Capital Asset Pricing Model. To determine the implied total enterprise value for the high end of the range for the Company, Jefferies included $160,000,000 of
value based on $0 $1,000 per acre of value prescribed to 130,330 acres prospective for the Vaca Muerta and $0 $250 per acre of value prescribed to 120,000 remaining acres in the Neuquen Basin. To determine the implied total equity
value for the Company, Jefferies subtracted negative net debt of approximately $24 million from the implied total enterprise value for the Company. This analysis indicated a range of implied values per share of the Company Shares of $9.51 to $15.64,
compared to the Merger Consideration of $14.50 per Company Share.
Premiums Paid Data
For informational purposes only, Jefferies also provided data with respect to the premium to be paid in the transaction relative to selected
precedent transactions. Using publicly-available information, Jefferies analyzed the premiums offered in selected corporate transactions since 2005 with a transaction value less than $1,000,000,000 and a North American listed oil and gas company as
the target.
For each of these transactions, Jefferies calculated the premium represented by the offer price over the target
companys closing share price one day, one week and one month prior to the transactions announcement. This analysis indicated the following 25th percentile premiums and 75th percentile premiums for those time periods prior to
announcement:
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|
|
|
|
|
|
Average of All Years |
|
Time Period Prior to Announcement |
|
25th Percentile Premium |
|
|
75th Percentile
Premium |
|
1 day |
|
|
12.0 |
% |
|
|
40.1 |
% |
1 week |
|
|
13.8 |
% |
|
|
44.8 |
% |
1 month |
|
|
15.4 |
% |
|
|
47.2 |
% |
Using the above premiums and the closing prices per share of the Company Shares one day prior to
September 18, 2014, this analysis indicated a range of implied value per share of the Company Shares of approximately $14.20 (25th percentile) to $17.76 (75th percentile), compared to the Merger Consideration of $14.50 per share of the Company
Shares.
Using the above premiums and the closing prices per share of the Company Shares one week prior to September 18, 2014, this
analysis indicated a range of implied value per share of the Company Shares of approximately $14.42 (25th percentile) to $18.34 (75th percentile), compared to the Merger Consideration of $14.50 per share of the Company Shares.
Using the above premiums and the closing prices per share of the Company Shares one month prior to September 18, 2014, this analysis
indicated a range of implied value per share of the Company Shares of approximately $15.87 (25th percentile) to $20.24 (75th percentile), compared to the Merger Consideration of $14.50 per share of the Company Shares.
Jefferies opinion was one of many factors taken into consideration by the Board in making its determination to approve the Merger and
should not be considered determinative of the views of the Board or management with respect to the Merger or the Merger Consideration.
Jefferies was selected by the Board based on Jefferies qualifications, expertise and reputation. Jefferies is an internationally
recognized investment banking and advisory firm. Jefferies, as part of its investment banking business, is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities, private placements, financial restructurings and other financial services.
- 42 -
In the ordinary course of business, Jefferies and its affiliates may trade or hold securities of
the Company or WPX and/or their respective affiliates for Jefferies own account and for the accounts of its customers and, accordingly, may at any time hold long or short positions in those securities.
The Board selected Jefferies based on Jefferies qualifications, expertise and reputation. Pursuant to an engagement agreement between
the Company and Jefferies dated September 10, 2014, the Company has agreed to pay Jefferies a fee in the amount of approximately $500,000 that was payable upon Jefferies delivery of its opinion (regardless of the conclusion reached
therein). In addition, the Company has agreed to reimburse Jefferies for reasonable expenses incurred, including certain fees and disbursements of Jefferies legal counsel. The Company also has agreed to indemnify Jefferies and certain related
parties against liabilities arising out of or in connection with the services rendered and to be rendered by it under its engagement.
Certain Company Financial Projections
Nature of the Financial Projections
The Company does not, as a matter of course, publicly release long-term projections regarding its expectations of future financial performance
due to, among other things, the uncertainty of the underlying assumptions and estimates. The accompanying prospective financial information was not prepared with a view toward public disclosure or with a view toward complying with the published
guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants with respect to prospective financial information or U.S. generally accepted accounting principles (GAAP). However, in the view
of the Companys management, the prospective financial information was prepared on a reasonable basis, reflects the best then-available estimates and judgments, and presents, to the best of managements knowledge and belief, the expected
course of action and the expected future financial performance of the Company. Moreover, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this proxy statement are cautioned
not to place undue reliance on the prospective financial information.
Neither Ernst & Young LLP, the independent registered
public accounting firm of the Company for 2014, nor any other independent accountant has examined, compiled or performed any procedures with respect to the accompanying prospective financial information and, accordingly, Ernst & Young LLP
does not express an opinion or any other form of assurance with respect to such information or its achievability, does not assume any responsibility for the prospective financial information and disclaims any association with the prospective
financial information. The Ernst & Young LLP report regarding the historical financial statements of the Company included in the Companys Annual Report on Form 10-K for the year ended December 31, 2013, relates to the
Companys historical financial information, and does not extend to the prospective financial information and should not be read to do so.
As part of its evaluation of the transaction, the Companys management prepared certain financial information regarding the
Companys future operations for its fiscal years 2014 through 2018 and provided such information to Jefferies in connection with the preparation of its projections and opinion summarized in the section entitled The Merger
Opinion of Jefferies LLC beginning on page 36. A summary of these projections is included below in order to give shareholders access to certain non-public unaudited projections that were utilized in connection with the process leading
up to entering into the Merger Agreement. The Company cautions that these projections are subjective in many respects and that uncertainties are inherent in prospective financial information of any kind. While the financial projections have been
prepared in good faith, no assurance can be given regarding future events. Neither the Company nor any of its respective affiliates, officers, directors, advisors or other representatives has made or makes any representation or can give any
assurance to any shareholder or any other person regarding the ultimate performance of the Company in relation to the information set forth below. In addition, the Company does not intend to update or otherwise revise the prospective financial
information to reflect circumstances existing or arising since its preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error. Furthermore, the Company
does not intend to update or revise the prospective financial information to reflect changes in general economic or industry conditions.
- 43 -
The internal financial forecasts of the Company, which were used as a basis for preparing the
projections, are inherently uncertain and, although considered reasonable by the management of the Company as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties
that could cause actual results to differ materially from those contained in the prospective financial information. Although the projections were prepared with numeric specificity, such projections reflect numerous and varying assumptions made by
the management of the Company, including various estimates and assumptions that may not be realized, and are subject to significant variables, uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are
beyond the control of the Company. The risk that these uncertainties and contingencies could cause the assumptions to fail to be reflective of actual results is further increased due to the length of time in the future over which these assumptions
apply. The assumptions in early periods have a compounding effect on the projections shown for the later periods. Thus, any failure of an assumption to be reflective of actual results in an early period would have a greater effect on the projected
results failing to be reflective of actual events in later periods. Important factors that may affect or cause the information below to materially vary from actual results include, but are not limited to, industry performance, general business,
economic, political, market, regulatory and financial conditions, and other matters such as those referenced under Risk Factors and Managements Discussion and Analysis of Financial Conditions and Results of Operations
in the Companys most recent annual and quarterly reports filed with the SEC on Forms 10-K and 10-Q, respectively and in the section entitled Cautionary Statement Concerning Forward-Looking Statements of this proxy
statement beginning on page 17. These financial projections are forward-looking statements, and in light of the uncertainties inherent in forward-looking information of any kind, the Company cautions you against relying on this information.
Accordingly, there can be no assurance that the assumptions made in preparing the internal financial forecasts upon which the projected financial information set forth below was based will be realized or that the prospective results are necessarily
indicative of the actual future performance of the Company or that actual results will not differ materially from those presented in the prospective financial information. Inclusion of the prospective financial information in this proxy statement
should not be regarded as a representation by any person that the results contained in the prospective financial information will be achieved.
The summary projections set forth below summarize the projections prepared by the Companys management prior to the execution of the
Merger Agreement.
THE COMPANY HAS NOT UPDATED OR REVISED, NOR DOES IT INTEND TO UPDATE OR REVISE, THE FINANCIAL PROJECTIONS TO REFLECT CIRCUMSTANCES
EXISTING OR ARISING SINCE THEIR PREPARATION OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS EVEN IN THE EVENT THAT ANY OR ALL OF THE UNDERLYING ASSUMPTIONS ARE SHOWN TO BE IN ERROR, EXCEPT TO THE EXTENT REQUIRED BY LAW.
Summary of Certain Financial Projections Reviewed by the Board and Jefferies, the Companys Financial Advisor
In connection with the Boards evaluation of the transaction, the Companys management provided certain financial information
regarding the Companys future operations for its fiscal years 2014 through 2018 (and which are referred to as the Companys Projections for the Company Provided to Parent and Jefferies) that were provided to Parent as well as
to Jefferies in connection with the preparation of its opinion.
Companys Projections for the Company Provided to Parent and
Jefferies (in $ thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2015 |
|
|
2016 |
|
|
2017 |
|
|
2018 |
|
Income Before Taxes |
|
$ |
59,142 |
|
|
|
65,195 |
|
|
|
38,602 |
|
|
|
23,875 |
|
|
|
13,349 |
|
|
|
|
|
|
|
Net Income |
|
|
39,884 |
|
|
|
42,061 |
|
|
|
25,577 |
|
|
|
14,506 |
|
|
|
7,302 |
|
- 44 -
In preparing the Companys Projections for the Company Provided to Parent and Jefferies, the
Companys management made numerous assumptions about the Companys industry and markets and its ability to execute on its business plan, taking into account that the Company does not operate in any of the areas in which it has an interest.
In particular, management made assumptions that included, but were not limited to, the following items:
|
|
|
amounts and nature of future capital expenditures including the allocation of capital to exploratory and developmental opportunities; |
|
|
|
the ability to obtain joint venture budget approvals in accordance with the Companys projections; |
|
|
|
volumes of future oil, gas and LPG production consistent with the assumptions in the Reserves Report with respect to the Companys proved oil and natural gas reserves and the estimates associated with the 2014
Colombia discovery potential; |
|
|
|
expansion and growth of our business and operations including the number of rigs and pace of development; |
|
|
|
estimates of proved oil and gas reserves; |
|
|
|
the results of exploration drilling and future development drilling potential; |
|
|
|
the productive potential of the Vaca Muerta shale in the Companys core areas; |
|
|
|
cash flow from operations or results of operations including the assumptions regarding dividends paid by equity investments; |
|
|
|
oil and natural gas prices including governmental influence on those prices in the countries where the Company does business, the participation in certain government hydrocarbon incentive programs, and demand for those
products; |
|
|
|
successful extension of certain concessions in Argentina, including the Río Negro concession, on acceptable terms; and |
|
|
|
the future economic, regulatory and political environment, including such items as inflation, taxation, foreign currency valuation and ability to transfer funds into and out of the countries in which the Company
operates. |
Jefferies, in consultation with the Companys management, prepared certain financial information regarding
the Companys future operations for its fiscal years 2014 through 2028 (and which are referred to as the Risked Projections for the Company and the Unrisked Projections for the Company). The Risked Projections for the
Company and the Unrisked Projections for the Company were based upon the Companys Projections for the Company Provided to Parent and the Reserves Report. Additionally, the Risked Projections for the Company included specific risk adjustments
(described below) applied to the proved, probable and possible reserves of the Company. The Risked Projections for the Company and Unrisked Projections for the Company were provided to the Board in connection with its review of the transaction and
used by Jefferies in connection with the preparation of its opinion.
Risked Projections for the Company (in $mm)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2015 |
|
|
2016 |
|
|
2017 |
|
|
2018 |
|
|
2019 |
|
|
2020 |
|
|
Remainder |
|
EBITDA(1) |
|
$ |
165.4 |
|
|
$ |
174.6 |
|
|
$ |
137.5 |
|
|
$ |
149.6 |
|
|
$ |
151.2 |
|
|
$ |
147.0 |
|
|
$ |
139.5 |
|
|
$ |
479.0 |
|
Free Cash Flow(2) |
|
|
12.9 |
|
|
|
40.1 |
|
|
|
33.5 |
|
|
|
75.3 |
|
|
|
65.2 |
|
|
|
70.5 |
|
|
|
70.3 |
|
|
$ |
307.2 |
|
Unrisked Projections for the Company (in $mm)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2015 |
|
|
2016 |
|
|
2017 |
|
|
2018 |
|
|
2019 |
|
|
2020 |
|
|
Remainder |
|
EBITDA(1) |
|
$ |
190.3 |
|
|
$ |
210.3 |
|
|
$ |
200.8 |
|
|
$ |
242.1 |
|
|
$ |
273.6 |
|
|
$ |
283.7 |
|
|
$ |
285.1 |
|
|
$ |
1,288.0 |
|
Free Cash Flow(2) |
|
|
7.6 |
|
|
|
39.3 |
|
|
|
48.5 |
|
|
|
105.8 |
|
|
|
91.5 |
|
|
|
114.0 |
|
|
|
106.9 |
|
|
|
696.6 |
|
- 45 -
(1) |
EBITDA is defined as earnings before interest, taxes, depreciation, depletion and amortization |
(2) |
Free Cash Flow is defined as EBITDA less cash, taxes and total capex. |
In
preparing the Risked Projections for the Company and the Unrisked Projections for the Company, Jefferies, in consultation with the Companys management, made numerous assumptions about the Companys industry, markets and products and its
ability to execute on its business plan. In particular, Jefferies made assumptions that included, but were not limited to, the following items:
|
|
|
Corporate Income Tax Expense: Jefferies assumed an Argentine corporate income tax rate of 35% and used straight-line depreciation of capital costs over a 10-year period. |
|
|
|
General and Administrative Expense. Jefferies assumed a total general and administrative expense of $18 19 million per year (inclusive of the Companys 40.1% share of the total general and
administrative expense of Petrolera Entre Lomas S.A. (PELSA)). |
|
|
|
Specific Risk Adjustments. With respect to the oil and gas production and revenues and the operating and capital costs applicable to each of the Companys reserve categories, Jefferies assumed the following
risk adjustments: (i) 100% credit for proved developed reserves; (ii) 75% credit for proved undeveloped reserves; (iii) 50% credit for probable reserves; and (iv) 10% credit for possible reserves. |
Certain Effects of the Merger; Effects on the Company if the Merger is not Completed
Certain Effects of the Merger
If
the Merger Agreement is adopted by the Companys shareholders and the other conditions to the closing of the Merger are either satisfied or waived and the Merger is consummated as contemplated by the Merger Agreement, Merger Sub will be merged
with and into the Company, upon the terms and subject to the conditions set forth in the Merger Agreement, with the Company continuing as the Surviving Company and a wholly-owned subsidiary of Parent. As a result of the Merger, your Company Shares
will be converted into the right to receive the Merger Consideration (or for those holders of Company Shares who properly elect to exercise dissenters rights, the right to seek payment of fair value).
At the Effective Time, (i) each Company Share issued and outstanding immediately prior to the Effective Time (other than the excluded
shares) will be automatically converted into the right to receive the Merger Consideration without interest and less any applicable withholding taxes, (ii) each Company Share held by the Company, any subsidiary of the Company (as treasury
shares (if applicable) or otherwise), Parent or Merger Sub, in each case, immediately prior to the Effective Time, will automatically be cancelled and retired and will cease to exist without consideration and (iii) each share, par value of
$1.00 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time, will be converted into and become one newly and validly issued, fully paid and non-assessable ordinary share, par value $0.01 per share, of the Surviving
Company and constitute the only outstanding share of the Surviving Company in the Merger.
The Company Shares held by any holder who is
entitled to dissenter rights under Section 238 of the Companies Law and who has delivered to the Company a written objection to the Merger pursuant to Section 238 of the Companies Law will not receive Merger Consideration.
Following the Merger, the entire equity in the Surviving Company will be directly owned by Parent. If the Merger is completed, Parent will be
the beneficiary of the Companys future earnings and growth, if any, and will be entitled to vote on corporate matters affecting the Company following the Merger. Similarly, Parent will also bear the risks of ongoing operations, including,
among other things, the risks of any decrease in the Companys value after the Merger.
The Company Shares are currently registered
under the Exchange Act and are quoted on NASDAQ under the symbol APAGF. Following the Merger, the Company will be a privately-held company, and there will be
- 46 -
no public market for the Company Shares. After the Merger, the Company Shares will cease to be quoted on NASDAQ and price quotations with respect to sales of Company Shares stock in the public
market will no longer be available. In addition, the Company Shares will no longer be registered under the Exchange Act. As a result, the Company will be a privately-held company and there will be no public market for the Company Shares. This will
make certain provisions of the Exchange Act, such as the requirement of furnishing of proxy information or information statements in connection with shareholders meetings no longer applicable to the Company. After the Effective Time, the
Company will also no longer be required to file periodic reports with the SEC on account of the Company Shares.
Subject to applicable
law, each of the Company, Parent and Merger Sub will take all necessary action to ensure that the directors of Merger Sub will become the directors of the Surviving Company effective as of and immediately following the Effective Time. Upon
consummation of the Merger, the officers of Merger Sub will be the initial officers of the Surviving Company. If Merger Sub has no officers, then upon consummation of the Merger, the Surviving Company will have no initial officers, as permitted
under the law of the Cayman Islands. Following the Merger, the memorandum of association and articles of association will be amended and restated in their entirety by a special resolution of the shareholders of the Surviving Company in accordance
with the Merger Agreement, the articles of association of the Surviving Company and the Companies Law.
Following the Merger, the
memorandum of association and articles of association of the Surviving Company will be amended and restated in their entirety by a special resolution of the shareholders of the Surviving Company in accordance with the articles of association of the
Surviving Company and in accordance with the law of the Cayman Islands.
Effects on the Company if the Merger is not Completed
If the Merger is not completed for any reason, then our shareholders will not receive any payment for their Company Shares pursuant to the
Merger Agreement. Instead, the Company will remain a public company and the Company Shares will continue to be registered under the Exchange Act and quoted on NASDAQ. In addition, if the Merger is not completed, the Company expects that its
management will operate its business in a manner similar to that in which it is being operated today and that our shareholders will continue to be subject to the same risks and opportunities to which they currently are subject, including, among
other things, the nature of the industry on which our business largely depends, and general industry, economic, regulatory and market conditions.
In the event the Merger is not completed, the Board will continue to evaluate and review the Companys business operations, prospects and
capitalization and make such changes as are deemed appropriate to enhance shareholder value. If the Merger is not consummated for any reason, there can be no assurance that any other transaction acceptable to the Company will be offered or that the
Companys business, prospects or results of operations will not be adversely impacted.
If the Merger Agreement is terminated under
certain circumstances, the Company will be obligated to pay Parent a termination fee of $15,450,000. For a description of the circumstances triggering payment of these termination fees, see The Merger Agreement Effect of
Termination; Termination Fee.
Interests of the Companys Directors and Executive Officers in the Merger
In considering the recommendation of our Board with respect to the Merger Agreement, you should be aware that certain of the
Companys directors and executive officers have interests in the Merger that are different from, or in addition to, the interests of our shareholders generally, as more fully described below. Our Board was aware of these interests and
considered them, among other matters, in reaching its decision to approve the Merger Agreement and recommend that the Companys shareholders vote in favor of adopting the Merger Agreement. See The Merger Background of
the Merger and The Merger Purpose of and Reasons for the Merger; Recommendation of the Board for a further discussion of these matters.
- 47 -
Retention Agreement
WPX (including its subsidiaries and affiliates) and Mr. Michael Kyle, President and Chief Operating Officer of the Company, entered into a
retention agreement (the Retention Agreement) pursuant to which Mr. Kyle is entitled to receive a total cash payment from WPX equal to $100,000 within 30 days following the closing of the Merger; provided, that the closing of the Merger
occurs by December 31, 2014 and (i) Mr. Kyle is employed by WPX on the closing date of the Merger (regardless of whether Mr. Kyle is terminated by WPX or terminates his employment with WPX following the closing of the Merger) or (ii) if Mr.
Kyles employment is terminated by WPX without cause (as defined in the Retention Agreement) prior to the closing of the Merger. Mr. Kyle is also required to keep confidential certain of the Companys confidential and
proprietary information at all times.
Additionally, under the terms of the Retention Agreement, if Mr. Kyles employment with WPX is
terminated solely due to a change of control of the Company and he is not offered a comparable position with a successor entity, Mr. Kyle will be eligible to receive the following severance benefits from WPX pursuant to the terms and conditions of
the WPX Executive Severance Pay Plan (the WPX Severance Plan): (i) a lump-sum payment in an amount equal to his annualized base salary; (ii) a lump-sum payment equal to the average of actual payments received by Mr. Kyle under the WPX
Annual Incentive Plan (AIP) during the three consecutive AIP payouts immediately preceding his termination and (iii) a payment equal to the monthly premium for COBRA continuation coverage for the medical and prescription coverage elected
by Mr. Kyle multiplied by 12.
All payments under the Retention Agreement will be paid to Mr. Kyle by WPX and no payments will be payable
by the Company.
Merger-Related Compensation for Company Named Executive Officers
The following table sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation for each named
executive officer of the Company that is based on or otherwise relates to the Merger. This compensation is referred to as golden parachute compensation. The golden parachute compensation that may be paid or become payable to
these individuals is subject to a non-binding advisory vote of the Companys shareholders, as described under Advisory Vote Regarding Certain Executive Compensation that May Be Paid or Become Payable in Connection with the
Merger and assumes the following:
|
|
|
the price per Company Share paid by Parent in the Merger is $14.50; and |
|
|
|
the Merger closed on [], which is the last practicable date prior to the filing of this proxy statement. |
Golden Parachute Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Cash ($)(1) |
|
|
Equity ($)(2) |
|
|
Pension/ NQDC ($) |
|
|
Perquisites/ Benefits ($)(3) |
|
|
Other ($) |
|
|
Total ($) |
|
Bryan K. Guderian,
Chief Executive Officer |
|
|
|
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58 |
|
Michael Kyle,
President and Chief Operating Officer |
|
|
459,735 |
|
|
|
687,501 |
|
|
|
|
|
|
|
19,581 |
|
|
|
|
|
|
|
1,166,817 |
|
Benjamin A. Holman,
Chief Financial Officer |
|
|
|
|
|
|
725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
725 |
|
(1) |
As described above, the amount represents the single trigger lump-sum cash payment of $100,000 that Mr. Kyle would be entitled to receive from WPX under the Retention Agreement upon the closing of the Merger
and the double-trigger lump-sum cash payment Mr. Kyle would be entitled to receive from WPX under the WPX Severance Plan following a qualifying termination of employment after the closing of the Merger. |
(2) |
This amount equals the number of Company Shares held by the named executive officer multiplied by the Merger Consideration. For Mr. Kyle, this amount
is the double-trigger payment from WPX equal to the |
- 48 -
|
number of shares of unvested time-based and performance-based restricted stock of WPX for which vesting would be accelerated following a qualifying termination of employment after the closing of
the Merger multiplied by the NYSE closing sale price of WPXs common stock on November 24, 2014 of $16.30. Mr. Kyle does not own any Company Shares. |
(3) |
As described above, Mr. Kyle will be eligible to receive a double-trigger payment from WPX equal to the monthly premium for COBRA continuation coverage for the medical and prescription coverage elected by
Mr. Kyle multiplied by 12 under the WPX Severance Plan following a qualifying termination of employment after the closing of the Merger. |
Indemnification
For a period of
six years from the Effective Time, to the extent permitted by applicable law, the memorandum of association and articles of association and other organizational documents of the Surviving Company and its subsidiaries will contain provisions with
respect to the indemnification and exculpation of current and former directors and officers, that are no less favorable to such persons than those set forth in the memorandum of association and articles of association and other organizational
documents of the Company and its subsidiaries as in effect as of the date of the Merger Agreement.
Director Compensation
The Board approved additional fees to be paid to the chairperson and member of the Special Committee in recognition of the additional time
commitment required of the members of the Special Committee. The chair of the Special Committee is to be paid $1,500 for each Special Committee meeting attended and each member of the Special Committee who is not the chairperson of the Committee
will receive a fee of $1,000 for each Special Committee meeting attended.
Certain Material US Federal Income Tax
Consequences
The following is a summary of certain material United States federal income tax considerations applicable to our
shareholders of the receipt of cash in exchange for Company Shares pursuant to the Merger. This summary is based upon the provisions of the Internal Revenue Code of 1986, as amended (the Code), applicable United States Treasury
Regulations, judicial authority and administrative rulings and practice, all as in effect on the date of this proxy statement. All of these authorities are subject to change, possibly on a retroactive basis and to differing interpretations, all of
which could result in tax considerations different from those described below. This discussion assumes that the Company Shares are held as capital assets (generally, as property held for investment). This discussion does not address all aspects of
United States federal income taxation that may be relevant to a particular shareholder in light of such shareholders unique investment circumstances, or to shareholders subject to special treatment under the United States federal income tax
laws (for example, life insurance companies, dealers or brokers in securities or currencies, traders in securities that elect to apply a mark-to-market method of tax accounting, tax-exempt organizations, financial institutions, United States
expatriates, controlled foreign corporations, passive foreign investment companies, U.S. holders (as defined below) whose functional currency is not the U.S. dollar, shareholders who hold Company Shares as part of a hedging,
straddle, conversion or other integrated transaction, shareholders who acquired their Company Shares through the exercise of employee stock options or other compensation arrangements, or shareholders who receive cash pursuant to the
exercise of dissenter rights). In addition, this discussion is general in nature and does not address the application of the Medicare tax on net investment income under Section 1411 of the Code, or any state, local, alternative minimum, estate,
gift or non-United States taxation that may be applicable to a particular shareholder.
If a partnership (or an entity or arrangement
treated as a partnership for United States federal income tax purposes) holds Company Shares, the tax treatment of a partner generally will depend on the status of the partner and activities of the partnership. If you are a partner of a partnership
holding Company Shares, you should consult your own tax advisor.
- 49 -
Company shareholders should consult their own tax advisors to determine the particular tax
consequences to them of the receipt of cash in exchange for Company Shares pursuant to the Merger (including the application and effect of the alternative minimum tax, the Medicare tax on net investment income and any state, local or non-United
States income and other tax laws).
For purposes of this discussion, the term U.S. holder means a beneficial owner of
Company Shares that is:
|
|
|
an individual who is a citizen or a resident of the United States (as determined for U.S. federal income tax purposes); |
|
|
|
a corporation, or other entity taxable as a corporation for United States federal income tax purposes, created or organized in or under the laws of the United States or any state in the United States or the District of
Columbia; |
|
|
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a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid
election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person; or |
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an estate that is subject to United States federal income tax on all of its income regardless of its source. |
A non-U.S. holder is a beneficial owner (other than a partnership or other entity or arrangement treated as a partnership for
United States federal income tax purposes) of Company Shares that is not a U.S. holder.
U.S. Holders
The receipt of cash in the Merger generally will be a taxable transaction to U.S. holders for United States federal income tax purposes.
Generally, a U.S. holder of shares of Company Shares will recognize gain or loss equal to the difference between the amount of cash received in the Merger and such holders adjusted tax basis in the Company Shares converted into the right to
receive cash pursuant to the Merger. Gain or loss will be determined separately for each block of shares (that is, shares acquired at the same cost in a single transaction) owned by a U.S. holder. If the Company Shares have been held for more than
one year, the gain or loss generally will be long-term capital gain or loss, and will be short-term capital gain or loss if the shares have been held for one year or less. Long-term capital gains recognized by non-corporate U.S. holders may be
subject to reduced tax rates. The deductibility of capital losses is subject to several limitations.
Information returns will be filed
with the Internal Revenue Service in connection with payments to a U.S. holder pursuant to the Merger, unless the U.S. holder is an exempt recipient. Under the United States federal income tax backup withholding rules, the paying agent generally
will be required to withhold 28% of all payments to which a U.S. holder is entitled in the Merger, unless the U.S. holder (1) is a corporation or comes within other exempt categories and demonstrates this fact or (2) provides its correct
tax identification number (generally a social security number, in the case of an individual, or employer identification number in the case of other shareholders), certifies under penalties of perjury that the number is correct, certifies as to no
loss of exemption from backup withholding and otherwise complies with the applicable requirements of the backup withholding rules. Each U.S. holder should complete, sign and return to the paying agent for the Merger the Internal Revenue Service Form
W-9 that each shareholder will receive with the letter of transmittal following completion of the Merger in order to provide the information and certification necessary to avoid backup withholding, unless an applicable exception exists and is proved
in a manner satisfactory to the paying agent. Backup withholding is not an additional tax. Generally, any amounts withheld under the backup withholding rules described above may be credited against a holders United States federal income tax
liability, if any, or refunded by the Internal Revenue Service provided that the required information is furnished to the Internal Revenue Service in a timely manner. Each U.S. holder should consult such holders own tax advisors as to the
qualifications for an exemption from backup withholding and the procedures for obtaining such exemption.
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Non-U.S. Holders
Any gain realized on the receipt of cash pursuant to the Merger by a non-U.S. holder generally will not be subject to United States federal
income tax unless:
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the gain is effectively connected with a United States trade or business of such non-U.S. holder (and, if an applicable income tax treaty so provides, is also attributable to a permanent establishment in the United
States maintained by such non-U.S. holder), in which case the non-U.S. holder generally will be taxed at graduated United States federal income tax rates applicable to United States persons (as defined under the Code), and, if the non-U.S. holder is
a foreign corporation, an additional branch profits tax may apply to its effectively connected earnings and profits for the taxable year at the rate of 30% (or such lower rate as may be specified by an applicable income tax treaty); or
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the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the Merger and certain other conditions are met, in which case the non-U.S. holder
will be subject to a 30% tax on the non-U.S. holders gain realized in the Merger (unless an exception is provided under an applicable treaty), which may be offset by U.S. source capital losses of the non-U.S. holder, if any. |
A non-U.S. holder may be subject to information reporting, and, in certain circumstances, backup withholding may apply to the cash received
pursuant to the Merger, unless the non-U.S. holder certifies under penalties of perjury that it is a non-U.S. person (and the payor does not have actual knowledge or reason to know that the holder is a United States person as defined under the Code)
or such holder otherwise establishes an exemption. To avoid backup withholding, non-U.S. holders generally must submit a properly executed Form W-8BEN or Form W-8BEN-E, Certificate of Foreign Status
of Beneficial Owner for United States Tax Withholding and Reporting or other applicable Form W-8. Backup withholding is not an additional tax. Generally, any amounts withheld under the backup withholding rules described above may be credited
against a non-U.S. holders United States federal income tax liability, if any, or refunded by the Internal Revenue Service provided that the required information is furnished to the Internal Revenue Service in a timely manner. Each non-U.S.
holder should consult its own tax advisors as to the qualifications for an exemption from backup withholding and the procedures for obtaining such exemption.
The foregoing discussion of certain material United States federal income tax consequences is not intended to be, and should not be
construed as, legal or tax advice to any holder of Company Shares. You should consult your own tax advisor to determine the particular tax consequences to you (including the application and effect of any state, local or non-United States income and
other tax laws) of the receipt of cash in exchange for Company Shares pursuant to the Merger.
Regulatory Matters
In connection with the Merger, the Company is required to make certain filings with, and comply with certain laws of, various federal,
state and foreign governmental agencies, including: (i) the filing with the SEC of certain reports under the Exchange Act, including this proxy statement, as may be required in connection with the Merger Agreement and the transactions
contemplated by the Merger Agreement and otherwise complying with U.S. federal securities laws, (ii) the filing of the Merger Filing Documents with the Cayman Registrar and appropriate documents with the relevant authorities of the other
jurisdictions in which the Company is qualified to do business and (iii) filings required under the rules of NASDAQ.
The Merger will
require approval from Argentine antitrust authorities and the parties will file, within one week following the consummation of the Merger, the requisite filings under Argentine antitrust laws. The approval of Argentine antitrust authorities is not a
condition to the closing of the Merger and the approval process will take place after the Merger has closed.
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The Merger is not subject to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or the
reporting and waiting requirements of any other United States antitrust law and the Company is not aware of any other material regulatory consents that are required in connection with the Merger.
Delisting and Deregistration of the Company Shares
The Company Shares are currently registered under the Exchange Act and are quoted on NASDAQ under the symbol APAGF. If the Merger
is completed, the Company will become a privately-held company that is directly owned by Parent, with no public market for the Company Shares. As a result, the Company Shares will be delisted from and cease to be quoted on NASDAQ and will be
deregistered under the Exchange Act. This will make certain provisions of the Exchange Act, such as the requirement of furnishing of proxy information or information statements in connection with shareholders meetings no longer applicable to
the Company. After the Effective Time, the Company will also no longer be required to file periodic reports with the SEC on account of the Company Shares.
Litigation Related to the Merger
Following the October 3, 2014 announcement that the Company had entered into the Merger Agreement, three putative class actions were filed in
the District Court of Tulsa County in the State of Oklahoma on behalf of purported shareholders of the Company against the Company, its directors and WPX. The first putative class action, which is captioned Michael Italiaander v. Apco Oil and
Gas International Inc. et al., CJ-2014-04027, was filed on October 23, 2014 (the Italiander Action). The plaintiff in the Italiander Action filed an amended complaint on November 12, 2014. The second putative
class action, which is captioned Brian Buckholz v. Apco Oil and Gas International Inc. et al., CJ-2014-04416, was filed on November 17, 2014 (the Buckholz Action). The third putative class action, which is captioned
Shiva Y. Stein v. Apco Oil and Gas International Inc. et al., CJ-2014-04417, was also filed on November 17, 2014 (the Stein Action). A fourth putative class action, which is captioned Assad v. Apco Oil and Gas
International Inc. et al., 4:14-cv-00707-GKF-TLW, was filed in the United States District Court for the Northern District of Oklahoma on behalf of purported shareholders of the Company against the Company, its directors, Parent, and Merger Sub on
November 24, 2014 (the Assad Action) (together with the Italiander Action, the Buckholz Action, and the Stein Action, the Shareholder Actions).
Each of the Shareholder Actions alleges that the Companys directors breached their fiduciary duties to the Companys shareholders
by agreeing to sell the Company for inadequate consideration, by engaging in a flawed sales and negotiation process, by agreeing to improper deal-protection terms in the Merger Agreement, and by approving this proxy statement as filed with the SEC
on October 31, 2014, which allegedly contained material misrepresentations and omissions. Additionally, each of the Shareholder Actions alleges that certain of the Companys directors had conflicts of interest in approving the Merger due
to their respective affiliations with WPX. The Assad Action further alleges that Parent and Merger Sub aided and abetted the Companys directors breaches of fiduciary duties to the Companys shareholders; that the
Companys directors violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder; and that the Companys directors, Parent, and Merger Sub violated Section 20(a) of the Exchange Act. Each of the Shareholder Actions
seeks, among other relief, declaratory and injunctive relief against the Merger and costs and fees.
The Company believes the allegations
in the Shareholder Actions are without merit and intends to vigorously defend these matters.
One of the conditions to the closing of the
Merger is that no governmental authority shall have issued any order which seeks to enjoin or otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the Merger. If the plaintiffs are successful in obtaining
an injunction prohibiting the completion of the Merger on the terms contained in the Merger Agreement, then such injunction may prevent or delay the Merger from becoming effective.
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THE MERGER AGREEMENT
This section of the proxy statement summarizes material provisions of the Merger Agreement. This summary does not purport to be complete and may not
contain all of the information about the Merger Agreement that is important to you. The following summary is qualified in its entirety by reference to the complete text of the Merger Agreement, which is attached as Annex A to this proxy statement
and incorporated into this proxy statement by reference. The Company encourages you to read carefully the Merger Agreement in its entirety, as the rights and obligations of the parties are governed by the express terms of the Merger Agreement and
not by this summary or any other information contained in this proxy statement.
The Merger Agreement and this summary of its terms have been
included to provide you with information regarding its terms. Factual disclosures about the Company contained in this proxy statement or in the Companys public reports filed with the SEC may supplement, update or modify the factual disclosures
about the Company contained in the Merger Agreement and described in this summary. The Merger Agreement contains representations and warranties made by and to the Company, Parent and Merger Sub as of specific dates. The statements embodied in those
representations and warranties were made for purposes of that contract between the parties and are subject to qualifications and limitations agreed by the parties in connection with negotiating the terms of that contract. In particular, in your
review of the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the
circumstances in which a party to the Merger Agreement may have the right not to consummate the Merger if the representations and warranties of the other party prove to be untrue because of a change in circumstances or otherwise, and allocating risk
between the parties to the Merger Agreement, rather than establishing matters as facts. In addition, certain representations and warranties were made as of a specified date, may be subject to contractual standards of materiality different from those
generally applicable to shareholders and reports and documents filed with the SEC, and in some cases were qualified by disclosures that may be made by each party to the other, which disclosures are not reflected in the Merger Agreement. Moreover,
information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement, may have changed since the date of the Merger Agreement and subsequent developments or new
information qualifying a representation or warranty may have been included in this proxy statement.
The Merger
The Merger Agreement provides that, at the Effective Time, Merger Sub, a wholly-owned subsidiary of Parent, will merge with and into the
Company, in accordance with the Companies Law and upon the terms and subject to the conditions set forth in the Merger Agreement, and the separate corporate existence of Merger Sub will cease and the Company will continue as the Surviving Company in
the Merger as a wholly-owned subsidiary of Parent. As the Surviving Company, the Company will continue to exist following the Merger.
The
closing of the Merger will occur on the third business day after satisfaction or (to the extent permitted by law) waiver of the conditions to the Merger (other than those conditions that require the delivery of a document or certificate or taking of
any other action at the closing of the Merger, but subject to the satisfaction, or to the extent permitted by law, waiver by the appropriate party of all such conditions to the closing of the Merger), but if the Company is required to file its
Quarterly Report on Form 10-Q or Annual Report on Form 10-K (or any amendment to any forms, documents or reports required to be filed and previously filed with the SEC) within 10 days of such date, the
closing of the Merger will occur on the first business day following the filing of such report or amendment. The Merger will become effective on the date and time that the Merger Filing Documents are registered by the Registrar of Companies of the
Cayman Islands or at a later time as agreed to by the parties.
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Effects of the Merger
The Surviving Company will be a privately-held company and the Companys current shareholders will cease to have any ownership interest in
the Surviving Company or rights as Company shareholders. Therefore, such current shareholders will not participate in any future earnings or growth of the Surviving Company and will not benefit from any appreciation in value of the Surviving
Company.
Subject to applicable law, each of the Company, Parent and Merger Sub will take all necessary action to ensure that the
directors of Merger Sub will become the directors of the Surviving Company effective as of and immediately following the Effective Time. Upon consummation of the Merger, the officers of Merger Sub will be the initial officers of the Surviving
Company. If Merger Sub has no officers, then upon consummation of the Merger, the Surviving Company will have no initial officers, as permitted under the law of the Cayman Islands. All directors and officers of the Surviving Company will hold their
positions until their successors are duly elected or appointed and qualified or their earlier death, incapacitation, retirement, resignation or removal.
Following the Merger, the memorandum of association and articles of association of the Surviving Company will be amended and restated in their
entirety by a special resolution of the shareholders of the Surviving Company in accordance with the articles of association of the Surviving Company and in accordance with the law of the Cayman Islands.
Following the completion of the Merger, the Company Shares will be delisted from NASDAQ and deregistered under the Exchange Act, and cease to
be publicly traded. As a result, the Company will become a privately-held company and there will be no public market for the Company Shares. This will make certain provisions of the Exchange Act, such as the requirement of furnishing proxy
information or information statements in connection with shareholders meetings no longer applicable to the Company. After the Effective Time, the Company will also no longer be required to file periodic reports with the SEC on account of the
Company Shares.
Merger Consideration and the Conversion of Company Shares
Except as noted below, each Company Share issued and outstanding immediately prior to the Effective Time will be automatically converted at the
Effective Time into the right to receive $14.50 in cash, which we refer to as the Merger Consideration, without interest and less any applicable withholding taxes. The following Company Shares will not receive the Merger Consideration:
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Company Shares held by the Company or any subsidiary of the Company (as treasury shares (if applicable) or otherwise), which shares shall automatically be cancelled and retired and shall cease to exist without
consideration; |
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Company Shares (if any) held by Parent or Merger Sub, in each case, immediately prior to the Effective Time, which shares shall automatically be cancelled and retired and shall cease to exist without consideration; and
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Company Shares held by any holder who is entitled to dissenter rights under Section 238 of the Companies Law and who has delivered to the Company a written objection to the Merger pursuant to Section 238 of
the Companies Law. |
At the Effective Time, each holder of a share certificate or book-entry shares (other than Company
Shares held by the Company, any subsidiary of the Company, Parent, Merger Sub or any holder who is entitled to dissenter rights under Section 238 of the Companies Law and who has delivered to the Company a written objection to the Merger
pursuant to Section 238 of the Companies Law) which immediately prior to the Effective Time represented Company Shares, shall cease to have any rights with respect to such Company Shares other than the right to receive, upon surrender of such
share certificate or book-entry share, the Merger Consideration, without interest thereon, for each such Company Share held by such holder.
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Each share of Merger Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one newly issued share of the Surviving Company and constitute the only outstanding share of the Surviving Company.
Payment Procedures
Prior to the Effective Time, Parent shall designate a bank or trust company, which bank or trust company shall
be reasonably acceptable to the Company, for the payment of the Merger Consideration. Immediately prior to the filing of the Merger Filing Documents, Parent shall deposit, or cause to be deposited, with the paying agent cash sufficient to pay the
aggregate Merger Consideration to the holders of the Company Shares.
As promptly as practicable following the Effective Time and in any
event not later than the fifth business day thereafter, the Surviving Company will cause the paying agent to mail (and to make available for collection by hand) to each holder of record of a share certificate or book-entry share a letter of
transmittal and instructions advising such holder how to surrender such holders certificates for the Merger Consideration. The paying agent, upon the later of the Effective Time and the surrender of a share certificate (or affidavit of loss in
lieu thereof), together with a duly completed and validly-executed letter of transmittal and such other documents as may be reasonably required by the instructions to such letter of transmittal, will pay the holder of such share certificate the
Merger Consideration payable pursuant to the provisions of the Merger Agreement. A holder of a book-entry share will not be required to deliver a share certificate or an executed letter of transmittal to the paying agent in order to receive the
Merger Consideration in respect of such book-entry share. Each holder of any book-entry share will automatically, upon the Effective Time (or, at any later time at which such book-entry shares are so converted), be entitled to receive and the paying
agent will pay as promptly as practicable after the Effective Time, the Merger Consideration payable in respect of such book-entry share.
At the Effective Time, the register of members of the Company will be closed, and there will be no further registrations of transfers of the
Company Shares that were outstanding immediately prior to the Effective Time. If any share certificates are presented to the Surviving Company or Parent for transfer following the Effective Time, they shall be cancelled against delivery of the
Merger Consideration for each Company Share formerly represented by such share certificates in accordance with the terms of the Merger Agreement.
Any portion of the Merger Consideration deposited with the paying agent that remains unclaimed by former shareholders of the Company six
months after the Effective Time shall be delivered to the Surviving Company or Parent (as directed by Parent), upon demand, and any such shareholders prior to the Merger who have not complied with the payment procedures shall thereafter look only to
the Parent or the Surviving Company, as applicable, for the payment of the Merger Consideration.
None of Parent, Merger Sub, the Company,
the Surviving Company or the paying agent will be liable to any person for any amount properly paid to a public official pursuant to any applicable abandoned property or escheat law.
If any share certificates shall have been lost, stolen or destroyed, the shareholder will have to make an affidavit of that fact and, if
required by the Surviving Company, post a bond in customary and reasonable amount as indemnification against any claim that may be made against it with respect to such share certificate in order for the paying agent to deliver the applicable Merger
Consideration with respect to such lost, stolen or destroyed certificate.
Parent will bear all costs, fees and expenses incurred in
connection with the retention and engagement of the paying agent.
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Representations and Warranties
The Company makes various representations and warranties to Parent and Merger Sub in the Merger Agreement that are subject, in some cases, to
specified exceptions and qualifications. The Companys representations and warranties relate to, among other things:
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the organization, qualification, good standing and power and authority of the Company and its subsidiaries to conduct their respective businesses; |
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the capitalization of the Company and its subsidiaries and PELSA; |
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the Companys and its subsidiaries and PELSAs governing documents; |
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the Companys ownership interest in PELSA; |
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the Companys power and authority to enter into the Merger Agreement and consummate the transactions contemplated by the Merger Agreement, the enforceability against the Company of the Merger Agreement and the
inapplicability of anti-takeover statutes or regulations; |
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the required consents and approvals of governmental authorities in connection with the transactions contemplated by the Merger Agreement; |
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the possession of permits and licenses by the Company, PELSA and their respective subsidiaries necessary for the Company, PELSA and their respective subsidiaries to conduct their respective businesses as currently
conducted; |
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compliance with applicable laws and regulations; |
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the Companys SEC filings since March 10, 2011, including the financial statements contained therein; |
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the Companys disclosure controls and procedures and internal controls over financial reporting; |
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the absence of a material adverse effect (as defined below), and certain other changes or events related to the Company, PELSA and their respective subsidiaries since December 31, 2013 through the date of the
Agreement; |
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the absence of certain undisclosed liabilities; |
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the absence of legal proceedings and investigations; |
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employee benefit plans; |
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intellectual property matters; |
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compliance with the U.S. Foreign Corrupt Practices Act of 1977 and similar laws; |
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title to direct working interests in certain concessions; |
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the receipt by the Company of a fairness opinion from Jefferies; |
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the absence of any undisclosed broker fees; |
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bank accounts and powers of attorney; |
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affiliate transactions; and |
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the absence of other representations and warranties made by Parent or Merger Sub other than those contained in the Merger Agreement. |
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You should be aware that these representations and warranties are made by the Company to Parent
and Merger Sub and may be subject to important limitations and qualifications agreed to by Parent and Merger Sub.
Many of the
representations and warranties made by the Company to Parent and Merger Sub in the Merger Agreement are qualified by a materiality or material adverse effect standard. For purposes of the Merger Agreement, material
adverse effect means any (a) change, event, effect, or circumstance that, individually or in the aggregate, would reasonably be expected to prevent or materially affect the ability of the Company to consummate on or prior to the
Termination Date the Merger and the other transactions contemplated by this Merger Agreement, (b) expropriatory act (as defined below) or (c) change, event, effect, or circumstance that, individually or in the aggregate, has resulted, or
would reasonably be expected to result, in a material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Company and its subsidiaries, taken as a whole. However, for clauses (a) and
(c) above, changes, events, effects, or circumstances that result from the following shall not be taken into account in determining whether there has been, or is reasonably expected to be, a material adverse effect:
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(i) any changes, events, effects, or circumstances generally affecting the international oil and gas industry or markets; (ii) any changes, events, effects, or circumstances in general international economic
regulatory or political conditions or the international financial, credit or securities markets in general; (iii) fluctuations in the value of any currency; (iv) any change in any Law or GAAP (or other interpretation thereof); (v) the
commencement, escalation or worsening of war or armed hostilities or the occurrence of acts of terrorism or sabotage; (vi) earthquakes, hurricanes, floods, other natural disasters or acts of God (except in, each case, to the extent that the
Company and its subsidiaries, taken as a whole, are disproportionately affected as compared to other companies in the oil and gas industry in Argentina and Colombia (in which case, the incremental disproportionate impact or impacts may be taken into
account in determining whether there has been, is or is reasonably expected to be a material adverse effect)); |
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any failure of the Company to meet any internal or external projections or forecasts or any estimates of earnings, revenues or other metrics or any changes in the market price or trading volume of the Company Shares
after the date of the Merger Agreement; and |
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the announcement or pendency of the Merger Agreement or any of the transactions contemplated by the Merger Agreement (including any adverse effect resulting from the identity of Parent or any of its affiliates or other
actions taken by them (other than actions taken pursuant to the Merger Agreement or consented to in writing by the Company), including the impact thereof on relationships, contractual or otherwise, with the Companys, or any of its
subsidiaries agents, customers, suppliers, vendors, licensees, licensors, lenders, partners, employees or regulators). |
For purposes of the Merger Agreement, expropriatory act means any act of confiscation, seizure, nationalization, requisition,
sequestration or similar act occurring after the date of the Merger Agreement caused by or on behalf of any governmental authority of Argentina or Colombia, as applicable, for any purpose and irrespective of whether it is on just terms or results in
any compensation and whether or not made pursuant to or in contemplation of or claiming the authority or force of any law or order, which directly or indirectly: (a) deprives or would reasonably be expected to deprive, in any material respect,
the Company and its subsidiaries, taken as a whole, or PELSA and its subsidiaries, taken as a whole, of, or otherwise adversely affect in any material respect or would reasonably be expected to adversely affect in any material respect, any part of
the Companys or PELSAs shareholding or direct or indirect ownership interest in the Company Operations (as defined in the Merger Agreement) or adversely affect in any material respect the economic benefits to be derived therefrom
(including dividends or other distributions); (b) deprives or prevents or would reasonably be expected to deprive, in any material respect, the Company and its subsidiaries, taken as a whole, or PELSA and its subsidiaries, taken as a whole, or
prevents or otherwise adversely affects or would reasonably be expected to otherwise adversely affect in any material respect the exercise by, the Company, PELSA or any of their respective subsidiaries of rights in or pertaining to the
Companys or PELSAs ownership interest in the Company Operations; or (c) deprives or would reasonably be expected to deprive the Company Operations of
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any material part of its fixed and/or current assets, income or revenue. For the purposes of this definition, any series of related measures, whether or not simultaneous or consecutive,
undertaken by or on behalf of any governmental authority of Argentina or Colombia, as applicable, after the date of this Agreement shall be regarded as one measure if their combined effect constitutes (directly or indirectly) an expropriatory act.
The Merger Agreement also contains various customary representations and warranties made by Parent and Merger Sub that are subject, in
some cases, to specified exceptions and qualifications. The representations and warranties relate to, among other things:
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the organization, qualification, good standing and power and authority of the Parent and Merger Sub to conduct their respective businesses; |
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Parents and Merger Subs power and authority to enter into the Merger Agreement and consummate the transactions contemplated by the Merger Agreement and the enforceability against Parent and Merger Sub of the
Merger Agreement; |
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the required consents and approvals of governmental authorities in connection with the transactions contemplated by the Merger Agreement; |
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the absence of conflicts with, creation of liens or defaults under Parents governing documents, certain agreements or applicable laws as a result of entering in the Merger Agreement and the consummation of the
Merger; |
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the absence of legal proceedings and investigations; |
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Parents sufficiency of funds to consummate the Merger; |
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Merger Subs capitalization; |
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accuracy of information supplied by Parent or Merger Sub for inclusion in this proxy statement; |
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Parents and Merger Subs investigation with respect to the Company and its subsidiaries; |
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the absence of any undisclosed broker fees; |
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certain specified tax matters; and |
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the absence of other representations and warranties made by the Company other than those contained in the Merger Agreement. |
Conduct of Companys Business Prior to Closing
Under the Merger Agreement, the Company has agreed that, except as (a) may be required by law, (b) may be expressly agreed to in
writing by Parent (which agreement shall not be unreasonably withheld, conditioned or delayed) or (c) set forth in disclosure schedules to the Merger Agreement, the Company shall, and shall cause each of its subsidiaries to:
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Carry on its business in the ordinary course consistent with past practice and use reasonable best efforts to preserve substantially intact its current business organizations; |
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Keep available the services of its current officers and employees; |
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Preserve its relationships with significant governmental authorities, joint venture partners, customers, suppliers, licensors, licensees, distributors, wholesalers, lessors and similar persons having significant
business dealings or other material relationships with the Company or any of its subsidiaries; and |
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Preserve the goodwill and maintain satisfactory relationships with persons having material business relationships with the Company and any of its subsidiaries. |
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Notwithstanding its obligations under the Merger Agreement to operate in the ordinary course as described above,
the Company has also agreed that, except as (a) may be required by law, (b) may be expressly agreed to in writing by Parent (which agreement shall not be unreasonably withheld, conditioned or delayed) or (c) set forth in disclosure
schedules to the Merger Agreement, it will not, and will not permit any of its subsidiaries to:
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amend or otherwise modify the Companys memorandum of association or its articles of association (or, in any material respect, such equivalent organizational or governing documents of any of its subsidiaries),
other than as contemplated by the Merger Agreement; |
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except for transactions among the Company and its wholly-owned subsidiaries or among the Companys wholly-owned subsidiaries, issue, sell, pledge, dispose, encumber or grant any shares, or any options, warrants,
convertible securities or other rights of any kind to acquire any such shares or rights settled in cash or other property based in whole or in part on the value of such shares; |
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(i) declare, authorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, other than dividends paid by PELSA or any wholly-owned subsidiary of the Company either to the
Company or any wholly-owned subsidiary of the Company; (ii) split, combine or reclassify any shares of capital stock or other equity interests; or (iii) redeem, purchase or otherwise acquire any shares of capital stock or other equity
interests; |
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except in the ordinary course of business or as required pursuant to the Company Benefit Plans (as defined in the Merger Agreement) in effect as of the date of the Merger Agreement or as otherwise required by law,
(i) increase the compensation or other benefits payable or to become payable to employees, directors or executive officers or grant any new short or long term incentive compensation awards, (ii) grant any severance or termination pay to,
or enter into any severance agreement with, any employee, director or executive officer, (iii) enter into, terminate or amend any employment agreement with any employee or executive officer, (iv) terminate, establish, adopt, enter into or
amend or terminate any of the Company Benefit Plans (or arrangement that would be a Company Benefit Plan were it effective as of the date of the Merger Agreement) or (v) enter into any new, or amend any existing, collective bargaining
agreement; |
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terminate the employment of any employee of the Company or its subsidiaries who is a party to any employment agreement and who makes in excess of $50,000 annually, other than as a direct result of such employees
(i) willful failure to perform the duties or responsibilities of his employment, (ii) engaging in serious misconduct, or (iii) being convicted of or entering a plea of guilty to any crime; |
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forgive any loans to employees, officers or directors or any of their respective affiliates; |
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grant, accelerate the vesting of, confer or award options, convertible securities, restricted stock, restricted stock units, performance stock units, stock appreciation rights or other rights to acquire any capital
stock or any equity-based award based in whole or in part on capital stock, whether settled in cash, securities or other property, or take any action not otherwise contemplated by the Merger Agreement to cause to be exercisable any otherwise
unexercisable option or other equity-based award under any existing plan; |
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acquire (including by merger, consolidation, or acquisition of stock or assets) any ownership interests in any corporation, partnership, limited liability company, other business organization or any division or material
amount of assets thereof other than acquisitions of assets up to an aggregate amount of $100,000, supplies, dealer accounts and inventory, in each case, in the ordinary course of business consistent with past practice; |
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dispose of, transfer, lease, license, mortgage, pledge, encumber or subject to a lien any material assets of the Company or any of its subsidiaries, other than (i) Company Owned IP (as defined in the Merger
Agreement), to the extent permitted in the bullet point below, (ii) sales of inventory made in the ordinary course of business consistent with past practice or (iii) in connection with any transaction solely between the Company and any
wholly-owned subsidiary of the Company or among any wholly-owned subsidiaries of the Company; |
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dispose of, transfer, lease, license, mortgage, pledge or encumber certain material Company Owned IP (other than non-exclusive licenses granted to end users in connection with sales of finished products in the ordinary
course of business); |
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abandon, allow to lapse or fail to maintain any material intellectual property rights in the Company Owned IP; |
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incur any Indebtedness (as defined in the Merger Agreement) or guarantee any Indebtedness for any person other than incurrences of or guarantees for unsecured Indebtedness in an aggregate amount not to exceed $100,000
and in the ordinary course of business consistent with past practice; |
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adopt any budget, work program or operating plan or otherwise authorize, make any commitment with respect to any capital expenditure or amend or make any capital expenditure not contemplated by the capital expenditure
budget included in the disclosure schedules to the Merger Agreement; |
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amend, terminate, cancel or materially modify or waive, release or assign any material rights or claims with respect to any Company Material Contract (as defined in the Merger Agreement) other than in the ordinary
course of business or (ii) enter into any new contract that if entered into prior to the date of the Merger Agreement, would have been a Company Material Contract or (iii) take any action that results in any breach of or constitutes a
default under or results in the cancellation of any Company Material Contract; |
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invest the cash of the Company or any of its subsidiaries other than in the ordinary course of business consistent with past practice; |
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loan, advance, invest or make a capital contribution to or in any person, other than a wholly-owned subsidiary of the Company; |
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waive, release, assign, settle or compromise any (i) governmental complaint or (ii) claims, liabilities or obligations arising out of, related to or in connection with litigation other than for compromises,
settlements or agreements that (x) involve only the payment of monetary damages not in excess of $100,000 in any single instance and $250,000 in the aggregate and in any case without the imposition of equitable relief on, or the admission of
wrongdoing by, the Company or any of its subsidiaries or (y) are permitted under the Merger Agreement with respect to shareholder litigation; |
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make any material change in accounting principles, policies, practices, procedures or methods in effect at December 31, 2013, except (i) as required by GAAP (or any interpretation or enforcement thereof) or
Regulation S-X of the Exchange Act or other rule or regulation promulgated by the SEC, or (ii) as required by applicable law; |
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except as required by law or the published interpretation or enforcement thereof, make or rescind any material tax election, change any material tax method, file any amended tax return that is material, or settle or
compromise any material federal, state, provincial, local or foreign income tax liability; |
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fail to maintain in full force and effect insurance policies covering the Company and its subsidiaries and their respective properties, assets and businesses in a form and amount consistent with past practice;
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adopt or enter into a plan of complete or partial liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries; |
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convene any regular or special meeting (or any adjournment thereof) of the Companys shareholders (other than the shareholders meeting for the purpose of voting upon the adoption of the Merger Agreement and,
not prior to March 31, 2015, the annual shareholders meeting of the Company) or enter into any contract or understanding or arrangement with respect to the voting or registration of the Company Shares or any other equity interests of the
Company; |
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enter into any new line of business outside the Companys existing business segments; |
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enter into, modify or terminate any transactions or contracts with any affiliate of the Company; |
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amend or modify in any material respect the engagement letter of any of the Companys financial advisors; or |
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enter into any binding contract or agreement to do any of the foregoing. |
Restrictions on Solicitations of Other Offers
The Company agreed to, and to cause its subsidiaries and their respective representatives to, (i) immediately following entry into the
Merger Agreement cease and cause to be terminated all existing discussions or negotiations with any third party conducted prior to entry into the Merger Agreement with respect to any acquisition proposal (as defined below) or acquisition inquiry (as
defined below) and (ii) promptly following entry into the Merger Agreement, request that all confidential information provided by or on behalf of the Company or any of its affiliates to such third party in connection with such discussions or
negotiations be returned or destroyed.
The Company has agreed it will not, and will not authorize or permit any of its subsidiaries to, and will cause
its and their respective representatives not to, directly or indirectly:
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initiate, solicit or knowingly encourage or knowingly facilitate the making of an acquisition proposal or acquisition inquiry; |
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other than informing third parties of the existence of the non-solicitation provisions contained in the Merger Agreement, engage in negotiations or discussions with, or furnish any non-public information concerning the
Company or any of its subsidiaries to, any third party who has made or in response to an acquisition proposal or acquisition inquiry; or |
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resolve or agree to do any of the foregoing. |
Notwithstanding the restrictions set forth
above, the Company was entitled substantially contemporaneously with the public announcement of the Merger Agreement, to waive the dont ask/dont waive provisions of any standstill provisions contained in any confidentiality
agreement in effect on the date of the Merger Agreement. The Company waived such provisions on October 3, 2014 and, as required by the terms of the Merger Agreement, notified Parent of the identity of the parties receiving the benefit of such
waiver.
The Company has agreed that any violation of the restrictions set forth above by any subsidiary or representative of the Company
will be a breach of the Merger Agreement by the Company.
Notwithstanding the aforementioned restrictions, if, at any time prior to the
adoption of the Merger Agreement by the Companys shareholders, (i) the Board receives an unsolicited, written acquisition proposal that the Board or any committee of the Board determines in good faith to be bona fide, (ii) the Board
or any committee of the Board determines in its good faith judgment, based on information then available and after consulting with outside counsel and a nationally recognized third-party financial advisor, that such acquisition proposal constitutes
or would reasonably be expected to lead to a superior offer (as defined below), and (iii) after consultation with outside counsel, the Board or any committee of the Board determines in good faith that the failure to take the actions described
in clauses (A), (B) and (C) below would reasonably be expected to be inconsistent with the Boards fiduciary duties under the law of the Cayman Islands, then the Company may, at any time prior to the adoption of the Merger Agreement
by the Companys shareholders (A) furnish information to the person or persons (and its or their representatives and potential financing sources) making such acquisition proposal but only after such person or persons enter into a
confidentiality agreement with terms no less restrictive of such person or persons than the confidentiality agreement entered into by and between the Company and Pluspetrol S.A. (an Acceptable Confidentiality Agreement),
(B) participate in discussions or negotiations with such person or persons (and its or their representatives and potential financing sources) regarding any such acquisition proposal made by such person or persons and (C) waive the
applicable standstill provisions of the
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Acceptable Confidentiality Agreement no more than once and solely to the extent necessary to permit a third party to make, on a confidential basis to the Board, one acquisition proposal following
the entry of such third party into an Acceptable Confidentiality Agreement (it being understood that any revisions made to such acquisition proposal from the time such discussions and negotiations permitted pursuant to the non-solicitation
provisions of the Merger Agreement shall have commenced until such time that the Board has delivered to Parent a notice of superior offer with respect to such acquisition proposal shall constitute one and the same acquisition proposal) and;
provided, that the Company shall give written notice to Parent after any such determination by the Board, in each case before taking any of the actions described in the foregoing clauses (A), (B) and (C). The Company will promptly (and
in any event, within 24 hours) provide Parent with all non-public information regarding the Company and its subsidiaries that is provided by the Company to a person or persons (or its or their representatives or potential financing sources) pursuant
to the immediately preceding sentence to the extent not previously provided to Parent or its representatives.
For purposes of the Merger
Agreement, an acquisition proposal is any offer or proposal (other than an offer or proposal made or submitted by or on behalf of Parent) relating to any acquisition transaction.
For purposes of the Merger Agreement, an acquisition inquiry is an inquiry, indication of interest or request for nonpublic
information (other than an inquiry, indication of interest or request for nonpublic information made or submitted by or on behalf of Parent) that could reasonably be expected to lead to an acquisition proposal.
For purposes of the Merger Agreement, an acquisition transaction is any transaction or series of related transactions with a
person or group (as defined in the Exchange Act and the rules promulgated thereunder) concerning any (i) merger, consolidation, business combination, recapitalization, share exchange, share sale, liquidation, dissolution, joint
venture or similar transaction involving the Company or any of its subsidiaries if, as a result of any such transaction, such person or group would own assets, revenues or net income of the Company or any of its subsidiaries,
individually or in the aggregate constituting 15% or more of the consolidated assets, revenues or net income of the Company and its subsidiaries, taken as a whole; (ii) sale, lease, license or other disposition directly or indirectly by merger,
consolidation, business combination, share exchange, joint venture or otherwise, of assets of the Company (including equity interests of any of its subsidiaries or any equity interests representing any of the shares of PELSA held directly or
indirectly by the Company (the PELSA Interest)) or any subsidiary of the Company representing 15% or more of the consolidated assets, revenues or net income of the Company and its subsidiaries, taken as a whole; (iii) issuance or
sale or other disposition (including by way of merger, consolidation, business combination, share exchange, share sale, joint venture or similar transaction) of equity interests representing any of the PELSA Interest or 15% or more of the issued and
outstanding equity securities of the Company or any of its subsidiaries whose assets, revenues or net income, individually or in the aggregate constitute 15% or more of the consolidated assets, revenues or net income of the Company and its
subsidiaries, taken as a whole; (iv) transaction or series of transactions (including any tender offer, purchase, acquisition or exchange offer) in which any Person or group would acquire beneficial ownership or the right to acquire
beneficial ownership of equity interests representing 15% or more of the issued and outstanding equity securities of the Company or the PELSA Interest or any of the Companys subsidiaries whose assets, revenues or net income, individual or in
the aggregate constitute 15% or more of the consolidated assets, revenues or net income of the Company and its subsidiaries, taken as a whole; or (v) any combination of the foregoing.
For purposes of the Merger Agreement, a superior offer means any bona fide written acquisition proposal (except that, for purposes
of this definition, the references in the definition of acquisition transaction to 15% shall be replaced by 80%) that (i) results in equal consideration being paid in respect of each Company Share (regardless of class of
Company Share), (ii) is not conditioned on receipt of financing and (iii) is determined in good faith by the Board, after consulting with a nationally recognized third-party financial advisor and outside legal counsel, to be
(A) reasonably capable of being consummated on a timely basis and (B) more favorable to the holders of Company Shares, from a financial point of view, than the Merger, taking into account any changes to the financial and other terms of the
Merger Agreement proposed by Parent to the Company pursuant to the
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terms of the Merger Agreement and any other factors that the Board deems in good faith appropriate. In the event that WPX is entitled to receive at least $15.00 per Company Share (and all other
holders of Company Shares are entitled to receive an equal or greater amount of consideration per Company share) pursuant to any changes to the financial and other terms of the Merger Agreement proposed in writing by Parent to the Company pursuant
to the match right provisions of the Merger Agreement described below, the Company shall consider the changes to the financial and other terms of the Merger Agreement proposed by Parent for purposes of determining whether or not there has been a
superior offer as though WPX was to receive the same consideration per Company Share as the other holders of Company Shares.
Company Board Recommendation; Termination in Connection with a Superior Offer
The Board has resolved to recommend and has unanimously recommended that the Companys shareholders adopt the Merger Agreement (and the
plan of merger exhibited thereto). The Board shall not (i) (A) withdraw (or qualify, amend or modify in a manner adverse to Parent), or propose publicly to withdraw (or to qualify, amend or modify, in a manner adverse to Parent), the Board
recommendation in favor of adoption of the Merger Agreement, (B) fail to publicly reaffirm the Board recommendation in favor of adoption of the Merger Agreement within five business days after Parent so requests in writing (provided however
that Parent shall only be entitled to request such reaffirmation no more than three times), (C) fail to recommend, in a Solicitation/Recommendation Statement on Schedule 14D-9, against any tender offer or exchange offer by a third party for 15%
or more of the outstanding Company Shares within ten business days after the commencement of such tender offer or exchange offer; (D) approve, adopt or recommend any acquisition proposal or propose publicly to approve, adopt or recommend, any
acquisition proposal or (E) approve, adopt, recommend or enter into any alternative acquisition agreement or propose publicly to approve, adopt, recommend or enter into, any alternative acquisition agreement (any such action in the foregoing
clauses (A) through (E) being referred to as an adverse recommendation change).
Notwithstanding the above
restrictions or anything else in the Merger Agreement to the contrary, at any time prior to obtaining the Company shareholder approval, the Board may, if the Board determines in its good faith judgment, after consulting with outside counsel, that
the failure to effect an adverse recommendation change would reasonably be expected to be inconsistent with the Boards fiduciary duties under law (x) make an adverse recommendation change in response to an intervening circumstance (as
defined below) or (y) in response to a superior offer, make an adverse recommendation change and cause the Company to terminate the Merger Agreement and enter into one or more definitive alternative acquisition agreements with respect to a
superior offer pursuant to the terms of the Merger Agreement as further described in Termination of the Merger Agreement below.
An adverse recommendation change due to an intervening circumstance may not be made unless (A) the Company shall have delivered to Parent
a written notice advising Parent that the Board intends to effect an adverse recommendation change as a result of an intervening circumstance (a notice of intervening circumstance) (it being understood that the delivery of such notice
shall not itself constitute an adverse recommendation change) and specifying, in reasonable detail, the reasons for such action; (B) at least four business days shall have elapsed following the delivery of such notice of intervening
circumstance; (C) during such period of four business days, the Company shall have, and shall have instructed its financial advisors and outside legal counsel to have, negotiated in good faith with Parent (if Parent shall have requested in
writing that the Company and its financial advisors and outside legal counsel to so negotiate) regarding adjustments to the terms and conditions of the Merger Agreement as would enable the Board to determine not to effect an adverse recommendation
change; and (D) the Board shall have in good faith taken into account any revisions to the terms and conditions of this Agreement that are reflected in any proposed definitive amendments thereto that are countersigned by Parent and Merger Sub
and delivered to the Company by 5:00 p.m. Eastern Time on the last day of such period of four Business Days.
For purposes of the Merger
Agreement, intervening circumstance means any change, event, effect or circumstance that affects, or would reasonably be expected to affect, the business, assets or operations of the Company that is unknown and is not reasonably
foreseeable to the Board as of the date of the Merger Agreement and becomes known to the Board prior to obtaining the Company shareholder approval that the Board determines in good faith makes it appropriate to consider an adverse recommendation
change.
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An adverse recommendation change in response to a superior offer, may not be made, and the Merger
Agreement may not be terminated in order to enter into a definitive agreement with respect to such superior offer, unless (A) the Company shall have delivered to Parent a written notice advising Parent that the Board intends to make an adverse
recommendation change and terminate the Merger Agreement pursuant to its terms (a notice of superior offer) (it being understood that the delivery of such notice shall not itself constitute an adverse recommendation change), specifying
in reasonable detail the material terms and conditions of such superior offer, accompanied by a copy of the then-current form of any agreement with respect to such superior offer that the Company has received from the person that made such superior
offer (the third party offeror); (B) at least four business days shall have elapsed following the delivery of such notice of superior offer (it being agreed that (x) any third party offeror subject to an Acceptable
Confidentiality Agreement (as defined in the Merger Agreement) or an Existing Confidentiality Agreement (as defined in the Merger Agreement) shall not be permitted pursuant to the terms of such Acceptable Confidentiality Agreement or Existing
Confidentiality Agreement or any waiver granted pursuant to the terms of the Merger Agreement to make any additional acquisition proposals or modify or amend the financial or other material terms of such superior offer in response to adjustments to
the terms and conditions of the Merger Agreement made by Parent pursuant to the terms of the Merger Agreement and (y) any amendment to the financial or other material terms of such superior offer made by a third party offeror not subject to an
Acceptable Confidentiality Agreement (as defined in the Merger Agreement) or an Existing Confidentiality Agreement (as defined in the Merger Agreement) will require a new notice of superior offer, except that the applicable time period for purposes
of requirement with respect to such new notice of superior offer shall be reduced to two business days from the four business days otherwise contemplated); (C) during such four-business-day (or, if applicable, such two-business-day) period
following the delivery of such notice of superior offer, the Company shall have, and if requested by Parent, shall have instructed its financial advisors and outside legal counsel to have, negotiated in good faith with Parent regarding adjustments
to the terms and conditions of the Merger Agreement as would enable the Board to determine not to make an adverse recommendation change and terminate the Merger Agreement in accordance with its terms; and (D) the Board shall have in good faith
taken into account any revisions to the terms and conditions of the Merger Agreement proposed in writing by Parent to the Company by 5:00 p.m. Eastern Time on the last day of such period of four business days (or, if applicable, two-business-day
period); provided that in the event WPX is receiving at least $15.00 per Company Share (and all other holders of Company Shares are entitled to receive an equal or greater amount or consideration per Company Share) pursuant to such revisions, the
Company shall consider such revisions as though WPX were entitled to receive the same consideration per Company Share as the other holders of Company Shares.
In order to enter into an alternative acquisition agreement with respect to a superior offer, the Company must terminate the Merger Agreement
in accordance with the terms of the Merger Agreement. See Termination of the Merger Agreement and Effect of Termination; Termination Fee below.
Shareholders Meeting
The Merger Agreement requires the Board to, as promptly as reasonably practicable (and in any event within five business days following the
date the SEC staff advises the Company that it has no further comments to the proxy statement), establish a record date for a meeting of its shareholders for the purpose of voting upon the adoption of the Merger Agreement, establish the earliest
reasonably practicable date for such meeting of its shareholders (which shall be no more than 40 days after the SEC staff advises the Company that it has no further comments to the proxy statement) and mail to the holders of Company Shares as of
such record date this proxy statement.
Unless the Board has made an adverse recommendation change, the Company shall use its reasonable
best efforts to solicit proxies in favor of the adoption of the Merger Agreement. In addition, the Company is permitted to adjourn or postpone the Company stockholder meeting:
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with the consent of Parent; |
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in the absence of a quorum; or |
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once, for no more than thirty days to allow reasonable additional time for the filing and distribution of any supplemental or amended disclosure which the Board has determined in good faith (after consultation with its
outside legal counsel) is required under Section 14(a) of the Exchange Act and the related rules and regulations promulgated by the SEC and for such supplemental or amended disclosure to be disseminated to and reviewed by the Companys
shareholders prior to the meeting of the shareholders. |
Indemnification
For a period of six years from the Effective Time, to the extent permitted by applicable law, the memorandum of association and articles of
association and other organizational documents of the Surviving Company and its subsidiaries will contain provisions with respect to the indemnification and exculpation of current and former directors and officers, that are no less favorable to such
persons than those set forth in the memorandum of association and articles of association and other organizational documents of the Company and its subsidiaries as in effect as of the date of the Merger Agreement.
Consents and Filings
Each of the parties to the Merger Agreement has agreed to use (and cause each of their applicable affiliates and subsidiaries to use) its
reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate, as promptly as practicable, the
Merger and the other transactions contemplated by the Merger Agreement.
In addition to the foregoing, each of the parties has agreed to
use its respective reasonable best efforts to:
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cause the conditions to the Merger set forth in the Merger Agreement to be satisfied as promptly as practicable; |
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obtain any consents, approvals, orders, waivers and authorizations of, actions or nonactions by, any governmental authority or any third party necessary in connection with consummation of the transactions contemplated
by the Merger Agreement, including the Merger; and |
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execute and deliver any additional instruments necessary to consummate the Merger and any other transactions to be performed or consummated by such party in accordance with the terms of the Merger Agreement and to carry
out fully the purposes of the Merger Agreement. |
Notwithstanding any of the obligations discussed above, the Merger
Agreement does not require Parent or any of its subsidiaries, or permit the Company or any of its subsidiaries (without the prior consent of Parent), to:
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litigate with any government authority to obtain approval, authorization or consent to the Merger, |
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any license, sale or other disposition or holding separate (through establishment of a trust or otherwise) of any shares of the Company, Parent, the Surviving Company or any of their respective subsidiaries or
affiliates or of any amount (other than a de minimis amount) of such entities businesses, assets or properties; |
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the imposition of any limitation (other than a de minimis limitation) on the ability of the Company, Parent, the Surviving Company, or any of their respective subsidiaries or affiliates to conduct their respective
businesses or own any shares or assets or to acquire, hold or exercise full rights of ownership of their respective businesses and, in the case of Parent, the businesses of the Surviving Company and its subsidiaries; |
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the imposition of any impediment (other than a de minimis impediment) on Parent, the Surviving Company or any of their respective subsidiaries or affiliates under any laws; or |
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pay any amounts (other than de minimis amounts) or otherwise agree to provide any benefit or undertaking to be subject to any limitation or restriction to any governmental authority other than in respect of customary
and established filing fees and other payments required as of the date hereof by law. |
Each party has agreed to:
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reasonably cooperate with respect to all discussions, submissions, negotiations and other communications with all governmental authorities in connection with all waiting periods, authorizations, consent or waivers
required to consummate the transactions contemplated by the Merger Agreement; |
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promptly and fully inform the other party of any written or material oral communication received from or given to any governmental authority; |
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permit the other party to review any submission required to be made by the Company to any governmental authority prior to its submission; |
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consult with the other party in advance of any meeting, conference or material discussion required by any governmental authority; and |
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if permitted to do so by the relevant governmental authority, give the other party the opportunity to attend and participate in any such meetings, conferences and discussions. |
Other Covenants
The Merger Agreement contains addition agreements between the Company and Parent relating to, among other things:
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access to information of the Company by Parent; |
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public announcements of the Merger Agreement and the transactions contemplated under the Merger Agreement; |
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exemptions from Rule 16b-3 promulgated under the Exchange Act; |
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shareholder litigation relating to the transactions contemplated by the Merger Agreement and the settlement of such litigation; |
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termination of affiliate transactions; and |
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elections under section 338(g) of the Code. |
Conditions to the Completion of the
Merger
Each partys obligation to consummate the Merger is subject to the satisfaction (or to the extent permitted by law) waiver
of the following conditions:
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the Companys shareholders shall have voted to adopt the Merger Agreement (and the plan of merger exhibited thereto); and |
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no governmental authority shall have enacted, issued, promulgated, enforced or entered into any law or order, or threatened or commenced any proceeding, which is then pending or in effect and seeks to enjoin or
otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the Merger. |
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In addition, Parent and Merger Subs obligation to consummate the Merger is subject to the
satisfaction (or to the extent permitted by law) waiver of the following conditions:
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(i) certain of the representations and warranties of the Company with respect to (a) its capitalization and subsidiaries and (b) required consents and approvals of governmental authorities in connection with
the transactions contemplated by the Merger Agreement and (ii) each of the representations and warranties of the Company with respect to (a) its authority to enter into the Merger Agreement and consummate the transactions contemplated by
the Merger Agreement, (b) the absence of a material adverse effect on the Company since December 31, 2013, (c) antitakeover statutes, and (d) the absence of undisclosed brokers fees, shall be true and correct in all
respects as of the date of the Merger Agreement and the closing date (as though made on and as of the closing date), except, for certain de minimis inaccuracies with respect to certain representations and warranties with respect to the
Companys capitalization; |
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(i) certain of the representations and warranties of the Company with respect to its capitalization and subsidiaries and (ii) each of the representations and warranties of the Company with respect to the
Companys title to direct working interests in certain concessions, shall be true and correct in all material respects (without giving effect to any qualifications as to materiality or material adverse effect or other similar qualifications
contained therein) as of the date of the Merger Agreement and the closing date; |
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each of the other representations and warranties of the Company set forth in the Merger Agreement that (x) are not made as of a specific date shall be true and correct as of the date of the Merger Agreement and the
closing date (as though made on and as of the closing date), and (y) are made as of a specific date shall be true and correct as of such date, except where the failure of such representations and warranties to be true and correct, without
giving effect to any qualifications as to materiality or material adverse effect or other similar qualifications contained therein, would not have, individually or in the aggregate, a material adverse effect; |
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the Company shall have performed or complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by it on or prior to the closing date;
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since the date of the Merger Agreement, there shall not have occurred any change, event, effect or circumstance that, individually or in the aggregate, has had a material adverse effect; |
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the Company shall have delivered to Parent a certificate, dated as of the closing date, and signed by an executive officer of the Company certifying that the closing conditions described in the bullet points above have
been satisfied; |
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all consents of the Companys secured creditors required under the Companies Law have been made, given or obtained on terms acceptable to the Parent, acting reasonably; and |
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the transactions contemplated by the Irrevocable Offer shall have been consummated or will be consummated concurrently with the closing of the Merger. |
In addition, the Companys obligation to consummate the Merger is subject to the satisfaction (or to the extent permitted by law) waiver
of the following conditions:
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each of the representations and warranties of Parent and Merger Sub contained in the Merger Agreement, without giving effect to any qualifications as to materiality or other similar qualifications contained therein,
shall be true and correct as of the date of the Merger Agreement and the closing date (except to the extent expressly made as of an earlier date, in which case as of such date), except for such failures to be true and correct as would not reasonably
be expected to, individually or in the aggregate, materially impair the ability of Parent or Merger Sub to consummate the Merger; |
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Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by the Merger Agreement to be performed or complied with by them on or prior to the closing
date; and |
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Parent shall have delivered to the Company a certificate, dated as of the closing date, and signed by an executive officer of Parent certifying that the closing conditions described in the bullet points above have been
satisfied. |
None of Parent, Merger Sub or the Company may rely on the failure of a condition to be satisfied if such failure
was caused by such partys failure to perform its obligations under the Merger Agreement or otherwise to comply with its obligations under the Merger Agreement.
Termination of the Merger Agreement
The Merger Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the
adoption of the Merger Agreement by the Company shareholders:
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by mutual written consent of the Company and Parent; |
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by either Parent or the Company, if: |
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the Effective Time shall not have occurred before the Termination Date; provided, that the right to terminate the Merger Agreement shall not be available to a party if such party has breached or violated any of its
covenants, agreements or other obligations hereunder and such breach or violation has been the principal cause of or directly resulted in (1) the failure to satisfy the conditions to the obligations of the terminating party to consummate the
Merger prior to the Termination Date or (2) the failure of the Merger Closing to occur by the Termination Date; |
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any governmental authority shall have enacted, issued, promulgated, enforced or entered into any law or order, or threatened or commenced any proceeding, which is then pending or in effect and seeks to enjoin or
otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the Merger , and such law or order or injunction shall have become final and non-appealable so long as the party seeking to terminate the Merger
Agreement has used reasonable best efforts to prevent, oppose or remove such law or order or injunction; or |
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if the shareholders meeting for the purpose of voting upon the adoption of the Merger Agreement has occurred and the Company shareholders vote against the adoption of the Merger Agreement; or |
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Parent or Merger Sub shall have breached or failed to perform any of their respective representations, warranties, covenants or other agreements set forth in the Merger Agreement, which breach or failure to perform,
individually or in the aggregate, (x) would give rise to a failure of certain conditions to the closing of the Merger and (y) (A) is not capable of being cured prior to the Termination Date or (B) is not cured by Parent or Merger
Sub on or before the earlier of (i) the Termination Date and (ii) the date that is 30 days following the receipt by Parent of written notice from the Company of such breach or failure so long as the Company is not then in material breach
of any of its representations, warranties, covenants or agreements under the Merger Agreement; or |
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at any time prior to the adoption of the Merger Agreement by the Companys shareholders, (A) the Board has determined to enter into one or more definitive agreements with respect to a superior offer;
(B) the Company shall have complied with the terms and conditions of the non-solicitation provisions with respect to such superior offer; (C) concurrently with the termination of the Merger Agreement the Company enters into one or more
definitive agreements with respect to such superior offer; and (D) the Company pays to Parent the a termination fee of $15,450,000; or |
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the Company shall have breached or failed to perform any of its representations, warranties, covenants or other agreements set forth in the Merger
Agreement, which breach or failure to perform, individually or in the aggregate, (x) would give rise to the failure of certain conditions to |
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the closing of the Merger and (y) (A) is not capable of being cured prior to the Termination Date or (B) is not cured by the Company on or before the earlier of (i) the
Termination Date and (ii) the date that is 30 days following the receipt by the Company of written notice from Parent of such breach or failure so long as neither Parent nor Merger Sub is then in material breach of any of its representations,
warranties, covenants or agreements under the Merger Agreement; or |
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at any time prior to the meeting of the Companys shareholders to adopt the Merger Agreement (and the plan of merger exhibited thereto), if (A) the Board makes an adverse recommendation change or (B) the
Company commits an Intentional Breach of its obligations under the non-solicitation provisions or provisions with respect to the meeting of the Companys shareholders to adopt the Merger Agreement (and the plan of merger exhibited thereto) and
file this proxy statement. |
Effect of Termination; Termination Fee
The Company has agreed to pay to Parent a termination fee of $15,450,000 if the Merger Agreement is terminated:
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(i) (A) by either Parent or the Company because the Effective Time has not occurred prior to the Termination Date or (B) by Parent because the Company has breached or failed to perform any of its
representations, warranties, covenants or other agreements set forth in this Agreement and (ii) (A) the Company receives or has received an acquisition proposal from a third party after the date of the Merger Agreement or an acquisition
proposal becomes publicly known at or prior to such termination and (B) within 12 months of termination, (1) the Company enters into a definitive agreement with respect to an acquisition proposal (whether or not the same acquisition
proposal described in clause (ii)(A) above) or (2) an acquisition proposal (whether or not the same acquisition proposal described in clause (ii)(A) above) is consummated by the Company (a Post-Termination Fee); |
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by the Company, in order to enter into an acquisition agreement with respect to a superior offer (a Superior Offer Fee); or |
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by Parent, because of an adverse recommendation change made by the Board or because the Company has committed an Intentional Breach of its obligations with respect to calling or holding the extraordinary general meeting
and with respect to preparing or filing this proxy statement (an Adverse Recommendation/Breach Fee). |
If the
Company fails to pay when due the termination fee, then the Company will reimburse Parent for all fees, costs and expenses incurred in connection with any action taken to collect payment and in connection with the enforcement by Parent of its
rights; and the Company will pay to Parent interest on the overdue amount at a rate per annum 300 basis points over the prime rate.
Amendment; Waiver
The Merger Agreement may be amended with the approval of the parties at any time prior to the Effective Time.
After any adoption of the Merger Agreement by the holders of Company Shares, no amendment will be made which by law requires further approval of such holders without the further approval of such holders. The Merger Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
No failure on the part of any party to exercise any right or
remedy under the Merger Agreement, and no delay on the part of any party in exercising any right or remedy under the Merger Agreement, will operate as a waiver of such right or remedy. No single or partial exercise of any such right or remedy will
preclude any other or further exercise thereof or of any other right or remedy.
At any time prior to the Effective Time, the parties may
(i) extend the time for performance of any of the obligations or other acts of the other parties, (ii) waive any inaccuracies in the representations and warranties of the other parties contained in the Merger Agreement or in any document
delivered pursuant to the Merger Agreement, or (iii) waive compliance with any of the agreements or conditions contained in the Merger Agreement.
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Remedies
The Merger Agreement permits both Parent and the Company to obtain an injunction, decree of specific performance or other equitable relief to
prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement.
In the event
(i) the remedy of specific performance contemplated by the Merger Agreement is not available to the Company, (ii) the Company seeks and obtains a judgment granting specific performance against Parent but the Company is unable to enforce
such judgment against Parent promptly for any reason or (iii) the Company declines, for whatever reason, to seek the remedy of specific performance contemplated by the Merger Agreement, the Company (and no other person) shall have the right to
seek to obtain damages (to the extent proven and taking into account other reasonably available combination opportunities) based on the lost shareholder premium (based on the NASDAQ quoted stock price as of the date of the Merger Agreement) in the
event of Parents or Merger Subs material breach of this Agreement that constituted a failure of any of the conditions to Merger Closing from being satisfied. Parent and Merger Sub shall each be jointly and severally liable for any such
damages for which Parent and/or Merger Sub are found liable.
Subject to Parents right to specific performance (described above), in
the event the termination fee is paid to Parent, the payment of the termination fee shall constitute the sole and exclusive remedy of Parent under the Merger Agreement other than the right to seek damages payable as a result of an Intentional Breach
(as defined in the Merger Agreement) of the Merger Agreement.
Other than Parent and Merger Subs ability to recover damages in
respect of an Intentional Breach, the termination fee of $15,450,000 shall constitute the maximum aggregate liability of the Company and its subsidiaries for damages in connection with the Merger Agreement or any of the transactions contemplated by
the Merger Agreement.
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POWER OF ATTORNEY
This section of the proxy statement summarizes material provisions of the Power of Attorney. This summary does not purport to be complete and may not
contain all of the information about the Power of Attorney that is important to you. The following summary is qualified in its entirety by reference to the complete text of the Power of Attorney, which is attached as Annex D to this proxy statement
and incorporated into this proxy statement by reference. The Company encourages you to read carefully the Power of Attorney in its entirety, as the rights and obligations of the parties are governed by the express terms of the Power of Attorney and
not by this summary or any other information contained in this proxy statement.
In connection with the Company and Parent entering
into the Merger Agreement, WPX, holding approximately 69% of the Company Shares, entered into the Power of Attorney. The Power of Attorney instructs Appleby Trust (Cayman) Ltd., a designee of Parent, to vote WPXs Company Shares in favor of the
approval and adoption of the Merger Agreement and the plan of merger and to vote against approvals of any proposal made in opposition to, competition with, or that would result in a breach of the Merger Agreement. The number of Company Shares held
by WPX and underlying the Power of Attorney is sufficient to adopt the Merger Agreement (and the plan of merger exhibited thereto).
Accordingly, we expect the Merger Agreement (and the plan of merger exhibited thereto) to be adopted at the extraordinary general meeting
unless the Merger Agreement is terminated prior to such meeting. The Power of Attorney automatically terminates upon the termination of the Merger Agreement pursuant to its terms.
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IRREVOCABLE OFFER
This section of the proxy statement summarizes material provisions of the Irrevocable Offer. This summary does not purport to be complete
and may not contain all of the information about the Irrevocable Offer that is important to you. The following summary is qualified in its entirety by reference to the complete text of the Irrevocable Offer, which is attached as Annex E to this
proxy statement and incorporated into this proxy statement by reference. The Company encourages you to read carefully the Irrevocable Offer in its entirety, as the rights and obligations of the parties are governed by the express terms of the
Irrevocable Offer and not by this summary or any other information contained in this proxy statement.
In connection with the Merger
Agreement, WPX accepted an Irrevocable Offer, dated October 2, 2014, from Parent, pursuant to which the WPX will sell to Parent all of the Companys interests in Apco Argentina, S.A., an Argentine corporation (Apco Argentina)
in which WPX owns a five percent interest, and Northwest Argentina Corporation, a Utah corporation (Northwest), which is a wholly-owned subsidiary of WPX. One of the conditions to the Merger is that the transactions contemplated by the
Irrevocable Offer shall have been consummated or will be consummated concurrently with the closing of the Merger.
Conditions to Closing of the
Irrevocable Offer
Parents obligations to consummate the transactions contemplated by the Irrevocable Offer are subject to the
following conditions:
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no governmental authority shall have enacted, issued, promulgated, enforced or entered into any law or order, or threatened or commenced any proceeding, which is then pending or in effect and seeks to enjoin or
otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the transactions contemplated by the Irrevocable Offer; |
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WPX shall have performed in all material respects all of its obligations under the Irrevocable Offer at or prior to the closing date of the transactions contemplated by the Irrevocable Offer; |
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certain representations and warranties with respect to the ownership and transfer of the interests of Northwest and Apco Argentina and the representation and warranty regarding the absence of undisclosed broker fees
shall be true and correct in all respects (other than de minimis inaccuracies with respect to certain representations and warranties regarding the ownership and transfer of interests of Northwest and Apco Argentina) as of the date of the Irrevocable
Offer and as of the closing the transactions contemplated by the Irrevocable Offer and the remaining representations and warranties made by WPX in the Irrevocable Offer shall be true and correct in all material respects as of the date of the
Irrevocable Offer and as of the closing the transactions contemplated by the Irrevocable Offer, in each case with the same effect as if then made (except to the extent such representations and warranties expressly relate to an earlier date in which
case they shall be tested as of such earlier date); |
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certain designees of Parent shall have been elected to the board of directors of Apco Argentina and Northwest immediately following the closing of the transactions contemplated by the Irrevocable Offer and WPXs
designees to such boards of directors shall have resigned effective immediately following the Closing; |
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WPX shall have delivered to Parent certain deliverables evidencing the transfer of the interests in Apco Argentina and Northwest; |
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at least two days prior to the consummation of the transactions contemplated by the Irrevocable Offer, WPX shall have converted Northwest to a limited liability company and such limited liability company shall not be
treated as a corporation for U.S. federal, state, or local tax purposes; and |
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the transactions contemplated by the Merger Agreement shall have been consummated or shall be consummated substantially concurrently with the Closing. |
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WPXs obligations to consummate the transactions contemplated by the Irrevocable Offer are
subject to the following conditions:
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no governmental authority shall have enacted, issued, promulgated, enforced or entered into any law or order, or threatened or commenced any proceeding, which is then pending or in effect and seeks to enjoin or
otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the transactions contemplated by the Irrevocable Offer; |
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Parent shall have performed in all material respects all of its obligations under the Irrevocable Offer at or prior to the closing date of the transactions contemplated by the Irrevocable Offer; |
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each of the representations and warranties made by Parent in the Irrevocable Offer shall be true and correct in all respects as of the date of the Irrevocable Offer and as of the closing the transactions contemplated by
the Irrevocable Offer, in each case with the same effect as if then made (except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be tested as of such earlier date), except for such
failures to be true and correct as would not reasonably be expected to, individually or in the aggregate, materially impair the ability of Parent to consummate the transactions contemplated by the Irrevocable Offer; |
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Parent shall have paid the purchase price to WPX pursuant to the terms of the Irrevocable Offer; and |
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the transactions contemplated by the Merger Agreement shall have been consummated or shall be consummated substantially concurrently with the Closing. |
Restrictions on Solicitations of Other Offers in the Irrevocable Offer
WPX has agreed to, and to cause its subsidiaries and their respective representatives to:
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immediately following entry into the Irrevocable Offer cease and cause to be terminated all existing discussions or negotiations with any third party conducted prior to entry into the Irrevocable Offer with respect to
any bona fide offer or proposal concerning (i)(a) any sale or transfer of all or a material portion of the assets of the Company and its subsidiaries taken as a whole, (b) any sale or transfer of the Company Shares or the shares of Apco
Argentina or Northwest held by WPX or (c) any merger or similar transaction involving the Company and its subsidiaries or Northwest or (ii) any inquiry that could reasonably be expected to lead to such an offer or proposal; and
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promptly following entry into the Irrevocable Offer request that all confidential information provided by or on behalf of WPX or any of its affiliates to such third party in connection with such discussions or
negotiations be returned or destroyed. |
WPX has agreed it will not, and will not authorize or permit any of its subsidiaries to, and will
cause its and their respective representatives not to, directly or indirectly:
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initiate, solicit or knowingly encourage or knowingly facilitate the making of any bona fide offer or proposal concerning (i)(a) any sale or transfer of all or a material portion of the assets of the Company and its
subsidiaries taken as a whole, (b) any sale or transfer of the Company Shares or the shares of Apco Argentina or Northwest held by it or (c) any merger or similar transaction involving the Company and its subsidiaries or Northwest or
(ii) any inquiry that could reasonably be expected to lead to such an offer or proposal; |
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other than informing third parties of the existence of the non-solicitation provisions contained in the Irrevocable Offer, engage in negotiations or discussions with, or furnish any non-public information concerning the
Company, Northwest or any of their respective subsidiaries to, any third party who has made or in response to a proposal or inquiry described in the foregoing bullet; or |
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resolve or agree to do any of the foregoing. |
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Notwithstanding the restrictions set forth above, WPX was entitled substantially
contemporaneously with the public announcement of the Merger Agreement to waive the dont ask/dont waive provisions of any standstill provisions contained in any confidentiality agreement in effect on the date of the Merger
Agreement. WPX waived such provisions on October 3, 2014 and, as required by the terms of the Irrevocable Offer, notified Parent of the identity of the parties receiving the benefit of such waiver.
Termination of the Irrevocable Offer; Post-Termination Fees
The Irrevocable Offer may be terminated and the transactions contemplated by the Irrevocable Offer may be abandoned at any time prior to the
closing of such transactions by the mutual written consent of WPX and Parent. The Irrevocable Offer will automatically be terminated if the Merger Agreement has been terminated in accordance with its terms. As described below, in certain
circumstances following termination of the Irrevocable Offer detailed below, WPX will be obligated to pay Parent a fee (an IO Post-Termination Fee).
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If the Irrevocable Offer is terminated because the Merger Agreement has been terminated and a Post-Termination Fee or a Superior Offer Fee is payable to Parent under the Merger Agreement, WPX shall pay to Parent an
amount equal to (i) the excess of (a) the per Company Share consideration actually paid to WPX and its affiliates in connection with the related acquisition proposal over (b) $15.00 multiplied by (ii) the number of Company Shares
in respect of which WPX received consideration in such acquisition proposal. |
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If the Irrevocable Offer is terminated because the Merger Agreement has been terminated in connection with an Intentional Breach by the Company of its obligations under the non-solicitation provisions of the Merger
Agreement or the provisions of the Merger Agreement with respect to the meeting of the Companys shareholders to adopt the Merger Agreement (and the plan of merger exhibited thereto) and file this proxy statement and an Adverse
Recommendation/Breach Fee is payable to Parent under the Merger Agreement and within 12 months of the termination of the Irrevocable Offer the Company enters into an agreement with respect to an acquisition proposal or an acquisition proposal is
consummated, WPX shall pay to Parent an amount equal to (i) the excess, of (a) the per Company Share consideration actually paid to WPX and its affiliates in connection with the related acquisition proposal over (b) $15.00 multiplied
by (ii) the number of Company Shares in respect of which WPX received consideration in such acquisition proposal. |
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If the Irrevocable Offer is terminated because the parties have agreed to terminate the Irrevocable Offer or because Merger Agreement has been terminated and prior to such termination WPX committed an Intentional Breach
of its obligations under the non-solicit covenants contained in the Irrevocable Offer described above and within 12 months of the termination of the Irrevocable Offer the Company enters into an agreement with respect to an acquisition proposal or an
acquisition proposal is consummated, WPX shall pay to Parent an amount equal to the (i) excess of (a) the per Company Share consideration actually paid to WPX and its affiliates in connection with the related acquisition proposal over
(b) $15.00 multiplied by (ii) the number of Common Shares in respect of which WPX received consideration in such acquisition proposal. |
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If the Irrevocable Offer is terminated because Parent has terminated the Merger Agreement in connection with the Companys breach or failure to perform any of its representations, warranties or covenants set forth
in the Merger Agreement or the Companys Intentional Breach of its obligations under the non-solicitation provisions of the Merger Agreement or of its obligations with respect to calling or holding the extraordinary general meeting with respect
to preparing or filing this proxy statement and within 12 months of the termination of the Irrevocable Offer, WPX enters into an agreement to sell all or any of the Company Shares held by it, WPX shall pay to Parent an amount equal to (i) the
excess of (a) the per Company Share consideration actually paid to WPX in connection with such sale over (b) $15.00 multiplied by (ii) the number of Company Shares sold by WPX in connection with such sale. |
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If the Irrevocable Offer is terminated because the parties have agreed to terminate the Irrevocable Offer or because Merger Agreement has terminated and prior to such termination WPX committed an Intentional Breach of
its obligations under the non-solicit covenants contained in the Irrevocable Offer described above and within 12 months of the termination of the Irrevocable Offer, WPX enters into an agreement to sell all or any of the Company Shares held by it,
WPX shall pay to Parent an amount equal to (i) the excess of (a) the per Company Share consideration actually paid to WPX in connection with such sale over (b) $15.00 multiplied by (ii) the number of Company Shares sold by WPX in
connection with such sale. |
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If the Irrevocable Offer is terminated because the Merger Agreement has terminated because the Merger has not occurred prior to the Termination Date and WPX has received a proposal regarding the acquisition of the
Company, a material portion of the Companys assets or the shares of the Company, Apco Argentina or Northwest held by it prior to any such termination and within 3 months of the termination of the Irrevocable Offer, WPX enters into an agreement
to sell all or any of the Company Shares held by it, WPX shall pay to Parent an amount equal to (i) the excess of (a) the per Company Share consideration actually paid to WPX in connection with such sale over (b) $15.00 multiplied by
(ii) the number of Company Shares sold by WPX in connection with such sale. |
For purposes of the Irrevocable Offer an Intentional
Breach by WPX means with respect to any representation, warranty, agreement or covenant, an action or omission (including a failure to cure circumstances) taken or omitted to be taken on or after the date of the Merger Agreement that WPX
intentionally takes (or fails to take) and knows would, or would reasonably be expected to, cause or constitute a material breach of such representation, warranty, agreement or covenant.
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DISSENTER RIGHTS
The following is a brief summary of the rights of holders of Company Shares to object to the Merger and receive payment of the fair value
of their Company Shares (Dissenter Rights). This summary is not a complete statement of the law, and is qualified in its entirety by the complete text of Section 238 of the Companies Law, a copy of which is attached as Annex C to
this proxy statement. If you are contemplating the possibility of objecting to the Merger, you should carefully review the text of Annex C, particularly the procedural steps required to exercise Dissenter Rights. These procedures are complex and you
should consult your Cayman Islands legal counsel. If you do not fully and precisely satisfy the procedural requirements of the Cayman Companies Law, you will lose your Dissenter Rights.
Requirements for Exercising Dissenter Rights
A dissenting registered shareholder of the Company is entitled to payment of the fair value of his or her Company Shares upon dissenting
to the Merger.
The exercise of your Dissenter Rights will preclude the exercise of any other rights by virtue of holding Company Shares
in connection with the Merger, other than the right to seek relief on the grounds that the Merger is void or unlawful. You may vote at the extraordinary general meeting, and you need not vote against any of the proposals at the extraordinary general
meeting in order to exercise your Dissenter Rights under the Companies Law. However, in the event you exercise Dissenter Rights, a vote by you in favor of the approval and adoption of the Merger Agreement and the plan of merger exhibited thereto at
the extraordinary general meeting could deprive you of standing to seek a determination from the Grand Court (defined below) of whether the fair value for your Company Shares exceeds the Merger Consideration. To exercise your Dissenter Rights, the
following procedures must be followed:
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you must give written notice of objection (Notice of Objection) to the Company prior to the vote to approve the Merger. The Notice of Objection must include a statement that you propose to demand payment for
your Company Shares if the Merger is authorized by the resolution at the extraordinary general meeting; |
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within 20 days immediately following the date on which the vote approving the Merger is made, the Company must give written notice of the authorization (Approval Notice) to each dissenting shareholder who
has served a Notice of Objection; |
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within 20 days immediately following the date on which the Approval Notice is given (the Dissent Period), the dissenting shareholder must give a written notice of his or her decision to dissent (a
Notice of Dissent) to the Company stating his or her name and address, the number and class of the Company Shares with respect to which he or she dissents and a demand for payment of the fair value of his Company Shares. A dissenting
shareholder must dissent in respect of all the Company Shares which he or she holds; |
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within seven days immediately following (a) the date of expiry of the Dissent Period or (b) the date on which the plan of Merger is filed with the Registrar of Companies of the Cayman Islands, whichever is
later, the Surviving Company, must make a written offer (a Fair Value Offer) to each dissenting shareholder to purchase their Company Shares at a price determined by the Company to be the fair value of such Company Shares;
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if, within 30 days immediately following the date of the Fair Value Offer, the Company and a dissenting shareholder agree upon the price to be paid for such dissenters Company Shares, the Company shall pay such
amount to such dissenting shareholder forthwith; |
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if, within 30 days immediately following the date of the Fair Value Offer, the Company and a dissenting shareholder fail to agree on the price to be
paid for the Company Shares owned by such dissenting shareholder, then, within 20 days immediately following the date of the expiry of such 30-day period, the |
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Company must, and the dissenting shareholder may, file a petition with the Grand Court of the Cayman Islands (the Grand Court) for a determination of the fair value of the Company
Shares held by all dissenting shareholders who have served a Notice of Dissent and who have not agreed the fair value of their Company Shares with the Company. The petition by the Company must be accompanied by a verified list containing the names
and addresses of all members who have filed a Notice of Dissent and who have not agreed the fair value of their Company Shares with the Company; and |
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at the hearing of a petition at which the dissenting shareholders are entitled to participate, the Grand Court will determine, (a) the fair value of the Company Shares of such dissenting shareholders as it finds
are involved together with a fair rate of interest (if any) and (b) the costs of the proceeding and the allocation of such costs among the parties. |
Notwithstanding the foregoing, at the Effective Time, such dissenters Company Shares shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and such dissenter shall cease to have any rights with respect thereto, except the right to receive the fair value of such Company Shares in accordance with the provisions of Section 238 of
the Companies Law.
All notices and petitions must be executed by or for the registered shareholder, fully and correctly, as such
shareholders name appears on the register of members of the Company. If the Shares are held by a fiduciary, such as by a trustee, guardian or custodian, these notices must be executed by or for the fiduciary. If the Company Shares are held by
or for more than one person such notices and petitions must be executed by or for all joint owners. An authorized agent, including an agent for two or more joint owners, may execute the notices or petitions for a registered shareholder; however, the
agent must identify the registered owner and expressly disclose the fact that, in exercising the notice, he is acting as agent for the registered holder. A person having a beneficial interest in Company Shares registered in the name of another
person, such as a broker or nominee, must act promptly to cause the registered holder to follow the steps summarized above and in a timely manner to exercise whatever Dissenter Rights attached to the Company Shares.
You must be a registered holder of Company Shares in order to exercise your Dissenter Rights.
If you do not satisfy each of these requirements, you cannot exercise your Dissenter Rights and will be bound by the terms of the Merger
Agreement and the plan of merger. Submitting a signed proxy card that does not direct how the Company Shares represented by that proxy are to be voted will give the proxy discretion to vote as it determines appropriate. In addition, failure to vote
your Company Shares, or a vote against the merger proposal, the plan of merger and the transactions contemplated by the Merger Agreement, including the Merger, will not alone entitle you to exercise your Dissenter Rights and will not satisfy the
notice requirements with respect to your Dissenter Rights. You must send all notices to the Companys Corporate Secretary at One Williams Center, 35th Floor, Tulsa, Oklahoma, 74172, Attention: Corporate Secretary.
If you are considering dissenting, you should be aware that the fair value of your Company Shares determined under Section 238 of the
Companies Law could be more than, the same as, or less than the $14.50 in cash without interest for each Company Share that you would otherwise receive as consideration in the Merger. In addition, in any proceedings for determination of the fair
value of the Company Shares covered by a Notice of Dissent, the Company and Parent intend to assert that the Merger Consideration of $14.50 is equal to the fair value of each of your Company Shares. You may also be responsible for the cost of any
appraisal proceedings.
The provisions of Section 238 of the Companies Law are technical and complex. If you fail to comply
strictly with the procedures set forth in Section 238, you will lose your Dissenter Rights. You should consult your Cayman Islands legal counsel if you wish to exercise Dissenter Rights.
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MARKET PRICE AND DIVIDEND INFORMATION
The Company Shares trade on NASDAQ under the trading symbol APAGF. The following table sets forth, for the periods indicated, the
range of high and low sales prices for the Company Shares by quarter.
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Calendar Quarters |
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High |
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Low |
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2014 |
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4th Quarter (through October 27, 2014) |
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$ |
14.90 |
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$ |
12.07 |
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3rd Quarter |
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14.90 |
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11.03 |
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2nd Quarter |
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16.04 |
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12.64 |
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1st Quarter |
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16.06 |
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10.99 |
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2013 |
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4th Quarter |
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$ |
16.43 |
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$ |
13.32 |
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3rd Quarter |
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17.64 |
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11.50 |
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2nd Quarter |
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13.67 |
|
|
|
8.82 |
|
1st Quarter |
|
|
15.44 |
|
|
|
12.22 |
|
2012 |
|
|
|
|
|
|
|
|
4th Quarter |
|
$ |
16.37 |
|
|
$ |
8.88 |
|
3rd Quarter |
|
|
22.16 |
|
|
|
15.17 |
|
2nd Quarter |
|
|
68.24 |
|
|
|
17.24 |
|
1st Quarter |
|
|
83.35 |
|
|
|
65.20 |
|
For the two most recent fiscal years, the Company paid a dividend of $0.02 per share on January 4, 2012
and April 12, 2012. Under the terms of the Merger Agreement, the Company cannot declare, authorize, make or pay any dividend, other than dividends paid by PELSA or any wholly-owned subsidiary of the Company either to the Company or any
wholly-owned subsidiary of the Company.
The closing sales price of the Company Shares on NASDAQ on October 2, 2014, the day
immediately prior to our public announcement that we had entered into the Merger Agreement, was $12.64 per share. The closing sales price of the Company Shares on NASDAQ on November 24, 2014, the day immediately prior to the date of this proxy
statement, was $14.19 per share. As of November 24, 2014, there were 29,441,243 Company Shares outstanding.
- 78 -
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our Class A and ordinary shares as of October [], 2014 by (i) each person, or group of affiliated persons, known by us to beneficially own more than 5% of our Class A and ordinary shares; (ii) each director; (iii) each of our
named executive officers; and (iv) all of our directors and named executive officers as a group.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owners(1) |
|
Number of Class A Shares Beneficially Owned |
|
|
Percent of Class A |
|
|
Number of Ordinary Shares Beneficially Owned |
|
|
Percent of Ordinary Shares |
|
WPX Energy, Inc.
One Williams Center
Tulsa, Oklahoma 74172 |
|
|
20,301,592 |
(2) |
|
|
100 |
% |
|
|
|
|
|
|
68.96 |
% |
|
|
|
|
|
NSB Advisors LLC
200 Westage Business
Center Drive, Suite 228,
Fishkill, New York 12524 |
|
|
|
|
|
|
|
|
|
|
2,604,046 |
(3) |
|
|
8.84 |
% |
Keith E. Bailey |
|
|
0 |
|
|
|
* |
|
|
|
804 |
(4) |
|
|
* |
|
Bryan K. Guderian |
|
|
0 |
|
|
|
* |
|
|
|
4 |
|
|
|
* |
|
Benjamin A. Holman |
|
|
0 |
|
|
|
* |
|
|
|
50 |
|
|
|
* |
|
Michael Kyle |
|
|
0 |
|
|
|
* |
|
|
|
0 |
|
|
|
* |
|
Robert J. LaFortune |
|
|
0 |
|
|
|
* |
|
|
|
20 |
|
|
|
* |
|
Richard E. Muncrief |
|
|
0 |
|
|
|
* |
|
|
|
1 |
|
|
|
* |
|
Piero Ruffinengo |
|
|
0 |
|
|
|
* |
|
|
|
4 |
|
|
|
* |
|
J. Kevin Vann |
|
|
0 |
|
|
|
* |
|
|
|
1 |
|
|
|
* |
|
All directors and executive officers as a group (8 persons) |
|
|
0 |
|
|
|
* |
|
|
|
884 |
|
|
|
* |
|
(1) |
This table is based upon information supplied by officers, directors and principal shareholders and Schedules 13G filed with the SEC. The percentages shown are based on 9,139,651 ordinary shares outstanding as of
October [], 2014 and 20,301,592 ordinary shares issuable upon the conversion of all outstanding Class A Shares. Beneficial ownership is determined in accordance with the rules of the SEC, and
includes voting and investment power with respect to shares. Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent
authority is shared by spouses under applicable law. Unless otherwise listed, the address of each shareholder is: c/o Apco Oil and Gas International Inc., One Williams Center, 35th Floor, Tulsa, Oklahoma 74172. |
(2) |
Class A shares have 85% of the voting power as a class with respect to the election and removal of our directors. The Class A shares and ordinary shares have identical rights and preferences in all other
respects, including with respect to dividend rights. The Class A shares will automatically convert into ordinary shares if neither The Williams Companies, Inc. nor WPX beneficially owns, separately or in the aggregate, directly or indirectly,
at least 50% of our aggregate outstanding Class A shares and ordinary shares. |
(3) |
A Schedule 13G filed with the SEC on February 13, 2013, indicates that NSB Advisors (NSB) is an Investment Advisor registered under Section 203 of the Investment Advisors Act of 1904 and has sole
dispositive power of 2,604,046 of our ordinary shares and shared dispositive power over 0 of these shares. NSB has no sole or shared voting power over these shares. |
(4) |
Includes 800 shares held in trust by Mr. Bailey. |
- 79 -
ADVISORY VOTE REGARDING CERTAIN EXECUTIVE COMPENSATION
The Board recognizes the significant interest of the Companys shareholders in executive compensation matters. In accordance with the
Dodd-Frank Wall Street reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, and pursuant to Section 14A of the Exchange Act, we are providing our shareholders with an opportunity to cast an advisory vote to approve the compensation
payable to our named executive officers in connection with the Merger payable pursuant to arrangements entered into with WPX and as disclosed in this proxy statement. We are asking our shareholders to adopt the following resolution at the
extraordinary general meeting:
RESOLVED, that the shareholders of Apco Oil and Gas International Inc. approve, on
an advisory basis, the compensation that will or may become payable to the named executive officers as disclosed pursuant to Item 402(t) of Regulation S-K and as set forth in this proposal titled Advisory Vote Regarding Certain Executive
Compensation and as further described in The Merger Interests of the Companys Directors and Executive Officers in the Merger.
This resolution, commonly referred to as a say on golden-parachute resolution, will be considered approved if it receives the
affirmative vote of a majority of the Company Shares represented in person or by proxy at the meeting and voting on the matter. Abstentions and broker non-votes will have no effect.
The descriptions of the payments contained in the section entitled The Merger Interests of the Companys Directors and
Executive Officers in the Merger as well as the table entitled Golden Parachute Compensation is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about
compensation of each named executive officer in connection with the Merger and that will or may become payable to the named executive officers. We are asking our shareholders to approve, on a non-binding advisory basis, the golden
parachute compensation that will or may become payable by WPX to the named executive officers as set forth in the table below and as described in The Merger Interests of the Companys Directors and Executive Officers in
the Merger.
The following table reflects the compensation and benefits that will or may be paid or provided to each
of the named executive officers in connection with the Merger as described in The Merger Interests of the Companys Directors and Executive Officers in the Merger. Please note that the amounts indicated
below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this proxy statement. Some of the assumptions are based on information currently available and, as a result, the actual amounts,
if any, to be received by a named executive officer may differ in material respects from the amounts set forth below. Further, calculations are based on (i) an assumed closing date of the Merger on
[], which is the last practicable date prior to the filing of this proxy statement, and (ii) the price per Company Share paid by Parent in the Merger is $14.50.
Golden Parachute Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
Cash ($)(1) |
|
|
Equity ($)(2) |
|
|
Pension/ NQDC ($) |
|
|
Perquisites/ Benefits ($)(3) |
|
|
Other ($) |
|
|
Total ($) |
|
Bryan K. Guderian,
Chief Executive Officer |
|
|
|
|
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58 |
|
|
|
|
|
|
|
|
Michael Kyle,
President and Chief Operating Officer |
|
|
459,735 |
|
|
|
687,501 |
|
|
|
|
|
|
|
19,581 |
|
|
|
|
|
|
|
1,166,817 |
|
|
|
|
|
|
|
|
Benjamin A. Holman,
Chief Financial Officer |
|
|
|
|
|
|
725 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
725 |
|
- 80 -
(1) |
As described above, the amount represents the single trigger lump-sum cash payment of $100,000 that Mr. Kyle would be entitled to receive from WPX under the Retention Agreement upon the closing of the Merger
and the double-trigger lump-sum cash payment Mr. Kyle would be entitled to receive from WPX under the WPX Severance Plan following a qualifying termination of employment after the closing of the Merger. |
(2) |
This amount equals the number of Company Shares held by the named executive officer multiplied by the Merger Consideration. For Mr. Kyle, this amount is the double-trigger payment from WPX equal to the
number of shares of unvested time-based and performance-based restricted stock of WPX for which vesting would be accelerated following a qualifying termination of employment after the closing of the Merger multiplied by the NYSE closing sale price
of WPXs common stock on November 24, 2014 of $16.30. Mr. Kyle does not own any Company Shares. |
(3) |
As described above, Mr. Kyle will be eligible to receive a double-trigger payment from WPX equal to the monthly premium for COBRA continuation coverage for the medical and prescription coverage elected by
Mr. Kyle multiplied by 12 under the WPX Severance Plan following a qualifying termination of employment after the closing of the Merger. |
Vote Required and Board of Directors Recommendation
The vote on this proposal is a vote separate and apart from the vote on the proposal to adopt the Merger Agreement. You may vote to approve the
proposal to adopt the Merger Agreement and not vote to approve this proposal on golden parachute compensation and vice versa. Because the vote is advisory in nature only, it will not be binding on either the Company or Parent regardless
of whether the Merger is completed. Accordingly, as the compensation to be paid in connection with the Merger is contractual with respect to the named executive officers, regardless of the outcome of this advisory vote, such compensation will be
payable, subject only to the conditions applicable thereto, if the Merger is completed. The vote required to approve this proposal is the affirmative vote of the holders of a majority of the Company Shares present in person or represented by proxy
at the extraordinary general meeting and voting on the matter.
The Board unanimously recommends a vote FOR the advisory
resolution on the compensation that will or may be received by our named executive officers in connection with the proposed merger.
FUTURE SHAREHOLDER PROPOSALS
If the Merger is completed, Parent will become our sole shareholder. As a result, we will no longer
have any public shareholders, and there will be no public participation in any future meetings of shareholders. However, if the Merger is not completed, we expect to hold a 2015 annual meeting of shareholders next year.
Shareholder proposals intended for inclusion in our proxy statement for our 2015 annual general meeting pursuant to Rule 14a-8 under the
Exchange Act must be directed to the Corporate Secretary, Apco Oil and Gas International Inc., 3500 One Williams Center, Tulsa, Oklahoma, 74172 and must be received by December 12, 2014. If we change the date of the 2015 annual general meeting
by more than 30 days from the anniversary of the date of this years meeting, then the deadline is a reasonable time before we begin to print and send our proxy materials.
In order for proposals of shareholders made outside of Rule 14a-8 under the Exchange Act to be considered timely within the
meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received by the Corporate Secretary at the above address by February 26, 2015. If we change the date of the 2015 annual general meeting by more than 30 days from the
anniversary of the date of our 2014 annual general meeting, then the proposal must be received a reasonable time before we send our proxy materials.
A shareholder who wishes to nominate a candidate for election to the Board at the 2015 annual general meeting is required to give written
notice addressed to the Corporate Secretary at the above address of his or her intention to make such a nomination. The notice of nomination must be received by the Corporate Secretary by [].
- 81 -
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN ADDRESS
In some cases, only one copy of the proxy statement is being delivered to multiple shareholders sharing an address. However, this delivery
method, called householding, is not being used if we have received contrary instructions from one or more of the shareholders sharing an address. Brokers with account holders who are our shareholders will also be householding our proxy
materials. We will deliver promptly, upon written or oral request, a separate copy of this proxy statement at a shared address to which a single copy of the documents was delivered. To request a separate delivery of these materials now or in the
future, a shareholder may submit a written request to Investor Relations, Apco Oil and Gas International Inc., One Williams Center, MD 35-8, Tulsa, Oklahoma 74172 or call (539) 573-9360. Additionally, any shareholders who are presently sharing
an address and receiving multiple copies of the proxy statement and who would prefer to receive a single copy of such materials may instruct us accordingly by directing that request to us in the manner provided above. If you have received notice
from your broker that they will be householding communications to your address and you would prefer to receive a separate set of materials, please notify your broker. Shareholders who currently receive multiple copies of the materials at their
addresses and would like to request householding of their communications should also contact their brokers.
WHERE YOU CAN
FIND MORE INFORMATION
We are subject to the reporting and other informational requirements of the Exchange Act. We file annual,
quarterly and current reports, proxy statements and other information with the SEC. You may also read and copy any document we file at the SECs Public Reference Room, 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the Public Reference Room. Such material may also be accessed electronically by means of the SECs home page on the Internet at www.sec.gov.
The information provided on our website is not part of this proxy statement, and therefore is not incorporated by reference herein.
The SEC allows us to incorporate by reference information into this proxy statement. This means that we can disclose important
information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this proxy statement. However, nothing in this proxy statement shall be deemed to
incorporate information furnished to, but not filed with, the SEC. Any statement in a document incorporated by reference into this proxy statement will be deemed to be modified or superseded to the extent a statement contained in (1) this proxy
statement, or (2) any other subsequently filed document that is incorporated by reference into this proxy statement modifies or supersedes such statement.
The documents listed below (as such documents may be amended from time to time) contain important information about the Company and its
financial condition, and are incorporated by reference in this proxy statement:
|
|
|
our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on March 7, 2014; |
|
|
|
the information specifically incorporated by reference into our Annual Report on Form 10-K for the year ended December 31, 2013 from our Definitive Proxy Statement on Schedule 14A for our 2014 Annual Meeting of
Stockholders, filed with the SEC on March 20, 2014, and our supplement to such Definitive Proxy Statement, filed with the SEC on March 27, 2014; |
|
|
|
our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2014 and June 30, 2014, filed with the SEC on May 8, 2014 and August 6, 2014 respectively; |
|
|
|
our Current Reports on Form 8-K (in all cases other than information furnished rather than filed pursuant to any Form 8-K) filed with the SEC on March 20, 2014, April 25, 2014, August 6, 2014,
and October 3, 2014; and |
- 82 -
|
|
|
all documents filed with the SEC by the Company pursuant to Sections 13, 14 and 15(d) of the Exchange Act subsequent to the date of this proxy statement and prior to the date of the extraordinary general meeting.
|
In the event of conflicting information in these documents, you should rely on the information in the latest filed
documents.
Each person to whom a copy of this proxy statement is delivered may obtain a copy of any or all of the documents to which we
have referred you, other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into such documents, at no cost, by writing us at Investor Relations, Apco Oil and Gas International Inc., One Williams Center,
MD 35-8, Tulsa, Oklahoma 74172 or calling (539) 573-9360.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A PROXY IN ANY JURISDICTION
TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE YOUR SHARES AT THE
EXTRAORDINARY GENERAL MEETING. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT. THIS PROXY STATEMENT IS DATED []. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT DATE, AND THE MAILING OF THIS PROXY STATEMENT TO SHAREHOLDERS DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
ANNEX A: MERGER AGREEMENT
ANNEX B: OPINION OF JEFFERIES LLC
ANNEX C: DISSENTER RIGHTS
ANNEX D: POWER OF ATTORNEY
ANNEX E: IRREVOCABLE OFFER
- 83 -
ANNEX A
EXECUTION
AGREEMENT AND PLAN OF MERGER
By and Among
PLUSPETROL RESOURCES CORPORATION,
PLUSPETROL BLACK RIVER CORPORATION,
and
APCO OIL AND GAS
INTERNATIONAL INC.
Dated as of October 2, 2014
TABLE OF CONTENTS
|
|
|
|
|
|
|
|
|
|
|
Page |
|
ARTICLE I DEFINITIONS |
|
|
1 |
|
|
|
|
Section 1.1 |
|
Definitions |
|
|
1 |
|
|
|
ARTICLE II THE MERGER |
|
|
11 |
|
|
|
|
Section 2.1 |
|
The Merger |
|
|
11 |
|
|
|
|
Section 2.2 |
|
Merger Closing |
|
|
11 |
|
|
|
|
Section 2.3 |
|
Effective Time |
|
|
12 |
|
|
|
|
Section 2.4 |
|
Effects of the Merger |
|
|
12 |
|
|
|
|
Section 2.5 |
|
Memorandum of Association and Articles of Association of the Surviving Company |
|
|
12 |
|
|
|
|
Section 2.6 |
|
Board of Directors |
|
|
12 |
|
|
|
|
Section 2.7 |
|
Officers |
|
|
12 |
|
|
|
ARTICLE III EFFECT OF THE MERGER ON SHARE CAPITAL; EXCHANGE OF CERTIFICATES |
|
|
13 |
|
|
|
|
Section 3.1 |
|
Effect on Securities |
|
|
13 |
|
|
|
|
Section 3.2 |
|
Exchange of Certificates |
|
|
13 |
|
|
|
|
Section 3.3 |
|
Lost Certificates |
|
|
15 |
|
|
|
|
Section 3.4 |
|
Dissenting Shares |
|
|
15 |
|
|
|
|
Section 3.5 |
|
Withholdings |
|
|
15 |
|
|
|
|
Section 3.6 |
|
Transfers; No Further Ownership Rights |
|
|
16 |
|
|
|
|
Section 3.7 |
|
Change in Shares |
|
|
16 |
|
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY |
|
|
16 |
|
|
|
|
Section 4.1 |
|
Organization and Qualification; Subsidiaries |
|
|
16 |
|
|
|
|
Section 4.2 |
|
Capitalization; Subsidiaries |
|
|
17 |
|
|
|
|
Section 4.3 |
|
Authority Relative to Agreement |
|
|
18 |
|
|
|
|
Section 4.4 |
|
No Conflict; Required Filings and Consents |
|
|
19 |
|
|
|
|
Section 4.5 |
|
Permits and Licenses |
|
|
19 |
|
|
|
|
Section 4.6 |
|
Compliance with Laws |
|
|
20 |
|
|
|
|
Section 4.7 |
|
Company SEC Documents; Financial Statements |
|
|
20 |
|
|
|
|
Section 4.8 |
|
Disclosure Controls and Procedures; Internal Controls over Financial Reporting |
|
|
21 |
|
|
|
|
Section 4.9 |
|
Absence of Certain Changes or Events |
|
|
21 |
|
|
|
|
Section 4.10 |
|
No Undisclosed Liabilities |
|
|
21 |
|
|
|
|
Section 4.11 |
|
Absence of Litigation |
|
|
22 |
|
|
|
|
Section 4.12 |
|
Environmental Matters |
|
|
22 |
|
|
|
|
Section 4.13 |
|
Employee Benefit Plans |
|
|
22 |
|
|
|
|
Section 4.14 |
|
Intellectual Property |
|
|
24 |
|
|
|
|
Section 4.15 |
|
Taxes |
|
|
24 |
|
|
|
|
|
|
|
|
|
|
|
|
Page |
|
|
|
|
Section 4.16 |
|
Material Contracts |
|
|
26 |
|
|
|
|
Section 4.17 |
|
Real Property |
|
|
27 |
|
|
|
|
Section 4.18 |
|
Labor Matters |
|
|
28 |
|
|
|
|
Section 4.19 |
|
Insurance |
|
|
28 |
|
|
|
|
Section 4.20 |
|
Questionable Payments |
|
|
29 |
|
|
|
|
Section 4.21 |
|
Concessions |
|
|
29 |
|
|
|
|
Section 4.22 |
|
Opinion of Financial Advisor |
|
|
29 |
|
|
|
|
Section 4.23 |
|
Antitakeover Statutes |
|
|
29 |
|
|
|
|
Section 4.24 |
|
Brokers |
|
|
29 |
|
|
|
|
Section 4.25 |
|
Bank Accounts; Powers-of-Attorney |
|
|
29 |
|
|
|
|
Section 4.26 |
|
Affiliate Transactions |
|
|
30 |
|
|
|
|
Section 4.27 |
|
No Other Representations or Warranties |
|
|
30 |
|
|
|
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB |
|
|
30 |
|
|
|
|
Section 5.1 |
|
Organization and Qualification; Subsidiaries |
|
|
30 |
|
|
|
|
Section 5.2 |
|
Authority Relative to Agreement |
|
|
31 |
|
|
|
|
Section 5.3 |
|
No Conflict; Required Filings and Consents |
|
|
31 |
|
|
|
|
Section 5.4 |
|
Absence of Litigation |
|
|
32 |
|
|
|
|
Section 5.5 |
|
Available Funds |
|
|
32 |
|
|
|
|
Section 5.6 |
|
Capitalization of Merger Sub |
|
|
32 |
|
|
|
|
Section 5.7 |
|
Information Supplied |
|
|
32 |
|
|
|
|
Section 5.8 |
|
Independent Investigation |
|
|
32 |
|
|
|
|
Section 5.9 |
|
Brokers |
|
|
32 |
|
|
|
|
Section 5.10 |
|
Section 355(e) |
|
|
32 |
|
|
|
|
Section 5.11 |
|
No Other Representations or Warranties |
|
|
32 |
|
|
|
ARTICLE VI COVENANTS AND AGREEMENTS |
|
|
33 |
|
|
|
|
Section 6.1 |
|
Conduct of Business by the Company Pending the Merger |
|
|
33 |
|
|
|
|
Section 6.2 |
|
Shareholder Meeting; Proxy Statement |
|
|
35 |
|
|
|
|
Section 6.3 |
|
Appropriate Action; Consents; Filings |
|
|
37 |
|
|
|
|
Section 6.4 |
|
Access to Information; Consultation; Confidentiality |
|
|
38 |
|
|
|
|
Section 6.5 |
|
Non-Solicitation; Adverse Recommendation Change |
|
|
39 |
|
|
|
|
Section 6.6 |
|
Directors and Officers Indemnification and Insurance |
|
|
42 |
|
|
|
|
Section 6.7 |
|
Notification of Certain Matters |
|
|
43 |
|
|
|
|
Section 6.8 |
|
Public Announcements |
|
|
43 |
|
|
|
|
Section 6.9 |
|
Director Resignations |
|
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43 |
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Section 6.10 |
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Shareholder Litigation |
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44 |
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A-ii
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Section 6.11 |
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Affiliate Transactions |
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Section 6.12 |
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Rule 16b-3 Actions |
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Section 6.13 |
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Further Actions |
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Section 6.14 |
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No Section 338(g) Election |
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ARTICLE VII CONDITIONS TO THE MERGER |
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Section 7.1 |
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Conditions to the Obligations of Each Party |
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Section 7.2 |
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Conditions to the Obligations of Parent and Merger Sub |
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Section 7.3 |
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Conditions to the Obligations of the Company |
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Section 7.4 |
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Frustration of Closing Conditions |
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ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER |
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Section 8.1 |
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Termination |
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Section 8.2 |
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Effect of Termination |
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Section 8.3 |
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Termination Fee |
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Section 8.4 |
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Amendment |
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Section 8.5 |
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Extension; Waiver |
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Section 8.6 |
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Expenses; Transfer Taxes |
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ARTICLE IX GENERAL PROVISIONS |
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Section 9.1 |
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Non-Survival of Representations, Warranties and Agreements |
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Section 9.2 |
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Notices |
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Section 9.3 |
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Interpretation; Certain Definitions |
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Section 9.4 |
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Severability |
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Section 9.5 |
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Assignment |
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51 |
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Section 9.6 |
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Entire Agreement |
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Section 9.7 |
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No Third-Party Beneficiaries |
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Section 9.8 |
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Governing Law |
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Section 9.9 |
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Specific Performance |
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52 |
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Section 9.10 |
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Consent to Jurisdiction |
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52 |
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Section 9.11 |
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Counterparts |
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53 |
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Section 9.12 |
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Non-Recourse |
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53 |
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Section 9.13 |
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WAIVER OF JURY TRIAL |
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53 |
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A-iii
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 2, 2014 (this
Agreement), is made by and among Pluspetrol Resources Corporation, a company incorporated under the Laws of the Cayman Islands (Parent), Pluspetrol Black River Corporation, a Caymans Island exempted company
limited by shares and a wholly-owned Subsidiary of Parent (Merger Sub), and Apco Oil and Gas International, Inc., a Cayman Islands exempted company limited by shares (the Company).
W I T N E S S E T H:
WHEREAS,
the board of directors of the Company (the Company Board) has unanimously (i) determined that this Agreement and the transactions contemplated hereby and by the plan of merger attached as Exhibit A hereto (the
Plan of Merger), including the Merger, are advisable, fair to and in the best interests of the Company and the shareholders of the Company and (ii) approved this Agreement and the transactions contemplated hereby and thereby,
including the Merger (as defined below), on the terms and subject to the conditions set forth in this Agreement and in accordance with the Companies Law (as defined below);
WHEREAS, the Company Board has unanimously recommended adoption of this Agreement and the Plan of Merger by its shareholders and directed that
this Agreement and the Plan of Merger be submitted to its shareholders for adoption;
WHEREAS, as an inducement to Parents and
Merger Subs willingness to enter into this Agreement, concurrently with the execution of this Agreement, WPX Energy, Inc. (Shareholder) has executed and delivered to Parent (i) that Power of Attorney set forth as
Exhibit B hereto (the Power of Attorney), providing that, among other things, such shareholder will vote their Class A Shares (as defined below) in favor of the approval of this Agreement, the Plan of Merger and the
Merger.
WHEREAS, in connection with entry into this Agreement, Parent and Shareholder have entered into a stock purchase agreement in the
form set forth as Exhibit C hereto (the Transaction Agreement);
WHEREAS, Merger Sub will merge with and into
the Company, with the Company continuing as the surviving company in the merger (the Merger), upon the terms and subject to the conditions set forth in this Agreement and the Companies Law, whereby, except as expressly provided in
Section 3.1, each issued and outstanding Ordinary Share and each issued and outstanding Class A Share (collectively, the Company Shares) immediately prior to the Effective Time, will be canceled and converted into the
right to receive the Merger Consideration as provided herein; and
WHEREAS, each of Parent, Merger Sub and the Company desire to make
certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties and covenants and subject to the conditions
herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto intending to be legally bound hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Defined terms used in this Agreement have the respective meanings ascribed to them by definition in this
Agreement and as follows:
Acquisition Inquiry means an inquiry, indication of interest or request for nonpublic
information (other than an inquiry, indication of interest or request for nonpublic information made or submitted by or on behalf of Parent) that could reasonably be expected to lead to an Acquisition Proposal.
A-1
Acceptable Confidentiality Agreement shall mean a confidentiality agreement
with a Third Party containing terms no less restrictive of the Third Party that is party to such agreement and its Affiliates and Representatives than the terms set forth in the Confidentiality Agreement with respect to Parent and its Affiliates and
Representatives, including with respect to standstill provisions (but not including any waiver of such standstill provisions for the benefit of Parent or its Affiliates).
Acquisition Proposal means any offer or proposal (other than an offer or proposal made or submitted by or on behalf of
Parent) relating to any Acquisition Transaction.
Acquisition Transaction means any transaction or series of related
transactions with a Person or group (as defined in the Exchange Act and the rules promulgated thereunder) concerning any (i) merger, consolidation, business combination, recapitalization, share exchange, share sale, liquidation,
dissolution, joint venture or similar transaction involving the Company or any of its Subsidiaries if, as a result of any such transaction, such Person or group would own assets, revenues or net income of the Company or any of its
Subsidiaries, individually or in the aggregate constituting fifteen percent (15%) or more of the consolidated assets, revenues or net income of the Company and its Subsidiaries, taken as a whole; (ii) sale, lease, license or other
disposition directly or indirectly by merger, consolidation, business combination, share exchange, joint venture or otherwise, of assets of the Company (including Equity Interests of any of its Subsidiaries or any Equity Interests representing any
of the PELSA Interest) or any Subsidiary of the Company representing fifteen percent (15%) or more of the consolidated assets, revenues or net income of the Company and its Subsidiaries, taken as a whole; (iii) issuance or sale or other
disposition (including by way of merger, consolidation, business combination, share exchange, share sale, joint venture or similar transaction) of Equity Interests representing any of the PELSA Interest or fifteen percent (15%) or more of the
issued and outstanding equity securities of the Company or any of its Subsidiaries whose assets, revenues or net income, individually or in the aggregate constitute fifteen percent (15%) or more of the consolidated assets, revenues or net
income of the Company and its Subsidiaries, taken as a whole; (iv) transaction or series of transactions (including any tender offer, purchase, acquisition or exchange offer) in which any Person or group would acquire beneficial
ownership or the right to acquire beneficial ownership of Equity Interests representing fifteen percent (15%) or more of the issued and outstanding equity securities of the Company or the PELSA Interest or any of the Companys Subsidiaries
whose assets, revenues or net income, individual or in the aggregate constitute fifteen percent (15%) or more of the consolidated assets, revenues or net income of the Company and its Subsidiaries, taken as a whole; or (v) any combination
of the foregoing.
Adverse Recommendation Change shall have the meaning set forth in Section 6.5(c).
Affiliate of any Person shall mean another Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such first Person.
Affiliated Group shall mean an
affiliated group as defined in Section 1504 of the Code (or any analogous combined consolidated or unitary group defined under income Tax Law).
Agreement shall have the meaning set forth in the Preamble.
Alternative Acquisition Agreement shall have the meaning set forth in Section 6.5(c).
Anticorruption Laws shall mean (i) the FCPA, (ii) the U.K. Bribery Act 2010 and (iii) any other Law
promulgated by any Governmental Authority applicable to the Company and its Subsidiaries relating to bribery or corruption.
Antitrust Laws shall mean any Laws intended to prohibit, restrict or regulate actions or transactions having the purpose or
effect of monopolization, restraint of trade, harm to competition or effectuating foreign investment.
A-2
Approval Time shall have the meaning set forth in Section 6.5(b).
Articles of Association shall have the meaning set forth in Section 4.1.
Book-Entry Shares shall have the meaning set forth in Section 3.1(b).
Business Day shall mean any day other than a Saturday, Sunday or a day on which all banking institutions in New York, New
York or, in all cases under this Agreement other than the last sentence of Section 6.2(a), the Cayman Islands are authorized or obligated by Law or executive order to close and shall consist of the time period from 12:01 a.m. through 12:00
midnight at such location.
Cayman Registrar shall have the meaning set forth in Section 2.3.
Certificates shall have the meaning set forth in Section 3.1(b).
Class A Shares shall mean the Class A Shares of the Company, par value $0.01 per share.
Code shall mean the Internal Revenue Code of 1986, as amended.
Companies Law shall have the meaning set forth in Section 2.1.
Company shall have the meaning set forth in the Preamble.
Company Benefit Plan shall mean each employee pension benefit plan (as defined in Section 3(2) of ERISA),
each employee welfare benefit plan (as defined in Section 3(1) of ERISA), whether or not subject to ERISA, and each other plan, program, agreement, arrangement or policy relating to pension, retirement, stock options, stock
purchases or other equity or equity-based compensation, deferred compensation, bonus, incentive, severance, retention, fringe benefits or employee benefits, including individual employment, retention, change in control and severance agreements, in
each case (i) maintained or contributed to, or required to be maintained or contributed to, by the Company or any of its Subsidiaries providing for payments or benefits for or to any current or former employees, individual consultants
(including personal services companies), directors, or officers of the Company or any of its Subsidiaries and/or their dependents or (ii) pursuant to which the Company or its Subsidiaries have any liability, but not including any Multiemployer
Plan.
Company Board shall have the meaning set forth in forth in the Recitals.
Company Board Recommendation shall have the meaning set forth in Section 4.3(b).
Company Concessions Contract has the meaning set forth in Section 4.21,
Company Disclosure Schedule shall mean the disclosure schedule delivered by the Company to Parent prior to the execution of
this Agreement.
Company ERISA Affiliate means, with respect to the Company or any of its Subsidiaries, any other
Person that, together with the Company or any of its Subsidiaries, would be treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.
Company Lease shall mean any lease, sublease, sub-sublease, license and other agreement under which the Company or any of
its Subsidiaries leases, subleases, licenses, uses or occupies (in each case whether as landlord, tenant, sublandlord, subtenant or by other occupancy arrangement), or has the right to use or occupy, now or in the future, any real property.
Company Material Contract shall have the meaning set forth in Section 4.16(a).
A-3
Company Operations shall mean the exploration and production operations of the
Company (or in which the Company has a direct or indirect interest) as of the date hereof in (i) the following provinces in Argentina: Neuquen, Rio Negro, Salta, Tierra del Fuego and Santa Cruz and (ii) the following provinces in Colombia:
Casanare, Boyaca and Antioquia.
Company Owned IP shall mean all Intellectual Property Rights owned by the Company or
its Subsidiaries.
Company Permits shall have the meaning set forth in Section 4.5.
Company Registered IP shall have the meaning set forth in Section 4.14(a).
Company SEC Documents shall have the meaning set forth in Section 4.7(a).
Company Shareholder shall mean each holder of Company Shares.
Company Shares shall have the meaning set forth in the Recitals.
Confidentiality Agreement shall mean the Confidentiality Agreement among Shareholder, the Company and Pluspetrol S.A.,
dated October 10, 2013, as amended from time to time.
Consent Fee have the meaning set forth in
Section 6.3(d).
Contract shall mean any binding contract, agreement, arrangement, understanding,
commitment, franchise, trust, indenture, instrument, note, deed, obligation, lease, purchase order or license, whether written or otherwise.
Contracting Parties shall have the meaning set forth in Section 9.12.
control (including the terms controlled by and under common control with) shall mean
the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, by Contract or otherwise.
Core PELSA Documents shall mean (i) Letter addressed by the Company to Compañía Naviera Perez Companc
S.A., Carlos A. Perez Companc and Petrolera Perez Companc, S.A.M. on April 1, 1968; (ii) Letter addressed to the Company by Compañía Naviera Perez Companc S.A., Alicia Perez Companc, María Carmen Sundblad de Perez
Companc, Jorge Gregorio Perez Companc, Carlos A. Perez Companc and Juan Mario Bustos on August 12, 1968; (iii) Joint Venture Agreement (convenio de sociedad accidental) for the exploitation of the Entre Lomas Block by and among
the Company, Compañía Naviera Pérez Companc S.A. and Petrolera Perez Companc S.A.M. dated August 12, 1968; (iv) Stockholders´ Agreement between Carlos Perez Companc and the Company dated September 6,1974;
(v) Memorandum of Understanding among the Company, Petrolera Perez Companc S.A.M. and Compañia Naviera Perez Companc S.A. dated August 16, 1979, as amended on the same date; (vi) Memorandum of Understanding
among Petrolera Perez Companc S.A., Compañia Naviera Perez Companc S.A. and the Company dated January 31,1986; (vii) Accounting Procedure for the Entre Lomas Block effective February 1, 2000; (viii) Memorandum of
Understanding among Petrolera Perez Companc S.A., Pecom Energía S.A., Jorge Gregorio Perez-Companc and the Company, dated March 1, 2001; (ix) Letter by the Company to Jorge Gregorio Perez-Companc, María Carmen Sundblad de
Perez Companc, Sudacia S.A. and Goyaike S.A., dated August 20, 2002; (x) Letter from María Carmen Sunblad de Pérez Companc and Sudacia S.A. to the Company, dated October 10, 2002; (xi) Letter from the Company to
María Carmen Sunblad de Pérez Companc and Sudacia S.A., dated October 22, 2002, (xii) Joint Venture Agreement entered into among the Company, PELSA and PESA on January 26, 2009 for the joint operation and exploitation of
the Bajada del Palo Hydrocarbons Exploitation Concession; (xiii) Decree No. 1054/2009 issued by the Governor of the Province of
A-4
Neuquén, approving a certain assignment of interests in connection with the Bajada del Palo Hydrocarbons Exploitation Concession; (xiv) Memorandum of Understanding entered into
among the Company, PELSA and PESA on April 18, 2007 in connection with a joint bid on the Agua Amarga Exploration Permit and (xv) Joint Venture Agreement entered into among the Company, PELSA and PESA on June 4, 2010 for the joint
operation and exploitation of the Agua Amarga Exploration Permit.
Damages shall mean damages, costs, fees, expenses,
liabilities, penalties or losses of any kind excluding special and punitive damages and consequential damages that were not reasonably foreseeable as of the date hereof.
Dissenting Shares shall have the meaning set forth in Section 3.4.
EDGAR shall mean the Electronic Data Gathering, Analysis, and Retrieval system maintained by the SEC.
Effective Time shall have the meaning set forth in Section 2.3.
Electronic Data Room shall mean the electronic dataroom hosted by the Shareholder and known as Project Black
River.
Environmental Claim shall mean any claim, action, cause of action, suit, proceeding, demand or written
notice alleging potential liability (including potential liability for costs of investigation or remediation, governmental response costs, property damages, and personal injuries), based on Environmental Law or arising out of or resulting from the
use, exposure to, Release, or threatened Release of Hazardous Substances.
Environmental Laws shall mean all Laws
relating to pollution or protection of the environment, natural resources or (to the extent relating to exposure to Hazardous Substances) human health or safety, including all Laws relating to the use, exposure to, Release, or threatened Release of
Hazardous Substances.
Environmental Permits shall mean any permit, license, approval or other authorization required
under any Environmental Laws.
Equity Interest means any share, capital stock, partnership, limited liability company,
membership, member or similar interest in any Person or group (as defined in the Exchange Act and the rules promulgated thereunder), and any option, warrant, right or security (including debt securities) convertible, exchangeable or
exercisable thereto or therefor, or the value of which is determined in reference thereto.
ERISA shall mean the
Employee Retirement Income Security Act of 1974, as amended.
Exchange Act shall mean the Securities Exchange Act of
1934, as amended.
Exchange Fund shall have the meaning set forth in Section 3.2(a).
Existing Confidentiality Agreement shall have the meaning set forth in Section 6.5(a).
Expropriatory Act shall mean any act of confiscation, seizure, nationalization, requisition, sequestration or similar act
occurring after the date of this Agreement caused by or on behalf of any Governmental Authority of Argentina or Colombia, as applicable, for any purpose and irrespective of whether it is on just terms or results in any compensation and whether or
not made pursuant to or in contemplation of or claiming the authority or force of any Law or Order, which directly or indirectly: (a) deprives or would reasonably be expected to deprive, in any material respect, the Company and its
Subsidiaries, taken as a whole, or PELSA and its Subsidiaries, taken as a whole, of, or otherwise adversely affect in any material respect or would reasonably be expected to adversely
A-5
affect in any material respect, any part of the Companys or PELSAs shareholding or direct or indirect ownership interest in the Company Operations or adversely affect in any material
respect the economic benefits to be derived therefrom (including dividends or other distributions); (b) deprives or prevents or would reasonably be expected to deprive, in any material respect, the Company and its Subsidiaries, taken as a
whole, or PELSA and its Subsidiaries, taken as a whole, or prevent or otherwise adversely affects or would reasonably be expected to otherwise adversely affect in any material respect the exercise by, the Company, PELSA or any of their respective
Subsidiaries of rights in or pertaining to the Companys or PELSAs ownership interest in the Company Operations; or (c) deprives or would reasonably be expected to deprive the Company Operations of any material part of its fixed
and/or current assets, income or revenue. For the purposes of this definition, any series of related measures, whether or not simultaneous or consecutive, undertaken by or on behalf of any Governmental Authority of Argentina or Colombia, as
applicable, after the date of this Agreement shall be regarded as one measure if their combined effect constitutes (directly or indirectly) an Expropriatory Act.
FCPA shall have the meaning set forth in Section 4.20.
GAAP shall mean the United States generally accepted accounting principles.
Governmental Authority shall mean any supranational, United States (federal, state or local), or foreign government, or any
political subdivision thereof, or any governmental, regulatory, judicial or administrative authority, agency, board, bureau, commission or similar authority.
Hazardous Substance shall mean any substance, material or waste defined or otherwise characterized or regulated under
applicable Environmental Law as hazardous, toxic, a pollutant, a contaminant, or words of similar meaning and regulatory effect, including but not limited to, any petroleum or petroleum products,
asbestos and asbestos containing materials, and polychlorinated biphenyls.
Hydrocarbon Agreement shall mean any
Contract with respect to interests or rights relating to Hydrocarbons or revenues derived therefrom, including: exploration and exploitation concessions and licenses; agreements providing for royalties and/or overriding royalties; agreements with
respect to bonuses, production payments, net profit interests and other nonworking interests and non-operating interests; Hydrocarbon leases, joint and other operating agreements, production sharing agreements, unitization and pooling agreements and
orders, division orders, transfer orders, mineral deeds and royalty deeds; Hydrocarbon sales, exchange and processing contracts and agreements; agreements with respect to surface interests, fee interests, reversionary interests, reservations and
concessions; and all easements, rights of way, licenses, permits, leases, and other interests associated with, appurtenant to, or necessary for the operation of any of the foregoing (including, for purposes of this Agreement, any Concession
Contract).
Hydrocarbons means oil, condensate, gas, casing head gas and other liquid or gaseous hydrocarbons or any
combination or constituents thereof, including sulphur and other constituents extracted therefrom.
Indebtedness shall
mean, with respect to any Person, without duplication: (a) any obligations for borrowed money; (b) any obligations evidenced by bonds, notes, debentures, letters of credit or similar instruments; (c) any obligations under conditional
sale, title retention or similar agreements or arrangements creating an obligation with respect to the deferred purchase price of securities or similar assets (including earn-out payments) and any obligations under any conditional sale,
title retention or similar agreements or arrangements with respect to the deferred purchase price of goods or services that are due more than 90 days following entry into such agreements or arrangements; (d) any obligations relating to advance
payments for goods or services; (e) any capital lease obligations; (f) any net obligations in respect of interest rate, currency or commodity swaps, collars, caps, hedges, futures contract, forward contract, option or other derivative
instruments or arrangements; (g) any accrued interest, premiums, penalties, breakages, make whole amounts and other obligations relating to the foregoing that would be payable in connection with the repayment of the foregoing; and
(h) any obligations to guarantee any of the foregoing types of obligations on behalf of any Person; provided,
A-6
however, that, with respect to the Company, Indebtedness shall not be deemed to include any intercompany Indebtedness owing by the Company to any of its wholly-owned
Subsidiaries, by a wholly-owned Subsidiary of the Company to the Company or by one wholly-owned Subsidiary of the Company to another wholly-owned Subsidiary of the Company.
Indemnitee shall mean any individual who, on or prior to the Effective Time, (i) (A) was an employee of the
Company or (B) served on behalf of the Company as an employee of any of the Companys Subsidiaries and, in each case, is identified by name and title on Section 1.2 of the Company Disclosure Schedule, (ii) was an officer or
director, of the Company or (iii) served on behalf of the Company as an officer or director of any of the Companys Subsidiaries or any of their predecessors in their capacities as such.
Intervening Circumstance shall mean any Event that affects, or would reasonably be expected to affect, the business, assets
or operations of the Company that is unknown and is not reasonably foreseeable to the Company Board as of the date of this Agreement and becomes known to the Company Board prior to the Approval Time that the Company Board determines in good faith
makes it appropriate to consider an Adverse Recommendation Change.
Intellectual Property Rights shall mean all
intellectual property rights, in any jurisdiction, whether registered or unregistered, including all rights in and to (i) patents, patent applications, invention disclosures and utility models (Patents); (ii) trademarks,
service marks, logos, trade dress, trade names, corporate names and all other designations of origin (Trademarks), together with the goodwill symbolized by any of the foregoing; (iii) copyrights, designs and copyrightable
subject matter (Copyrights); (iv) rights in computer programs and software (whether in source code, object code, or other form); (v) trade secrets and rights in other confidential information, including rights in ideas,
proprietary information, know-how, inventions (whether patentable or unpatentable and whether or not reduced to practice), improvements, proprietary processes, technology, technical data, algorithms, specifications, formulae, models, and
methodologies, customer lists and supplier lists, and industrial designs (Trade Secrets); (vi) Internet domain names; and (vii) all applications and registrations for the foregoing.
Intentional Breach shall mean, with respect to any representation, warranty, agreement or covenant, an action or omission
(including a failure to cure circumstances) taken or omitted to be taken on or after the date hereof that the breaching Person intentionally takes (or fails to take) and knows would, or would reasonably be expected to, cause or constitute a material
breach of such representation, warranty, agreement or covenant.
Investments shall have the meaning set forth in
Section 4.2(d).
IRS shall mean the United States Internal Revenue Service.
Knowledge shall mean (i) with respect to the Company, the actual knowledge of the individuals set forth on
Section 1.1(a) of the Company Disclosure Schedule after due and reasonable inquiry of any other senior executives having responsibility for such matters and (ii) with respect to Parent or Merger Sub, the actual knowledge of the individuals
set forth on Section 1.1(a) of the Parent Disclosure Schedule after due and reasonable inquiry of any other senior executives having responsibility for such matters.
Law shall mean, with respect to any Person, domestic (federal, state or local), statute, code, ordinance, tribal or foreign
law, rule, regulation, Order, writ or award promulgated by any Governmental Authority to which such Person or any of its business or businesses is subject.
Liabilities shall have the meaning set forth in Section 2.4.
License Agreement shall mean any Contract pursuant to which the Company, PELSA or any of their respective Subsidiaries is
granted a license to or right to use or exploit (including by means of a covenant not to sue) Intellectual Property Rights or proprietary rights owned or controlled by third parties.
A-7
Lien shall mean liens (statutory or other), claims, mortgages, encumbrances,
pledges, security interests (including, in respect of shares, depositary receipts for such shares having been issued), easements, hypothecation, rights-of-way, claims, covenants, conditions, restrictions (including transfer restrictions), options,
rights of first offer or refusal, third-party rights, limitations on voting rights, encroachments, title defects or charges of any kind or nature whatsoever, whether secured or unsecured, choate or inchoate, filed or unfiled, scheduled or
unscheduled, recorded or unrecorded, contingent or non-contingent, material or non-material, known or unknown.
Material Adverse
Effect shall mean any (a) change, event, effect, or circumstance (Event) that, individually or in the aggregate, would reasonably be expected to prevent or materially affect the ability of the Company to consummate
on or prior to the Termination Date the Merger and the other transactions contemplated by this Agreement, (b) Expropriatory Act or (c) Event that, individually or in the aggregate, has resulted, or would reasonably be expected to result,
in a material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that in the case of the foregoing clauses
(a) and (c), Events to the extent resulting from the following shall not be taken into account in the determination of whether there has been, or is reasonably expected to be, a Material Adverse Effect: (i) any Events generally affecting
the international oil and gas industry or markets; (ii) any Events in general international economic, regulatory or political conditions or the international financial, credit or securities markets in general; (iii) fluctuations in the
value of any currency; (iv) any failure of the Company to meet any internal or external projections or forecasts or any estimates of earnings, revenues or other metrics or any changes in the market price or trading volume of the Company Shares
after the date hereof; provided that the exception in this clause (iv) shall not prevent or otherwise affect a determination that any Event not otherwise excluded by clauses (i), (ii), (iii), (v), (vi), (vii) or
(viii) underlying such a failure or change has resulted in, or contributed to, a Material Adverse Effect; (v) any change in any Law or GAAP (or other interpretation thereof); (vi) the commencement, escalation or worsening of war or
armed hostilities or the occurrence of acts of terrorism or sabotage; (vii) the announcement or pendency of this Agreement or any of the transactions contemplated hereby (including any adverse effect resulting from the identity of Parent or any
of its Affiliates or other actions taken by them (other than actions taken pursuant to this Agreement or consented to in writing by the Company), including the impact thereof on relationships, contractual or otherwise, with the Companys, or
any of its Subsidiaries, agents, customers, suppliers, vendors, licensees, licensors, lenders, partners, employees or regulators) and (viii) earthquakes, hurricanes, floods, other natural disasters or acts of God, except in the case of
each of clauses (i), (ii), (iii), (v), (vi) and (viii) to the extent that the Company and its Subsidiaries, taken as a whole, are disproportionately affected thereby as compared to other companies in the oil and gas industry in Argentina
and Colombia (in which case, the incremental disproportionate impact or impacts may be taken into account in determining whether there has been, is or is reasonably expected to be a Material Adverse Effect).
Material Company Lease shall mean any Company Lease (a) which has annual rent obligations in excess of $50,000;
(b) for the Companys offices in Tulsa Oklahoma; (c) for the Companys offices in Buenos Aires, Argentina; or (d) for the Companys offices in Bogota, Colombia.
Memorandum of Association shall have the meaning set forth in Section 4.1.
Merger shall have the meaning set forth in the Recitals.
Merger Closing shall have the meaning set forth in Section 2.2.
Merger Closing Date shall have the meaning set forth in Section 2.2.
Merger Consideration shall have the meaning set forth in Section 3.1(b).
Merger Filing Documents shall have the meaning set forth in Section 2.3.
Merger Sub shall have the meaning set forth in the Preamble.
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Multiemployer Plan shall mean any multiemployer plan within the
meaning of Section 3(37) of ERISA.
NASDAQ shall mean The NASDAQ Capital Market.
New York Court shall have the meaning set forth in Section 9.10.
Notice of Intervening Circumstance shall have the meaning set forth in Section 6.5(d)(i).
Notice of Superior Offer shall have the meaning set forth in Section 6.5(d)(ii).
Order shall mean any decree, order, stipulation, award, judgment, injunction, temporary restraining order or other order in
any suit or proceeding by or with any Governmental Authority.
Ordinary Shares shall mean the ordinary shares of the
Company, par value $0.01 per share.
Parent shall have the meaning set forth in the Preamble.
Parent Disclosure Schedule shall have the meaning set forth in ARTICLE V.
Parent Information shall have the meaning set forth in Section 6.2(c).
Paying Agent shall have the meaning set forth in Section 3.2(a).
PELSA shall mean Petrolera Entre Lomas S.A., an Argentine corporation.
PELSA Financial Statements shall mean the audited financial statements of PELSA for the financial years 2011, 2012 and
2013.
PELSA Interest shall mean the 47,181,947 total shares of PELSA which include 26,767,820 voting shares of PELSA
held directly and indirectly by the Company (including through the Companys ownership of 95% of Apco Argentina S.A.) and 20,414,127 preferred shares of PELSA held directly by the Company.
Permitted Liens shall mean: with respect to properties or assets, (a) any Lien for Taxes, assessments and other
governmental charges not yet due or delinquent or due but being contested in good faith and for which adequate accruals or reserves have been established on the latest audited financial statements included in the Company SEC Documents;
(b) construction, mechanics, materialmens, laborers, workmens, repairmens, carriers and similar Liens, arising or incurred in the ordinary course of business; provided, that the underlying obligations
(i) are not yet due and payable or (ii) if due, are being contested in good faith by appropriate proceeding; and (c) with respect to real properties, (i) any zoning and other land use restrictions not violated by the current
improvements or current use in any material respect, (ii) survey exceptions, utility easements, rights of way and similar agreements, easements, covenants, reservations, restrictions and Liens typical for the applicable property type and
locality, and (iii) Liens disclosed on existing title reports or existing surveys copies of which have been made available to Parent; provided, that, in the case of clauses (c)(i), (c)(ii) and (c)(iii), none of the foregoing, individually or
in the aggregate, materially impairs current occupancy, materially detracts from the value of, or materially impairs, and is not reasonably expected to, materially impair, the present or continued use and operation of the affected asset (and
excluding in all events any Liens securing the payment of money).
Person shall mean an individual, a corporation
(including a not-for-profit corporation), general or limited partnership, limited liability company, unlimited liability company, joint venture, association, Governmental Authority, unincorporated organization, trust or any other entity of any kind
or nature.
Plan of Merger shall have the meaning set forth in the Recitals.
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Power of Attorney shall have the meaning set forth in the Recitals.
Proceeding shall have the meaning set forth in Section 4.11.
Proxy Statement shall have the meaning set forth in Section 6.2(a).
Proxy Statement Clearance Date shall mean the first date on which the SEC (or staff of the SEC) has, orally or in writing,
confirmed that (a) it has no further comments on the Proxy Statement, or (b) it does not intend to review the Proxy Statement.
Record Date shall have the meaning set forth in Section 6.2(d).
Register shall have the meaning set forth in Section 3.1(c).
Release shall mean any release, spill, emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the environment (including ambient air, surface water, groundwater and surface or subsurface strata).
Representatives shall mean, with respect to any Person, any Subsidiary of such Person and such Persons and each of
its respective Subsidiaries directors (in their capacity as such), officers, employees, investment bankers, financial advisors, attorneys, accountants or other advisors or representatives.
Requisite Shareholder Approval shall have the meaning set forth in Section 4.3(a)
Restraints shall have the meaning set forth in Section 7.1(b).
SEC shall mean the United States Securities and Exchange Commission.
Securities Act shall mean the Securities Act of 1933, as amended.
Shareholder shall have the meaning set forth in the Recitals.
Shareholders Meeting shall have the meaning set forth in Section 6.2(d).
Subsidiary of any Person, shall mean any corporation, partnership, joint venture or other legal entity of which such Person
(itself or together with any other Subsidiary or Subsidiaries), (i) owns, directly or indirectly, more than fifty percent (50%) of the stock or other Equity Interests, the holders of which are generally entitled to vote for the election of
the board of directors or other governing body of such corporation or other legal entity or (ii) otherwise controls, directly, or indirectly through one or more intermediaries, or both, such corporation or other legal entity.
Superior Offer shall mean any bona fide written Acquisition Proposal (except that, for purposes of this definition, the
references in the definition of Acquisition Transaction to 15% shall be replaced by 80%) that (i) results in equal consideration being paid in respect of each Company Share (regardless of class of Company Share),
(ii) is not conditioned on receipt of financing and (iii) is determined in good faith by the Company Board, after consulting with a nationally recognized third party financial advisor and outside legal counsel, to be (A) reasonably
capable of being consummated on a timely basis and (B) more favorable to the holders of Company Shares, from a financial point of view, than the Merger, taking into account any changes to the financial and other terms of this Agreement proposed
by Parent to the Company pursuant to Section 6.5(d)(ii) and any other factors that the Company Board deems in good faith appropriate; provided that, in the event the Shareholder is entitled to receive at least $15.00 per Company Share
(and all other Company Shareholders are entitled to receive an equal or greater amount of consideration per Company Share) pursuant to any proposed changes to the financial and other terms of this Agreement proposed by Parent in writing to the
Company pursuant to Section 6.5(d)(ii)), the Company shall consider the changes to the financial and other terms of this Agreement proposed by Parent as though the Shareholder was to receive the same consideration per Company Share as
the other Company Shareholders.
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Surviving Company shall have the meaning set forth in Section 2.1.
Target Closing Date shall have the meaning set forth in Section 2.2.
Tax shall mean any and all taxes, assessments, fees, levies, duties, tariffs, imposts, and other similar charges (together
with any and all interest, penalties, additions to tax, additional amounts in respect of the foregoing, and any obligations or payments to any Person with respect to any of the foregoing) imposed by any Governmental Authority or taxing authority
including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; customs duties, tariffs, and similar charges.
Tax Return shall mean any return, declaration, report information statement, claim for refund or other document, including
any schedule or attachment thereto filed or required to be filed with any Governmental Authority in connection with the determination, assessment or collection of any Tax of any party or the administration of any laws, regulations or administrative
requirements relating to any Tax.
Termination Date shall have the meaning set forth in Section 8.1(b)(i).
Termination Fee shall have the meaning set forth in Section 8.3(a).
Third Party shall mean any Person or group other than Parent, Merger Sub and their respective Affiliates.
Third Party Offeror shall have the meaning set forth in Section 6.5(d)(ii).
Total Merger Consideration shall have the meaning set forth in Section 3.1(b).
Transaction Agreement shall have the meaning set forth in the Recitals.
Transaction Agreement Termination Fee means the Termination Fee (as defined in the Transaction Agreement).
ARTICLE II
THE
MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions of this Agreement, and in accordance with
the Companies Law of the Cayman Islands (2013 Revision) (as amended) (the Companies Law), at the Effective Time, Merger Sub shall be merged with and into the Company, whereupon the separate corporate existence of Merger Sub shall
cease, and the Company shall continue its corporate existence under the name Apco Oil and Gas International Inc. as the surviving company (the Surviving Company) and shall continue to be governed by the Laws of the
Cayman Islands.
Section 2.2 Merger Closing. The closing of the Merger (the Merger Closing) will take place
at the offices of Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza, New York, New York 10006 (a) at 10:00 a.m., New York City time, on the third Business Day after satisfaction or (to the extent permitted by Law) waiver of the
conditions set forth in ARTICLE VII (other than those conditions that require the delivery of a document or certificate or taking of any other action at the Merger Closing, but subject to the satisfaction or, to the extent permitted by
Law, waiver by the appropriate party of all such conditions at the Merger Closing) (such date, the Target Closing Date); provided, however, that if the Company is required to file its Quarterly Report on Form 10-Q or
Annual Report on Form 10-K (or any amendment to any previously filed Company SEC Document) within 10 days of the Target Closing Date, the Merger Closing shall take place on the first Business Day following the filing of such report or (b) such
other time or date as mutually agreed to in writing by the parties hereto. The date on which the Merger Closing occurs is referred to in this Agreement as the Merger Closing Date.
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Section 2.3 Effective Time. Subject to the provisions of this Agreement, as promptly
as reasonably practicable on the Merger Closing Date, the parties shall cause the Merger to be consummated by (a) filing with the Registrar of Companies of the Cayman Islands (the Cayman Registrar) such documents as may be
required in accordance with the applicable provisions of the Companies Law or by Law to make the Merger effective, including (but not limited to) (i) the Plan of Merger as referred to in Section 233(3) of the Companies Law and (ii) a
declaration by a director of Merger Sub and a director of the Company made in accordance with Section 233(9) of the Companies Law (together, the Merger Filing Documents) and (b) making such other filings or recordings
and taking such other actions as may be required in accordance with the applicable provisions of the Companies Law or by Law to make the Merger effective hereinafter. The Merger shall become effective on such date and time as the Merger Filing
Documents are registered by the Cayman Registrar or at such other date and time as Parent and the Company shall agree and specify in the Merger Filing Documents in accordance with the Companies Law. The date and time at which the Merger becomes
effective is referred to in this Agreement as the Effective Time.
Section 2.4 Effects of the Merger. The
Merger shall have the effects set forth in this Agreement and in the applicable provisions of the Companies Law. Without limiting the generality of the foregoing, from and after the Effective Time, the Surviving Company shall possess all properties
(including choses in action), undertakings, goodwill, benefits, immunities rights, privileges, powers and franchises of the Company and Merger Sub, and all of the mortgages, charges, security interests, Contracts, claims, obligations, liabilities,
debts, commitments and duties of any kind whatsoever, whether, fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or
otherwise, whenever or however arising (including, whether arising out of contract or tort, based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the
notes thereto (Liabilities) of the Company and Merger Sub shall become the Liabilities of the Surviving Company.
Section 2.5 Memorandum of Association and Articles of Association of the Surviving Company. Immediately following the Effective
Time, the memorandum of association and articles of association of the Surviving Company shall be amended and restated in their entirety by a special resolution of the shareholders of the Surviving Company in accordance with the articles of
association of the Surviving Company and the Companies Law. Notwithstanding the foregoing, such amended and restated memorandum of association and articles of association of the Surviving Company shall contain the indemnification provisions as
contemplated by Section 6.6.
Section 2.6 Board of Directors. Subject to Law, each of the parties hereto shall
take all necessary action to ensure that the board of directors of the Surviving Company effective as of, and immediately following, the Effective Time shall consist of the members of the board of directors of Merger Sub immediately prior to the
Effective Time, each to hold office in accordance with the memorandum of association and articles of association of the Surviving Company until their respective successors shall have been duly elected, designated or qualified, or until their earlier
death, incapacitation, retirement, resignation or removal in accordance with the memorandum of association and articles of association of the Surviving Company.
Section 2.7 Officers. From and after the Effective Time, the officers of Merger Sub at the Effective Time shall be the officers of
the Surviving Company, until their respective successors are duly elected or appointed and qualified in accordance with Law or their earlier death, incapacitation, retirement, resignation or removal.
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ARTICLE III
EFFECT OF THE MERGER ON SHARE CAPITAL;
EXCHANGE OF CERTIFICATES
Section 3.1 Effect on Securities. At the Effective Time, by virtue of the Merger and without any action on the part of the
Company, Merger Sub or the holders of any securities of the Company or Merger Sub:
(a) Cancellation of Treasury Shares and Certain
Other Company Securities. Each Company Share held by the Company or any Subsidiary of the Company (as treasury shares (if applicable) or otherwise) or held by Parent or Merger Sub, in each case, immediately prior to the Effective Time, shall
automatically be canceled and retired and shall cease to exist, and no consideration or payment shall be delivered in exchange therefor or in respect thereof.
(b) Conversion of Company Shares. Each Company Share issued and outstanding immediately prior to the Effective Time (other than shares
canceled pursuant to Section 3.1(a) and, except as provided in Section 3.4, the Dissenting Shares) shall be converted into the right to receive $14.50 in cash (such sum, the Merger Consideration), without
interest. For purposes of this Agreement, Total Merger Consideration shall mean the product of (x) the number of Company Shares issued and outstanding (other than shares canceled pursuant to Section 3.1(a) and,
except as provided in Section 3.4, the Dissenting Shares) immediately prior to the Effective Time and (y) the Merger Consideration. Each Company Share to be converted into the right to receive the Merger Consideration as provided in
the first sentence of this Section 3.1(b) shall, by virtue of the Merger and without any action on the part of the holders thereof, be automatically canceled and shall cease to exist, and the holders of share certificates (the
Certificates) or book-entry shares (Book-Entry Shares) which immediately prior to the Effective Time represented such Company Shares shall cease to have any rights with respect to such Company Shares other than
the right to receive, upon surrender of such Certificates (or affidavits of loss in lieu thereof in accordance with Section 3.3) or Book-Entry Shares in accordance with Section 3.2, the Merger Consideration, without interest
thereon, for each such Company Share held by them.
(c) Conversion of Merger Sub Share Capital. Each share, par value of $1.00 per
share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) newly and validly issued, fully paid and non-assessable ordinary share, par value $0.01 per share, of the Surviving
Company and constitute the only outstanding share of the Surviving Company and the register of members of the Surviving Company (Register) shall promptly be updated to reflect such conversion.
Section 3.2 Exchange of Certificates.
(a) Designation of Paying Agent; Deposit of Exchange Fund. Prior to the Effective Time, Parent shall designate a bank or trust company,
which bank or trust company shall be reasonably acceptable to the Company (the Paying Agent), it being agreed by the parties that Computershare Trust Company, N.A., Bank of New York Mellon, HSBC or Deutsche Bank is acceptable, for
the payment of the Merger Consideration as provided in Section 3.1(b). Parent shall pay all costs, fees and expenses incurred in connection with the retention and engagement of the Paying Agent. Immediately prior to the filing of the
Merger Filing Documents with the Cayman Registrar, Parent shall deposit, or cause to be deposited with the Paying Agent, for the benefit of the holders of Company Shares outstanding immediately prior to the Effective Time (other than holders of
shares to be canceled pursuant to Section 3.1(a) and, except as provided in Section 3.4, the Dissenting Shares) cash constituting an amount equal to the Total Merger Consideration (such Total Merger Consideration as deposited
with the Paying Agent, the Exchange Fund). In the event the Exchange Fund shall be insufficient to make the payments contemplated by Section 3.1(b), Parent shall promptly deposit, or cause to be deposited, additional
funds with the Paying Agent in an amount which is equal to the deficiency in the amount required to make such payment. Parent shall cause the Exchange Fund to be (i) held for the benefit of the holders of Company Shares from and after the
Effective Time and (ii) applied promptly to making the payments pursuant to Section 3.1(b). The Exchange Fund shall not be used for any purpose other than to fund payments pursuant to Section 3.1.
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(b) As promptly as practicable following the Effective Time and in any event not later than the
fifth (5th) Business Day thereafter, the Surviving Company shall cause the Paying Agent to mail (and to make available for collection by hand) to each holder of record of a Certificate or Book-Entry Shares that immediately prior to the
Effective Time represented outstanding Company Shares (i) a letter of transmittal, which shall specify that delivery shall be effected, and risk of loss and title to the Certificates, as applicable, shall pass, only upon proper delivery of the
Certificates (or affidavits of loss in lieu thereof) to the Paying Agent and which shall be in the form (including customary provisions with respect to delivery of an agents message with respect to Book-Entry Shares) and have such
other provisions as Parent may reasonably specify (subject to the Companys approval (such approval not to be unreasonably withheld, delayed or conditioned)) and (ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration.
(c) Surrender Procedures.
(i) Certificates. Upon the later of the Effective Time and surrender of a Certificate (or affidavit of loss in lieu thereof) for
cancellation to the Paying Agent, together with a letter of transmittal duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required pursuant to such instructions, Parent
shall cause the Paying Agent to pay in exchange therefor as promptly as practicable, the Merger Consideration pursuant to the provisions of this ARTICLE III, and the Certificates surrendered shall forthwith be canceled. In the event of a
transfer of ownership of Company Shares that is not registered in the register of members of the Company, payment of the appropriate amount of Merger Consideration may be made 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 accompanied by all documents reasonably required by the Paying Agent) and the Person requesting such payment shall pay, or
cause to be paid, any transfer or other taxes required by reason of the payment to a Person other than the registered holder of such Certificate or establish to the satisfaction of Parent that such tax has been paid or is not applicable. Except with
respect to Dissenting Shares, until surrendered as contemplated by this Section 3.2, 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 into which the Company Shares theretofore represented by such Certificate have been converted pursuant to Section 3.1(b). No interest shall be paid or accrue on any cash payable upon surrender of any Certificate.
(ii) Book-Entry Shares. Notwithstanding anything to the contrary contained in this Agreement, any holder of Book-Entry Shares shall
not be required to deliver a Certificate or an executed letter of transmittal to the Paying Agent to receive the Merger Consideration that such holder is entitled to receive pursuant to this ARTICLE III. In lieu thereof, each holder of
record of Book-Entry Shares whose Company Shares were converted into the right to receive the Merger Consideration shall automatically upon the Effective Time (or, at any later time at which such Book-Entry Shares shall be so converted) be entitled
to receive, and Parent shall cause the Paying Agent to pay and deliver as promptly as practicable after the Effective Time, in respect of each such Book-Entry Share, the Merger Consideration.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund which remains unclaimed by the applicable former shareholders of the
Company six (6) months after the Effective Time shall be delivered to the Surviving Company or Parent (as directed by Parent), upon demand, and any such shareholders prior to the Merger who have not theretofore complied with this
ARTICLE III shall thereafter look only to the Parent or the Surviving Company (as applicable) for payment of their claims for Merger Consideration in respect thereof, and Parent or the Surviving Company (as applicable) shall be
responsible for the payment of such amounts.
(e) No Liability. None of Parent, Merger Sub, the Company, the Surviving Company or
the Paying Agent shall be liable to any Person in respect of any cash held in the Exchange Fund properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate shall not have been
surrendered prior to the date on which any Merger Consideration in respect thereof would otherwise escheat to or become the property of any Governmental Authority, any such Merger Consideration in respect of
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such Certificate shall, to the extent permitted by Law, become the property of the Surviving Company, and any holder of such Certificate who has not theretofore complied with this
ARTICLE III with respect thereto shall thereafter look only to the Surviving Company for payment of its claim for Merger Consideration in respect thereof (if any).
(f) Investment of Exchange Fund. The Paying Agent shall invest any cash included in the Exchange Fund as directed by Parent or, after
the Effective Time, the Surviving Company; provided, that (i) no such investment shall relieve Parent or the Paying Agent from making the payments required by this ARTICLE III, and following any losses Parent shall promptly
provide additional funds to the Paying Agent for the benefit of the holders of Company Shares in the amount of such losses, (ii) no such investment shall have maturities that could prevent or delay payments to be made pursuant to this
Agreement, and (iii) such investments shall be in short-term obligations of the United States of America with maturities of no more than thirty days or guaranteed by the United States of America and backed by the full faith and credit of the
United States of America. Any interest or income produced by such investments will be payable to the Surviving Company or Parent, as directed by Parent.
Section 3.3 Lost Certificates. If any Certificate shall have been lost, stolen or destroyed, then upon the making of an affidavit
of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Surviving Company, the posting by such Person of a bond, in such customary and reasonable amount as the Surviving Company may direct, as
indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration to which the holder thereof is entitled
pursuant to this ARTICLE III.
Section 3.4 Dissenting Shares. Notwithstanding anything to the contrary contained
in this Agreement, Company Shares issued and outstanding immediately prior to the Effective Time that are held by any holder who is entitled to appraisal rights under Section 238 of the Companies Law, and who has delivered to the Company a
written objection to the Merger pursuant to Section 238 of the Companies Law (the Dissenting Shares), shall not be converted into the right to receive the Merger Consideration as provided in Section 3.1(b) but
instead the holders of such Dissenting Shares shall be entitled only to such rights as are granted by the Companies Law. At the Effective Time, the Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease
to exist, and each holder of Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the provisions of Section 238 of the Companies Law.
Notwithstanding the foregoing, if any such holder shall have failed to perfect or prosecute or shall have otherwise waived, effectively withdrawn or lost his or her rights under Section 238 of the Companies Law or a court of competent
jurisdiction shall determine that such holder is not entitled to the relief provided by Section 238 of the Companies Law, then the right of such holder to be paid the fair value of such holders Dissenting Shares under Section 238 of
the Companies Law shall cease and such shares shall no longer be considered Dissenting Shares for purposes hereof and such holders Company Shares shall thereupon be deemed to have been converted as of the Effective Time into the right to
receive the Merger Consideration, without any interest thereon, as provided in Section 3.1(b). The Company shall give Parent (A) prompt notice of any demands for appraisal, attempted withdrawals of such demands, and any other
instruments served pursuant to Law that are received by the Company relating to the Company shareholders rights of dissention, and (B) the opportunity to the extent permitted by Law to participate in all negotiations and proceedings with
respect to demand for determining the fair value of the Dissenting Shares under the Companies Law. Except with the prior written consent of the Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not
voluntarily make any payment with respect to or any demands for appraisal and shall not settle or offer to settle any such demands.
Section 3.5 Withholdings. Parent, the Company, the Surviving Company and the Paying Agent shall be entitled to deduct and withhold
from the Merger Consideration, and any amounts otherwise payable pursuant to this Agreement to any holder of Company Shares, if any, such amounts as Parent, the Company, the Surviving Company or the Paying Agent are required to deduct and withhold
with respect to the making of such payment under the Code or any provision of applicable Tax Law. To the extent that amounts are so withheld and paid over
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to the appropriate taxing authority by Parent, the Company, the Surviving Company or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been
paid to the Person in respect of which such deduction and withholding was made by Parent, the Company, the Surviving Company or the Paying Agent.
Section 3.6 Transfers; No Further Ownership Rights. At the Effective Time, the Register of the Company shall be closed, and from
and after the Effective Time, there shall be no further registration of transfers of the Company Shares that were outstanding immediately prior to the Effective Time. From and after the Effective Time, the holders of the Company Shares immediately
prior to the Effective Time shall cease to have any rights with respect to such Company Shares (other than the right to receive the Merger Consideration attributable to such Company Shares in accordance with the terms of this Agreement), except as
otherwise provided herein or by Law. If Certificates are presented to the Surviving Company or Parent for transfer following the Effective Time, they shall be canceled against delivery of the Merger Consideration, as provided for in
Section 3.1(b), for each Company Share formerly represented by such Certificates. All Merger Consideration paid in accordance with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to such
Company Shares.
Section 3.7 Change in Shares. If between the date of this Agreement and the Effective Time any outstanding
Company Shares shall have been changed into a different number of shares or a different class, solely by reason of any share dividend, subdivision, reclassification, recapitalization, split, reverse split, combination or exchange of shares or any
other similar transaction, the Merger Consideration shall be correspondingly adjusted to reflect such share dividend, subdivision, reclassification, recapitalization, split, reverse split, combination or exchange of shares or any other similar
transaction and to provide to the holders of Company Shares the same economic effect as contemplated by this Agreement prior to such action; provided, that nothing in this Section 3.7 shall be construed to permit the Company to
take any action with respect to its securities that is prohibited by the terms of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as disclosed in (i) the Company SEC Documents filed and publicly available after March 10, 2011 but prior to the date hereof
(but excluding any forward-looking disclosures set forth in any risk factor section, any disclosure in any section relating to forward-looking statements and any other disclosures included in any such form, report, schedule, statement or other
document to the extent they are predictive or forward-looking in nature) (provided that in no event shall any disclosure in such Company SEC Documents qualify or limit the representations and warranties in Section 4.1,
Section 4.2 or Section 4.3) (ii) the corresponding section of the Company Disclosure Schedule (it being understood that any information set forth in one section or subsection of the Company Disclosure Schedule shall be
deemed to apply to and qualify the representation and warranty set forth in this Agreement to which it corresponds in number and each other representation and warranty set forth in this ARTICLE IV solely to the extent that it is
reasonably apparent on its face that such information is relevant to such other representation and warranty), the Company hereby represents and warrants to Parent and Merger Sub as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Each of the Company, PELSA and each of their respective Subsidiaries is a
corporation or legal entity duly incorporated, organized or formed, validly existing and (to the extent applicable) in good standing, under the Laws of its jurisdiction of incorporation, organization or formation. Each of the Company, PELSA and each
of their respective Subsidiaries has the requisite corporate or similar entity power and authority to conduct its business as it is now being conducted. Each of the Company, PELSA and each of their respective Subsidiaries is duly qualified or
licensed as a foreign entity to do business, and (to the extent applicable) is in good standing, in each jurisdiction in which the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or
licensing necessary, except where the failure to be so licensed, qualified or in good standing has not had, individually or in the
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aggregate, a Material Adverse Effect. The copies of (a) the Memorandum of Association of the Company (the Memorandum of Association) and Articles of Association of the
Company (the Articles of Association), in each case, as most recently filed with the Company SEC Documents and (b) the Register, register of directors and officers, register of mortgages and charges and minute books are, in
each case, complete and correct copies of such documents.
Section 4.2 Capitalization; Subsidiaries.
(a) As of the date hereof, the authorized share capital of the Company is $600,000.00 and consists of 60,000,000 shares with a par value of
$0.01. As of September 30, 2014, (i) 9,139,650 Ordinary Shares were issued and outstanding, (ii) 20,301,592 Class A Shares were issued or outstanding and (iii) no shares were held in treasury. No share capital of, or other
equity or voting interests in, the Company, or options, warrants or other rights to acquire any such shares or securities were issued, reserved for issuance or outstanding. All outstanding shares in the capital of the Company are duly authorized,
validly issued, fully paid and non-assessable and not subject to preemptive rights.
(b) There are no outstanding subscriptions, options,
warrants, calls, convertible securities or other similar rights, agreements, commitments or contracts of any kind to which the Company or any of its Subsidiaries or, to the Knowledge of the Company, PELSA or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or, to the Knowledge of the Company, PELSA or any of its Subsidiaries is bound obligating the Company, PELSA or any of their respective Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of, or other equity or voting interests in, or securities convertible into, or exchangeable or exercisable for, shares of capital stock of, or other equity or voting interests in, the Company,
PELSA or any of their respective Subsidiaries or obligating the Company, PELSA or any of their respective Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right or contract. Except for the Power of
Attorney and as otherwise set forth in Section 4.2(a), there are no outstanding contractual obligations of the Company or any of its Subsidiaries or, to the Knowledge of the Company, PELSA or any of its Subsidiaries affecting the voting
rights of or requiring the repurchase, redemption, issuance, creation or disposition of any Equity Interests in the Company, PELSA or any of their respective Subsidiaries. Except as set forth in Section 4.2(b) of the Company Disclosure Schedule,
since the close of business on September 30, 2014, the Company has not issued any of its shares, or securities convertible into or exchangeable for such shares or any other Equity Interests in the Company as of such date. There are no
outstanding bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matter on which the Company Shareholders may vote.
(c)
(i) Each outstanding
share of capital stock of, or other Equity Interests in, each Subsidiary of the Company and PELSA and each Subsidiary of PELSA (A) is (to the extent such concept is applicable) duly authorized, validly issued, fully paid, nonassessable and not
subject to preemptive rights, and (B) is owned, directly or indirectly, free and clear of all Liens, by the Company (or in the case of a Subsidiary of PELSA, PELSA) or such other Person listed in Section 4.2(c)(i) of the Company Disclosure
Schedule as owning such share. The PELSA Interest is duly recorded in the Stock Registry Book of PELSA in accordance with Law. Section 4.2(c)(i) of the Company Disclosure Schedule contains a correct and complete list as of the date of this
Agreement of all the Subsidiaries of the Company, PELSA and all of the Subsidiaries of PELSA (including their names and jurisdictions of organization), the ownership interest of the Company in each of its Subsidiaries, and the ownership interest of
any other Person or Persons in each Subsidiary of the Company or PELSA or any Subsidiary of PELSA.
(ii) Immediately following the
Effective Time, Parent or its Subsidiaries will have good title to the PELSA Interests and the outstanding shares of capital stock or other Equity Interests of the Subsidiaries of the
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Company free and clear of any Liens. The Company has made available to Parent complete and correct copies of the charter and bylaws (or similar organizational documents) of each Subsidiary of the
Company and PELSA and each Subsidiary of PELSA (including, for the avoidance of any doubt, the Core PELSA Documents, as amended to date), each as in full force and effect as of the date hereof. Other than the organizational documents and the Core
PELSA Documents made available to Parent pursuant to the foregoing sentence, there are no Contracts, arrangements or understandings which regulate the relationship between the shareholders of any Subsidiary of the Company or PELSA or any Subsidiary
of PELSA or the governance of any Subsidiary of the Company or PELSA or any Subsidiary of PELSA.
(d) Section 4.2(d) of the Company
Disclosure Schedule sets forth the name, jurisdiction of organization and the Companys or any of its Subsidiaries or, to the Knowledge of the Company and as of the date hereof, PELSAs or any of its Subsidiaries percentage
ownership of any and all Persons in which the Company, PELSA or any of their respective Subsidiaries owns, or has the right or obligation to acquire, any Equity Interests (other than any Subsidiary of the Company or PELSA) (collectively, the
Investments). All of the Investments are owned by the Company or one of its Subsidiaries or PELSA or one of its Subsidiaries. All Investments owned by the Company or its Subsidiaries are owned free and clear of all Liens. To the
Knowledge of the Company, all of the Investments owned by PELSA or its Subsidiaries are owned free and clear of all Liens. As of the date of this Agreement, except for the capital stock or other Equity Interests of the Subsidiaries of the Company
and PELSA, as applicable, and the Investments, neither the Company nor, to the Knowledge of the Company, PELSA, directly or indirectly, owns any capital stock or other voting or equity securities or interests in any Person.
(e) None of the Company, PELSA or any of their respective Subsidiaries has entered into any commitment, arrangement or agreement, or are
otherwise obligated, to contribute capital, loan money or otherwise provide funds or make additional investments in any other Person. Except for the Power of Attorney, there are no shareholder agreements, voting trusts, proxies or other agreements
or understandings to which the Company, PELSA or any of their respective Subsidiaries is a party or by which it is bound relating to the voting or registration of any shares of the Company, PELSA or any of their Subsidiaries or any Investment.
Section 4.3 Authority Relative to Agreement.
(a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder
and to consummate the transactions contemplated hereby, including the Merger, and thereby, subject solely in the case of the Merger to obtaining, at the Shareholder Meeting, the affirmative vote of the holders of two-thirds of the Company Shares
attending and voting at the Shareholders Meeting or a unanimous written resolution of the shareholders of the Company (the Requisite Shareholder Approval) in favor of the adoption of the Plan of Merger and the transactions
contemplated by this Agreement, including the Merger. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby, including the Merger, have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement or to consummate the transactions contemplated hereby, including the
Merger (other than, with respect to the consummation of the Merger, the receipt of the Requisite Shareholder Approval, as well as the filing of the Merger Filing Documents with the Cayman Registrar). This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except
as such enforceability may be limited by bankruptcy, winding up, insolvency, fraudulent transfer, reorganization, moratorium and other similar Laws of general applicability relating to or affecting creditors rights, and subject to general
equitable principles).
(b) On or prior to the date hereof, the Company Board, by resolutions adopted at a meeting duly called and held,
has, subject to the terms and conditions of this Agreement, unanimously (i) determined that this Agreement, the Merger and the other transactions contemplated by this Agreement are advisable, fair to and in the best interests of the Company and
the Company Shareholders, (ii) approved this Agreement, (iii) approved
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the Merger and the other transactions contemplated by this Agreement and (iv) subject to the terms and conditions of Section 6.2 and Section 6.5, resolved to
recommend that the Company Shareholders approve the adoption of this Agreement (the Company Board Recommendation) and directed that such matter be submitted for the consideration of the shareholders of the Company at the
Shareholders Meeting, which resolutions have not been rescinded, modified or withdrawn in any way.
Section 4.4 No Conflict;
Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by the Company, the consummation by the
Company of the Merger or any other transaction contemplated by this Agreement or the Companys performance of its obligations hereunder will (i) subject to, in the case of the Merger, obtaining the Requisite Shareholder Approval, conflict
with or violate the Memorandum of Association or Articles of Association or the charter or bylaws (or similar organizational documents) of any of the Companys Subsidiaries, PELSA or any of PELSAs Subsidiaries (ii) violate the
Companies Law, (iii) assuming the consents, registrations, filings, notices, approvals and authorizations specified in Section 4.4(b) have been obtained or made and the waiting periods referred to therein have expired, and any
condition precedent to such consent, approval, authorization, or waiver has been satisfied, conflict with or violate any Law applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected or (iv) result in any breach of, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien upon any of the properties or assets of the Company or any of its Subsidiaries pursuant to any of the Core PELSA Documents any Company Material Contract, other than, in the case of
clauses (iii) and (iv), any such conflict, violation, breach, default, right of termination, amendment, acceleration, cancellation or Lien that has not had, individually or in the aggregate, a Material Adverse Effect.
(b) None of the execution and delivery of this Agreement by the Company, the consummation by the Company of the Merger or any other
transaction contemplated by this Agreement, or the Companys performance of its obligations hereunder will require any consent, approval, authorization, waiver or permit of, or filing with or notification to, any Governmental Authority, except
for (i) the filing with the SEC of such reports under the Exchange Act as may be required in connection with this Agreement and the transactions contemplated by this Agreement, (ii) the filing of the Merger Filing Documents with the Cayman
Registrar and appropriate documents with the relevant authorities of the other jurisdictions in which the Company is qualified to do business, (iii) any filings required under the rules of NASDAQ and (iv) such other consents, approvals,
authorizations, waivers or permits, filings or notifications, the failure of which to have, make or obtain, as applicable, has not had, individually or in the aggregate, a Material Adverse Effect.
(c) There is no secured Indebtedness of the Company outstanding that would give rise to a consent right of a secured creditor under the
Companies Law.
Section 4.5 Permits and Licenses. The Company, PELSA and each of their respective Subsidiaries are in
possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders necessary for the Company, PELSA and their respective Subsidiaries to carry on their respective
businesses as they are now being conducted in all material respects (the Company Permits), except where the failure to hold such Company Permits would not, and would not reasonably be expected to, individually or in the aggregate,
result in any material liability to the Company or its Subsidiaries or otherwise interfere in any material respect with the conduct of their respective businesses as currently conducted. All such Company Permits are, in all material respects, in
full force and effect and none of the Company, PELSA or any of their respective Subsidiaries is in material default or violation of any such Company Permit. None of the Company or any of its Subsidiaries has received any written notice since
March 10, 2011 from any Governmental Authority threatening to suspend, revoke, withdraw, modify in any adverse respect or limit any such Company Permit. To the Knowledge of the Company, there are no circumstances or conditions (including entry
into this Agreement) providing grounds for any suspension, revocation, withdrawal, adverse modification
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or limitation on any Company Permit. Neither the execution nor performance of this Agreement will result in the Company or any of is Subsidiaries losing the benefit of any Company Permit which it
possessed immediately prior to execution of this Agreement, except any loss of benefit that would not, and would not reasonably be expected to, individually or in the aggregate, result in any material liability to the Company or its Subsidiaries or
otherwise interfere in any material respect with the conduct of their respective businesses as currently conducted.
Section 4.6
Compliance with Laws. Except for instances of non-compliance, default or violation that have not had, individually or in the aggregate, a Material Adverse Effect, (i) the Company, PELSA and each of their respective Subsidiaries has been
since March 10, 2011 and is in compliance with, and has not received written notice of any default or violation of, any Laws applicable to the Company, PELSA or such Subsidiary or by which any property, asset or right of the Company or such
Subsidiary is bound or affected and (ii) the Company is in compliance in all respects with the applicable listing, corporate governance and other rules and regulations of NASDAQ.
Section 4.7 Company SEC Documents; Financial Statements.
(a) Since March 10, 2011, the Company has filed with the SEC all forms, documents and reports required under the Exchange Act or the
Securities Act to be filed or furnished prior to the date of this Agreement by the Company with the SEC (the forms, documents, and reports filed with the SEC, including any amendments thereto since the date of their filing, the Company SEC
Documents). As of their respective filing dates, or, if amended, superseded or restated after the date of filing, as of the date of the last such amendment or applicable subsequent filing, the Company SEC Documents (i) complied in all
material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the applicable rules and regulations promulgated thereunder, and (ii) did not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made not misleading. The Company has made available to Parent (via EDGAR or otherwise) copies of
all comment letters and other material correspondence received by the Company from the SEC since March 10, 2011 and relating to the Company SEC Documents, together with all written responses of the Company thereto. No executive officer of the
Company or any of its Subsidiaries has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002 with respect to any Company SEC Documents. As of the date of this
Agreement, to the Knowledge of the Company, there are no outstanding or unresolved comments in such comment letters received by the Company from the SEC. As of the date of this Agreement, to the Knowledge of the Company, none of the Company SEC
Documents is the subject of any ongoing review by the SEC. None of the Companys Subsidiaries is, or since March 10, 2011 has been, required to file periodic reports with the SEC pursuant to the Exchange Act.
(b) The consolidated financial statements (including all related notes and schedules) of the Company included in the Company SEC Documents
fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the respective dates thereof and their consolidated results of operations and consolidated cash flows for the
respective periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which are not material in amounts or significance and the absence of notes) in conformity with GAAP (except in the case of the
unaudited statements, as permitted by Form 10-Q or other rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).
(c) Since March 10, 2011, (i) none of the Company, PELSA or any of their respective Subsidiaries nor any director or officer nor, to
the Knowledge of the Company, any auditor or accountant of the Company, PELSA or any of their respective Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company, PELSA or any of their respective Subsidiaries or their respective internal accounting controls, including any material complaint, allegation,
assertion or claim that the Company, PELSA or any of their respective Subsidiaries has engaged in questionable accounting or
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auditing practices, and (ii) no attorney representing the Company, PELSA or any of their respective Subsidiaries has reported evidence of a material violation of securities Laws, breach of
fiduciary duty or similar violation by the Company, PELSA or any of their respective Subsidiaries or any of their respective officers, directors, employees or agents to the Company Board or any committee thereof.
(d) The PELSA Financial Statements fairly present in all material respects the financial condition and results of operations of PELSA and its
Subsidiaries as of the date thereof and for the period indicated therein, all in accordance with GAAP.
(e) No change has been made to the
accounting policies or to any other accounting treatment of the Company, PELSA or any of their respective Subsidiaries, for at least three (3) years prior to the date hereof other than as required by GAAP, the Exchange Act or Law.
(f) The accounting and other records of the Company, PELSA and each of their respective Subsidiaries have been prepared and maintained in all
material respects in a manner adequate for preparing audited financial statements in accordance with GAAP.
Section 4.8 Disclosure
Controls and Procedures; Internal Controls over Financial Reporting. The Company (a) has established and maintains internal controls over financial reporting (as such term is defined in paragraph (f) of Rule 13a-15 promulgated under
the Exchange Act) as required by Rule 13a-15 promulgated under the Exchange Act designed to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the management of the Company by others
within those entities, and (b) has disclosed, based on its most recent evaluation by its chief executive officer and chief financial officer, prior to the date hereof, to the Companys auditors and the audit committee of the Company Board
(i) any significant deficiencies or material weakness in the design or operation of internal controls over financial reporting (as such terms are defined in paragraph (f) of Rule 13a-15 promulgated under the Exchange Act) which are
reasonably likely to adversely affect in any material respect the Companys ability to record, process, summarize and report financial data and (ii) any fraud, whether or not material, that involves management or other employees who have a
significant role in the Companys internal controls. As and to the extent described in the Company SEC Documents, the Company and the Subsidiaries of the Company have devised and maintain a system of internal accounting controls sufficient to
provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. The Company is in compliance in all material respects with all rules, regulations and requirements of
the Sarbanes-Oxley Act.
Section 4.9 Absence of Certain Changes or Events. Between December 31, 2013 and the date hereof,
there has not been any Event that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. Between such date and the date hereof, each of the Company, PELSA and each of their respective
Subsidiaries has conducted its business only in the ordinary course of business consistent with past practice, and none of the Company or any of its Subsidiaries has taken any action that if taken after the date of this Agreement would constitute a
violation of Section 6.1(a), (b), (c), (h), (j), (l), (q), (r), (s) or (u) or with respect to any of the foregoing, (z).
Section 4.10 No Undisclosed Liabilities. Except (a) as reflected or reserved against in the Companys financial
statements or the notes thereto included in the Company SEC Documents, (b) for liabilities or obligations incurred in the ordinary course of business consistent with past practice since December 31, 2013 which, individually or in the
aggregate, have not had a Material Adverse Effect, (c) for liabilities or obligations incurred in connection with the transactions contemplated by this Agreement and (d) for liabilities under the terms of any Contracts (excluding any
liabilities arising from breaches or defaults of any such Contracts) binding on the Company, PELSA or any of their respective Subsidiaries, none of the Company, PELSA or any of their respective Subsidiaries has any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, whether due or to become due, that are required by GAAP or IFRS, as applicable, to be reflected or reserved against on a consolidated balance sheet (or the notes thereto) of the Company and
its Subsidiaries or on an audited balance sheet of PELSA or any of its Subsidiaries.
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Section 4.11 Absence of Litigation. As of the date hereof, there is no claim, suit,
action, litigation, arbitration, mediation, proceeding or investigation (each, a Proceeding) pending against the Company, PELSA or any of their respective Subsidiaries or, to the Knowledge of the Company, threatened against the
Company, PELSA or any of their respective Subsidiaries that is, or would reasonably be expected to become, material to the Company and its Subsidiaries, taken as a whole. As of the date hereof, there are no Proceedings pending against the Company,
PELSA or any of their respective Subsidiaries or, to the Knowledge of the Company, threatened against the Company, PELSA or any of their respective Subsidiaries challenging or seeking to prohibit the execution, delivery or performance of this
Agreement or any of the transactions contemplated hereby. To the Knowledge of the Company, (x) no officer or director of the Company, PELSA or any of their respective Subsidiaries is a defendant in any Proceeding in connection with his or her
status as an officer or director of the Company, PELSA or any of their respective Subsidiaries, and (y) no such Proceeding is threatened in writing, in either case that is, or would reasonably be expected to become, material to the Company and
its Subsidiaries, taken as a whole.
Section 4.12 Environmental Matters. Except as would not be material, individually or in
the aggregate, to the Company and its Subsidiaries, taken as a whole, (a) each of the Company, PELSA and their respective Subsidiaries has been and is in compliance with all applicable Environmental Laws (which compliance includes, but is not
limited to, the possession by such entities of all Environmental Permits necessary to conduct the operations of the Company, PELSA and their respective Subsidiaries, and compliance with the terms and conditions thereof); (b) there is no
Environmental Claim pending against the Company, PELSA or any of their respective Subsidiaries or, to the Knowledge of the Company, threatened against the Company, PELSA or any of their respective Subsidiaries; (c) none of the Company or any of
its Subsidiaries or, to the Knowledge of the Company, PELSA or any of its Subsidiaries has caused or knowingly permitted or is responsible or liable for any Releases of Hazardous Substances, whether or not on, at, in or underneath any property
currently owned or leased by the Company or any of its Subsidiaries or, to the Knowledge of the Company, PELSA or any of its Subsidiaries, or any investigation or remediation relating thereto; (d) none of the Company or any of its Subsidiaries
or, to the Knowledge of the Company, PELSA or any of its Subsidiaries has entered into any Contract, undertaking, warranty or indemnity to assume actual or contingent liability for any environmental matters for which it would not otherwise be
liable; and (e) the Company has delivered to, or has otherwise made available for inspection by the Parent or Merger Sub, all material non-privileged investigation reports, studies, test results or similar documents in the possession, control
or custody of the Company or any Subsidiary of the Company or PELSA or any of its Subsidiaries related to environmental matters or (to the extent relating to exposure to Hazardous Substances) human health or safety matters.
Section 4.13 Employee Benefit Plans.
(a) Section 4.13(a) of the Company Disclosure Schedule contains an accurate and complete list of each material Company Benefit Plan. The
Company has made available to Parent prior to the date hereof copies of the following with respect to each material Company Benefit Plan: (i) the most recent Company Benefit Plan document and all amendments and exhibits thereto; (ii) the
most recent annual report on Form 5500 or similar report filed with respect to each Company Benefit Plan (if required by Law), and any exhibits thereto, and the most recent actuarial report in respect of any Company Benefit Plan that is a single
employer pension plan subject to Title IV of ERISA; (iii) the most recent summary plan description for each Company Benefit Plan for which a summary plan description is required by Law and all related summaries of material modifications;
(iv) the most recent IRS determination, notification, or opinion letter (or similar document required by Law), if any, received with respect to each applicable Company Benefit Plan; and (v) each trust agreement, insurance Contract, annuity
Contract, or other funding arrangement in effect as of the date hereof and relating to any Company Benefit Plan.
(b) Except as would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each Company Benefit Plan has been established, operated, funded (where required), registered (where required), qualified and administered in accordance with
its terms and Law, including ERISA, the Code
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and any relevant foreign Laws and regulations. All material contributions, premiums and other payments required to be made by the Company or its Subsidiaries with respect to each Company Benefit
Plan have been made on or before their due dates under Law and the terms of such Company Benefit Plan or, to the extent not required to be made or paid on or prior to the date hereof, have been fully reflected on the Companys financial
statements in accordance with GAAP. There are no pending or, to the Knowledge of the Company, threatened investigations by any Governmental Authority, termination proceedings or other claims (except routine claims for benefits in the ordinary
course) against or involving any Company Benefit Plan, or the assets, fiduciaries or administrators thereof (other than routine claims for benefits), or asserting any rights to or claims for benefits under any Company Benefit Plan that is, or would
reasonably be expected to become, material to the Company and its Subsidiaries, taken as a whole. With respect to each Company Benefit Plan, no material Lien or penalty imposed under the Code, ERISA or any foreign Law exists.
(c) Except as set forth in Section 4.13(c) of the Company Disclosure Schedule, (i) neither the Company, any Subsidiary of the
Company nor any Company ERISA Affiliate, maintains, participates in, contributes to or has any material liability (contingent or otherwise) with respect, or has within the past six years sponsored, maintained, participated or contributed to, to any
plan subject to Section 302 or Title IV of ERISA or Section 412 of the Code, (ii) no Company Benefit Plan is a multiple employer plan within the meaning of Section 413(c) of the Code and neither the Company nor any
Company ERISA Affiliate has contributed to within the past six years or has liability (contingent or otherwise) in respect of any such multiple employer plan or Multiemployer Plan, (iii) neither the Company nor any Company ERISA Affiliate has
incurred or reasonably expects to incur, either directly or indirectly, any material liability under Title IV of ERISA, or related provisions of the Code or foreign Law or regulations relating to employee benefit plans and (iv) no Company
Benefit Plan that is subject to or governed by the Laws of any jurisdiction other than the United States is a defined benefit plan.
(d)
Each Company Benefit Plan intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS as to its qualification under the Code, and, to the Knowledge of the Company, nothing has
occurred since the date of such determination or opinion letter that would reasonably be expected to result in such Company Benefit Plan ceasing to qualify.
(e) No Company Benefit Plan provides post-termination health and welfare benefits, and neither the Company nor any of its Subsidiaries has any
obligation to provide any post-termination health and welfare benefits, in each case, other than health care continuation as required by Section 4980B of the Code, ERISA or similar Law of any state or foreign jurisdiction and at no expense to
the Company and its Subsidiaries.
(f) Neither the execution by the Company of this Agreement nor the consummation of the transactions
contemplated hereby will (either alone or upon occurrence of any additional or subsequent events) (i) constitute an event under any Company Benefit Plan or any trust or loan related to any of those plans or agreements that will result in any
payment, acceleration, forgiveness of indebtedness, vesting, distribution, increase in the amount or value of, or any payment or benefits or obligation to fund benefits with respect to any Person or (ii) result in any parachute
payment under Section 280G of the Code (whether or not such payment is considered to be reasonable compensation for services rendered). Except as set forth in Section 4.13(f) of the Company Disclosure Schedule, none of the Company or
any of its Subsidiaries has the obligation to indemnify, hold harmless or gross-up any individual with respect to any Tax, penalty or interest under Section 280G or 409A of the Code.
(g) Neither the Company nor any Subsidiary of the Company maintains any plan, program or arrangement or is a party to any Contract that
provides any material benefits or provides for material payments to any Person in, based on or measured by the value of, any equity security of, or interest in, the Company or any Subsidiary of the Company.
(h) Parent will not incur any liability with respect to the Company Benefit Plans sponsored or maintained by Shareholder and its Affiliates
(excluding the Company and its Subsidiaries).
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Section 4.14 Intellectual Property.
(a) Section 4.14(a) of the Company Disclosure Schedule sets forth a list of all (i) issued Patents and Patent applications,
(ii) Trademark registrations and applications, (iii) Copyright applications and registrations, and (iv) Internet domain names, in each case, owned or filed by or held in the name of the Company or any of its Subsidiaries
(Company Registered IP); indicating with respect to all items listed in items (i) through (iii), where applicable, the jurisdiction in which each of the items of Company Registered IP has been applied for, filed, issued or
registered, the application/registration number and the current owner of record. The Company Registered IP listed in Section 4.14(a) of the Company Disclosure Schedule and, to the Knowledge of the Company, the other Company Registered IP is in
effect, valid, enforceable and subsisting and the Company and its Subsidiaries have otherwise complied with and are in compliance with all Laws (including payment of all applicable fees) with respect to any Company Registered IP except for any
non-compliance that has not had, individually or in the aggregate, a Material Adverse Effect. The Company or one of its Subsidiaries, as indicated, exclusively owns all right, title and interest in, to and under the items listed in
Section 4.14(a) of the Company Disclosure Schedule.
(b) Except as would not, and would not reasonably be expected to, individually
or in the aggregate, result in any material liability to the Company or its Subsidiaries or otherwise interfere in any material respect with the conduct of their respective businesses as currently conducted, each of the Company and its Subsidiaries,
collectively, and PELSA and its Subsidiaries, collectively, own or have the valid right or license to use and exploit all Company Registered IP and all other material Intellectual Property Rights used, held for use or exploited in its business, in
each case, free and clear of any Liens other than Permitted Liens.
(c) To the Knowledge of the Company, (i) no Company Owned IP is
being infringed, misappropriated or otherwise violated by any third party and (ii) neither the Company nor any of its Subsidiaries is infringing, misappropriating or otherwise violating any Intellectual Property Rights of any third party, in
each case with respect to clauses (i) and (ii), except as would not, individually or in the aggregate, reasonably be expected to result in a material liability for the Company or any of its Subsidiaries. Since March 10, 2011, none of the
Company, PELSA or any of their respective Subsidiaries has received notice of any claim alleging that the Company, PELSA or any of their respective Subsidiaries is infringing, misappropriating or otherwise violating any Intellectual Property Rights
or moral rights owned by any third party and there are no claims against the Company, PELSA or any of their respective Subsidiaries presently pending, or, to the Knowledge of the Company, threatened, alleging infringement, misappropriation or other
violation of any third-party Intellectual Property Rights. There is no pending, or to the Knowledge of the Company, threatened Proceeding concerning the validity, enforceability or ownership of Company Owned IP. None of the Company Owned IP is
subject to any outstanding Order that restricts, in any way its use, distribution, transfer, licensing or other exploitation by the Company, PELSA or any their respective Subsidiaries.
(d) Except as has not had a Material Adverse Effect, the Company, PELSA and their respective Subsidiaries have taken reasonable steps to
protect, preserve and maintain the secrecy and confidentiality of the Trade Secrets (i) included in Company Owned IP and (ii) of their customers, licensors or business partners.
Section 4.15 Taxes.
(a) All material Tax Returns required by Law to be filed with any taxing authority by, or on behalf of, the Company, PELSA or any of their
respective Subsidiaries have been duly filed when due (including any applicable extensions) in accordance with all Laws, and such Tax Returns are true and complete in all material respects.
(b) The Company, PELSA and each their respective Subsidiaries has duly and timely paid or has duly and timely withheld and remitted to the
appropriate taxing authority all material amounts of Taxes due and payable or required by Law to be withheld and remitted, or where payment is not yet due or is being contested in good faith pursuant to appropriate procedures, has established an
adequate accrual in accordance with GAAP that is reflected in the most recent financial statements.
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(c) There are no material Liens for Taxes upon any property or assets of the Company, PELSA or
any of their respective Subsidiaries except for Permitted Liens.
(d) There is no Proceeding pending or, to the Knowledge of the Company,
threatened against or with respect to the Company, PELSA or any of their respective Subsidiaries in respect of any Tax. No extension or waiver of any statute of limitations in respect of any Tax Returns of the Company, PELSA or any of their
respective Subsidiaries is currently in effect.
(e) None of the Company, PELSA or any of their respective Subsidiaries has participated
in a prohibited tax shelter transaction as defined for purposes of Section 4965(e) of the Code.
(f) None of the Company,
PELSA or any of their respective Subsidiaries (i) has been a member of an Affiliated Group (other than a group of which the Company or such entity is or was the parent), (ii) is a party to any Tax sharing, allocation, indemnification or
similar agreement (other than any such agreement exclusively between or among the Company and any of its Subsidiaries or any credit or other commercial agreement the primary purpose of which does not relate to Taxes), (iii) has any liability
(including any contingent liability) for any material Taxes (or any material amount calculated with reference to any portion of a Tax) of any Person other than any such Company or its Subsidiaries, including under Treasury Regulations
Section 1.1502-6 (or any similar provision of Law), as transferee or successor, by Contract, intercompany agreement or otherwise (other than by reason of any credit or other commercial agreement the primary purpose of which does not relate to
Taxes), or (iv) has any material liability (including any contingent liability) for any Tax or any portion of a Tax of a former Subsidiary of the Company, PELSA or any of their respective or former Subsidiaries that has been liquidated,
dissolved or merged out of existence.
(g) Each of the Company, PELSA and their respective Subsidiaries is and has at all times been a
resident for Tax purposes solely in its country of incorporation. Within the last five years, no written claim has been made by any taxing authority in any jurisdiction where the Company, PELSA or any of their respective Subsidiaries does not file
Tax Returns that it or such Person is, or may be, subject to Tax by that jurisdiction. Within the last five years, none of the Company, PELSA or any of their respective Subsidiaries has conducted a business through a permanent establishment in a
country other than the country in which such Person is resident for Tax purposes.
(h) No ruling by or arrangement with any taxing
authority applies to the Company, PELSA or any of their respective Subsidiaries. None of the Company, PELSA or any of their respective Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction
from, taxable income for a taxable period (or portion thereof) beginning after the Merger Closing Date as a result of: (i) a change in method of accounting for a taxable period ending on or prior to the Merger Closing Date; (ii) a
closing agreement as described in Section 7121 of the Code or any corresponding or similar provision of state, local or foreign income Tax law, a gain recognition agreement, Tax holiday, Tax exemption, or other agreement with a
taxing authority executed on or prior to the Merger Closing Date; (iii) an installment sale or open transaction disposition made on or prior to the Merger Closing Date; or (iv) a prepaid amount received on or prior to the Merger Closing
Date.
(i) There was no agreement, understanding or arrangement (as such terms are defined in Treasury Regulations
Section 1.355-7(h)(1)) regarding the Merger or a similar acquisition (as such term is defined in Treasury Regulations Section 1.355-7(h)(12)) on October 26, 2011, and there was no agreement, understanding, arrangement, or substantial
negotiations (as such terms are defined in Treasury Regulations Section 1.355-7(h)(1)) regarding the Merger or a similar acquisition (as such term is defined in Treasury Regulations Section 1.355-7(h)(12)) within one year after
October 26, 2011 as set forth in Treasury Regulations Section 1.355-7(d)(3).
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Section 4.16 Material Contracts.
(a) Section 4.16 of the Company Disclosure Schedule sets forth a correct and complete list, as of the date of this Agreement, of each
Company Material Contract. For purposes of this Agreement, Company Material Contract means any Contract to which the Company or any of its Subsidiaries is a party that:
(i) constitutes a material contract (as such term is defined in Item 601(b)(10) of Regulation S-K promulgated under the
Exchange Act);
(ii) creates (or governs the operation of) a joint venture, alliance or partnership that is material to the Company and
its Subsidiaries, taken as a whole;
(iii) is a stock purchase agreement, merger agreement, asset purchase agreement or other similar
agreement (A) entered into after March 10, 2011 pursuant to which the Company or any of its Subsidiaries has made or which sets forth agreements, arrangements or understandings (including exclusivity agreements, non-binding agreements or
agreements in principle) relating to a material acquisition or disposition or (B) pursuant to which the Company or any of its Subsidiaries has continuing indemnification, earn-out or other contingent payment obligations;
(iv) is a Contract or form of Contract (A) with a supplier to the Company or any of its Subsidiaries of components or materials for use
in the products of the Company or any of its Subsidiaries, (B) that is a contract manufacturing agreement or (C) that is a contract for the lease of equipment, and, in each case, such Contract, including any purchase orders under any such
form of Contract, involves payments by the Company or any of its Subsidiaries or other consideration between the parties with a value in excess of $250,000 per year;
(v) relates to (A) Indebtedness having an outstanding principal amount (or equivalent) in excess of $250,000 or (B) conditional
sale arrangements, the sale, securitization or servicing of loans or loan portfolios, in each case in connection with which the aggregate actual or contingent obligations of the Company or any of its Subsidiaries under such contract are greater than
$250,000;
(vi) obligates the Company or any of its Subsidiaries to provide indemnification or a guarantee that would reasonably be
expected to result in payments in excess of $250,000;
(vii) constitutes (A) a License Agreement (other than with respect to
software licenses for off-the-shelf, commercially available software with a license fee of less than $250,000 annually); or (B) a Contract pursuant to which the Company or any of its Subsidiaries grants a license under or right to use or
exploit (including by means of a covenant not to sue) any Company Owned IP;
(viii) prohibits the Company or any of its Subsidiaries (or
which, following the consummation of the Merger, could restrict the ability of the Surviving Company or any of its Affiliates ) from (A) engaging or competing in any material line of business, in any geographical location or with any Person or
(B) selling any products or services of or to any other Person or in any geographic region;
(ix) involves any exchange traded,
over-the-counter or other swap, cap, floor, collar, futures contract, forward contract, option or any other derivative financial instrument or contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature
whatsoever, whether tangible or intangible, including commodities, emissions allowances, renewable energy credits, currencies, interest rates, foreign currency and other indices, in each case, that is material to the business of the Company or any
of its Subsidiaries;
(x) is a Material Company Lease;
(xi) is a Contract which requires or is reasonably likely to require, or pursuant to which will be made, in the aggregate either
(A) annual payments or other consideration from third parties to the Company or any of its Subsidiaries with a value of at least $250,000 in the aggregate or (B) annual payments or other consideration from the Company or any of its
Subsidiaries with a value of at least $250,000 in the aggregate;
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(xii) contains any covenant granting most favored nation status that, following the
consummation of the Merger, would restrict actions taken by Parent, the Surviving Company or their respective Subsidiaries or Affiliates (including PELSA and its Affiliates);
(xiii) contains a standstill or similar agreement pursuant to which the Company or any of its Subsidiaries has agreed not to acquire assets
or securities of any other Person;
(xiv) is a collective bargaining agreement;
(xv) is a settlement or conciliation agreement with any Governmental Authority or which would require the Company or any of its Subsidiaries
to pay consideration of more than $250,000;
(xvi) is with a Governmental Authority and would reasonably be expected to result in
payments in excess of $250,000 in the aggregate; or
(xvii) is a Hydrocarbon Agreement.
(b) None of the Company or any of its Subsidiaries is in breach of or default under the terms of any Company Material Contract where such
breach or default has had, individually or in the aggregate, a Material Adverse Effect. To the Knowledge of the Company, no other party to any Company Material Contract is in breach of or default under the terms of any Company Material Contract
where such breach or default has had, individually or in the aggregate, a Material Adverse Effect. Each Company Material Contract is a valid and binding obligation of the Company or the relevant Subsidiary party thereto, as applicable, and, to the
Knowledge of the Company, is in full force and effect, except as has not had, individually or in the aggregate, a Material Adverse Effect; provided, however, that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws, now or hereafter in effect, relating to creditors rights generally and subject to general equitable principles. None of the Company or any of its Subsidiaries has received any written claim of
default under any provision of Company Material Contract. None of the Company or any of its Subsidiaries has received any written notice from any other party to any Company Material Contract, and otherwise has no Knowledge, that such third party
intends to terminate or not renew any Company Material Contract, or is seeking renegotiation thereof or substitute performance thereunder. None of the Company or any of its Subsidiaries has assigned in any manner, in whole or in part, any of its
rights or obligations under or in respect of any Company Material Contract to any other Person. Complete and correct copies of all Company Material Contracts, including any assignments or amendments in respect thereof, have been made available to
Parent by the Company in the Electronic Data Room.
Section 4.17 Real Property.
(a) As of the date hereof, neither the Company nor any of its Subsidiaries owns any real property.
(b) Section 4.17(b) of the Company Disclosure Schedule sets forth, as of the date hereof, a list of the Company Leases, including a
street address or other description of the premises leased, use, and the Company or its Subsidiary that leases the same. Copies of all Company Leases (including all modifications, amendments, supplements, waivers and side letters thereto) have been
made available to Parent. Except as has not had, individually or in the aggregate, a Material Adverse Effect, the Company or one of its Subsidiaries has a good and valid leasehold interest in each Material Company Lease, free and clear of all Liens
(other than Permitted Liens), and each Material Company Lease is in full force and effect and is the valid and binding obligation of each party thereto in accordance with its terms. None of the Company or any of its Subsidiaries has received any
written notice of any material event of default under any of the Material Company Leases, nor to the Knowledge of the Company is there any condition or event which, with notice or lapse of time or both, would constitute a material default under a
Material Company Lease.
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(c) Except as has not had, individually or in the aggregate, a Material Adverse Effect, the
Company or one of its Subsidiaries owns or leases all of the material tangible personal property shown to be owned or leased by the Company or any of its Subsidiaries reflected in the latest audited financial statements included in the Company SEC
Documents or acquired after the date thereof, free and clear of all Liens (other than Permitted Liens), except to the extent disposed of in the ordinary course of business consistent with past practice since the date of the latest audited financial
statements included in the Company SEC Documents.
Section 4.18 Labor Matters. Except as set forth in
Section 4.16(a)(xiv) of the Company Disclosure Schedule, none of the Company, PELSA or any of their respective Subsidiaries, is a party to any collective bargaining agreement with a labor union in the United States or any agreement with any
works council, labor union or other similar organization outside the United States. None of the employees of the Company, PELSA or any of their respective Subsidiaries are represented by a work council, labor union or other similar organization and,
to the Knowledge of the Company, there is no organizing activity by any work council, labor union or other similar organization directed at the Company, PELSA or any of their respective Subsidiaries, or any employees of the Company, PELSA and their
respective Subsidiaries. None of the Company, PELSA or any of their respective Subsidiaries is the subject of any proceeding before the National Labor Relations Board or any comparable body outside the United States asserting that the Company, PELSA
or any of their respective Subsidiaries has committed an unfair labor practice or seeking to compel the Company, PELSA or any of their respective Subsidiaries to bargain with any labor union, nor is there pending or, to the Knowledge of the Company,
threatened in writing, nor has there been for the past five (5) years, any labor strike, walkout, work stoppage, or lockout involving the Company, PELSA or any of their respective Subsidiaries, except for any such (i) proceeding, the
outcome of which has not had, individually or in the aggregate, a Material Adverse Effect; or (ii) labor strike, walkout, work stoppage, or lockout which has not had, individually or in the aggregate, a Material Adverse Effect. There are no
requirements to provide notification to, or engage in consultation with, employees, former employees, employee representatives, work councils, unions, labor boards and relevant government agencies as a result of the transactions contemplated by this
Agreement. None of the Company, PELSA or any of their respective Subsidiaries has violated any statute, Law, ordinance, ruling or arbitration award of any court, arbitrator or any government agency regarding the terms and conditions of employment of
employees, former employees or prospective employees or other employment or labor related matters, including Laws, rulings, and awards relating to discrimination, fair labor standards and occupational health and safety, employee classification,
wrongful discharge or violation of the personal rights of employees, former employees or prospective employees, except for any violations which do not have, and would not have, individually or in the aggregate, a Material Adverse Effect on the
Company.
Section 4.19 Insurance. Except as has not had, individually or in the aggregate, a Material Adverse Effect, the
Company, PELSA and each of their respective Subsidiaries maintains insurance coverage with reputable insurers in such amounts and covering such risks as are in accordance with normal industry practice. All insurance policies maintained by the
Company, PELSA or any of their respective Subsidiaries are in full force and effect (and were in full force and effect during the periods of time such insurance policies were purported to be in effect) other than as has not had, individually or in
the aggregate, a Material Adverse Effect. The Company has made available to Parent complete and correct copies of all such insurance policies. Each of the Company, PELSA and each of their respective Subsidiaries has paid, or caused to be paid, all
premiums due under such policies and are otherwise in compliance in all material respects with the terms of all such policies and have not received written notice that they are in default with respect to any obligations under such policies other
than as has not had, individually or in the aggregate, a Material Adverse Effect. None of the Company, PELSA or any of their respective Subsidiaries has received any written notice of cancellation or termination with respect to any existing material
insurance policy that is held by, or for the benefit of, any of the Company, PELSA or any of their respective Subsidiaries, other than as has not had, individually or in the aggregate, a Material Adverse Effect. To the Knowledge of the Company, as
of the date of this Agreement, there is no material claim pending regarding the Company, PELSA or any of their respective Subsidiaries under any of material insurance policies as to which coverage has been questioned, denied or disputed by the
underwriters of such policies.
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Section 4.20 Questionable Payments. None of the Company, PELSA, any of their
respective Subsidiaries and (to the Knowledge of the Company) no agent or other Person acting on behalf of any of the Company, PELSA or their respective Subsidiaries with respect to any matter relating to any of the Company, PELSA or their
respective Subsidiaries has: (a) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity (b) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns; (c) violated any applicable Anticorruption Laws, other than the U.S. Foreign Corrupt Practices Act of 1977, as amended (including any regulations promulgated thereunder) (the
FCPA); or (d) violated the FCPA. The Company and its Subsidiaries have policies, procedures, and internal controls reasonably designed, and which are reasonably expected to, ensure compliance with applicable Anticorruption
Laws.
Section 4.21 Concessions. The Company, PELSA or one of their respective Subsidiaries has good and valid title to a
direct working interest in each concession set forth on Section 4.21 of the Company Disclosure Schedule, free and clear of all Liens, and each Contract pursuant to which such direct working interest was granted or is governed (the
Company Concession Contracts) is (x) set forth on Section 4.21(x) of the Company Disclosure Schedule and (y) is in full force and effect and is the valid and binding obligation of each party thereto in accordance
with its terms. None of the Company or any of its Subsidiaries has received any written notice of any material event of default under any of the Company Concession Contracts, nor to the Knowledge of the Company is there any condition or event which,
with notice or lapse of time or both, would constitute a material default under a Company Concession Contract.
Section 4.22
Opinion of Financial Advisor. The Company Board has received the opinion of Jefferies LLC on or prior to the date of this Agreement, to the effect that, as of the date of such opinion and subject to the assumptions and qualifications set
forth in such opinion, the consideration to be received by the holders (other than Parent, Merger Sub and their respective Affiliates) of outstanding Company Shares pursuant to this Agreement is fair to such holders from a financial point of view.
Promptly following the execution of this Agreement, the Company will make available to Parent, solely for informational purposes, a signed copy of such opinion.
Section 4.23 Antitakeover Statutes. Assuming the accuracy of the representation and warranty in Section 5.3(c), there
is no anti-takeover statute or regulation, takeover-related provision in the Memorandum of Association or the Articles of Association, or stockholder rights plan or similar agreement that is applicable to Parent, this Agreement, the Power of
Attorney, the Transaction Agreement or the Merger that would (a) prohibit or restrict the ability of the Company to perform its obligations under this Agreement or the Merger Filing Documents or its ability to consummate the Merger or the other
transactions contemplated hereby, (b) have the effect of invalidating or voiding this Agreement, Power of Attorney, the Transaction Agreement or the Merger Filing Documents, or any provision hereof or thereof, or (c) subject Parent to any
impediment or condition in connection with the exercise of any of its rights under this Agreement, the Power of Attorney, the Transaction Agreement or the Merger Filing Documents.
Section 4.24 Brokers. No broker, finder or investment banker (other than Jefferies LLC) is entitled to any brokerage,
finders or other fee or commission from the Company or any of its Subsidiaries or Affiliates in connection with the Merger and any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of the
Company. The Company has made available to Parent complete and correct copies of all letter agreements between the Company and Jefferies LLC, pursuant to which Jefferies LLC could be entitled to any payment from the Company or any of its
Subsidiaries in connection with the Merger and the other transactions contemplated hereby.
Section 4.25 Bank Accounts;
Powers-of-Attorney. The name and address of each bank with which the Company or any of its Subsidiaries maintains a bank account and the account name and number, all authorities and mandates (including powers of attorney), standing orders and
direct debits with respect to such bank accounts are set forth in Section 4.25 of the Company Disclosure Schedule. Other than as set forth on
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Section 4.25 of the Company Disclosure Schedule, there are no outstanding material powers of attorney granted by the Company or any of its Subsidiaries to any Person which are still in force
and that grant general authority to enter into any Contract that would constitute a Company Material Contract on its behalf.
Section 4.26 Affiliate Transactions. Except for Contracts, transactions and other arrangements that are solely among the Company
and its wholly owned Subsidiaries or the Company Benefit Plans, no (x) present or former officer or director of the Company or any of its Subsidiaries, or to the Knowledge of the Company, any immediate family member or Affiliate of any such
director or officer, or (y) Affiliate of the Company or, to the Knowledge of the Company, any of such Affiliates Subsidiaries, or officers or directors of such Affiliate, (i) is a party to any Contract, transaction or other
arrangement with the Company or any of its Subsidiaries or has any interest in any property or asset (tangible or intangible) of the Company or any of its Subsidiaries, or (ii) to the Knowledge of the Company, beneficially owns a controlling
Equity Interest in a party of the type described in clause (i) above.
Section 4.27 No Other Representations or
Warranties. Except for the representations and warranties expressly set forth in this ARTICLE IV, none of the Company or any of its Affiliates nor any other Person on behalf of the Company makes or has made any express or implied
representation or warranty with respect to the Company, its Subsidiaries or their respective businesses or with respect to any other information provided, or made available, to Parent, Merger Sub or their respective Representatives or Affiliates in
connection with the transactions contemplated hereby, including the accuracy or completeness thereof. The Company acknowledges and agrees that, except for the representations and warranties made by Parent and Merger Sub in ARTICLE V (as
qualified by the applicable items disclosed in the Parent Disclosure Schedule) none of the Parent, Merger Sub or any other Person is making or has made any representations or warranty, expressed or implied, at law or in equity, with respect with
respect to or on behalf of Parent, Merger Sub or any of their Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts,
plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding Parent, Merger Sub or any of their Subsidiaries
or any other matter furnished or provided to the Company or made available to the Company in any data rooms, virtual data rooms, management presentations or in any other form in expectation of, or in connection with, this
Agreement or the transactions contemplated hereby or thereby. The Company is not relying and specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and
acknowledges and agrees that Parent, Merger Sub and their Affiliates have specifically disclaimed and do hereby specifically disclaim any such other representations and warranties. The Company acknowledges and agrees that the representations and
warranties contained in ARTICLE V (as qualified by the applicable items disclosed in the Parent Disclosure Schedule) are for risk allocation purposes and not necessarily assertions of truth.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as disclosed in the corresponding section of the separate disclosure schedule which has been delivered by Parent to the Company
prior to the execution of this Agreement (the Parent Disclosure Schedule) (it being understood that any information set forth in one section or subsection of the Parent Disclosure Schedule shall be deemed to apply to and qualify
the representation and warranty set forth in this Agreement to which it corresponds in number and each other representation and warranty set forth in this ARTICLE V to the extent that it is reasonably apparent on its face that such
information is relevant to such other representation and warranty), Parent and Merger Sub hereby jointly and severally represent and warrant to the Company as follows:
Section 5.1 Organization and Qualification; Subsidiaries. Each of Parent and Merger Sub is a corporation or legal entity duly
incorporated, organized or formed, validly existing and (to the extent applicable) in good
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standing, under the laws of its jurisdiction of incorporation, organization or formation and has the requisite corporate or similar entity power and authority to conduct its business as it is now
being conducted. Each of Parent and Merger Sub is duly qualified or licensed as a foreign entity to do business, and (to the extent applicable) is in good standing, in each jurisdiction in which the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or to be in good standing would not reasonably be expected to, individually or in the aggregate,
materially impair the ability of Parent and Merger Sub to consummate the Merger.
Section 5.2 Authority Relative to Agreement.
Each of Parent and Merger Sub has all necessary power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, including the Merger. The execution and delivery
of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated hereby, including the Merger, have been duly and validly authorized by all necessary corporate or similar entity action of
Parent and Merger Sub (and, with respect to Merger Sub, by its sole shareholder), and no other corporate or similar entity proceedings on the part of Parent or Merger Sub are necessary to authorize the execution and delivery of this Agreement or to
consummate the transactions contemplated hereby, including the Merger (other than, with respect to the consummation of the Merger, the filing of the Merger Filing Documents with the Cayman Registrar). This Agreement has been duly and validly
executed and delivered by Parent and Merger Sub and, assuming the due authorization, execution and delivery by the Company, this Agreement constitutes a legal, valid and binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms (except as such enforceability may be limited by bankruptcy, insolvency, winding up, fraudulent transfer, reorganization, moratorium and other similar laws of general applicability relating to or affecting
creditors rights, and subject to general equitable principles).
Section 5.3 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement by Parent and Merger Sub, the consummation by Parent or Merger Sub of the
transactions contemplated by this Agreement, including the Merger, or performance of their obligations hereunder will (i) conflict with or violate the organizational documents of Parent, (ii) violate the Companies Law, (iii) assuming
the consents, registrations, filings, notices, approvals and authorizations specified in Section 5.3(b) have been obtained or made and the waiting periods referred to therein have expired, and any condition precedent to such consent,
approval, authorization, or waiver has been satisfied, conflict with or violate any Law applicable to Parent or Merger Sub or by which any property or asset of Parent or Merger Sub is bound or affected or (iv) result in any breach of, or
constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the
properties or assets of Parent or Merger Sub pursuant to, any note, bond, mortgage, indenture or credit agreement, or any other Contract or other instrument or obligation to which Parent or Merger Sub is a party or by which Parent or Merger Sub or
any property or asset of Parent or Merger Sub is bound, other than, in the case of clauses (ii) and (iii), for any such violation, breach, default, right, termination, amendment, acceleration, or cancellation that would not reasonably be
expected to, individually or in the aggregate, materially impair the ability of Parent and Merger Sub to consummate the Merger.
(b) None
of the execution and delivery of this Agreement by Parent and Merger Sub, the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement, including the Merger, or performance of their obligations hereunder will require
any consent, approval, authorization, waiver or permit of, or filing with or notification to, any Governmental Authority, except for (i) the filing with the SEC of such reports under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (ii) the filing of the Merger Filing Documents with the Cayman Registrar and appropriate documents with the relevant authorities of the other jurisdictions in which the Company is
qualified to do business and (iii) such other consents, approvals, authorizations or permits, filings or notifications, the failure of which to have, make or obtain, as applicable, would not reasonably be expected to, individually or in the
aggregate, materially impair the ability of Parent and Merger Sub to consummate the Merger.
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(c) As of the date of this Agreement, Parent and Merger Sub do not beneficially own (as such term
is used in Rule 13d-3 promulgated under the Exchange Act) any Company Shares or other securities of the Company or any options, warrants or other rights to acquire Company Shares or other securities of,
or any other economic interest (through derivative securities or otherwise) in, the Company.
Section 5.4 Absence of
Litigation. As of the date of this Agreement, there is no Proceeding pending or, to the Knowledge of Parent, threatened in writing against either Parent or Merger Sub which seeks to, or would reasonably be expected to, individually or in the
aggregate, materially impair the ability of Parent and Merger Sub to consummate the Merger.
Section 5.5 Available Funds.
Parent has or will have sufficient funds to consummate the Merger on the terms contemplated by this Agreement and, at the Effective Time, Parent will have available, and will make available to Merger Sub, all of the funds necessary to consummate the
Merger.
Section 5.6 Capitalization of Merger Sub. As of the date of this Agreement, the authorized share capital of Merger
Sub is $50,000 and consists of 50,000 shares, each with a par value $1.00, one of which is validly issued and outstanding. All of the issued and outstanding share capital of Merger Sub is, and at the Effective Time will be, owned by Parent. Merger
Sub was formed solely for the purpose of engaging in the transactions contemplated hereby, and it has not conducted any business prior to the date hereof.
Section 5.7 Information Supplied. None of the information supplied or to be supplied by or on behalf of Parent or Merger Sub in
writing expressly for inclusion in the Proxy Statement shall, on the date the Proxy Statement (including any amendment or supplement thereto) is first mailed to Company Shareholders or at the time of the Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made
by Parent with respect to statements made therein based on information supplied by the Company.
Section 5.8 Independent
Investigation. Parent and Merger Sub have conducted their own independent investigation, review and analysis of the business, operations, assets, liabilities, results of operations, financial condition and prospects of the Company and its
Subsidiaries, which investigation, review and analysis was performed by Parent, Merger Sub, their respective Affiliates and Representatives. Each of Parent and Merger Sub acknowledges that it, its Affiliates and their respective Representatives have
been provided reasonable access to the personnel, properties, facilities and records of the Company and its Subsidiaries for such purpose. In entering into this Agreement, each of Parent and Merger Sub acknowledges that it has relied solely upon the
aforementioned investigation, review and analysis and not on any statements, representations or opinions of any of the Company, its Affiliates or their respective Representatives (except the representations and warranties of the Company set forth in
ARTICLE IV).
Section 5.9 Brokers. No broker, finder or investment banker is entitled to any brokerage,
finders or other fee or commission in connection with the Merger and any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.
Section 5.10 Section 355(e). There was no agreement, understanding or arrangement (as such terms are defined in Treasury
Regulations Section 1.355-7(h)(1)) regarding the Merger or a similar acquisition (as such term is defined in Treasury Regulations Section 1.355-7(h)(12)) on October 26, 2011, and there was no agreement, understanding, arrangement, or
substantial negotiations (as such terms are defined in Treasury Regulations Section 1.355-7(h)(1)) regarding the Merger or a similar acquisition (as such term is defined in Treasury Regulations Section 1.355-7(h)(12)) within one year after
October 26, 2011 as set forth in Treasury Regulations Section 1.355-7(d)(3).
Section 5.11 No Other Representations or
Warranties. Except for the representations and warranties expressly set forth in this ARTICLE V, none of Parent, Merger Sub or any of their respective Affiliates nor any
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other Person on behalf of any of them makes any express or implied representation or warranty (and there is and has been no reliance by the Company or any of its Affiliates or Representatives on
any such representation or warranty) with respect to Parent, Merger Sub or their respective businesses or with respect to any other information provided, or made available, to the Company or any of its Representatives or Affiliates in connection
with the transactions contemplated hereby, including the accuracy or completeness thereof. Parent and Merger Sub acknowledge and agree that, except for the representations and warranties made by the Company in ARTICLE IV (as qualified by the
applicable items disclosed in the Company Disclosure Schedule) neither the Company nor any other Person is making or has made any representations or warranty, expressed or implied, at law or in equity, with respect with respect to or on behalf of
the Company or its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the
reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Company or its Subsidiaries or any other matter furnished or provided to Parent
or Merger Sub or made available to Parent or Merger Sub in any data rooms, virtual data rooms, management presentations or in any other form in expectation of, or in connection with, this Agreement or the transactions
contemplated hereby or thereby. Parent and Merger Sub are not relying and specifically disclaim that they are relying upon or have relied upon any such other representations or warranties that may have been made by any Person (other than
representations and warranties expressly made by the Shareholder in the Transaction Agreement), and acknowledge and agree that the Company and its Affiliates have specifically disclaimed and do hereby specifically disclaim any such other
representations and warranties. Each of Parent and Merger Sub acknowledge and agree that the representations and warranties (including all such representations and warranties with respect to PELSA) contained in ARTICLE IV (as qualified by the
applicable items disclosed in the Company Disclosure Schedule) are for risk allocation purposes and not necessarily assertions of truth.
ARTICLE VI
COVENANTS
AND AGREEMENTS
Section 6.1 Conduct of Business by the Company Pending the Merger. Between the date of this Agreement
and the earliest to occur of the Effective Time and the date, if any, on which this Agreement is terminated pursuant to Section 8.1, except as (a) may be required by Law, (b) may be expressly agreed in writing by Parent (which
agreement shall not be unreasonably withheld, conditioned or delayed) or (c) set forth on Section 6.1of the Company Disclosure Schedule, (i) other than as expressly required by this Agreement and subject to clause (ii) below, the
Company shall, and shall cause each of its Subsidiaries to, carry on its business in the ordinary course consistent with past practice and, to the extent consistent therewith, use reasonable best efforts to preserve substantially intact its current
business organizations, to keep available the services of its current officers and employees and to preserve its relationships with significant Governmental Authorities, joint venture partners, customers, suppliers, licensors, licensees,
distributors, wholesalers, lessors and similar Persons, in each case, having significant business dealings or other material relationships with the Company or any of its Subsidiaries and to preserve the goodwill and maintain satisfactory
relationships with Persons having material business relationships with the Company or any of its Subsidiaries and (ii) without limiting the generality of the foregoing clause (i), the Company shall not and shall not permit any of its
Subsidiaries to and, only to the extent the Company has any right or ability to cause, use reasonable best efforts to exercise such right or ability to cause PELSA and its Subsidiaries not to:
(a) amend or otherwise modify the Memorandum of Association or the Articles of Association (or, in any material respect, such equivalent
organizational or governing documents of any of the Subsidiaries of the Company), other than as contemplated by this Agreement;
(b)
except for transactions among the Company and its wholly-owned Subsidiaries or among the Companys wholly-owned Subsidiaries, issue, sell, pledge, dispose, encumber or grant any shares, or any options, warrants, convertible securities or other
rights of any kind to acquire any such shares or rights settled in cash or other property based in whole or in part on the value of such shares;
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(c) (i) declare, authorize, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, other than dividends paid by PELSA, any wholly-owned Subsidiary of the Company to the Company or any wholly-owned Subsidiary of the Company; (ii) split, combine or reclassify any shares of capital stock or other
Equity Interests; or (iii) redeem, purchase or otherwise acquire any shares of capital stock or other Equity Interests;
(d) except
in the ordinary course of business or as required pursuant to the Company Benefit Plans in effect as of the date hereof or as otherwise required by Law, (i) increase the compensation or other benefits payable or to become payable to employees,
directors or executive officers or grant any new short or long term incentive compensation awards, (ii) grant any severance or termination pay to, or enter into any severance agreement with, any employee, director or executive officer,
(iii) enter into, terminate or amend any employment agreement with any employee or executive officer, (iv) terminate, establish, adopt, enter into or amend or terminate any Company Benefit Plan (or arrangement that would be a Company
Benefit Plan were it effective as of the date hereof) or (v) enter into any new, or amend any existing, collective bargaining agreement;
(e) terminate the employment of any employee of the Company or its Subsidiaries who is a party to any employment agreement and who makes in
excess of $50,000 annually, other than as a direct result of such employees (i) willful failure to perform the duties or responsibilities of his employment, (ii) engaging in serious misconduct, or (iii) being convicted of or
entering a plea of guilty to any crime;
(f) forgive any loans to employees, officers or directors or any of their respective affiliates;
(g) grant, accelerate the vesting of, confer or award options, convertible securities, restricted stock, restricted stock units,
performance stock units, stock appreciation rights or other rights to acquire any capital stock or any equity-based award based in whole or in part on capital stock, whether settled in cash, securities or other property, or take any action not
otherwise contemplated by this Agreement to cause to be exercisable any otherwise unexercisable option or other equity-based award under any existing plan;
(h) acquire (including by merger, consolidation, or acquisition of stock or assets) any ownership interests in any corporation, partnership,
limited liability company, other business organization or any division or material amount of assets thereof other than acquisitions of assets up to an aggregate amount of $100,000, supplies, dealer accounts and inventory, in each case, in the
ordinary course of business consistent with past practice;
(i) dispose of, transfer, lease, license, mortgage, pledge, encumber or
subject to a Lien any material assets of the Company or any of its Subsidiaries, other than (i) Company Owned IP, to the extent permitted in (j) below, (ii) sales of inventory made in the ordinary course of business consistent with
past practice or (iii) in connection with any transaction solely between the Company and any wholly-owned Subsidiary of the Company or among any wholly-owned Subsidiaries of the Company;
(j) dispose of, transfer, lease, license, mortgage, pledge or encumber any material Company Owned IP (other than non-exclusive licenses
granted to end users in connection with sales of finished products in the ordinary course of business);
(k) abandon, allow to lapse or
fail to maintain any material Intellectual Property Rights in the Company Owned IP;
(l) incur any Indebtedness or guarantee any
Indebtedness for any Person other than incurrences of or guarantees for unsecured Indebtedness in an aggregate amount not to exceed $100,000 and in the ordinary course of business consistent with past practice;
(m) adopt any budget, work program or operating plan or otherwise authorize, make any commitment with respect to any capital expenditure or
amend or make any capital expenditure not contemplated by the capital expenditure budget set forth in Section 6.1(m) of the Company Disclosure Schedule;
(n) (i) amend, terminate, cancel or materially modify or waive, release or assign any material rights or claims with respect to any
Company Material Contract other than in the ordinary course of business or (ii) enter
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into any new Contract that if entered into prior to the date hereof, would have been required to be listed in Section 4.16 of the Company Disclosure Schedule as a Company Material Contract
or (iii) take any action that results in any breach of or constitutes a default under or results in the cancellation of any Company Material Contract;
(o) invest the cash of the Company or any of its Subsidiaries other than in the ordinary course of business consistent with past practice;
provided that the Company and its Subsidiaries shall take the actions set forth on Section 6.1(o) of the Company Disclosure Schedule;
(p) loan, advance, invest or make a capital contribution to or in any Person, other than a wholly-owned Subsidiary of the Company;
(q) waive, release, assign, settle or compromise any (i) governmental complaint or (ii) claims, liabilities or obligations arising
out of, related to or in connection with litigation other than for compromises, settlements or agreements that (x) involve only the payment of monetary damages not in excess of $100,000 in any single instance and $250,000 in the aggregate and
in any case without the imposition of equitable relief on, or the admission of wrongdoing by, the Company or any of its Subsidiaries or (y) are permitted under Section 6.10;
(r) make any material change in accounting principles, policies, practices, procedures or methods in effect at December 31, 2013, except
(i) as required by GAAP (or any interpretation or enforcement thereof) or Regulation S-X of the Exchange Act or other rule or regulation promulgated by the SEC, or (ii) as required by applicable Law;
(s) except as required by Law or the published interpretation or enforcement thereof, make or rescind any material Tax election, change any
material Tax method, file any amended Tax Return that is material, or settle or compromise any material federal, state, provincial, local or foreign income Tax liability;
(t) fail to maintain in full force and effect insurance policies covering the Company and its Subsidiaries and their respective properties,
assets and businesses in a form and amount consistent with past practice;
(u) adopt or enter into a plan of complete or partial
liquidation, dissolution, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries;
(v) convene
any regular or special meeting (or any adjournment thereof) of the Company Shareholders (other than the Shareholders Meeting and, not prior to March 31, 2015, the annual Shareholders meeting of the Company) or enter into any Contract or
understanding or arrangement with respect to the voting or registration of the Company Shares or any other Equity Interests of the Company;
(w) enter into any new line of business outside the Companys existing business segments;
(x) enter into, modify or terminate any transactions or Contracts with any Affiliate of the Company;
(y) amend or modify in any material respect the engagement letter of any of the Companys financial advisors; or
(z) enter into any Contract to do any of the foregoing.
Section 6.2 Shareholder Meeting; Proxy Statement.
(a) Preparation and Filing of the Proxy Statement. As promptly as reasonably practicable following the date of this Agreement (and in
any event, no later than 30 days after the date hereof), the Company shall prepare and cause to be filed with the SEC in preliminary form a proxy statement relating to the Shareholders Meeting (together with any amendments or supplements
thereto, the Proxy Statement). Unless the Company Board
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shall have made an Adverse Recommendation Change in accordance with Section 6.5(c), the Proxy Statement shall include the Company Board Recommendation with respect to the Merger. The
Company shall promptly notify Parent upon the receipt of any comments or other correspondence from the SEC (or the staff of the SEC) or any request from the SEC (or the staff of the SEC) regarding the Proxy Statement, including with respect to
amendments or supplements to the Proxy Statement, and shall provide Parent with copies of all correspondence between the Company and its Representatives, on the one hand, and the SEC (or the staff of the SEC), on the other hand. The Company shall
use its reasonable best efforts to respond as promptly as practicable to any comments of the SEC (or the staff of the SEC) or any request from the SEC (or the staff of the SEC) for amendments or supplements with respect to the Proxy Statement and to
cause the Proxy Statement to be cleared by the SEC as promptly as practicable. The Proxy Statement shall comply as to form in all material respects with the applicable provisions of the Exchange Act and the rules and regulations promulgated
thereunder. Prior to filing or mailing the Proxy Statement (or any amendment or supplement thereto) or responding to any comments of the SEC (or the staff of the SEC) with respect thereto, the Company shall provide Parent a reasonable opportunity to
review and to propose comments on such document or response and shall consider any such comments in good faith. The Company, commencing 10 days after the submission to the SEC of the Proxy Statement in accordance with the first sentence of this
Section 6.2(a), shall on a weekly basis run a broker search for a deemed record date of 20 Business Days after the date of each such search.
(b) Covenants of the Company with respect to the Proxy Statement. The Company shall cause the Proxy Statement, at the date it is first
mailed to the shareholders of the Company and at the time of the Shareholders Meeting, not to contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company shall have no obligation pursuant to this Section 6.2(b) with respect to any of the Parent Information.
(c) Covenants of Parent with Respect to the Proxy Statement. Parent shall furnish to the Company all information (the Parent
Information) concerning Parent and Merger Sub reasonably requested by the Company in connection with the Proxy Statement and required by the Exchange Act or the rules and regulations promulgated thereunder and any other Law to be set forth
in the Proxy Statement, and shall otherwise reasonably assist and cooperate with the Company in the preparation of the Proxy Statement and the resolution of comments from the SEC (or the staff of the SEC). The information relating to Parent or
Merger Sub at the time supplied by it to the Company for inclusion in the Proxy Statement shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
(d) Mailing of Proxy Statement;
Shareholders Meeting. The Company shall, as promptly as reasonably practicable (and in any event within five (5) Business Days following the Proxy Statement Clearance Date), (x) in compliance with Law, and by resolutions of its
Board of Directors, establish the earliest reasonably practicable record date for a meeting of its shareholders (the Record Date), for the purpose of voting upon the adoption of this Agreement (including any adjournment or
postponement thereof, the Shareholders Meeting), (y) by resolutions of its Board of Directors establish the earliest reasonably practicable date for the Shareholders Meeting; provided that the
Shareholders Meeting will not be held more than forty (40) days after the Proxy Statement Clearance Date without the prior written consent of Parent, and (z) mail to the holders of Company Shares as of the Record Date the Proxy
Statement. The Company shall duly call, convene and hold the Shareholders Meeting as promptly as reasonably practicable after the Proxy Statement Clearance Date; provided, however, that the Company may delay, postpone, recess or
adjourn the Shareholders Meeting: (i) with the consent of Parent, (ii) in the absence of a quorum or (iii) once, for no more than thirty (30) days, to allow reasonable additional time for the filing and distribution of any
supplemental or amended disclosure which the Company Board has determined in good faith (after consultation with its outside legal counsel) is required under Section 14(a) of the Exchange Act and the related rules and regulations promulgated by
the SEC and for such supplemental or amended disclosure to be disseminated to and reviewed by the Companys shareholders prior to the Shareholders Meeting. Unless the Company Board shall have made an Adverse Recommendation Change in
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accordance with Section 6.5(c), the Company shall use its reasonable best efforts to solicit proxies in favor of the adoption of this Agreement as contemplated by
Section 4.3(a) and shall ensure that all proxies solicited in connection with the Shareholders Meeting are solicited in compliance with all Laws and all rules of NASDAQ. Without limiting the generality of the foregoing, the
Companys obligation to call, give notice of and hold the Shareholders Meeting in accordance with this Section 6.2 shall not be limited or otherwise affected by the commencement, disclosure, announcement or submission of any
Acquisition Proposal or an Adverse Recommendation Change and there shall be no vote of the Shareholders or solicitation by the Company of the written consent of the Shareholders in respect of any Acquisition Proposal prior to the Shareholders
Meeting.
(e) Amendments to the Proxy Statement. If at any time prior to the Effective Time any event or circumstance relating to
the Company or Parent or any of the Companys or Parents Subsidiaries, or their respective officers or directors, is discovered by the Company or Parent, respectively, which, pursuant to the Exchange Act, should be set forth in an
amendment or a supplement to the Proxy Statement, such party shall promptly inform the others. Each of Parent, Merger Sub and the Company agree to correct any information provided by it for use in the Proxy Statement which shall have become false or
misleading.
Section 6.3 Appropriate Action; Consents; Filings.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties hereto shall (and shall cause each of their
applicable Affiliates and Subsidiaries to) use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate, as promptly as practicable, the Merger and the other transactions contemplated by this Agreement. Without limiting the foregoing, each of the parties agrees to use its respective reasonable best efforts to (i) cause the
conditions to the Merger set forth in ARTICLE VII to be satisfied as promptly as practicable, (ii) obtain any consents, approvals, orders, waivers and authorizations of, actions or nonactions by, any Governmental Authority or any
third party necessary in connection with consummation of the transactions contemplated by this Agreement, including the Merger and (iii) execute and deliver any additional instruments necessary to consummate the Merger and any other
transactions to be performed or consummated by such party in accordance with the terms of this Agreement and to carry out fully the purposes of this Agreement. Notwithstanding anything to the contrary contained herein, nothing in this Agreement
shall require Parent or any of its Subsidiaries, or permit the Company or any of its Subsidiaries (without the prior consent of Parent), to (x) litigate with any Government Authority to obtain approval, authorization or consent to the Merger,
(y) agree to (A) any license, sale or other disposition or holding separate (through establishment of a trust or otherwise) of any shares of the Company, Parent, the Surviving Company or any of their respective Subsidiaries or Affiliates
or of any amount (other than a de minimis amount) of such entities businesses, assets or properties, (B) the imposition of any limitation (other than a de minimis limitation) on the ability of the Company, Parent, the Surviving Company,
or any of their respective Subsidiaries or Affiliates to conduct their respective businesses or own any shares or assets or to acquire, hold or exercise full rights of ownership of their respective businesses and, in the case of Parent, the
businesses of the Surviving Company and its Subsidiaries, or (C) the imposition of any impediment (other than a de minimis impediment) on Parent, the Surviving Company or any of their respective Subsidiaries or Affiliates under any Laws or
(z) pay any amounts (other than de minimis amounts) or otherwise agree to provide any benefit or undertaking to be subject to any limitation or restriction to any Governmental Authority other than in respect of customary and established filing
fees and other payments required as of the date hereof by Law.
(b) To the extent not expressly prohibited by Law, Parent and the Company
shall reasonably cooperate with respect to all discussions, submissions, negotiations and other communications with all Governmental Authorities in connection with all waiting periods, authorizations, consents or waivers required to consummate the
transactions contemplated by this Agreement, and, subject to reasonable concerns regarding confidentiality, each party shall keep the other reasonably informed with respect to such matters. In connection with the actions and procedures referenced in
this Section 6.3, each party shall, and shall cause its Representatives to: (i) promptly and fully inform the other party of any written or material oral communication received from or
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given to any Governmental Authority; (ii) permit the other party to review any submission required to be made by the Company to any Governmental Authority prior to its submission;
(iii) consult with the other party in advance of any meeting, conference or material discussion required by any Governmental Authority and (iv) if permitted to do so by the relevant Governmental Authority, give the other party the
opportunity to attend and participate in any such meetings, conferences and discussions.
(c) In furtherance and not in limitation of the
covenants of the parties contained in Section 6.3(a), and subject to the last sentence of Section 6.3(a) and to Section 6.10, if any objections are asserted or suit is instituted (or threatened to be instituted) with
respect to the transactions contemplated hereby as violative of any Law by any Governmental Authority or if any suit is instituted (or threatened to be instituted) by any Governmental Authority or any private party challenging any of the
transactions contemplated hereby as violative of any Antitrust Law or which would otherwise prevent, impede or delay the consummation of the transactions contemplated hereby, each of Parent and the Company shall, subject to the other provisions of
this Section 6.3 (including the last sentence of Section 6.3(a)), reasonably cooperate with each other and use its reasonable best efforts to resolve any such objections or suits so as to permit the prompt consummation of the
transactions contemplated by this Agreement.
(d) Without limiting any covenant contained in this Section 6.3, Parent and the
Company shall each, and shall each cause their respective Subsidiaries to use reasonable best efforts to obtain all consents and approvals of third parties (including parties to Company Material Contracts and other Contracts of the Company and its
Subsidiaries) that are required in connection with the consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing, in no event shall Parent or any of its Affiliates or the Company or any of its Subsidiaries be
obligated to bear any expense or pay any fee or grant any concession, other than de minimis expenses, fees or concessions (any such expense, fee or concession, a Consent Fee) in connection with obtaining any waivers, permits,
approval, authorizations, qualifications or consents that are required in in connection with the consummation of the transactions contemplated hereby pursuant to the terms of any Contract to which the Company or any of its Subsidiaries is a party;
provided that the Company shall (x) promptly inform Parent in writing of any request or demand for a Consent Fee received by it or its Subsidiaries and (y) pay any monetary Consent Fee if Parent undertakes to reimburse the Company for
amounts paid in respect of such Consent Fee. As required under the Companies Law, the Company shall obtain the written consent of its secured creditors to the Merger in accordance with Section 7.2(f).
Section 6.4 Access to Information; Consultation; Confidentiality.
(a) From the date of this Agreement to the earlier of the Effective Time or the date, if any, on which this Agreement is terminated pursuant
to Section 8.1, the Company will, and will cause its Subsidiaries to, and, only to the extent the Company has any right or ability to cause, use reasonable best efforts to exercise such right or ability to cause PELSA to, provide to
Parent and its authorized Representatives (x) upon reasonable notice, reasonable access during normal business hours to the Companys and Companys Subsidiaries and PELSAs officers, employees, properties, books, Contracts
and records (including Tax Returns, Tax correspondence, Tax work papers, Tax advice, correspondence with taxing authorities (including any assessments of Tax)), as Parent may reasonably request and (y) such reasonably available financial and
operating information of the Company, PELSA and their respective Subsidiaries as Parent may reasonably request. Notwithstanding the foregoing, the Company shall not be required to provide access to, or cause its Subsidiaries to provide access to, or
disclose any information or documents to the extent that such access would (in the reasonable judgment of the Company) (i) constitute a waiver of the attorney-client, work-product or other doctrine or privilege held by the Company or any of its
Subsidiaries, (ii) violate any Contract of the Company or any of its Subsidiaries in effect as of the date hereof with respect to confidentiality or privacy, (iii) materially interfere with the conduct of the business of the Company or any
of its Subsidiaries or its or their Affiliates or (iv) violate any Laws relating to the exchange of information or otherwise; provided, that in the case of clauses (i) and (iv) each party shall use its reasonable best efforts
to obtain any required consents and take such other action (such as the entry into a joint defense agreement or other arrangement to avoid loss of attorney client privilege) to permit such access or disclosure;
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provided further, that in the case of clause (ii) the Company shall use reasonable best efforts to obtain a waiver from the counterparty to any such Contract so as to allow the
Company to provide access to or furnish the relevant information.
(b) All information exchanged pursuant to this Section 6.4 shall
be subject to the Confidentiality Agreement and the parties shall comply with, and shall cause their respective Representatives (as defined in the Confidentiality Agreement) to comply with, all of their respective obligations thereunder.
Section 6.5 Non-Solicitation; Adverse Recommendation Change.
(a) Except as permitted by this Section 6.5, from the date of this Agreement until the Effective Time or, if earlier, the
termination of this Agreement in accordance with its terms, the Company will not, nor shall it authorize or permit any of its Subsidiaries to, and shall cause its and their respective Representatives not to, directly or indirectly (i) initiate,
solicit or knowingly encourage or knowingly facilitate the making of an Acquisition Proposal or Acquisition Inquiry (provided, that the Company shall be entitled substantially contemporaneously with the public announcement of this Agreement,
to waive the dont ask/dont waive provisions of any standstill provisions contained in any confidentiality agreement in effect on the date of this Agreement (such agreement, an Existing Confidentiality
Agreement); provided, further; that the Company shall notify Parent as to the identity of the other parties to the Existing Confidentiality Agreements to the extent not prohibited by such Existing Confidentiality Agreement
and, in the event that one or more Existing Confidentiality Agreements prohibit such notification to Parent, the waiver of the dont ask/dont waive provisions for such Existing Confidentiality Agreements shall be conditioned
upon the party to such Existing Confidentiality Agreement acknowledging that the Company shall not be prohibited from notifying the Parent as to the identity of such party), (ii) other than informing Third Parties of the existence of the
provisions contained in this Section 6.5, engage in negotiations or discussions with, or furnish any non-public information concerning the Company or any of its Subsidiaries to, any Third Party who has made or in response to an Acquisition
Proposal or Acquisition Inquiry or (iii) resolve or agree to do any of the foregoing. The Company shall, and shall cause its Subsidiaries to, and shall cause its and their respective Representatives to (i) immediately cease and cause to be
terminated all existing discussions or negotiations with any Person conducted heretofore with respect to any Acquisition Proposal or Acquisition Inquiry and (ii) promptly request that all confidential information provided by or on behalf of the
Company or any of its Affiliates to any such Person in connection with such discussions or negotiations be returned or destroyed.
(b)
Notwithstanding the foregoing or anything else in this Agreement to the contrary, if after the date hereof but prior to the time that the Requisite Shareholder Approval is obtained (the Approval Time), (i) the Company Board
receives an unsolicited, written Acquisition Proposal that the Company Board or any committee thereof determines in good faith to be bona fide, (ii) the Company Board or any committee thereof determines in its good faith judgment, based on
information then available and after consulting with outside counsel and a nationally recognized third party financial advisor, that such Acquisition Proposal constitutes or would reasonably be expected to lead to a Superior Offer, and
(iii) after consultation with outside counsel, the Company Board or any committee thereof determines in good faith that the failure to take the actions described in clauses (A), (B) and (C) below would reasonably be expected to be
inconsistent with the Company Boards fiduciary duties under Law, then the Company may, at any time prior to the Approval Time (A) furnish information to the Person or Persons (and its or their Representatives and potential financing
sources) making such Acquisition Proposal, but only after such Person or Persons enter into an Acceptable Confidentiality Agreement with the Company, (B) participate in discussions or negotiations with such Person or Persons (and its or their
Representatives and potential financing sources) regarding any such Acquisition Proposal made by such Person or Persons and (C) waive the applicable standstill provisions of the Acceptable Confidentiality Agreement no more than once and solely
to the extent necessary to permit a Third Party to make, on a confidential basis to the Company Board, one Acquisition Proposal following the entry of such Third Party into an Acceptable Confidentiality Agreement (it being understood that any
revisions made to such Acquisition Proposal from the time such discussions and negotiations permitted pursuant to this Section 6.5(b) shall have commenced until such
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time that the Company Board has delivered to Parent a Notice of Superior Offer with respect to such Acquisition Proposal shall constitute one and the same Acquisition Proposal) and;
provided, that the Company shall (x) cause the Person making such Acquisition Proposal to waive any confidentiality or other restriction existing as of the date hereof on the Companys ability to share information with Parent
regarding such Acquisition Proposal as contemplated by this Section 6.5 and (y) give written notice to Parent after any such determination by the Company Board, in each case before taking any of the actions described in the
foregoing clauses (A), (B) and (C). The Company shall promptly (and in any event, within 24 hours) provide Parent with all non-public information regarding the Company and its Subsidiaries that is provided by the Company to a Person or Persons
(or its or their Representatives or potential financing sources) pursuant to the immediately preceding sentence to the extent not previously provided to Parent or its Representatives.
(c) The Company Board shall not (i) (A) withdraw (or qualify, amend or modify in a manner adverse to Parent), or propose publicly to
withdraw (or to qualify, amend or modify, in a manner adverse to Parent), the Company Board Recommendation, (B) fail to publicly reaffirm the Company Board Recommendation within five (5) Business Days after Parent so requests in writing
(provided however that Parent shall only be entitled to request such reaffirmation no more than three (3) times), (C) fail to recommend, in a Solicitation/Recommendation Statement on Schedule 14D-9, against any tender offer or exchange
offer by a Third Party for fifteen percent (15%) or more of the outstanding Company Shares within ten (10) Business Days after the commencement of such tender offer or exchange offer; (D) approve, adopt or recommend any Acquisition
Proposal or propose publicly to approve, adopt or recommend, any Acquisition Proposal or (E) approve, adopt, recommend or enter into any Alternative Acquisition Agreement or propose publicly to approve, adopt, recommend or enter into, any
Alternative Acquisition Agreement (any such action being referred to as an Adverse Recommendation Change). For purposes hereof, an Alternative Acquisition Agreement shall mean any letter of intent, memorandum of
understanding, agreement in principle, merger, acquisition, option, alliance, partnership, purchase or joint venture agreement or Contract (other than an Acceptable Confidentiality Agreement in accordance with Section 6.5(b)) (A) in
respect of or relating to any Acquisition Proposal, (B) requiring, or reasonably expected to cause, the Company to abandon, terminate or materially delay the consummation of the Merger, or prohibiting the consummation of the Merger,
(C) that would otherwise impede or materially interfere with the Merger or any of the other transactions contemplated by this Agreement, or (D) requiring, or reasonably expected to cause, the Company to breach the terms of this Agreement.
(d) Notwithstanding Section 6.5(c) or anything else in this Agreement to the contrary, at any time before the Approval Time,
the Company Board may, if the Company Board determines in its good faith judgment, after consulting with outside counsel, that the failure to effect an Adverse Recommendation Change would reasonably be expected to be inconsistent with the Company
Boards fiduciary duties under Law (x) make an Adverse Recommendation Change in response to an Intervening Circumstance or (y) in response to a Superior Offer, make an Adverse Recommendation Change and cause the Company to terminate
this Agreement and enter into one or more definitive Alternative Acquisition Agreements with respect to a Superior Offer pursuant to Section 8.1(c)(ii); provided, that,
(i) with respect to an Adverse Recommendation Change due to an Intervening Circumstance, no such Adverse Recommendation Change may be made
unless (A) the Company shall have delivered to Parent a written notice advising Parent that the Company Board intends to effect an Adverse Recommendation Change as a result of an Intervening Circumstance (a Notice of Intervening
Circumstance) (it being understood that the delivery of such notice shall not itself constitute an Adverse Recommendation Change) and specifying, in reasonable detail, the reasons for such action; (B) at least four Business Days shall
have elapsed following the delivery of such Notice of Intervening Circumstance; (C) during such period of four Business Days, the Company shall have, and shall have instructed its financial advisors and outside legal counsel to have, negotiated
in good faith with Parent (if Parent shall have requested in writing that the Company and its financial advisors and outside legal counsel to so negotiate) regarding adjustments to the terms and conditions of this Agreement as would enable the
Company Board to determine not to effect an Adverse Recommendation Change; and (D) the Company Board shall have in good faith taken into account any revisions to the terms and conditions of this
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Agreement that are reflected in any proposed definitive amendments thereto that are countersigned by Parent and Merger Sub and delivered to the Company by 5 p.m. Eastern Time on the last day of
such period of four Business Days; and
(ii) with respect to an Adverse Recommendation Change in response to a Superior Offer, no such
Adverse Recommendation Change may be made, and no termination of this Agreement pursuant to Section 8.1(c)(ii) may be made, unless (A) the Company shall have delivered to Parent a written notice advising Parent that the Company
Board intends to make an Adverse Recommendation Change and terminate this Agreement pursuant to Section 8.1(c)(ii) (a Notice of Superior Offer) (it being understood that the delivery of such notice shall not itself
constitute an Adverse Recommendation Change), specifying in reasonable detail the material terms and conditions of such Superior Offer, accompanied by a copy of the then-current form of any agreement with respect to such Superior Offer that the
Company has received from the Person that made such Superior Offer (the Third Party Offeror); (B) at least four Business Days shall have elapsed following the delivery of such Notice of Superior Offer (it being agreed that
(x) any Third Party Offeror subject to an Acceptable Confidentiality Agreement or an Existing Confidentiality Agreement shall not be permitted pursuant to the terms of such Acceptable Confidentiality Agreement or Existing Confidentiality
Agreement or any waiver granted pursuant to Section 6.5(a) to make any additional Acquisition Proposals or modify or amend the financial or other material terms of such Superior Offer in response to adjustments to the terms and conditions of
this Agreement made by Parent pursuant to the terms of this Section 6.5(d)(ii) and (y) any amendment to the financial or other material terms of such Superior Offer made by a Third Party Offeror not subject to an Acceptable
Confidentiality Agreement or an Existing Confidentiality Agreement will require a new Notice of Superior Offer, except that the applicable time period for purposes of this Section 6.5(d)(ii) with respect to such new Notice of Superior
Offer shall be reduced to two Business Days from the four Business Days otherwise contemplated); (C) during such period of four Business Days (or, if applicable, such two Business Day period) following the delivery of such Notice of Superior
Offer, the Company shall have, and shall have instructed its financial advisors and outside legal counsel to have, negotiated in good faith with Parent (if Parent shall have requested in writing that the Company and its financial advisors and
outside legal counsel to so negotiate) regarding adjustments to the terms and conditions of this Agreement as would enable the Company Board to determine not to make an Adverse Recommendation Change and terminate this Agreement pursuant to
Section 8.1(c)(ii); and (D) the Company Board shall have in good faith taken into account any revisions to the terms and conditions of this Agreement proposed in writing by Parent to the Company by 5 p.m. Eastern Time on the last
day of such period of four Business Days (or, if applicable, two Business Day period); provided that, in the event that the Shareholder is receiving at least $15.00 per Company Share (and all other Company Shareholders are entitled to receive an
equal or greater amount of consideration per Company Share) pursuant to any changes to the financial and other terms of this Agreement proposed by Parent to the Company pursuant to this Section 6.5(d)(ii), the Company shall consider such
revised terms and conditions presented by Parent as though the Shareholder were to receive the same consideration per Company Share as the other Company Shareholders.
(e) Except to the extent prohibited by any confidentiality agreement or similar agreement entered into prior to the date hereof, the Company
shall promptly (and in any event within 24 hours after any director, officer or financial advisor of the Company is notified of the receipt thereof) advise Parent in writing in the event that the Company receives any Acquisition Proposal or
Acquisition Inquiry, and in connection with such notice, provide to Parent the material terms and conditions of any such Acquisition Proposal and the identity of the Third Party making any such Acquisition Proposal or Acquisition Inquiry. The
Company shall (i) keep Parent reasonably informed of the status and material details (including any material change to the terms thereof) of any such Acquisition Proposal or such Acquisition Inquiry and any discussions and negotiations
concerning the material terms and conditions thereof and (ii) provide to Parent as soon as practicable (and in any event within 24 hours) after receipt or delivery thereof copies of all material correspondence and other material written
material exchanged between the Company or any of its Subsidiaries and any Person that describes any of the material terms or conditions of any such Acquisition Proposal or Acquisition Inquiry. Without limiting the foregoing, the Company shall
promptly (and in any event within 24 hours) notify Parent in writing if it determines to begin providing information or engaging in discussions or negotiations concerning an Acquisition Proposal pursuant to
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Section 6.5(b). The Company shall not, and shall cause its Subsidiaries not to, in any way contract with any Person subsequent to the date of this Agreement in a manner that would
restrict the Companys ability to provide information to Parent as required under this Agreement.
(f) The Company agrees that any
violation of the restrictions set forth in Section 6.5 by any Subsidiary or Representative of the Company, including a violation by a Representative of a direction given to a Representative pursuant to the first sentence of Section
6.5(a), shall be a breach of this Section 6.5 by the Company
(g) Subject to Section 6.5(c), nothing contained in this
Agreement shall prohibit the Company or the Company Board, directly or indirectly through their respective Representatives, from (i) taking and disclosing any position or disclosing any information reasonably required under Rule 14d-9 or Rule
14e-2 promulgated under the Exchange Act or (ii) making any stop, look and listen communication to the Companys shareholders pursuant to Rule 14d-9(f) promulgated under the Exchange Act; provided, that, in order to
effect an Adverse Recommendation Change, the Company shall comply with Section 6.5(d).
Section 6.6 Directors
and Officers Indemnification and Insurance.
(a) Parent and Merger Sub agree that all rights to exculpation and indemnification
(and all rights to advancement of expenses relating thereto) for acts or omissions occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time (including any matters arising in connection with
the transactions contemplated by this Agreement, including the Merger), now existing in favor of the Indemnitees as permitted by the Memorandum of Association or Articles of Association (or such equivalent organizational or governing documents of
any of the Companys Subsidiaries as in effect on the date of this Agreement), shall survive the Merger and shall continue in full force and effect in accordance with their respective terms to the extent permitted by Law. From and after the
Effective Time, the Surviving Company shall indemnify, defend and hold harmless the Indemnitees, and promptly pay or advance any costs or expenses (including attorneys fees), judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement by such Indemnitees in connection with any claim, action, suit, proceeding or investigations, whether civil, criminal, administrative or investigative, to the extent such claim, action, suit, proceeding or investigation arises out
of or pertains to (x) any act or omission by them in their capacities as such at any time at or prior to the Effective Time or (y) the Merger, this Agreement and any transactions contemplated hereby or taken at the request of Parent, in
either case, (i) in the case of the Indemnitees who are directors and officers, to the fullest extent permitted by (A) the Memorandum of Association or Articles of Association (or such equivalent organizational or governing documents of
any of the Companys Subsidiaries as in effect on the date of this Agreement) and (B) Law and (ii) in the case of the Indemnitiees who are employees, to the fullest extent required by (A) the Memorandum of Association or Articles
of Association (or such equivalent organizational or governing documents of any of the Companys Subsidiaries as in effect on the date of this Agreement) and (B) Law. For a period of six (6) year from and after the Effective Time,
Parent shall, to the extent permitted by Law, cause the memorandum of association, articles of association or other organizational documents of the Surviving Company and its Subsidiaries to contain provisions with respect to indemnification,
advancement of expenses and limitation of director, officer, employee and agent liability that are no less favorable to the Indemnitees than those set forth in the Memorandum of Association and Articles of Association and the Companys
Subsidiaries organizational documents as in effect on the date of this Agreement, which provisions thereafter shall not be amended, repealed or otherwise modified in any manner that would adversely affect the rights thereunder of any
Indemnitees.
(b) The Indemnitees to whom this Section 6.6 applies shall be third party beneficiaries of this Section 6.6.
The provisions of this Section 6.6 are intended to be for the benefit of each Indemnitee and his or her successors, heirs or representatives. The Surviving Company shall pay all reasonable expenses, including attorneys fees, that may be
incurred by any Indemnitee in successfully enforcing the indemnity and other obligations provided in this Section 6.6.
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(c) The rights of each Indemnitee under this Section 6.6 shall be in addition to any
rights such Person may have under the Memorandum of Association or Articles of Association (or equivalent organizational or governing documents of any of the Companys Subsidiaries), certificate of incorporation, bylaws or other organizational
documents of the Surviving Company or under Law.
(d) Notwithstanding any other provision of this Agreement, this Section 6.6
shall survive the consummation of the Merger indefinitely and shall be binding on all successors and assigns of the Surviving Company and its Subsidiaries, and shall be enforceable by the Indemnitees and their successors, heirs or representatives.
In the event that the Surviving Company or any of its successors or assigns consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or transfers or conveys
all or a majority of its properties and assets to any Person, then, and in each such case, Parent shall ensure that proper provision shall be made so that the successors and assigns of the Surviving Company shall succeed to the obligations set forth
in this Section 6.6.
Section 6.7 Notification of Certain Matters. From and after the date hereof until the Effective
Time, the Company shall give prompt notice to Parent, and Parent and Merger Sub shall give prompt notice to the Company, upon receiving Knowledge of (a) any notice, complaint, investigation or hearing (or communications indicating that the same
may be contemplated) of any Governmental Authority in connection with this Agreement, the Merger or the transactions contemplated hereby, (b) any written notice of any Person (other than a Governmental Authority) alleging that the consent of
such Person is or may be required in connection with the Merger or the transactions contemplated hereby, (c) any actions, suits, claims, investigations or proceedings that are commenced or, to such partys Knowledge, privately threatened
in writing against, relating to or involving or otherwise affecting such party or any of its Subsidiaries which relate to this Agreement, the Merger or the transactions contemplated hereby, (d) any Event that would or would be reasonably likely
to cause or constitute a breach of any of its representations, warranties, covenants or agreements contained herein (provided, that the failure to provide such notice under this clause (d) shall not of itself be deemed to constitute a failure
of the conditions precedent set forth in Section 7.2(b) or Section 7.3(b), as applicable) or (e) any material change, effect or circumstance that would reasonably be expected to give rise to a failure of a condition precedent in
Section 7.1, Section 7.2 (in the case of the Company) or Section 7.3 (in the case of Parent); provided, however, that no such notification shall affect the representations, warranties, covenants or agreements of
the parties herein or the conditions to the obligations of the parties hereunder or the remedies available hereunder to any party.
Section 6.8 Public Announcements. The initial press release(s) announcing the execution of this Agreement shall be in a form
mutually agreed upon by Parent and the Company. Each party hereto agrees not to issue any press release or make any other public announcement relating to this Agreement or the transactions contemplated hereby without the prior written approval
(which approval shall not be unreasonably withheld, conditioned or delayed) of the other parties, except as may be required by Law, court process or the rules and regulations of any national securities exchange or national securities quotation
system, in which case the other parties hereto shall, to the extent practicable, be given the reasonable opportunity to review and comment on any such press release or other public announcement prior to its public release. Notwithstanding any other
provision of this Agreement, the requirements of this Section 6.8 shall not apply to any disclosure by (a) Company or Parent of any information concerning this Agreement or the transactions contemplated hereby in connection with any
dispute between the parties regarding this Agreement, the Merger or the transactions contemplated by this Agreement, or (b) the Company or Parent, with respect to any public announcement or public statement with respect to any Adverse
Recommendation Change made in accordance with Section 6.5(d).
Section 6.9 Director Resignations.
(a) At the Merger Closing, the Company shall deliver to Parent (i) a duly executed resignation letter, in form and substance reasonably
satisfactory to Parent, in respect of each member of each of the boards of directors (or other applicable governing body) of each Subsidiary of the Company which shall be effective as of the Effective Time and (ii) duly executed resignation
letters, in form and substance reasonably satisfactory to
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Parent, in respect of the Companys appointees to the PELSA board of directors which in each case shall be effective as of the later of (A) the Effective Time and (B) Parents
written instruction to the Companys appointees that such resignation shall be deemed effective
(b) Prior to the Merger Closing
Date, the Company shall use reasonable best efforts to appoint Parents nominees to the board of directors of PELSA in accordance with the Stockholders Agreement, by and among Dr. Carlos Perez Companc and the Company dated as of
September 6, 1974.
Section 6.10 Shareholder Litigation. Prior to the Effective Time, the Company shall provide Parent
reasonable opportunity to participate in the defense of any shareholder litigation against the Company and/or its directors relating to the transactions contemplated by this Agreement. The Company will give due consideration to Parents advice
with respect to such litigation and use its reasonable best efforts to defend or settle any unresolved litigation in accordance with Parents advice; provided that, except as set forth on Section 6.10 of the Company Disclosure Schedules,
no settlement of any such litigation shall be agreed to without the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed); provided further that after receipt of the Requisite Shareholder
Approval, the Company shall, if requested by Parent, use its reasonable best efforts to defend or settle any unresolved shareholder litigation in accordance with Parents direction.
Section 6.11 Affiliate Transactions. Prior to the Effective Time, all Contracts between the Company or any of its Subsidiaries, on
the one hand, and any of their respective Affiliates, on the other hand, including the Contracts set forth on Section 4.26 of the Company Disclosure Schedules, other than (a) Contracts listed on Section 6.11 of the Company Disclosure
Schedules and (b) Contracts solely between or among the Company and its Subsidiaries, shall have been terminated as of the Merger Closing Date with no liabilities or obligations surviving such termination.
Section 6.12 Rule 16b-3 Actions. Prior to the Effective Time, the Company may take such actions as may be required to cause any
dispositions of equity securities in the Company resulting from the transactions contemplated by this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Exchange Act with respect to the Company to
be exempt under Rule 16b-3 promulgated under the Exchange Act.
Section 6.13 Further Actions. Subject to the other express
provisions of this Agreement, upon the request of any party, the other parties shall use reasonable best efforts to undertake as soon as reasonably practicable (or procure the undertaking as soon as reasonably practicable of) all acts including
executing and delivering (or procuring the execution and delivery of) all such other documents, instruments and agreements as may be reasonably necessary for the purpose of carrying out the intent of this Agreement and the transactions contemplated
by this Agreement.
Section 6.14 No Section 338(g) Election. Neither Parent nor any of its Affiliates shall make an
election under Section 338(g) of the Code, or any similar provision of Law, with respect to the transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.1 Conditions to the Obligations of Each Party. The respective obligations of each party to consummate the Merger are
subject to the satisfaction or (to the extent permitted by Law) waiver by the Company and Parent at or prior to the Merger Closing Date of the following conditions:
(a) the Requisite Shareholder Approval shall have been received; and
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(b) no Governmental Authority shall have enacted, issued, promulgated, enforced or entered any
Law or Order (collectively, Restraints), or threatened or commenced any Proceeding, which is then pending or in effect and seeks to enjoin or otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the
consummation of the Merger.
Section 7.2 Conditions to the Obligations of Parent and Merger Sub. In addition to the conditions
set forth in Section 7.1, the respective obligations of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or (to the extent permitted by Law) waiver by Parent at or prior to the Merger Closing Date of the
following further conditions:
(a) (i) each of the representations and warranties of the Company set forth in Section 4.2(a),
Section 4.2(b) (except to the extent such representations and warranties relate to PELSA or any of its Subsidiaries), Section 4.2(c)(i) and the first sentence of Section 4.2(c)(ii) (Capitalization; Subsidiaries), Section
4.3 (Authority Relative to Agreement), Section 4.4(c) (No Conflict; Required Filings and Consents), the first sentence of Section 4.9 (Absence of Certain Changes or Events), Section 4.23 (Antitakeover Statutes) and
Section 4.24 (Brokers) shall be true and correct in all respects as of the date of this Agreement and the Merger Closing Date (as though made on and as of the Merger Closing Date), except, with respect Section 4.2(a), to the
extent that any inaccuracies would be de minimis, in the aggregate; (ii) the representations and warranties of the Company set forth in Section 4.2(b) (but only to the extent such representations and warranties relate to PELSA or any of
its Subsidiaries), in the third sentence of Section 4.2(c)(ii) (Capitalization; Subsidiaries) and Section 4.21 (Concessions), shall be true and correct in all material respects (without giving effect to any qualifications as to
materiality or Material Adverse Effect or other similar qualifications contained therein) as of the date of this Agreement and the Merger Closing Date; and (iii) each of the other representations and warranties of the Company set forth in
ARTICLE IV that (x) are not made as of a specific date shall be true and correct as of the date of this Agreement and the Merger Closing Date (as though made on and as of the Merger Closing Date), and (y) are made as of a specific
date shall be true and correct as of such date, except, in the case of this clause (iii), where the failure of such representations and warranties to be true and correct, without giving effect to any qualifications as to materiality or Material
Adverse Effect or other similar qualifications contained therein, would not have, individually or in the aggregate, a Material Adverse Effect;
(b) the Company shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Merger Closing Date;
(c) since the date of this Agreement, there shall not have
occurred any change, event, effect or circumstance that, individually or in the aggregate, has had a Material Adverse Effect;
(d) the
Company shall have delivered to Parent a certificate, dated the Merger Closing Date and signed by an executive officer of the Company certifying that the conditions set forth in Section 7.2(a), Section 7.2(b) and
Section 7.2(c) shall have been satisfied;
(e) all consents of the Companys secured creditors required under the
Companies Law have been made, given or obtained on terms acceptable to the Parent, acting reasonably; and
(f) The transactions
contemplated by the Transaction Agreement have been consummated or will be consummated concurrently with the Merger Closing.
Section 7.3 Conditions to the Obligations of the Company. In addition to the conditions set forth in Section 7.1, the
obligations of the Company to consummate the Merger are subject to the satisfaction or (to the extent permitted by Law) waiver by the Company at or prior to the Merger Closing Date of the following further conditions:
(a) each of the representations and warranties of Parent and Merger Sub contained in this Agreement, without giving effect to any
qualifications as to materiality or other similar qualifications contained therein, shall
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be true and correct as of the date of this Agreement and the Merger Closing Date (except to the extent expressly made as of an earlier date, in which case as of such date), except for such
failures to be true and correct as would not reasonably be expected to, individually or in the aggregate, materially impair the ability of Parent or Merger Sub to consummate the Merger;
(b) Parent and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Merger Closing Date;
(c) Parent shall have delivered to the Company
a certificate, dated the Merger Closing Date and signed by an executive officer of Parent, certifying that the conditions set forth in Section 7.3(a) and Section 7.3(b) have been satisfied; and
Section 7.4 Frustration of Closing Conditions. Neither Parent nor Merger Sub may rely on the failure of any conditions set forth
in Section 7.1 or Section 7.2 to be satisfied as a basis for not consummating the transactions contemplated hereby or terminating this Agreement if such failure was caused by the failure of Parent or Merger Sub to perform any of its
obligations under this Agreement. The Company may not rely on the failure of any conditions set forth in Section 7.1 or Section 7.3 to be satisfied as a basis for not consummating the transactions contemplated hereby or
terminating this Agreement if such failure was caused by the failure of the Company to perform any of its obligations under this Agreement.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. Notwithstanding anything to the contrary contained in this Agreement, this Agreement may be terminated
(to the extent set forth Section 8.2) at any time prior to the Effective Time, whether before or after the Requisite Shareholder Approval is obtained (except as otherwise expressly noted), as follows:
(a) by mutual written consent of each of Parent and the Company; or
(b) by either Parent or the Company, if:
(i) the Effective Time shall not have occurred on or before 5:00 p.m. (New York City time) on July 2, 2015 (the Termination
Date); provided, further, that the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be available to a party if such party has breached or violated any of its covenants, agreements or other
obligations hereunder and such breach or violation has been the principal cause of or directly resulted in (1) the failure to satisfy the conditions to the obligations of the terminating party to consummate the Merger set forth in ARTICLE
VII prior to the Termination Date or (2) the failure of the Merger Closing to occur by the Termination Date; or
(ii) any
Restraint shall be in effect enjoining or otherwise prohibiting the consummation of the Merger, and such Restraint shall have become final and non-appealable; provided, however, that the party seeking to terminate this Agreement
pursuant to this Section 8.1(b)(ii) shall have used reasonable best efforts to prevent, oppose or remove such Restraint; or
(iii) if the Shareholders Meeting shall have been convened and a vote with respect to the adoption of the Plan of Merger shall have
been taken thereat (or any adjournment or postponement thereof) and the Requisite Shareholder Approval shall not have been obtained; or
(c) by the Company:
(i) if
Parent or Merger Sub shall have breached or failed to perform any of their respective representations, warranties, covenants or other agreements set forth in this Agreement, which breach or failure to
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perform, individually or in the aggregate, (x) would give rise to a failure of a condition set forth in Section 7.3(a) or Section 7.3(b) and (y) (A) is not capable of
being cured prior to the Termination Date or (B) is not cured by Parent or Merger Sub on or before the earlier of (i) the Termination Date and (ii) the date that is thirty (30) days following the receipt by Parent of written
notice from the Company of such breach or failure; provided, however, that the Company shall not have a right to terminate this Agreement pursuant to this Section 8.1(c)(i) if the Company is then in material breach of any of its
representations, warranties, covenants or agreements hereunder; or
(ii) at any time prior to the Approval Time, if (A) the Company
Board has determined to enter into one or more definitive Alternative Acquisition Agreements with respect to a Superior Offer; (B) the Company shall have complied with the terms and conditions of Section 6.5 with respect to such
Superior Offer; (C) concurrently with the termination of this Agreement the Company enters into one or more definitive Alternative Acquisition Agreements with respect to such Superior Offer; and (D) the Company pays to Parent the
Termination Fee in accordance with Section 8.3(a)(ii); or
(d) by Parent:
(i) if the Company shall have breached or failed to perform any of its representations, warranties, covenants or other agreements set forth in
this Agreement, which breach or failure to perform, individually or in the aggregate, (x) would give rise to the failure of any condition set forth in Section 7.2(a) or Section 7.2(b) and (y) (A) is not capable of
being cured prior to the Termination Date or (B) is not cured by the Company on or before the earlier of (i) the Termination Date and (ii) the date that is thirty (30) days following the receipt by the Company of written notice
from Parent of such breach or failure; provided, however, that Parent shall not have a right to terminate this Agreement pursuant to this Section 8.1(d)(i) if Parent or Merger Sub is then in material breach of any of its
representations, warranties, covenants or agreements hereunder; or
(ii) at any time prior to the date of the Shareholder Meeting, if
(A) the Company Board shall have effected an Adverse Recommendation Change or (B) the Company shall have committed an Intentional Breach of any of its obligations contained in Section 6.2 or Section 6.5.
Section 8.2 Effect of Termination. In the event that this Agreement is terminated in accordance with Section 8.1, written
notice thereof shall be given to the other party or parties, specifying the provisions hereof pursuant to which such termination is made and the basis therefor described in reasonable detail, and, except as set forth in this Section 8.2, this
Agreement shall forthwith become null and void and of no effect without liability on the part of any party hereto (or any of its Representatives), and all rights and obligations of any party hereto shall cease; provided, that if (x) such
termination resulted, directly or indirectly, from the Intentional Breach of any representation, warranty, covenant or other agreement contained herein or (y) the Intentional Breach of any representation, warranty, covenant or other agreement
contained herein shall cause the Merger Closing not to occur, then, notwithstanding such termination, such breaching party shall be fully liable for any and all Damages as a result of such Intentional Breach regardless of whether or not the
Termination Fee has been paid or is payable; provided, further that the Confidentiality Agreement, and the provisions of Section 4.24, Section 5.7, Section 6.4(b), Section 6.8, ARTICLE
I, ARTICLE VIII and ARTICLE IX shall survive any termination of this Agreement pursuant to Section 8.1.
Section 8.3 Termination Fee.
(a) If the Agreement is terminated by:
(i) (x) either Parent or the Company pursuant to Section 8.1(b)(i) or by Parent pursuant to Section 8.1(d)(i), and
(y) (A) the Company receives or has received an Acquisition Proposal from a Third Party after the date hereof or an Acquisition Proposal shall have become publicly known at or prior to such termination, and (B) within twelve
(12) months of such termination of this Agreement, (1) the Company enters into a definitive agreement with respect to an Acquisition Proposal (whether or not the same Acquisition
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Proposal described in clause (y)(A)), or (2) an Acquisition Proposal (whether or not the same Acquisition Proposal described in clause (y)(A)) is consummated by the Company, then the Company
shall pay, or cause to be paid, to Parent an amount equal to $15,450,000 (the Termination Fee) by wire transfer of immediately available funds on the date of, and as a condition to, the entry into such definitive agreement or such
consummation, as applicable;
(ii) the Company pursuant to Section 8.1(c)(ii), then the Company shall pay to Parent the
Termination Fee in cash by wire transfer immediately prior to or concurrently with the termination of this Agreement; or
(iii) by Parent
pursuant to Section 8.1(d)(ii), the Company shall pay to Parent, the Termination Fee in cash by wire transfer within two Business Days after the termination of this Agreement.
(b) Notwithstanding anything to the contrary in this Agreement and subject to Parents right to obtain the remedy of specific performance
contemplated in Section 9.9 in lieu of such Termination Fee, in the event that the Termination Fee is paid to Parent, except with respect to any Damages payable as a result of an Intentional Breach of this Agreement, the payment of the
Termination Fee shall constitute the sole and exclusive remedy of Parent, Merger Sub and their respective Affiliates (whether at law, in equity, in contract, in tort or otherwise) against the Company and its Subsidiaries and each of their respective
shareholders (other than the Shareholder), former, current and future directors, officers, employees, agents and assignees for any Damages for, or with respect to, this Agreement, the transactions contemplated hereby, the termination of this
Agreement, the failure to consummate the transactions contemplated by this Agreement or any claims or actions under Law arising out of such breach, termination or failure. Subject to Parent and Merger Subs ability to recover Damages in respect
of an Intentional Breach, the Termination Fee shall constitute the maximum aggregate liability of the Company and its Subsidiaries for Damages in connection with this Agreement or any of the transactions contemplated hereby. The parties acknowledge
and agree that in no event shall (i) Parent or Merger Sub, or any Affiliate of Parent or Merger Sub, be entitled to obtain both (x) specific performance of this Agreement resulting in the consummation of the Merger and (y) the
Termination Fee, and (ii) the Company be required to pay the Termination Fee on more than one occasion, whether or not the Termination Fee may be payable under more than one provision of this Agreement at the same or at different times and upon
the occurrence of different events; provided, that the Company, Parent and Merger Sub acknowledge that Parent shall not be entitled to receive both the Termination Fee and the Transaction Agreement Termination Fee.
(c) Each of the parties acknowledges that (i) the agreements contained in this Section 8.3 are an integral part of the
transactions contemplated by this Agreement and (ii) without these agreements, the parties would not enter into this Agreement. If the Company fails to pay the Company Termination Fee pursuant to this Section 8.3 when due, and, in
order to obtain such payment, Parent commences a suit that results in a judgment against such party for the Company Termination Fee, the Company shall pay to Parent its costs and expenses (including attorneys fees and expenses) in connection
with such suit, together with interest on the amount of the Company Termination Fee from the date such payment was required to be made until the date of payment at the rate per annum three hundred (300) basis points over the prime
rate (as announced by JP Morgan or any successor thereto) in effect on the date such awarded amount was originally required to be paid.
Section 8.4 Amendment. This Agreement may be amended by mutual agreement of the parties by action taken by or on behalf of their
respective boards of directors at any time before or after receipt of the Requisite Shareholder Approval; provided, however, that after the Requisite Shareholder Approval has been obtained, there shall not be any amendment that by Law
requires further approval by the shareholders of the Company without such further approval of such shareholders. This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.
Section 8.5 Extension; Waiver. At any time prior to the Effective Time, subject to Law, any party hereto may, without limiting its
rights and remedies under this Agreement, (a) extend the time for the performance of
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any obligation or other act of any other party hereto, (b) waive any inaccuracy in the representations and warranties of the other party contained herein or in any document delivered
pursuant hereto, and (c) subject to the proviso of the first sentence of Section 8.4, waive compliance with any agreement or condition contained herein. Notwithstanding the foregoing, no failure or delay by the Company, Parent or Merger
Sub in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any other right hereunder. Any agreement on the part of a party to any extension or
waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party.
Section 8.6 Expenses;
Transfer Taxes. Except as expressly set forth herein (including Section 8.2), all fees and expenses incurred in connection with this Agreement, the Merger and the other transactions contemplated by this Agreement shall be paid by the
party incurring such fees or expenses, whether or not the Merger or any of the other transactions contemplated by this Agreement are consummated.
ARTICLE IX
GENERAL
PROVISIONS
Section 9.1 Non-Survival of Representations, Warranties and Agreements. The representations, warranties,
covenants and agreements in this Agreement and any certificate delivered pursuant hereto by any Person shall terminate at the Effective Time, except that this Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance in whole or in part after the Effective Time.
Section 9.2 Notices. Any notice required to
be given hereunder shall be sufficient if in writing and sent by facsimile transmission (providing confirmation of transmission by the transmitting equipment) or e-mail of a .pdf attachment (with confirmation of receipt by non-automated reply e-mail
from the recipient); provided, that any notice received by facsimile or e-mail transmission or otherwise at the addressees location on any Business Day after 5:00 p.m. (New York City time) shall be deemed to have been received at 9:00
a.m. (New York City time) on the next Business Day), by reliable overnight delivery service (with proof of service), hand delivery or certified or registered mail (return receipt requested and first-class postage prepaid), addressed as follows (or
at such other address for a party as shall be specified in a notice given in accordance with this Section 9.2):
if to Parent or
Merger Sub:
Pluspetrol Resources Corporation
Muiderstraat 7/A
1011PZ
Amsterdam, The Netherlands
Phone: +31 20 662 2199
Fax: +31 20 364 0323
e-mail:
mstorni@pluspetrol.net
Attention: María Ximena Storni
with a copy (which shall not constitute notice) to:
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY
10006
Phone: (212) 225-2000
Fax: (212) 225-3999
e-mail:
jlewis@cgsh.com; nwhoriskey@cgsh.com
Attention: Jeffrey S. Lewis
Neil Q. Whoriskey
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if to the Company:
Apco Oil and Gas International Inc.
One Williams Center, 35th Floor
Tulsa, Oklahoma 74172
Phone:
(539) 573-2164
Fax: (539) 573-0576
e-mail: bryan.guderian@wpxenergy.com
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
Weil, Gotshal & Manges LLP
200 Crescent Court, Suite 300
Dallas, TX 75201
Phone:
(214) 746-7700
Fax: (214) 746-7777
e-mail: gdwest@weil.com; james.griffin@weil.com
Attention: Glenn D. West
James R.
Griffin
Section 9.3 Interpretation; Certain Definitions. The parties have participated jointly in the negotiation and
drafting of this Agreement. Consequently, in the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. When a reference is made in this Agreement to an Article, Section, Appendix, Schedule, Annex or Exhibit, such reference shall be to an Article or
Section of, or an Appendix, Schedule, Annex or Exhibit to, this Agreement, unless otherwise indicated. The table of contents and headings for this Agreement are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words include, includes or including are used in this Agreement, they shall be deemed to be followed by the words without limitation. The words
hereof, herein, hereby, hereto and hereunder and words of similar import when used in this Agreement shall refer to this Agreement as a whole, including all Exhibits, Schedules and Annexes
and Appendices, and not to any particular provision of this Agreement. All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto unless otherwise defined
herein. References to a Person are also to its successors and permitted assigns. The words made available to Parent or words of similar import refer to documents posted to EDGAR or the Electronic Data Room and delivered to Parent on
CD-ROM at least twenty-four (24) hours prior to the date hereof. The specification of any dollar amount in any representation or warranty contained in ARTICLE IV or ARTICLE V is not intended
to imply that such amount, or higher or lower amounts, are or are not material for purposes of this Agreement, and no party shall use the fact of the setting forth of any such amount in any dispute or controversy between or among the parties as to
whether any obligation, item or matter not described herein or included in the Company Disclosure Schedule or the Parent Disclosure Schedule is or is not material for purposes of this Agreement. Words describing the singular number shall be deemed
to include the plural and vice versa, and words denoting any gender shall be deemed to include all genders.
Section 9.4
Severability. If any term or other provision of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, illegal or incapable of being enforced under any present or future Law or public policy,
(a) such term or other provision shall be fully separable, (b) this Agreement shall be construed and enforced as if such invalid, illegal or unenforceable provision had never comprised a part hereof, and (c) all other conditions and
provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or other provision or by its severance herefrom so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of
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being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible to the fullest extent permitted
by Law in a mutually acceptable manner in order that the transactions contemplated hereby are fulfilled as originally contemplated to the fullest extent possible.
Section 9.5 Assignment. Neither this Agreement nor any rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of Law or otherwise) without the prior written consent of the other parties hereto, except that Parent may assign its rights and delegate its obligations hereunder to one or more of its Affiliates, including any
direct or indirect wholly owned subsidiary, as long as Parent remains ultimately liable for all of Parents obligations hereunder. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by, the parties and their respective permitted successors and permitted assigns.
Section 9.6 Entire Agreement.
This Agreement (including the Exhibits, Schedules, Annexes and Appendices hereto and other documents delivered pursuant hereto) constitutes, together with the Confidentiality Agreement, the Company Disclosure Schedule and the Parent Disclosure
Schedule, the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, among the parties and their Affiliates, or any of them, with respect to the subject matter hereof.
Section 9.7 No Third-Party Beneficiaries. This Agreement is not intended to and shall not confer any rights or remedies upon any
Person other than the parties hereto and their respective successors and permitted assigns, except (a) for the rights to receive consideration after the Effective Time under ARTICLE III (which shall be enforceable by the applicable
holders of equity securities issued by the Company if the Effective Time shall occur), (b) as specifically provided in Section 6.6(b) (which shall be to the benefit of the parties referred to in such section). Without conferring any
third-party beneficiary rights on any Company Shareholder or any other Person not party hereto, in the event (i) the remedy of specific performance contemplated in Section 9.9 is not available to the Company, (ii) the Company seeks
and obtains a judgment granting specific performance against Parent but the Company is unable to enforce such judgment against Parent promptly for any reason or (iii) the Company declines, for whatever reason, to seek the remedy of specific
performance contemplated in Section 9.9, the Company (and no other Person) shall have the right to seek to obtain damages (to the extent proven and taking into account other reasonably available combination opportunities) based on the lost
shareholder premium (based on the NASDAQ quoted stock price as of the date hereof) in the event of Parents or Merger Subs material breach of this Agreement that constituted a failure of any of the conditions to Merger Closing from being
satisfied, which right is hereby expressly acknowledged and agreed by each of Parent and Merger Sub, who shall each be jointly and severally liable for any such damages for which Parent and/or Merger Sub are found liable. The representations and
warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in
accordance with Section 8.5 without notice or liability to any other Person. The representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of
the Knowledge of any of the parties hereto. Accordingly, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this
Agreement or as of any other date.
Section 9.8 Governing Law. This Agreement and all claims, actions, proceedings or
counterclaim (whether based on contract, tort or otherwise) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or
relating to any representation or warranty made in connection with this Agreement or as an inducement to enter into this Agreement) shall be governed by and construed in accordance with the laws of the State of New York, without regard to the
conflicts of law rules (other than New York General Obligations Law Sections 5-1401 and 5-1402) of such State (provided that the fiduciary duties of the Company Board, the internal corporate affairs of the Company, and the Merger and any exercise of
dissention rights with respect to the Merger, shall in each case be governed by the laws of the Cayman Islands).
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Section 9.9 Specific Performance.
(a) The parties acknowledge and agree that irreparable damage for which monetary damages, even if available, would not be an adequate remedy
may occur in the event that the parties hereto do not perform the provisions of this Agreement (including failing to take such actions as are required of it hereunder to consummate the transactions contemplated by this Agreement) in accordance with
its specified terms or otherwise breach such provisions. Accordingly, except as otherwise set forth in this Section 9.9, the parties acknowledge and agree that the parties hereto shall be entitled, without posting a bond or other indemnity,
to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity.
(b) Each party hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or
restrain breaches of this Agreement by such party, and to specifically enforce the terms and provisions of this Agreement to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of such party under
this Agreement all in accordance with the terms of this Section 9.9. Any party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement shall not be
required to provide any bond or other security in connection with such order or injunction all in accordance with the terms of this Section 9.9. The parties hereto further agree that (i) by seeking the remedies provided for in this
Section 9.9, a party shall not in any respect waive its right to seek or obtain any other form of relief that may be available to a party under this Agreement in the event that this Agreement has been terminated or in the event that the
remedies provided for in this Section 9.9 are not available or otherwise are not granted, and (ii) nothing set forth in this Section 9.9 shall require any party hereto to institute any proceeding for (or limit any partys
right to institute any proceeding for) specific performance under this Section 9.9 prior or as a condition to exercising any termination right under ARTICLE VIII, nor shall the commencement of any legal proceeding pursuant to this
Section 9.9 or anything set forth in this Section 9.9 restrict or limit any partys right to terminate this Agreement in accordance with the terms of ARTICLE VIII or pursue any other remedies under this Agreement that may
be available then or thereafter.
Section 9.10 Consent to Jurisdiction.
(a) Each of Parent, Merger Sub and the Company irrevocably submits to the exclusive jurisdiction of any New York federal court (or if
jurisdiction is not available therein, a New York state court) sitting in the Borough of Manhattan of the City of New York, and any appellate court from any thereof (any such court, a New York Court), for the purposes of any suit,
action, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Agreement, the other agreements contemplated hereby or any transaction contemplated hereby . Each of Parent, Merger Sub and
the Company hereby agree to commence any action, suit or proceeding relating hereto in a New York federal court (or if jurisdiction is not available therein, a New York state court) sitting in the Borough of Manhattan of the City of New York. To the
extent process by mail is permitted by Law, each of Parent, Merger Sub and the Company agrees that service of any process, summons, notice or document by U.S. registered mail to such partys respective address set forth above shall be effective
service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 9.10. Each of Parent, Merger Sub and the Company irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in any New York federal court sitting in the Borough of Manhattan of the City of New York, and any appellate
court from any thereof, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum. Each
of Parent, Merger Sub and the Company irrevocably waives any objections or immunities to jurisdiction to which it may otherwise be entitled or become entitled (including sovereign immunity, immunity to pre-judgment attachment, post-judgment
attachment and execution) in any legal suit, action or proceeding against it arising out
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of or relating to this Agreement or the transactions contemplated hereby which is instituted in any such court. Each Party agrees that any Order (including in respect of specific performance)
issued by a New York Court pursuant to this Section 9.10 may be entered and enforced in any court having jurisdiction in the Cayman Islands or any other court having jurisdiction.
Section 9.11 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile
transmission or by e-mail of a .pdf attachment shall be effective as delivery of a manually executed counterpart of this Agreement.
Section 9.12 Non-Recourse. Except to the extent otherwise set forth in the Transaction Agreement and Power of Attorney, all
claims, obligations, Liabilities, or causes of action (whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to
this Agreement, or the negotiation, execution, or performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement), may be made by the parties hereto only against (and such
representations and warranties are those solely of) the Persons that are expressly identified as parties in the preamble to this Agreement (the Contracting Parties). Except as set forth in the Power of Attorney and Transaction
Agreement, no Person who is not a Contracting Party, including any current, former or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any Contracting Party, or any current, former or
future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any of the foregoing (collectively, the Nonparty Affiliates), shall have any Liability (whether in contract or in
tort, in law or in equity, or granted by statute) for any claims, causes of action, obligations, or Liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by reason of this
Agreement or its negotiation, execution, performance, or breach and, to the maximum extent permitted by Law, each Contracting Party hereby waives and releases all such Liabilities, claims, causes of action, and obligations against any such Nonparty
Affiliates of another Contracting Party. Without limiting the foregoing, to the maximum extent permitted by Law, except with respect to rights, claims, demands and causes of action arising under or in respect of the Transaction Agreement and the
Power of Attorney, each Contracting Party hereby waives and releases any and all rights, claims, demands, or causes of action that may otherwise be available at law or in equity, or granted by statute, to avoid or disregard the entity form of a
Contracting Party or otherwise impose Liability of a Contracting Party on any other Contracting Partys Nonparty Affiliate in respect of this Agreement, whether granted by statute or based on theories of equity, agency, control,
instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness, undercapitalization, or otherwise. Notwithstanding anything in this Agreement to the contrary, for the avoidance of doubt, nothing in this
Agreement (including the provisions of Section 5.11, Section 8.3(b) or this Section 9.12) shall limit in any way (i) the terms and conditions of the Power of Attorney or the Transaction Agreement or any rights that Parent
or any of its Affiliates has thereunder against Shareholder or (ii) any partys right to obtain Damages against the Shareholder for Intentional Breach of the Transaction Agreement.
Section 9.13 WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, MERGER SUB OR THE COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT
THEREOF.
[Remainder of page intentionally left blank; signature page follows.]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this Agreement to be executed
on the date first written above by their respective officers thereunto duly authorized.
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PLUSPETROL RESOURCES CORPORATION |
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By: |
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/s/ Maria Ximena Storni |
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Name: |
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Maria Ximena Storni |
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Title: |
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Attorney-in-fact |
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PLUSPETROL BLACK RIVER CORPORATION |
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By: |
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/s/ Maria Ximena Storni |
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Name: |
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Maria Ximena Storni |
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Title: |
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Attorney-in-fact |
Signature page to Merger Agreement
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APCO OIL AND GAS INTERNATIONAL INC. |
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By: |
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/s/ Richard E. Muncrief |
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Name: |
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Richard E. Muncrief |
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Title: |
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Chairman of the Board |
Signature page to Merger Agreement
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Exhibit A
Plan of Merger
See the
attached.
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EXECUTION
PLAN OF MERGER
THIS PLAN OF MERGER is
made on [],
BETWEEN
(1) |
Apco Oil and Gas International Inc., an exempted company incorporated in the Cayman Islands with limited liability (registered number MC-668) and whose registered office is situated at the offices of c/o Maples
Corporate Services Limited, Ugland House, PO Box 309, Grand Cayman KY1-1104, Cayman Islands (Surviving Company); and |
(2) |
Pluspetrol Black River Corporation, an exempted company incorporated in the Cayman Islands with limited liability (registered number HL-291350) and whose registered office is situated at the offices of c/o
Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands (Merging Company). |
WHEREAS
(A) |
The respective boards of directors of the Surviving Company and the Merging Company have approved the merger of the Companies, with the Surviving Company continuing as the surviving company (Merger), upon the
terms and subject to the conditions of this Plan of Merger and pursuant to provisions of Part XVI of the Companies Law (as amended) (Companies Law). |
(B) |
In accordance with section 233(6) of the Companies Law, the shareholders of each of the Surviving Company and the Merging Company have approved and adopted this Plan of Merger on the terms and subject to the conditions
set forth herein and otherwise in accordance with the Companies Law. |
(C) |
Each of the Surviving Company and the Merging Company wishes to enter into this Plan of Merger pursuant to the provisions of Part XVI of the Companies Law. |
IT IS AGREED as follows:
1. |
DEFINITIONS AND INTERPRETATION |
Capitalized terms used but not defined in this Plan of
Merger shall have the meaning given to them in the merger agreement among Pluspetrol Resources Corporation, the Surviving Company and the Merging Company, dated as of October 2, 2014 (as may be modified or amended from time to time) (Merger
Agreement).
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2.1 |
The constituent companies (as defined in the Companies Law) to this Plan of Merger are the Surviving Company and the Merging Company (Constituent Companies). |
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2.2 |
The surviving company (as defined in the Companies Law) that results from the merger of the Constituent Companies (Merger) is the Surviving Company. |
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2.3 |
The registered office of the Surviving Company upon the Effective Date is c/o Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands. |
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2.4 |
Immediately prior to the Effective Time, the authorised share capital of the Surviving Company is $600,000 divided into 60,000,000 shares each of nominal or par value $0.01 per share (each a Company Share).
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2.5 |
Immediately prior to the Effective Time, the registered office of the Merging Company is c/o Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands.
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2.6 |
Immediately prior to the Effective Time, the authorised share capital of the Merging Company is $50,000 divided into 50,000 shares each of nominal or par value $1.00 per share. |
In accordance with section 233(13) of the Companies Law, the date on
which it is intended that the Merger is to take effect is the date specified as such in the notices to the Registrar signed by a director of the Surviving Company and a director of the Merging Company, respectively; being the date that the
applicable documents are registered by the Registrar in accordance with the Companies Law (Effective Date).
4. |
TERMS AND CONDITIONS; SHARE RIGHTS |
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4.1 |
The terms and conditions of the Merger are as follows: |
(a) Each Company Share held by the
Surviving Company or any Subsidiary of the Surviving Company (as treasury shares (if applicable) or otherwise) or held by Parent or Merging Company, in each case, immediately prior to the Effective Time, shall automatically be canceled and retired
and shall cease to exist, and no consideration or payment shall be delivered in exchange therefor or in respect thereof;
(b) Each Company
Share issued and outstanding immediately prior to the Effective Time (other than shares canceled pursuant to Section 4.1(a) and, except as provided in Section 4.1(d), the Dissenting Shares) shall be converted into the right
to receive US$ 14.50 in cash (such sum, Merger Consideration), without interest. For purposes of this Plan of Merger, Total Merger Consideration shall mean the product of (x) the number of Company Shares issued and outstanding
(other than shares canceled pursuant to Section 4.1(a) and, except as provided in Section 4.1(d), the Dissenting Shares) immediately prior to the Effective Time and (y) the Merger Consideration. Each Company Share to be
converted into the right to receive the Merger Consideration as provided in the first sentence of this Section 4.1(b) shall, by virtue of the Merger and without any action on the part of the holders thereof, be automatically canceled and
shall cease to exist, and the holders of share certificates (Certificates) or book-entry shares (Book-Entry Shares) which immediately prior to the Effective Time represented such Company Shares shall cease to have any rights with
respect to such Company Shares other than the right to receive, upon surrender of such Certificates (or affidavits of loss in lieu thereof in accordance with Merger Agreement) or Book-Entry Shares in accordance with Merger Agreement, the Merger
Consideration, without interest thereon, for each such Company Share held by them;
(c) Each share, par value of $1.00 per share, of
Merging Company issued and outstanding immediately prior to the Effective Time shall be converted into and become one (1) newly and validly issued, fully paid and non-assessable ordinary share, par value $0.01 per share, of the Surviving
Company and constitute the only outstanding share of the Surviving Company and the register of members of the Surviving Company (Register) shall promptly be updated to reflect such conversion; and
(d) Notwithstanding anything to the contrary contained in this Plan of Merger, Company Shares issued and outstanding immediately prior to the
Effective Time that are held by any holder who is entitled to appraisal rights under Section 238 of the Companies Law, and who has delivered to the Surviving Company a written objection to the Merger pursuant to Section 238 of the
Companies Law (Dissenting Shares), shall not be converted into the right to receive the Merger Consideration as provided in Section 4.1(b) but instead the holders of such Dissenting Shares shall be entitled only to such rights as
are granted by the Companies Law. At the Effective Time, the Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of Dissenting Shares shall cease to have any rights with
respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the provisions of Section 238 of the Companies Law. Notwithstanding the foregoing, if any such holder shall
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have failed to perfect or prosecute or shall have otherwise waived, effectively withdrawn or lost his or her rights under Section 238 of the Companies Law or a court of competent
jurisdiction shall determine that such holder is not entitled to the relief provided by Section 238 of the Companies Law, then the right of such holder to be paid the fair value of such holders Dissenting Shares under Section 238 of
the Companies Law shall cease and such shares shall no longer be considered Dissenting Shares for purposes hereof and such holders Company Shares shall thereupon be deemed to have been converted as of the Effective Time into the right to
receive the Merger Consideration, without any interest thereon, as provided in Section 4.1(b).
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4.2 |
From the Effective Time, (i) the memorandum and articles of association of the Surviving Company immediately prior to the merger shall be its memorandum and articles of association with effect from the Effective
Date in the form set out in the Annex A to this Plan of Merger (Articles), and (ii) the rights and restrictions attaching to the shares of nominal or par value of $0.01 each in the capital of the Surviving Corporation are as set out in
the Articles. |
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4.3 |
The Cayman Islands and United States tax elections (whether federal or state) of the Surviving Company (if any) shall continue in full force and effect. |
At any time prior to the Effective date, this Plan of Merger may be
terminated in accordance with the Merger Agreement; provided that any change of the Effective Date shall not be to a date later than the ninetieth (90th) day after the date of registration of
this Plan of Merger with the Registrar of Companies.
Neither Constituent Company has granted any fixed or floating
security interests that are outstanding as at the date of this Plan of Merger.
7. |
DIRECTORS INTEREST IN THE MERGER |
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7.1 |
The name and address of the Director of the Surviving Company as of the Effective Date is PRC Oil & Gas B.V. whose registered office is at Muiderstraat 7A, 1011PZ Amsterdam, The Netherlands. |
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7.2 |
No director of either of the Constituent Companies will be paid any amounts or receive any benefits consequent upon the Merger. |
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8.1 |
This Plan of Merger has been approved in accordance with the Companies Law by the respective boards of directors (Board) of each of the Constituent Companies. |
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8.2 |
This Plan of Merger has been approved in accordance with the Companies Law by the respective shareholders of each of the Constituent Companies. |
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8.3 |
Each of the Constituent Companies agrees and undertakes with the other that it will, and will procure that a member of its Board will, give, execute and file with the Registrar such certificates, documents,
declarations, undertakings and confirmations, and pay such fees, as may be required to filed pursuant to section 233 of the Companies Law in order to consummate the Merger. |
This Plan of Merger may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument. Any party may enter into this Plan of Merger by executing any such counterpart. Delivery of an executed counterpart of this Plan of Merger by e-mail (PDF) or facsimile shall be
effective as delivery of a manually executed counterpart of this Plan of Merger.
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10.1 |
This Plan of Merger, and any non-contractual obligations arising out of or in connection with it, shall be governed by and construed in accordance with the laws of the Cayman Islands. |
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10.2 |
Each of the parties agrees that the courts of the Cayman Islands shall have jurisdiction to hear and determine any action or proceeding arising out of or in connection with this Plan of Merger, and any non-contractual
obligations arising out of or in connection with it, and for that purpose each party irrevocably submits to the jurisdiction of the courts of the Cayman Islands and agrees that the process by which any such action or proceeding is begun may be
served on it by being delivered in accordance with the notice provisions of this Plan of Merger. |
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intentionally left blank. Signature pages follow.]
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IN WITNESS WHEREOF this Plan of Merger has been executed as a deed by the parties hereto
on the date first before written.
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EXECUTED as a Deed by Apco Oil and Gas International Inc. |
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EXECUTED as a Deed by Pluspetrol Black River Corporation |
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Annex A
Memorandum and Articles of Association of Surviving Company
A-62
Exhibit B
Power of Attorney
See the
attached.
A-63
EXECUTION
THIS LIMITED POWER OF ATTORNEY is made on 2 October 2014.
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WPX Energy, Inc., a corporation incorporated under the laws of the State of Delaware whose registered office is situated at 3500 One Williams Center, Tulsa, OK 74103, United States of America (WPX). |
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WHEREAS |
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WPX is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of 20,301,592 Class A Shares (Subject Shares), of a nominal or par value of US$0.01 each, in the capital of Apco Oil
and Gas International Inc. (Company) and, in connection therewith, WPX has determined to irrevocably appoint the Attorney (as defined below) to be WPXs attorney-in-fact for the purposes noted below from the date hereof through the
Termination Time. |
IT IS AGREED AND DECLARED THAT
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Capitalized terms used but not defined in this Power of Attorney shall have the meaning given to them in the merger agreement among Pluspetrol Black River Corporation and the Company, dated as of the date hereof (as may
be modified or amended from time to time) (Merger Agreement). |
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WPX hereby retains Appleby Trust (Cayman) Ltd., whose registered office is situated at Clifton House, 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands (Attorney) for the purpose of voting (or
procuring the vote of) the Subject Shares at every meeting of the shareholders of the Company, and at every adjournment or postponement thereof, and on every action or approval by written consent of the shareholders of the Company and instructs the
Attorney to vote (or procure the vote of) the Subject Shares only as follows: |
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in favor of the approval and adoption of the Merger Agreement and the Plan of Merger (which provides for, among other things, the merger of Pluspetrol Black River Corporation with and into the Company (the
Merger) with the Company continuing as the surviving corporation), the approval of the Merger and the other transactions contemplated by the Merger Agreement and the Plan of Merger and any other matter that must be approved by the
shareholders of the Company in order for the transactions contemplated by the Merger Agreement and the Plan of Merger to be consummated; |
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against approval of any proposal made in opposition to, made in competition with, or that would result in a breach of, the Merger Agreement, the Plan or Merger or the Merger or any other transactions contemplated by the
Merger Agreement; and |
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against any of the following actions (other than those actions in furtherance of the Merger, the Plan of Merger and the Merger Agreement): (i) any merger, consolidation, business combination, sale of assets,
reorganization or recapitalization of or involving the Company or any of its Subsidiaries, (ii) any sale, lease or transfer of all or substantially all of the assets of the Company or any of its Subsidiaries, (iii) any reorganization,
recapitalization, extraordinary dividend, dissolution, liquidation or winding up of the Company or any of its Subsidiaries, (iv) any material change in the capitalization of the Company or any of its Subsidiaries, or the corporate structure of
the Company or any of its Subsidiaries, (v) any Acquisition Proposal with respect to the Company, (vi) to the extent submitted to a shareholder vote, any change in the business, management or Board of Directors of the Company, or
(vii) any other action that (1) is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone, discourage or adversely affect the Merger or any other transactions contemplated by the Merger Agreement,
(2) would result in a breach in any respect of any covenant, representation or warranty, or any other obligation or agreement of the Company under the Merger Agreement, or (3) would change in any manner the dividend policy or
capitalization of, including the voting rights of any class of equity interests in, the Company, |
A-64
collectively, the Subject Votes.
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For the services to be rendered by the Attorney hereunder, the Attorney shall be paid by WPX, concurrently with the Termination Time, a fee (Fee) in an amount equal to the aggregate of (i) US$0.01 for each
time the Attorney attends, participates in or directs the exercise of any voting rights attaching to the Subject Shares (whether at any general meeting, class meeting or other meeting at which such rights are capable of being exercised or sign or
execute written resolution), plus (ii) US$1.00 in connection with the passage or adoption of a resolution of the members of the Company approving the Merger. |
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For the purpose of securing the interest of the Attorney in the Fee, WPX irrevocably and by way of security hereby appoints the Attorney as its true and lawful attorney with authority on its behalf and in its name or
otherwise to exercise all rights, powers and privileges attaching to the Subject Shares or otherwise capable of being exercised by the registered holder of the Subject Shares and for such purpose to do all such acts and things and to execute all
such deeds and other documents as the Attorney shall consider necessary or desirable to effect the Subject Votes, including (without prejudice to the generality of the foregoing), all or any of the following for and on behalf of WPX (in each case in
such manner and on such terms as the Attorney in its absolute discretion shall think fit): |
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to attend, participate in and direct the exercise of any voting rights attaching to the Subject Shares at any general meeting, class meeting or other meeting at which such rights are capable of being exercised; and
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to approve, complete, or otherwise sign or execute any requisition of any meeting, consent to short notice or waive notice, proxy, written resolution, agreement of the members of the Company (or any of them) or any
other document capable of being signed by the registered holder of the Subject Shares. |
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WPX hereby undertakes not to, and it shall not, exercise any of the rights, powers and privileges attaching to the Subject Shares, or otherwise capable of being exercised by the registered holder of the Subject Shares,
in relation to the Subject Votes without the prior written consent of the Attorney. |
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The Attorney may from time to time, on such terms as it thinks fit, appoint and remove a substitute (who shall not have the power of substitution) and delegate to an agent the exercise of any other power conferred by
this Power of Attorney and may act concurrently with such substitute or agent. The Attorney may delegate all or any of these powers conferred by this Power of Attorney to an officer or officers of the Attorney. |
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WPX hereby ratifies and confirms, and agrees to ratify and confirm, any acts and other things whatsoever that the Attorney shall do or purport to do by virtue of this Power of Attorney including any such acts and things
done between the time of revocation of this Power of Attorney and the time of that revocation becoming known to the Attorney. |
8. |
By the execution of this Power of Attorney, WPX undertakes to indemnify, and hereby indemnifies, each of the persons named above as Attorney (and any substitutes or delegates of such Attorney) of WPX from and against
any and all actions, proceedings, losses, costs, damages, expenses, claims, demands or other liabilities of any nature whatsoever which any or all of them may suffer or otherwise incur by reason of their exercising the powers, acting pursuant to or
in reliance on this Power of Attorney. |
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WPX shall not sell, dispose of, transfer, or assign the Subject Shares or any other ownership interests in the Company and shall cause the Company not to sell, dispose of, transfer, or assign any ownership interests in
any corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof owned by it as of the date hereof, other as permitted pursuant to the terms and conditions of the Merger
Agreement. |
10. |
This Power of Attorney shall remain effective and valid until the earlier of (i) termination of the Merger Agreement pursuant to its terms and (ii) immediately prior to the effective time of the Merger and it
shall be deemed to be revoked at that time (such time, the Termination Time) and shall be of no further effect after that time. |
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11. |
This Power of Attorney and any non-contractual obligations arising out of or in connection with this Power of Attorney shall be governed by, and construed in accordance with, the laws of the Cayman Islands. The courts
of Cayman Islands shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Power of Attorney or its subject matter or formation (including any non-contractual dispute or claim).
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A copy of this Deed may be deposited at the registered office of the Company or with such other person as may be deemed necessary or desirable to satisfy any requirement of the Companys articles of association or
for any other purpose. |
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IN WITNESS whereof WPX has executed this Power of Attorney as a deed the day and year first above written.
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EXECUTED AS A DEED by WPX Energy, Inc.: |
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Duly Authorised Signatory |
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A-67
Exhibit C
Transaction Agreement
See
the attached.
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Step N°1
Amsterdam, The Netherlands, October 2, 2014
Messrs.
WPX ENERGY, INC.
3500 One Williams Center
Tulsa, OK 74172-0135
REF: IRREVOCABLE OFFER N° 001-WPX-TA-2014
Dear Sirs,
In accordance with recent
negotiations, Pluspetrol Resources Corporation, a company duly organized and validly existing under the laws of the Cayman Islands and domiciled in the Cayman Islands (Purchaser), hereby submits this irrevocable stock
purchase offer (the Offer) to WPX ENERGY, INC., a corporation duly organized and validly existing under the laws of Delaware and domiciled in the State of Oklahoma (Seller), subject to the terms
and conditions set forth below (including all schedules hereto).
This Offer shall be deemed accepted if, on or before 11:59 p.m. (New
York time) on October 2, 2014, Seller delivers to Purchaser a written notice of acceptance of the Offer.
If Seller were to accept
this Offer pursuant to the immediately preceding paragraph, the rights and obligations under which Seller and Purchaser will be bound shall be those arising from the terms and conditions of this Offer and those terms and conditions shall govern the
relationship between Seller and Purchaser relating to the subject matter thereof.
TERMS AND CONDITIONS OF THE OFFER
THIS TRANSACTION AGREEMENT (this Agreement) is entered into as of October 2, 2014, between Seller and
Purchaser.
WHEREAS, Seller is the beneficial and record owner of (a) 16,239 shares, par value ARS 1.00 per share (the
Apco Argentina Shares), of Apco Argentina S.A., an Argentine corporation (Apco Argentina); and (b) 1,000 common shares, par value $1.00 per share (the Northwest Common
Shares) of Northwest Argentina Corporation, a Utah corporation (Northwest Corporation);
WHEREAS, prior to Closing (as defined below), Seller shall cause the conversion (the Conversion) of Northwest
Corporation into a limited liability company (Northwest LLC and, together with Northwest Corporation, Northwest);
WHEREAS, subsequent to such conversion and immediately prior to Closing, Seller shall own beneficially and of record, all of the
limited liability company interests (the Northwest Interests) in Northwest LLC; and
WHEREAS, Seller
desires to sell, and Purchaser desires to purchase, the Apco Argentina Shares owned beneficially and of record by Seller and the Northwest Interests owned beneficially and of record by Seller at Closing (the Target
Interests and the acquisition of the Target Interests, the Purchase), subject to the terms and conditions set forth herein.
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NOW, THEREFORE, in consideration of the foregoing recitals and the representations,
warranties, covenants, and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
Definitions
1.1
Certain Definitions.
Acquisition Inquiry means an inquiry, indication of interest or request for
nonpublic information (other than an inquiry, indication of interest or request for nonpublic information made or submitted by or on behalf of Purchaser or its Affiliates) that could reasonably be expected to lead to an Acquisition Proposal.
Acambuco Agreements has the meaning set forth in Section 3.4(b).
Acquisition Proposal has the meaning set forth in Section 7.4.
Administrative Services Agreement has the meaning set forth in Section 7.9(b).
Affiliates means, with respect to any Person, any other Person that, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term control (including the terms controlled by and under common control with) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
Agreement has the meaning set forth in the recitals.
Apco has the meaning set forth in Section 2.1.
Apco Argentina Board has the meaning set forth in Section 3.11.
Apco Board means the board of directors of Apco.
Apco Shares means, collectively, each issued and outstanding ordinary share of Apco, par value $0.01 per share, and
each issued and outstanding Class A Share of Apco, par value $0.01 per share.
Argentine Antitrust Approval
means the authorization required by Argentine Antitrust Laws for the transactions contemplated by this Agreement.
Argentine
Antitrust Laws means any Law of Argentina intended to prohibit, restrict or regulate actions or transactions having the purpose or effect of monopolization, restraint of trade, harm to competition or effectuating foreign investment
(including, without limitation, Argentine Antitrust Law Nº 25,156 as amended by Argentine Legislative Decree N° 396/2001 and implemented by, inter alia, Argentine Regulatory Decree N° 89/2001 and Argentine Resolution SDyCS N°
40/2001, as amended and complemented from time to time).
Argentine Stock Transfer Notice means a notice,
pursuant to Section 215 of the Argentine Commercial Corporations Law, of the transfer of 16,239 shares, par value ARS 1.00 per share of Apco Argentina S.A., an Argentine corporation.
Balance Sheet Date means June 30, 2014.
Beneficiaries has the meaning set forth in Section 7.15.
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Board Designees has the meaning set forth in
Section 5.1(c).
Business Day means any day of the year on which national banking institutions in
New York, New York and the Cayman Islands are open to the public for conducting business and are not required or authorized to close.
Closing has the meaning set forth in Section 2.1.
Closing Date has the meaning set forth in Section 2.1.
Company Disclosure Schedule means the disclosure schedule delivered by Apco to Purchaser prior to the execution of
the Merger Agreement.
Consent Fee has the meaning set forth in Section 7.2.
Confidentiality Agreement means the confidentiality agreement among Pluspetrol S.A., Seller and Apco dated
October 10, 2013, as amended on August 29, 2014, and as further amended from time to time.
Contract
means any contract, agreement, arrangement, understanding, commitment, franchise, trust, indenture, note, deed, obligation, bond, mortgage, loan, instrument, lease, or license, whether written or otherwise.
Contracting Parties has the meaning set forth in Section 8.12.
Conversion has the meaning set forth in the recitals.
Current Insurance Policy has the meaning set forth in Section 7.15.
Damages means damages, costs, fees, expenses, liabilities, penalties or losses of any kind excluding special and
punitive damages and consequential damages that were not reasonably foreseeable as of the date hereof.
Directors and
Officers means Keith E. Bailey, Bryan K. Guderian, Benjamin A. Holman, Michael Kyle, Robert J. LaFortune, Richard E. Muncrief, Piero Ruffinengo, and J. Kevin Vann.
Existing Confidentiality Agreement has the meaning set forth in Section 7.4(a).
GAAP means the United States generally accepted accounting principles.
Governmental Body means any government or governmental or regulatory body thereof, or political subdivision thereof,
whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).
Hydrocarbons means petroleum, natural gas and all related hydrocarbons (including liquid hydrocarbons) and all other
substances, whether liquids, gases or solids and whether hydrocarbons or not, produced in association with petroleum, natural gas or related hydrocarbons.
Hydrocarbons Concession means the concessions rights granted by Governmental Bodies which entitles the holder
thereof to explore for, drill for, recover, produce, develop, remove, and dispose of Hydrocarbons.
Indebtedness
means, with respect to any Person, without duplication: (a) any obligations for borrowed money; (b) any obligations evidenced by bonds, notes, debentures, letters of credit or similar instruments; (c) any
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obligations under conditional sale, title retention or similar agreements or arrangements creating an obligation with respect to the deferred purchase price of securities or similar assets
(including earn-out payments) and any obligations under any conditional sale, title retention or similar agreements or arrangements with respect to the deferred purchase price of goods or services that are due more than 90 days following
entry into such agreements or arrangements; (d) any obligations relating to advance payments for goods or services; (e) any capital lease obligations; (f) any net obligations in respect of interest rate, currency or commodity swaps,
collars, caps, hedges, futures contract, forward contract, option or other derivative instruments or arrangements; (g) any accrued interest, premiums, penalties, breakages, make whole amounts and other obligations relating to the
foregoing that would be payable in connection with the repayment of the foregoing; and (h) any obligations to guarantee any of the foregoing types of obligations on behalf of any Person; provided, however, that, with respect to
the Company, Indebtedness shall not be deemed to include any intercompany Indebtedness owing by Northwest to any of its wholly-owned Subsidiaries, by a wholly-owned Subsidiary of Northwest to Northwest or by one
wholly-owned Subsidiary of Northwest to another wholly-owned Subsidiary of Northwest.
Intentional Breach means,
with respect to any representation, warranty, agreement or covenant, an action or omission (including a failure to cure circumstances) taken or omitted to be taken on or after the date hereof that the breaching Person intentionally takes (or fails
to take) and knows would, or would reasonably be expected to, cause or constitute a material breach of such representation, warranty, agreement or covenant.
Knowledge (including the term Known) means, with respect to Seller, the actual knowledge of the
individuals set forth on Schedule 1.1(a) to this Agreement after due and reasonable inquiry of any other senior executives having responsibility for such matters.
Law means any and all domestic (federal, state or local), statute, code, ordinance, tribal or foreign laws, rules,
regulations, orders, judgments, writs, stipulations, awards, injunctions or decrees promulgated by any Governmental Body.
Legal Proceedings means any claim, suit, action, litigation, arbitration, mediation, proceeding or investigation.
Liability means mortgages, charges, security interests, claims, obligations, liabilities, debts, commitments
and duties of any kind whatsoever, whether, fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined, determinable or otherwise, whenever or
however arising (including, whether arising out of contract or tort, based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or disclosed in the notes thereto.
Lien means liens (statutory or other), claims, mortgages, encumbrances, pledges, security interests (including, in
respect of shares, depositary receipts for such shares having been issued), easements, hypothecation, rights-of-way, claims, covenants, conditions, restrictions (including transfer restrictions), options, rights of first offer or refusal,
third-party rights, limitations on voting rights, encroachments, title defects or charges of any kind or nature whatsoever, whether secured or unsecured, choate or inchoate, filed or unfiled, scheduled or unscheduled, recorded or unrecorded,
contingent or non-contingent, material or non-material, known or unknown.
Merger has the meaning set
forth in Section 2.1.
Merger Agreement has the meaning set forth in Section 2.1.
Merger Agreement Acquisition Proposal means any offer or proposal (other than an offer or proposal made or submitted
by or on behalf of Purchaser) relating to any Merger Agreement Acquisition Transaction.
Merger Agreement Acquisition
Transaction means an Acquisition Transaction (as defined in the Merger Agreement).
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Merger Agreement Adverse Recommendation Change means an Adverse
Recommendation Change (as defined in the Merger Agreement).
Merger Agreement Termination Fee means the
Termination Fee (as defined in the Merger Agreement).
Merger Closing Date means the Merger Closing Date (as
defined in the Merger Agreement).
Negative Antitrust Decision has the meaning set forth in
Section 7.1(c).
Nonparty Affiliates has the meaning set forth in Section 8.12.
Northwest has the meaning set forth in the recitals.
Northwest Board has the meaning set forth in Section 3.11.
Northwest Common Shares has the meaning set forth in the recitals.
Northwest Corporation has the meaning set forth in the recitals.
Northwest Interests has the meaning set forth in the recitals.
Northwest LLC has the meaning set forth in the recitals.
Order means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of a Governmental
Body.
Parent Disclosure Schedule means the disclosure schedule delivered by Purchaser to Apco prior to the
execution of the Merger Agreement.
Permit means any approvals, authorizations, consents, licenses, permits or
certificates of a Governmental Body, including, without limitation, any Hydrocarbons Concession.
Person means
any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.
Power of Attorney means the Power of Attorney set forth as Exhibit B to the Merger Agreement.
PRC has the meaning set forth in Section 2.1.
Purchase has the meaning set forth in the recitals.
Purchase Price has the meaning set forth in Section 2.2.
Purchaser has the meaning set forth in the preamble.
Purchaser Disclosure Schedule means the disclosure schedule delivered by Purchaser to Seller prior to the execution
of this Agreement.
Purchaser Documents has the meaning set forth in Section 4.2.
Replacement Insurance Policy has the meaning set forth in Section 7.15.
Representatives means, with respect to any Person, any Subsidiary of such Person and such Persons and each of
its respective Subsidiaries directors (in their capacity as such), officers, employees, investment bankers, financial advisors, attorneys, accountants or other advisors or representatives.
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Restraints has the meaning set forth in
Section 5.1(a).
SEC means the United States Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
Seller has the meaning set forth in the preamble.
Seller Disclosure Schedule means the disclosure schedule delivered by Seller to Purchaser prior to the execution of
this Agreement.
Seller Documents has the meaning set forth in Section 3.2.
Subsidiary means, with respect to any Person, a Person of which a majority of the outstanding share capital, voting
securities or other voting equity interests are owned, directly or indirectly, by the first Person.
Target
Boards has the meaning set forth in Section 3.11.
Tax means any and all taxes,
assessments, fees, levies, duties, tariffs, imposts, and other similar charges (together with any and all interest, penalties, additions to tax, additional amounts in respect of the foregoing, and any obligations or payments to any Person with
respect to any of the foregoing) imposed by any Governmental Body or taxing authority including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, social security, workers compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; customs duties, tariffs,
and similar charges.
Tax Return means any return, declaration, report information statement, claim for refund
or other document, including any schedule or attachment thereto filed or required to be filed with any Governmental Body in connection with the determination, assessment or collection of any Tax of any party or the administration of any laws,
regulations or administrative requirements relating to any Tax.
Target Companies means Apco Argentina and
Northwest.
Target Interests has the meaning set forth in the recitals.
Third Party means any Person or group other than Purchaser or its Affiliates.
Unaudited Balance Sheet means the balance sheet of Northwest for the year ended June 30, 2014.
1.2 Other Definitional and Interpretive Matters.
(a) Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply
Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or
step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
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Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby incorporated
and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.
Gender and
Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.
Headings. The division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any Section are to the corresponding Section of this Agreement unless otherwise
specified.
Including. The word including or any variation thereof means (unless the context of its usage otherwise
requires) including, without limitation and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(b) The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this
Agreement.
ARTICLE II
Sale and Purchase of Securities
2.1 Sale and Purchase of Securities. Seller is selling and delivering to Purchaser, and Purchaser is purchasing and accepting from
Seller, all right, title, and interest of Seller in and to the Target Interests, free and clear of all Liens and in connection with the Agreement and Plan of Merger (the Merger Agreement), dated as of October 2, 2014,
by and among Pluspetrol Resources Corporation, a Cayman Island exempted company limited by shares (PRC), Pluspetrol Black River Corporation, a Caymans Island exempted company limited by shares and a wholly-owned Subsidiary
of PRC, and Apco Oil and Gas International, Inc., a Cayman Islands exempted company limited by shares (Apco). The closing of the purchase and sale of the Target Interests (the Closing) shall take
(a) place at the place and time of the closing of the transactions contemplated by the Merger Agreement (the Merger) or (b) such other time or date as agreed to in writing by the parties hereto. The date on which
the Closing occurs is referred to in this Agreement as the Closing Date.
2.2 Purchase Price. The
aggregate consideration for the Target Interests payable hereunder shall be an amount in cash equal to $2.00 (the Purchase Price). On the Closing Date, Purchaser shall pay the Purchase Price to Seller by wire transfer.
Contemporaneously with the delivery of the Purchase Price, Seller will cause to be delivered to Purchaser (or its designee) the certificates (or evidence of book-entry delivery) representing the Target Interests to be sold hereunder by the Seller.
ARTICLE III
Representations and Warranties of Seller
Seller hereby represents and warrants to Purchaser as follows:
3.1 Organization.
(a)
Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation as set forth above and has all requisite corporate power and authority to own, lease and operate its properties and
to conduct its business as it is now being conducted.
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(b) As of the date hereof, Northwest is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation as set forth above and has the requisite corporate power and authority to conduct its business as it is now being conducted. Following the Conversion, Northwest will be a limited
liability company validly existing and in good standing under the laws of the State of Utah and will have all requisite limited liability company power and authority to conduct its business as it is now being conducted.
(c) Each of Seller and Northwest is duly qualified or licensed as a foreign entity to do business, and (to the extent applicable) is in good
standing, in each jurisdiction in which the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so licensed, qualified or in good
standing would not be material to Apco and its Subsidiaries, taken as a whole.
3.2 Authorization. Seller has all requisite
corporate power, authority and legal capacity to execute and deliver this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement or to be executed by Seller in connection with the consummation of
the transactions contemplated by this Agreement (together with this Agreement, the Seller Documents), and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and each of the Seller Documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all required corporate action on the part of Seller. This Agreement has been, and each of
the Seller Documents will be at or prior to the Closing, duly and validly executed and delivered by Seller, and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each
Seller Document, when so executed and delivered will constitute, the legal, valid and binding obligation of the Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
3.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Section 3.3(a) of the Seller Disclosure Schedule, none of the execution and delivery by Seller of this
Agreement or the Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by Seller with any of the provisions hereof or thereof will conflict with, or result in any violation or breach of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws (or other organizational and governing documents) of Seller,
Northwest or Apco Argentina; (ii) any Contract or Permit to which Seller, Northwest or Apco Argentina is a party or is bound or to which any of the properties or assets of Seller, Northwest or Apco Argentina are subject; (iii) any Order of
any Governmental Body applicable to Seller, Northwest or Apco Argentina or by which any of the properties or assets of Seller, Northwest or Apco Argentina are bound; or (iv) any Law applicable to Seller, Northwest or Apco Argentina or any of
the properties or to which any of the assets of Seller, Northwest or Apco Argentina are subject.
(b) No consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Seller in connection with the execution and delivery of this Agreement or the Seller Documents, or the
compliance by Seller with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby and thereby, except for such consents, waivers, approvals, Orders, Permits or authorizations the failure of which to
obtain would not materially impair Apco Argentina, Northwest and its Subsidiaries (taken as a whole) or Sellers ability to consummate the transactions contemplated hereby.
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3.4 Ownership and Transfer of Target Interests.
(a) The authorized capital stock of Apco Argentina consists of 324,786 shares of common stock, par value ARS 1.00 per share, of which
324,786 shares are issued and outstanding. Apco is the sole record and beneficial owner of 308,547 shares of Apco Argentina. The Apco Argentina Shares (i) represent five percent (5%) of the entire allotted, duly authorized and validly
issued share capital of Apco Argentina and (ii) are duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive rights. The Apco Argentina Shares represent five percent (5%) of the voting rights of shareholders
of Apco Argentina and are not subject to any restrictions as to voting. Other than the Apco Argentina Shares and the shares of Apco Argentina owned by Apco, there are no outstanding shares of capital stock or other equity interests of Apco
Argentina.
(b) As of the date hereof through the Conversion, the authorized capital stock of Northwest consists of 1,000 shares of common
stock, par value $1.00 per share, of which 1,000 shares are issued and outstanding. As of the date hereof through the Conversion, the Northwest Common Shares represent one hundred percent (100%) of the entire allotted, duly authorized and
validly issued share capital of Northwest and are duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive rights. Following the Conversion, the authorized limited liability company interests of Northwest will consist
of one class of outstanding limited liability company interests. Following the Conversion, the Northwest Interests will represent one hundred percent (100%) of the entire allotted, duly authorized and validly issued limited liability company
interests of Northwest and will be duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive rights. As of the date hereof through the Conversion, the Northwest Common Shares represent one hundred percent
(100%) of the voting rights of shareholders of Northwest and are not subject to any restrictions as to voting. Following the Conversion, the Northwest Interests will represent one hundred percent (100%) of the voting rights of members of
Northwest and will not be subject to any restrictions as to voting. Other than the Northwest Common Shares, or, following the Conversion, the Northwest Interests, there are no outstanding shares of capital stock or other equity interests of
Northwest or any outstanding securities convertible into or exchangeable or exercisable for any such capital stock or equity interests. There is no Person (other than Purchaser) who is entitled to acquire or receive any shares of capital stock or
other securities or equity interests of Northwest. Northwest has not conducted any operations other than those directly related to its participating interest in Acambuco pursuant to the (i) Agreement among YPF Sociedad Anónima, Bridas
S.A.P.I.C, Acambuco S.A., Apco Argentina and Northwest as of August 29, 1991 (ii) Decreto 2175/91 as of October 21, 1991; (iii) Public deed 301 as of December 17, 1991; (iv) Agreement among Bridas S.A.P.I.C., Apco
Argentina and Northwest, effective as of April 23, 1984 and (v) Unión Transitoria de Empresas Área Acambuco among Bridas S.A.P.I.C., Apco Argentina, Northwest and YPF Sociedad Anónima, effective as of
September 28, 1994, as amended on November 29, 1999 and as further amended on October 19, 2007 (collectively, the Acambuco Agreements).
(c) Seller is the record and beneficial owner of, and has good, valid and marketable title to, the Apco Argentina Shares and the Northwest
Common Shares, free and clear of any and all Liens and, following the Conversion, will be the record and beneficial owner of, and has good, valid and marketable title to, the Target Interests, free and clear of any and all Liens. Seller has the
corporate power and authority to sell, transfer, assign and deliver such Target Interests as provided in this Agreement, and such delivery will convey to Purchaser good title to such Target Interests, free and clear of any and all Liens or any other
restrictions on transfer (other than any restrictions on transfer under the Securities Act and any state securities Laws).
(d) Northwest
does not own, directly or indirectly, any capital stock, equity interest, beneficial interest or other voting or equity securities or interest in any Person. Northwest does not act or carry on business in partnership with any other Person and is not
party to any joint venture agreement.
(e) Prior to the date hereof, Seller has made available to Purchaser complete and correct copies of
the articles of association, charter and bylaws (or similar organizational documents) of Northwest. Other than the organizational documents made available to Purchaser pursuant to the foregoing sentence, there are no Contracts, arrangements,
shareholder agreements, voting trusts, proxies or understandings which relate to the governance of the voting, registration, transfer or issuance of shares or equity interests of any company of Northwest.
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3.5 No Undisclosed Liabilities. Northwest does not have any Liabilities of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, liquidated or unliquidated, or otherwise that are required by GAAP to be reflected or reserved against on a balance sheet (or
the notes thereto) of Northwest except for Liabilities (i) that are specifically stated and adequately reserved against in the Unaudited Balance Sheet or, (ii) that have been incurred in the ordinary course of business consistent with past
practice since the Balance Sheet Date and are not, individually or in the aggregate, material to Northwest.
3.6 Contracts. Other
than the Acambuco Agreements and Contracts between Northwest and its Affiliates disclosed on Section 4.26 of the Company Disclosure Schedule, Northwest is not party to any Contract.
3.7 Legal Proceeding. As of the date hereof, there is no Legal Proceeding pending, or to the Knowledge of Seller, threatened, against
Northwest, Northwests properties (tangible or intangible) or any of Northwests officers or directors (in their capacities as such). As of the date hereof, there is no investigation or other proceeding pending or, to the Knowledge of
Seller, threatened, against Northwest, any of Northwests properties (tangible or intangible) or any of Northwests officers or directors (in their capacities as such) by or before any Governmental Body.
3.8 Tax. Effective as of the Closing Date, Northwest LLC will be disregarded as an entity separate from Seller for purposes of U.S.
federal income tax law and any applicable state or local law.
3.9 Financial Advisors.
(a) No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission from Apco or any of its
Subsidiaries or Northwest or any of its Subsidiaries in connection with the Purchase or the Merger or any of the other transactions contemplated by this Agreement or the Merger Agreement based upon arrangements made by or on behalf of Seller or any
of its Affiliates (other than Apco and its Subsidiaries).
3.10 Big Boy Representation. Seller acknowledges that
(i) it is a sophisticated institution engaged in the business of assessing and assuming investment risks in respect of securities, including securities such as the Target Interests, (ii) it initiated and still desires to consummate the
sale of the Target Interests to Purchaser, (iii) it is fully satisfied with the Purchase Price, and the Purchase Price is all that Seller is or will be entitled to receive for the Target Interests and (iv) Purchaser is consummating this
transaction with Seller in reliance on the foregoing acknowledgements.
3.11 Board Matters. Section 3.11 of the Seller
Disclosure Schedule sets forth a true, correct and complete list of Sellers designees to the board of directors or applicable governing body of (a) Apco Argentina (the Apco Argentina Board), and
(b) Northwest (the Northwest Board and, together with the Apco Argentina Board, the Target Boards).
3.12 No Other Representations or Warranties. Except for the representations and warranties expressly set forth in this ARTICLE
III and those representations and warranties expressly made by Apco set forth in Article IV of the Merger Agreement, none of Seller or any of its Affiliates nor any other Person on behalf of Seller makes or has made any express or implied
representation or warranty with respect to Seller, the Target Companies or their respective businesses or with respect to any other information provided, or made available, to Purchaser or their respective Representatives or Affiliates in connection
with the transactions contemplated hereby, including the accuracy or completeness thereof. Seller acknowledges and agrees that, except for the representations and warranties made by Purchaser in ARTICLE IV (as qualified by the applicable
items disclosed in the Purchaser Disclosure Schedule) and those representations and warranties expressly set forth in Article V of the Merger Agreement (as qualified by the applicable items disclosed in the Parent Disclosure Schedule), none of
Purchaser or any other Person is making or has made any representations or warranty, expressed or implied, at
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law or in equity, with respect to or on behalf of Purchaser or any of its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future
operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any
information regarding Purchaser or any of its Subsidiaries or any other matter furnished or provided to Seller or made available to the Company in any data rooms, virtual data rooms, management presentations or in any other
form in expectation of, or in connection with, this Agreement or the transactions contemplated hereby or thereby. Seller is not relying and specifically disclaims that it is relying upon or has relied upon any such other representations or
warranties that may have been made by any Person, and acknowledges and agrees that Purchaser and its Affiliates have specifically disclaimed and do hereby specifically disclaim any such other representations and warranties. Seller acknowledges and
agrees that the representations and warranties contained in ARTICLE IV (as qualified by the applicable items disclosed in the Purchaser Disclosure Schedule) and Article V of the Merger Agreement (as qualified by the applicable item disclosed
in the Parent Disclosure Schedule) are for risk allocation purposes and not necessarily assertions of truth.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to Seller as follows:
4.1 Organization. Purchaser is a company duly organized, validly existing and in good standing under the laws of the Cayman Islands and
has all requisite corporate or similar entity power and authority to own, lease and operate properties and conduct business as it is being conducted.
4.2 Authorization. Purchaser has all necessary power and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be executed by Purchaser in connection with the consummation of the transactions contemplated hereby and thereby (the Purchaser Documents), and to
consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Purchaser of this Agreement and each of the Purchaser Documents and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all required corporate or similar entity action on behalf of Purchaser. This Agreement has been, and each Purchaser Document will be at or prior to the Closing, duly executed and delivered by Purchaser and
(assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Purchaser Document when so executed and delivered will constitute, the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
4.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Section 4.3 of the Purchaser Disclosure Schedule, none of the execution and delivery by Purchaser of this
Agreement or the Purchaser Documents, the consummation of the transactions contemplated hereby or thereby, or the compliance by Purchaser with any of the provisions hereof or thereof will conflict with, or result in any violation or breach of or
default (with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the organizational documents of Purchaser; (ii) any Contract or Permit to which Purchaser
is a party or is bound or to which Purchaser or any of the properties or assets of Purchaser are subject; (iii) any Order of any Governmental Body applicable to Purchaser or by which any of the properties or assets of Purchaser are bound; or
(iv) any applicable Law, other than, in the case of clauses (ii) and (iv), for any such violation, breach, default, right, termination, or cancellation that would not materially impair Purchasers ability to consummate the
transactions contemplated hereby.
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(b) No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement or the Purchaser Documents, the compliance by Purchaser with any of the provisions hereof
or thereof, the consummation of the transactions contemplated hereby and thereby or the taking by Purchaser of any other action contemplated hereby, except for such consents, waivers, approvals, orders, Permits or authorizations the failure of which
to obtain would not have a material adverse effect on Purchasers ability to consummate the transactions contemplated hereby.
4.4
Securities Law Matters. Purchaser (i) is acquiring the Target Interests solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof, (ii) acknowledges
that the Target Interests are not registered under the Securities Act, or any state securities laws, and that the Target Interests may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an
applicable exemption therefrom and subject to state securities laws and regulations, as applicable, (iii) has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of purchasing
the Target Interests being purchased by it hereunder and (iv) is able to bear the economic risk of an investment in the Target Interests for an indefinite period, including the risk of a complete loss of any such investment.
4.5 Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser in
connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof.
4.6 Financial Capability. Purchaser has or will have sufficient funds to consummate the Purchase and at the Closing will have
sufficient funds to pay the Purchase Price and consummate the Purchase.
4.7 No Other Representations and Warranties. Except for
the representations and warranties expressly set forth in this ARTICLE IV, none of Purchaser or any of its respective Affiliates nor any other Person on behalf of any of them makes or has made any express or implied representation or warranty
(and there is and has been no reliance by Seller or any of its Affiliates or Representatives on any such representation or warranty) with respect to Purchaser or its businesses or with respect to any other information provided, or made available, to
Seller or any of its Representatives or Affiliates in connection with the transactions contemplated hereby, including the accuracy or completeness thereof. Purchaser acknowledges and agrees that, except for the representations and warranties made by
Seller in ARTICLE III (as qualified by the applicable items disclosed in the Seller Disclosure Schedule) and the representations and warranties expressly set forth in Article IV of the Merger Agreement (as qualified by the applicable items
disclosed in the Company Disclosure Schedule), neither Seller nor any other Person is making or has made any representations or warranty, expressed or implied, at law or in equity, with respect with respect to or on behalf of the Seller, the Target
Companies or any of their respective Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including
the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Target Companies or their respective Subsidiaries or any other matter
furnished or provided to Purchaser or made available to Purchaser in any data rooms, virtual data rooms, management presentations or in any other form in expectation of, or in connection with, this Agreement or the
transactions contemplated hereby or thereby. Purchaser is not relying and specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person (other than the
representations and warranties made by Apco under the Merger Agreement), and acknowledges and agrees that the Seller, the Target Companies and their respective Affiliates have specifically disclaimed and do hereby specifically disclaim any such
other representations and warranties. Purchaser acknowledges and agrees that the representations and warranties contained in ARTICLE III (as qualified by the applicable items disclosed in the Seller Disclosure Schedule) and Article IV of the
Merger Agreement (as qualified by the applicable items disclosed in the Company Disclosure Schedule) are for risk allocation purposes and not necessarily assertions of truth.
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4.8 Doing Business in Argentina. Purchaser acknowledges that (i) it is acquiring
companies doing business in Argentina, (ii) it is familiar with the risks of doing business in Argentina and (iii) has obtained all necessary advise in this respect.
ARTICLE V
Conditions
to Closing
5.1 Conditions Precedent to Obligations of Purchaser. The obligation of Purchaser to consummate the
transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in its sole discretion in whole or in part to the extent
permitted by applicable Law):
(a) No Actions. No Governmental Body of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (collectively, Restraints), or threatened or commenced any Legal Proceeding, which is then pending or in effect and seeks to enjoin or otherwise prohibit, or has the effect
of enjoining or otherwise prohibiting, the consummation of the transactions contemplated by this Agreement.
(b) Performance;
Representations and Warranties True and Correct. Seller shall have performed in all material respects all of its obligations hereunder to be performed by Seller at or prior to the Closing Date, and (i) each of the representations and
warranties set forth in Section 3.4(a), Section 3.4(b) and Section 3.4(c) (Ownership and Transfer of Target Interests) and Section 3.9 (Financial Advisors) shall be true and correct in all respects as
of the date of this Agreement and as of the Closing, except, with respect to Section 3.4(a) and Section 3.4(b), to the extent that any inaccuracies would be de minimis and (ii) each of the other representation and
warranties set forth in ARTICLE III shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date, in each case with the same effect as if then made (except to the extent such representations
and warranties expressly relate to an earlier date, in which case they shall be tested as of such earlier date);
(c) Board
Matters. (i) Those individuals set forth on Schedule 5.1(c) to this Agreement shall have been duly and validly elected to the Target Boards, with such election to be effective immediately following the Closing; and (ii) each
member of Sellers designees (collectively, the Board Designees) to the Target Boards prior to the Closing (other than those members included on Schedule 5.1(c) to this Agreement) shall have duly and validly
delivered to the applicable Target Company his or her executed resignation as a director of the applicable Target Company, subject to and effective immediately following the Closing.
(d) Deliveries. Seller shall have delivered, or caused to be delivered, to Purchaser the documents described in
Section 7.10;
(e) Conversion of Northwest Corporation to Limited Liability Company. At least two days prior to
the Closing Date, Seller shall have (i) effectively converted Northwest Corporation into a limited liability company pursuant to the laws of the State of Utah, and (ii) transferred the relevant certificates of conversion to Purchaser, and
Seller shall not have filed an election to cause such limited liability companies to be treated as corporations for U.S. federal, state or local tax purposes; and
(f) Consummation of Other Transactions. The transactions contemplated by the Merger Agreement shall have been consummated or shall be
consummated substantially concurrently with the Closing.
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5.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate
the transactions contemplated by this Agreement are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Seller in its sole discretion in whole or in part to the
extent permitted by applicable Law):
(a) No Actions. There shall be no Restraints and no Governmental Body has threatened or
commenced any Legal Proceeding, which is then pending or in effect and seeks to enjoin or otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the transactions contemplated by this Agreement.
(b) Performance; Representations and Warranties True and Correct. Purchaser shall have performed in all material respects all of its
obligations hereunder to be performed by Purchaser at or prior to the Closing Date, and each of the representations and warranties contained in ARTICLE IV shall be true and correct in all respects, in each case, as of the date of this
Agreement and as of the Closing Date, in each case with the same effect as if then made (except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall be tested as of such earlier date),
except for such failures to be true and correct as would not reasonably be expected to, individually or in the aggregate, materially impair the ability of Purchaser to consummate the Purchase.
(c) Deliveries. Purchaser shall have delivered, or caused to be delivered, to Seller (or its designee(s)) the Purchase Price by wire
transfer of immediately available funds and (ii) a certificate dated the Closing Date and signed by an executive officer of Seller certifying that the conditions set forth in Section 5.2(b) shall have been satisfied.
(d) Consummation of Other Transactions. The transactions contemplated by the Merger Agreement shall have been consummated or shall be
consummated substantially concurrently with the Closing.
5.3 Frustration of Closing Conditions. Neither of Purchaser or Seller may
rely on the failure of any condition set forth in Section 5.1 or Section 5.2, as the case may be, if such failure was caused by such partys failure to comply with any provision of this Agreement.
ARTICLE VI
Termination
6.1
Termination. This Agreement:
(a) may be terminated and the transactions contemplated hereby may be abandoned at any time prior to
the Closing by mutual written consent of Seller and Purchaser; or
(b) shall automatically be terminated, without any further action by
any party, and the transactions contemplated hereby shall be abandoned at any time prior to the Closing if the Merger Agreement has been terminated in accordance with its terms.
6.2 Procedure Upon Termination. In the event of termination and abandonment by Purchaser or Seller, or both, pursuant to
Section 6.1, written notice thereof shall forthwith be given to the other party or parties, and this Agreement shall terminate, and the purchase of the Target Interests hereunder shall be abandoned, without further action by Purchaser or
Seller.
6.3 Effect of Termination. In the event of any termination of this Agreement in accordance with Section 6.1,
except as set forth in this Section 6.3, this Agreement shall be terminated, and there shall be no further liability or obligation hereunder by the part of any party hereto; provided, that if (x) such termination resulted,
directly or indirectly, from the Intentional Breach of any representation, warranty, covenant or other agreement contained herein or (y) the Intentional Breach of any representation, warranty, covenant or other agreement contained herein shall
cause the Closing not to occur, then, notwithstanding such termination, such breaching party shall be fully liable for any and all Damages, to the extent proven, as a result of such Intentional Breach regardless of whether or not the Termination Fee
or the Merger Agreement Termination Fee has been paid or is payable;
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provided, further that the Confidentiality Agreement, and the provisions of Section 3.9 (Financial Advisors), Section 4.5 (Financial Advisors),
Section 7.7 (Public Statements), ARTICLE I, ARTICLE VI and ARTICLE VIII shall survive any termination of this Agreement pursuant to this ARTICLE VI.
6.4 Future Sale Fee.
(a) If this Agreement is terminated pursuant to Section 6.1(b) and a Merger Agreement Termination Fee is payable to Purchaser
pursuant to Section 8.3(a)(i) or 8.3(a)(ii) of the Merger Agreement, within one Business Day of Seller or its Affiliates receipt of consideration in connection with a related Merger Agreement Acquisition Proposal, Seller shall pay to Purchaser
by wire transfer of immediately available funds an amount equal to the excess, if any, of (x) the consideration actually paid to Seller or its Affiliates in connection with the related Merger Agreement Acquisition Proposal (whether paid in one
transaction or a series of transactions, in cash, securities or any other form and including any deferred purchase price payments, dividends, seller notes and earn-out payments) over (y) $15.00 multiplied by the number of Apco
Shares in respect of which Seller received consideration in such Merger Agreement Acquisition Proposal.
(b) (i) If this Agreement is
terminated (A) pursuant to Section 6.1(b) and a Merger Agreement Termination Fee is payable to Purchaser pursuant to Section 8.3(a)(iii) of the Merger Agreement (following a termination of the Merger Agreement pursuant to
Section 8.1(d)(ii)(B) thereof) or (B) pursuant to Section 6.1(a) or Section 6.1(b) and prior to such termination Seller shall have committed an Intentional Breach of any of its obligations contained in
Section 7.4 and (ii) within 12 months of the termination of this Agreement the Company enters into a definitive agreement with respect to a Merger Agreement Acquisition Proposal with a Third Party (whether or not such Third Party
made an Acquisition Proposal prior to termination) or a Merger Agreement Acquisition Proposal (whether or not the applicable Third Party made an Acquisition Proposal prior to termination) is consummated, then Seller shall pay to Purchaser by wire
transfer of immediately available funds an amount equal to the excess, if any, of (x) the consideration actually paid to Seller or its Affiliates in connection with such Merger Agreement Acquisition Proposal (whether paid in one transaction or
a series of transactions, in cash, securities or any other form and including any deferred purchase price payments, dividends, seller notes and earn-out payments) over (y) $15.00 multiplied by the number of Apco Shares in respect of
which Seller received consideration in such Merger Agreement Acquisition Proposal.
(c) (i) If the Agreement is terminated
(A) pursuant to Section 6.1(b) and the Merger Agreement was terminated by Purchaser or Seller, as applicable, pursuant to Section 8.1(d)(i) or 8.1(d)(ii)(B) of the Merger Agreement or (B) pursuant to
Section 6.1(a) or Section 6.1(b) and prior to such termination Seller shall have committed an Intentional Breach of any of its obligations contained in Section 7.4 of this Agreement, and (ii) (A) within
12 months of the termination of this Agreement following a termination of the Merger Agreement pursuant to Section 8.1(d)(i) or 8.1(d)(ii)(B) of the Merger Agreement or (B) within 12 months of the termination of this Agreement following an
Intentional Breach by Seller of any of its obligations under Section 7.4 of this Agreement, Seller enters into an agreement to sell, dispose or transfer of all or any of the Apco Shares (or the economic benefit thereof) held by Seller as
of the date hereof in a transaction or a series of transactions (a Subsequent Share Sale), Seller shall pay to Purchaser by wire transfer of immediately available funds an amount equal (x) the excess if any of
(1) the per Apco Share consideration actually paid to Seller in connection with the Subsequent Share Sale (whether paid in cash, securities or any other form and including any deferred purchase price payments, seller notes and
earn-out payments and including any consideration paid or payable for the Target Interests) over (2) $15.00 multiplied by (y) the number of Apco Shares sold by Seller in such Subsequent Share Sale.
(d) If the Agreement is (i) terminated pursuant to Section 6.1(b) and the Merger Agreement was terminated by Purchaser or
Seller pursuant to Section 8.1(b)(i), (ii) Seller receives an Acquisition Proposal prior to any such termination and (iii) within 3 months of any such termination of this Agreement, Seller enters into a Subsequent Share Sale, Seller
shall pay to Purchaser by wire transfer of immediately available funds an amount equal (x) the excess if any of (1) the per Apco Share consideration actually paid to Seller in connection with the
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Subsequent Share Sale (whether paid in cash, securities or any other form and including any deferred purchase price payments, seller notes and earn-out payments and including any
consideration paid or payable for the Target Interests) over (2) $15.00 multiplied by (y) the number of Apco Shares sold by Seller in such Subsequent Share Sale.
(e) If the consideration received by Seller in respect of any Merger Agreement Acquisition Proposal subject to Section 6.4(a) or
Section 6.4(b) or any Subsequent Share Sale subject to Section 6.4(c) or Section 6.4(d) is not all in the form of cash, then the value of such non-cash consideration shall equal: (i) in the case of non-cash
consideration in the form of securities listed on a national securities market, the volume weighted average price for such securities for (x) the five consecutive trading days ending on the trading day immediately preceding Sellers
receipt of such securities or (y) the five consecutive trading days starting with the first trading day following Sellers receipt of such securities if such securities are first listed upon the consummation of such Merger Agreement
Acquisition Proposal or Subsequent Share Sale, as applicable or (ii) in the case of all other non-cash consideration, the fair market value of such non-cash consideration as agreed between a willing buyer and a willing seller, neither under any
compulsion to transact, as determined by a third-party valuation firm of international reputation that is reasonably acceptable to both Purchaser and Seller.
6.5 Termination Fee.
(a) If: (i) the Agreement is terminated by either Purchaser or Seller pursuant to Section 6.1; (ii) prior to such
termination, Seller committed an Intentional Breach of any of its obligations contained in Section 7.4; and (iii) no Merger Agreement Termination Fee is payable by Apco pursuant to the terms of the Merger Agreement, then Seller
shall pay to Purchaser an amount equal to $15,450,000 (the Termination Fee) by wire transfer within two Business Days after the termination of this Agreement; provided that the Purchaser and Seller acknowledge that
Purchaser shall not be entitled to receive both the Termination Fee and the Merger Agreement Termination Fee.
6.6 Failure to Pay
Amounts Due.
(a) If Seller fails to pay the Termination Fee or any amounts payable by it pursuant to Section 6.4, when
due, and, in order to obtain such payment, Purchaser commences a suit that results in a judgment against Seller for such amount, Seller shall pay to Purchaser its costs and expenses (including attorneys fees and expenses) in connection with
such suit, together with interest on such amount from the date such payment was required to be made pursuant to Section 6.4 or Section 6.5 until the date of payment at the rate per annum three hundred (300) basis points
over the prime rate (as announced by JP Morgan or any successor thereto) in effect on the date such awarded amount was originally required to be paid.
ARTICLE VII
Covenants
7.1
Consents; Regulatory Approvals.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties
hereto shall (and shall cause each of their applicable Affiliates and Subsidiaries to) use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate, as promptly as practicable, the Purchase and the other transactions contemplated by this Agreement. Without limiting the foregoing, each of the parties agrees to use its respective
reasonable best efforts to (i) cause the conditions to the Purchase set forth in ARTICLE V to be satisfied as promptly as practicable, (ii) obtain any consents, approvals (including any post-Closing approvals), orders, waivers
and authorizations of, actions or nonactions by, any Governmental Bodies or any third party necessary in connection with consummation of the transactions contemplated by this Agreement,
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including the Purchase and (iii) execute and deliver any additional instruments necessary to consummate the Purchase and any other transactions to be performed or consummated by such party
in accordance with the terms of this Agreement and to carry out fully the purposes of this Agreement. Notwithstanding anything to the contrary contained herein, nothing in this Agreement shall require Purchaser or any of its Affiliates, or permit
Northwest or any of their Subsidiaries (without the prior consent of Purchaser), to (x) litigate with any Government Body to obtain approval, authorization or consent to the Purchase, (y) agree to (A) any license, sale or other
disposition or holding separate (through establishment of a trust or otherwise) of any shares of Northwest, Purchaser or any of their respective Subsidiaries or Affiliates or of any amount (other than a de minimis amount) of such entities
businesses, assets or properties, (B) the imposition of any limitation (other than a de minimis limitation) on the ability of Northwest, Purchaser, or any of their respective Subsidiaries or Affiliates to conduct their respective businesses or
own any shares or assets or to acquire, hold or exercise full rights of ownership of their respective businesses, or (C) the imposition of any impediment (other than a de minimis impediment) on Purchaser or any of their respective Subsidiaries
or Affiliates under any Laws or (z) pay any amounts (other than de minimis amounts) or otherwise agree to provide any benefit or undertaking to be subject to any limitation or restriction to any Governmental Body or any other Person in
connection with any approval by a Governmental Body other than in respect of customary and established filing fees and other payments required as of the date hereof by Law.
(b) To the extent not expressly prohibited by Law, Purchaser and Seller shall reasonably cooperate with respect to all discussions,
submissions, negotiations and other communications with all Governmental Bodies in connection with all waiting periods, authorizations, consents or waivers (including any post-Closing approvals) required to consummate the transactions contemplated
by this Agreement, and, subject to reasonable concerns regarding confidentiality, each party shall keep the other reasonably informed with respect to such matters. In connection with the actions and procedures referenced in this
Section 7.1, each party shall, and shall cause its Representatives to: (i) promptly and fully inform the other party of any written or material oral communication received from or given to any Governmental Body, (ii) permit the
other party to review any submission required to be made by Northwest or any of their respective Subsidiaries to any Governmental Body, (iii) consult with the other party in advance of any meeting, conference or material discussion required by
any Governmental Body and (iv) if permitted to do so by the relevant Governmental Body, give the other party the opportunity to attend and participate in any such meetings, conferences and discussions. Notwithstanding anything to the contrary
contained in this Agreement, nothing in this Section 7.1 shall require (x) Purchaser to take or (y) Seller to cause Apco to take any action not required under Section 6.3 of the Merger Agreement.
(c) Each of the parties hereto shall (and shall cause its Affiliates and Subsidiaries to) as soon as practicable but in no event later than
one (1) calendar week following the Closing Date, take all actions necessary to make the filings required under the Argentine Antitrust Laws. Upon request by Purchaser, Seller shall (and shall cause its Affiliates and Subsidiaries to) use its
reasonable best efforts to obtain, or cause to be obtained, any applicable consents, authorizations, orders, clearances, and approvals from all Governmental Bodies required in connection with the transactions contemplated by this Agreement and the
Merger Agreement. Seller shall cooperate fully with the Purchaser and its Affiliates and use reasonable best efforts to promptly seek to obtain all such consents, authorizations, orders, clearances, and approvals (including any post-Closing
approvals) and to make all required registrations, declarations and filings with, and notices to, any Governmental Bodies (including in connection with any applicable Antirust Law). To the extent not expressly prohibited by Law, Seller shall
reasonably cooperate with Purchaser with respect to all discussions, submissions, negotiations and other communications with all Governmental Bodies in connection with all authorizations, consents, waivers or approvals (including any post-Closing
approvals) required in connection with the transactions contemplated by the Merger Agreement, and, subject to reasonable concerns regarding confidentiality, each party shall keep the other reasonably informed with respect to such matters. In
connection with the actions and procedures referenced in this Section 7.1(c), Seller shall, and shall cause its Representatives to: (i) promptly and fully inform Purchaser of any written or material oral communication received from
or given to any Governmental Body, (ii) permit Purchaser to review any submission required to be made by Seller to any Governmental Body, (iii) consult with Purchaser in advance of any meeting, conference or material discussion required by
any Governmental Body and
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(iv) if permitted to do so by the relevant Governmental Body, give Purchaser the opportunity to attend and participate in any such meetings, conferences and discussions. For the avoidance of
doubt, Purchaser acknowledges that the Argentine Antitrust Approval shall not be a condition to Closing and agrees to assume all the risks related to the Argentine Antitrust Approval (or the lack thereof) and that Seller and its Affiliates shall not
be required to return the Purchase Price in the event the Argentine Antitrust Approval is delayed, rejected or conditioned (a Negative Antitrust Decision). Purchaser shall be solely responsible to perform any and all
actions required by a Negative Antitrust Decision at its own risk and cost. Seller and its Affiliates shall not be liable for any losses arising out of a Negative Antitrust Decision.
7.2 Third-Party Consents. Without limiting any covenant contained in Section 7.1, Purchaser and Seller shall each, and
shall each cause their respective Subsidiaries to use reasonable best efforts to obtain all consents and approvals of third parties (including parties to Company Material Contracts (as defined in the Merger Agreement) and other Contracts of Apco and
its Subsidiaries) that are required in connection with the consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing, in no event shall Purchaser or any of its Affiliates or Seller, Northwest or any of their
respective Subsidiaries be obligated to bear any expense or pay any fee or grant any concession, other than de minimis expenses, fees or concessions (any such expense, fee or concession, a Consent Fee) in connection with
obtaining any waivers, permits, approval, authorizations, qualifications or consents that are required in in connection with the consummation of the transactions contemplated hereby pursuant to the terms of any Contract to which Seller or Northwest
or any of their respective Subsidiaries is a party; provided that Seller shall (x) promptly inform Purchaser in writing of any request or demand for a Consent Fee received by it, Northwest or their respective Subsidiaries and
(y) pay any monetary Consent Fee if Purchaser undertakes to reimburse Seller for amounts paid in respect of such Consent Fee.
7.3
Notification of Certain Matters. Seller shall give prompt written notice to the Purchaser, and Purchaser shall give prompt written notice to Seller, of the occurrence, or failure to occur, of any event which occurrence or failure to occur has
resulted in or would reasonably be expected to result in the failure to satisfy or be able to satisfy any of the conditions specified in Section 5.1 or Section 5.2, as applicable. For the avoidance of doubt, notices provided
to either party hereto pursuant to Section 9.2 of the Merger Agreement shall be deemed delivered under this Section 7.3.
7.4 Non-Solicitation; No Transfer.
(a) From the date of this Agreement until the date and time at which the Merger becomes effective or, if earlier, the termination of this
Agreement in accordance with its terms, Seller will not, nor shall it authorize or permit any of its Subsidiaries to, and shall cause its and their respective Representatives not to, directly or indirectly (i) initiate, solicit or knowingly
encourage or knowingly facilitate the making of any bona fide proposal or offer (provided, that Seller shall be entitled substantially contemporaneously with the public announcement of the Merger Agreement, to waive the dont
ask/dont waive provisions of any standstill provisions contained in any confidentiality agreement in effect on the date of this Agreement (such agreement, an Existing Confidentiality Agreement); provided
further; that Seller shall notify Purchaser as to the identity of the other parties to the Existing Confidentiality Agreements to the extent not prohibited by such Existing Confidentiality Agreement and, in the event that one or more Existing
Confidentiality Agreements prohibit such notification to Parent, the waiver of the dont ask/dont waive provisions for such Existing Confidentiality Agreements shall be conditioned upon the party to such Existing
Confidentiality Agreement acknowledging that Seller shall not be prohibited from notifying Purchaser as to the identity of such party) concerning, (x) any sale or transfer of all or a material portion of the assets of Apco and its Subsidiaries,
taken as a whole; or all or a material portion of the assets of Northwest and its Subsidiaries, taken as a whole; (y) any sale or transfer of any Apco Shares or the Target Interests or (z) any conversion, consolidation, recapitalization,
merger, liquidation, dissolution or similar transaction involving Apco and its Subsidiaries or Northwest and its Subsidiaries (an Acquisition Proposal) or any Acquisition Inquiry, (ii) other than informing Third
Parties of the existence of the provisions contained in this Section 7.4, engage in negotiations or discussions with, or furnish any non-public
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information concerning Apco, Northwest or any of their respective Subsidiaries to, any Third Party who has made or in response to an Acquisition Proposal or any Acquisition Inquiry or
(iii) resolve or agree to do any of the foregoing. Seller shall, and shall cause its Subsidiaries to and shall cause its and their respective Representatives to (i) immediately cease and cause to be terminated all existing discussions or
negotiations with any Person conducted heretofore with respect to any Acquisition Proposal, or any Acquisition Inquiry and (ii) promptly request that all confidential information provided by or on behalf of Seller or any of its Affiliates to
any such Person in connection with such discussions or negotiations be returned or destroyed. Notwithstanding anything to the contrary in this Section 7.4, any actions taken by Apco, the Apco Board, the Subsidiaries or Representatives of
Apco (including those Representatives of Apco that are also employees of the Seller) in accordance with the provisions of Section 6.5 of the Merger Agreement shall not constitute a breach by Seller of this Section 7.4.
(b) Seller shall promptly (and in any event within 24 hours after any director, officer or financial advisor of Seller is notified of the
receipt thereof) advise Purchaser in writing in the event that Seller receives any Acquisition Proposal or Acquisition Inquiry, and in connection with such notice, provide to Purchaser the material terms and conditions (including the identity of the
Third Party making any such Acquisition Proposal) of any such Acquisition Proposal. For the avoidance of doubt, any notices provided to either party hereto as required pursuant to Section 6.5 of the Merger Agreement shall be deemed delivered
under this Section 7.4(b).
(c) Seller shall not (solely with respect to the Target Companies), and shall cause the Target
Companies not to, sell, dispose of, transfer, or assign any ownership interests in any corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof owned by any of them as of
the date hereof, other than asset sales or dispositions in the ordinary course of business.
7.5 Conduct of Business. From the date
of this Agreement until the earlier of the Closing or the termination of this Agreement, without the prior written consent of Purchaser, Seller shall not, in respect of the Target Companies, and shall cause Northwest not to: (a) except for the
Conversion, amend or modify the organizational or constituent documents of the Target Companies, (b) pay or make any dividends, (c) issue, sell, pledge, dispose of, encumber (or authorize any of the foregoing) or authorize any additional
shares of Apco Argentina Shares or Northwest Common Shares, as applicable, or of any preferred stock or any other capital stock or other equity or voting securities of any of the Target Companies, (d) sell, pledge, dispose of or encumber any
material asset of either Target Company, (e) amend, terminate, assign or waive any material right under any material Contract to which either Target Company is a party other than in the ordinary course of business, (f) incur any
Indebtedness, (g) adopt any budget or operating plan or otherwise authorize or make any commitment with respect to any capital expenditure, (h) settle, waive, release assign or compromise any litigation to which either Target Company is a
party, other than for compromises, settlements or agreements that involve only the payment of monetary damages not in excess of $100,000 in any single instance and $250,000 in the aggregate and in any case without the imposition of equitable relief
on, or the admission of wrongdoing by, any Target Company or any of its Subsidiaries or (i) except for the Conversion or as required by Law or the published interpretation or enforcement thereof, make or rescind any material Tax election,
change any material Tax method, file any amended Tax Return that is material, incur any material Tax Liability, or settle or compromise any material federal, state, provincial, local or foreign income Tax liability.
7.6 Director Resignations. Seller shall cause each Board Designee to duly and validly deliver to the relevant Target Company his or her
executed resignation as a director of such Target Company subject to and effective immediately following the Closing.
7.7 Public
Statements.
(a) Each party hereto agrees not to issue any press release or make any other public announcement relating to this
Agreement or the transactions contemplated hereby without the prior written approval (which approval shall not be unreasonably withheld, conditioned or delayed) of the other party, except as may be
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required by Law, court process or the rules and regulations of any national securities exchange or national securities quotation system, in which case the other parties hereto shall, to the
extent practicable, be given the reasonable opportunity to review and comment on any such press release or other public announcement prior to its public release. Notwithstanding any other provision of this Agreement, the requirements of this
Section 7.7 shall not apply to any disclosure by (a) Seller or Purchaser of any information concerning this Agreement or the transactions contemplated hereby in connection with any dispute between the parties regarding this
Agreement, the Purchase or the transactions contemplated by this Agreement, or (b) Seller or Purchaser, with respect to any public announcement or public statement with respect to any Merger Agreement Adverse Recommendation Change made in
accordance with Section 6.5(d) of the Merger Agreement.
(b) Each of Purchaser and Seller agree that the terms of this Agreement, and
the information provided to Purchaser in connection with this Agreement and the transactions contemplated hereby, shall not be disclosed or otherwise made available to the public and that copies of this Agreement shall not be publicly filed or
otherwise made available to the public, except where such disclosure, availability or filing is required by applicable Law and only to the extent required by such Law.
7.8 Preservation of Records. Purchaser shall use reasonable efforts to preserve and keep the records held by Purchaser or its
Affiliates relating to the businesses of the Target Companies for a period of five years from the Closing Date and shall make such records and, as reasonably requested by Seller, personnel available to Seller, during regular business hours and upon
reasonable advance notice and in such a manner as not to materially interfere with the normal operation of Purchaser and its Subsidiaries, as may be reasonably required by Seller in connection with any insurance claims by, Legal Proceedings or tax
audits against or governmental investigations of Seller or any of its Affiliates involving the Target Companies or in order to enable Seller to comply with its obligations under this Agreement and the Seller Documents. All information obtained by
Seller and its Affiliates pursuant to this Section 7.8 shall be treated confidentially by Seller and its Affiliates. If Purchaser wishes to destroy such records after that time, Purchaser shall first give 90-day written notice to Seller
and Seller shall have the right at its option and expense, upon prior written notice given to such party within that 90-day period, to take possession of the records within 180 days after the date of such notice. Seller shall deliver all original
records relating to the businesses of the Target Companies to Apco within 15 days of Closing. Notwithstanding anything to the contrary herein or otherwise, Purchaser shall not be required to provide access to, or cause its Subsidiaries (including,
following the Merger, Apco) to provide access to, or disclose any information or documents to the extent that such access would (in the reasonable judgment of Purchaser) (i) constitute a waiver of the attorney-client, work-product or other
doctrine or privilege held by the Purchaser or any of its Subsidiaries or (ii) violate any Contract of Purchaser or any of its Subsidiaries in effect as of the date hereof with respect to confidentiality or privacy, (iii) materially
interfere with the conduct of the business of Purchaser or any of its Subsidiaries or its or their Affiliates or (iv) violate any Laws relating to the exchange of information or otherwise; provided, that in the case of clauses
(i) and (iv), Purchaser shall use its reasonable best efforts to obtain any required consents and take such other action (such as the entry into a joint defense agreement or other arrangement to avoid loss of attorney client privilege) to
permit such access or disclosure; provided further, that in the case of clause (ii), Purchaser shall use reasonable best efforts to obtain a waiver from the counterparty to any such Contract so as to allow Purchaser to provide access
to or furnish the relevant information.
7.9 Access to Information.
(a) From the date of this Agreement to the earlier of the Closing or the date, if any, on which this Agreement is terminated pursuant to
Section 6.1, Seller will, and will cause Apco and Northwest to, and will use reasonable best efforts to cause Apco Argentina to, provide to Purchaser and its authorized Representatives (i) upon reasonable notice, reasonable access
during normal business hours to the Sellers and Apcos and Apcos Subsidiaries and Northwests employees, properties, books, Contracts and records (including Tax Returns, Tax correspondence, Tax work papers, Tax advice,
correspondence with taxing authorities (including any assessments of Tax)), passwords of all platforms and information systems, access to all electronic data repositories, including backups, service and maintenance Contracts, and related licenses,
as Purchaser may reasonably request and (ii) such reasonably available financial and operating information of Apco, Northwest and
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their respective Subsidiaries as Purchaser may reasonably request. From the date of this Agreement to the earlier of (x) the later of March 31, 2015 and the date that is three months
after the Closing and (y) the date, if any, on which this Agreement is terminated pursuant to Section 6.1, Seller will reasonably assist Purchaser the transition and migration to Purchaser of all the information and documentation
stored by Seller and pertaining to Apco, Apcos Subsidiaries and Northwest, including information concerning administrative, accounting, reporting, planning, financial, tax and information technology activities. Notwithstanding the foregoing,
Seller shall not be required to provide access to, or cause Apco or Northwest to, or use reasonable best efforts to cause Apco Argentina to, provide access to, or disclose any information or documents to the extent that such access would (in the
reasonable judgment of the Seller) (i) constitute a waiver of the attorney-client, work-product or other doctrine or privilege held by the Seller or any of Apco, Northwest or Apco Argentina, (ii) violate any Contract of Seller or any of
Apco, Northwest or Apco Argentina in effect as of the date hereof with respect to confidentiality or privacy, (iii) materially interfere with the conduct of the business of Seller or any of Apco, Northwest or Apco Argentina or its or their
Affiliates or (iv) violate any Laws relating to the exchange of information or otherwise; provided, that in the case of clauses (i) and (iv) each party shall use its reasonable best efforts to obtain any required consents and
take such other action (such as the entry into a joint defense agreement or other arrangement to avoid loss of attorney client privilege) to permit such access or disclosure; provided further, that in the case of clause
(ii) Seller shall use reasonable best efforts to obtain a waiver from the counterparty to any such Contract so as to allow Seller to provide access to or furnish the relevant information.
(b) Upon request by Purchaser, Seller shall negotiate in good faith with Purchaser regarding an agreement for the provision of services by
Purchaser to Apco and its Subsidiaries following Closing through the later of (i) March 31, 2015 and (ii) the date that is three months after the Closing; provided that Purchaser may terminate the agreement prior to such date.
The agreement shall be on substantially similar terms to those set forth in the Amended and Restated Administrative Services Agreement, dated May 7, 2013, between Apco and Seller (the Administrative Services Agreement)
and the compensation for the provision of such services shall be on the same terms as those set forth in the Administrative Services Agreement.
7.10 Deliveries. At Closing, Seller shall deliver, or cause to be delivered, to Purchaser (i) the Argentine Stock Transfer Notice,
(ii) stock certificates, any limited liability company interest certificates (if applicable), and/or written confirmation, or other evidence reasonably satisfactory to Purchaser that the Northwest Interests have been transferred, (iii) the
Northwest Limited Liability Company Agreement, duly executed by Seller (iv) stock certificates and/or written confirmation, or other evidence reasonably satisfactory to Purchaser that the Apco Argentina Shares have been transferred,
(v) the Share Registry Book (Registro de Accionistas) reflecting the transfer of the Apco Argentina Shares to Purchaser and (vi) a certificate dated the Closing Date and signed by an executive officer of Seller certifying that the
conditions set forth in Section 5.1(b) shall have been satisfied.
7.11 Disclosure Schedules. Inclusion of an item in
the applicable Schedules, or any references to dollar amounts, shall not constitute an acknowledgement or representation that such item is material, shall not establish any standard of materiality and shall not define further the meaning of such
terms for purposes of this Agreement. Information disclosed in the Schedules shall constitute a disclosure only for the purposes of the representation and warranty that is correspondingly numbered and lettered in the Agreement and any other numbered
and lettered Section of this Agreement to the extent that it is reasonably apparent upon reading the disclosure contained in such section of the applicable Schedule that such disclosure is responsive to such other numbered and lettered Section of
this Agreement.
7.12 Control of Business. Notwithstanding anything in this Agreement to the contrary, Purchaser acknowledges on
behalf of itself and its Affiliates and its and their directors, officers, employees, Affiliates, agents, representatives, successors and assigns that the operation of each Target Company remains in the dominion and control of such Target Company
until the Closing and that none of the foregoing Persons will provide, directly or indirectly, any directions, orders, advice, aid, assistance or information to any director, officer or employee of any Target Company, except as specifically
contemplated or permitted by ARTICLE VIII or as otherwise consented to in advance by an officer of such Target Company.
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7.13 Conversion. Prior to the Closing Date, Seller shall cause the Conversion of Northwest
from a corporation incorporated under the laws of the State of Utah to a limited liability company organized under the laws of the State of Utah. In connection with the Conversion, Seller shall cause Northwest to adopt a limited liability company
agreement in a form provided by Purchaser and reasonably acceptable to Seller.
7.14 Federal Tax Status of Northwest. As of the
Closing Date, Seller shall cause Northwest LLC to be disregarded as an entity separate from Seller for U.S. federal income tax purposes.
7.15 Insurance. Seller shall maintain in full force and effect through the Closing (A) the Management Liability and Company
Reimbursement Insurance Policy with XL Specialty Insurance Company (including the A-Side, B-Side and C-Side policies associated therewith) (the Current Insurance Policy) or (B) a policy (the Replacement
Insurance Policy) with provisions no less favorable to APCO and its Subsidiaries and their respective officers, directors and employees (the Beneficiaries) than to Seller and its officers, directors and
employees. For the six year period immediately following the Closing, Seller shall continue in full force and effect a directors and officers liability insurance policy to cover the Directors and Officers prior service at
Apco that is no less favorable to such persons than any policy covering Sellers directors and officers. Seller shall use reasonable best efforts to make (or cause to be made) for the benefit of the Beneficiaries all claims available to it
under the Current Insurance Policy or the Replacement Insurance Policy, as applicable, as promptly as practicable, and to the extent Seller shall receive proceeds on account of any claims under any such policy that are applicable to such
Beneficiaries, Seller shall pay such proceeds over to the applicable Beneficiaries promptly following receipt by Seller of such amounts from the insurer.
7.16 Further Assurances. Subject to the other express provisions of this Agreement, upon the request of the other party, each of
Purchaser and Seller shall use reasonable best efforts to undertake as soon as reasonably practicable (or procure the undertaking as soon as reasonably practicable of) all acts including executing and delivering (or procuring the execution and
delivery of) all such other documents, instruments and agreements as may be reasonably necessary for the purpose of carrying out the intent of this Agreement and the transactions contemplated by this Agreement.
ARTICLE VIII
Miscellaneous
8.1
Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party
beneficiary rights in any person or entity not a party to this Agreement except as provided below. No assignment of this Agreement or of any rights or obligations hereunder may be made by either Seller or Purchaser, directly or indirectly (by
operation of Law or otherwise), without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void. No assignment of any obligations hereunder shall relieve the parties hereto of
any such obligations. Upon any such permitted assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires.
8.2 Payment of Sales, Use or Similar Taxes. All sales, use, transfer, intangible, recordation, documentary, stamp or similar Taxes or
charges, applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne by Purchaser.
8.3
Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by e-mail of a .pdf attachment will be effective as delivery of a
manually executed counterparty of this agreement.
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8.4 Entire Agreement; Amendments and Waivers. This Agreement (including the schedules and
exhibits hereto) and the Confidentiality Agreement represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and thereof. This Agreement can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken pursuant to this
Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The waiver by any
party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no
delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
8.5 Expenses. Except as otherwise provided in this Agreement, each of Seller and Purchaser shall
bear its own expenses incurred in connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and
thereby.
8.6 Governing Law. This Agreement and all claims, actions, proceedings or counterclaims (whether based on contract, tort
or otherwise) based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or relating to any representation or warranty
made in connection with this Agreement or as an inducement to enter into this Agreement) shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law rules (other than New York
General Obligations Law Sections 5-1401 and 5-1402) of such State.
8.7 Submission to Jurisdiction; Consent to Service of Process;
Waiver of Jury Trial. Each of Purchaser and Seller irrevocably submits to the exclusive jurisdiction of any New York federal court (or if jurisdiction is not available therein, a New York state court) sitting in the Borough of Manhattan of the
City of New York, and any appellate court from any thereof, for the purposes of any suit, action, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Agreement, the other agreements
contemplated hereby or any transaction contemplated hereby. Each of Purchaser and Seller hereby agree to commence any action, suit or proceeding relating hereto in a New York federal court (or if jurisdiction is not available therein, a New York
state court) sitting in the Borough of Manhattan of the City of New York. To the extent process by mail is permitted by applicable law, each of Purchaser and Seller agrees that service of any process, summons, notice or document by U.S. registered
mail to such partys respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 8.7.
Each of Purchaser and Seller irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in any New York federal court sitting in
the Borough of Manhattan of the City of New York, and any appellate court from any thereof, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought
in any such court has been brought in an inconvenient forum. Each of Purchaser and Seller irrevocably waives any objections or immunities to jurisdiction to which it may otherwise be entitled or become entitled (including sovereign immunity,
immunity to pre-judgment attachment, post-judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or relating to this Agreement or the transactions contemplated hereby which is instituted in any such
court.
8.8 Specific Performance. Each party hereto agrees that money damages would not be a sufficient remedy for any breach of
this Agreement by any party here and that the other party would suffer irreparable harm as a result of any such breach. Without prejudice to the rights and remedies otherwise available to the parties
A-91
hereto, each party agrees that the parties shall be entitled, without the requirement of posting a bond or other security, to equitable relief, including an injunction or specific performance, in
the event of any breach or threatened breach of the provisions of this Agreement by the other party. Such remedies shall not be deemed to be exclusive remedies but shall be in addition to all other remedies available at law or equity to such other
party.
8.9 Notices. Any notice, request, demand, or other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given if sent by hand delivery, mail (first class, certified mail, postage prepaid), facsimile, email of a .pdf attachment (with confirmation of receipt by non-automated reply e-mail from the recipient)
or overnight courier if to any party hereto, at the address or facsimile number set forth below such partys name on the signature pages hereto or to such other address or facsimile number as such party shall have last designated by notice to
the other parties hereto in accordance with this Section 8.9. Notices sent by hand delivery shall be deemed to have been given when received or delivery is refused; notices mailed in accordance with this Section 8.9 shall be
deemed to have been given three days after the date so mailed; notices sent by facsimile shall be deemed to have been given when electronically confirmed; notice sent by e-mail shall be deemed to have been given when electronically confirmed) and
notices sent by overnight courier shall be deemed to have been given on the next business day after the date so sent.
8.10
Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated
as originally contemplated to the greatest extent possible.
8.11 Survival. The representations and warranties set forth in this
Agreement shall not survive the consummation of the transactions contemplated hereby other than the representations and warranties set forth in Section 3.4 and Section 3.9 which shall survive indefinitely.
8.12 No Recourse Against Non-Parties. Except to the extent otherwise set forth in the Merger Agreement and Power of Attorney, all
claims, obligations, Liabilities or causes of action (whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise under, out or by reason of, be connected with or relate in any manner to
this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement), may be made by the parties hereto only against (and such
representations and warranties are those solely of) the Persons that are expressly identified as parties in the preamble to this Agreement (the Contracting Parties). Except as set forth in the Power of Attorney and the
Merger Agreement, no Person who is not a Contracting Party, including any current, former or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any Contracting Party, or any current,
former or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any of the foregoing (collectively, the Nonparty Affiliates), shall have any Liability (whether in
contract or in tort, in law or in equity, or granted by statute) for any claims, causes of action, obligations, or Liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by
reason of this Agreement or its negotiation, execution, performance, or breach and, to the maximum extent permitted by Law, each Contracting Party hereby waives and releases all such Liabilities, claims, causes of action, and obligations against any
such Nonparty Affiliates of another Contracting Party. Without limiting the foregoing, to the maximum extent permitted by Law, except with respect to rights, claims, demands and causes of action arising under or in respect of the Merger Agreement
and the Power of Attorney, each Contracting Party hereby waives and releases any and all rights, claims, demands, or causes of action that may otherwise be available at law or in equity, or granted by statute, to avoid or disregard the entity form
of a Contracting Party or otherwise impose Liability of a Contracting Party on any other Contracting Partys Nonparty Affiliate in respect of this
A-92
Agreement, whether granted by statute or based on theories of equity, agency, control, instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness,
undercapitalization, or otherwise. Notwithstanding anything in this Agreement to the contrary (x) for the avoidance of doubt, nothing in this Agreement (including the provisions of Section 4.7 or this Section 8.12) shall
limit in any way (i) the terms and conditions of the Power of Attorney or the Merger Agreement or any rights that Purchaser or any of its Affiliates has thereunder or (ii) any parties right to obtain Damages, to the extent proven,
against Apco for Intentional Breach of the Merger Agreement and (y) following the Merger, Purchaser shall be entitled to obtain Damages, to the extent proven, from Seller for any Intentional Breach by Apco of which Seller had Knowledge of
(i) the specific representations and warranties made as of the date hereof and set forth in Article IV the Merger Agreement or the representations and warranties made as of the Merger Closing Date to the standard set forth in the certificate
delivered pursuant to Section 7.2(d) of the Merger Agreement and (ii) any of the covenants set forth in Article VI of the Merger Agreement to the standard set forth in the certificate delivered pursuant to Section 7.2(d);
provided, that any such claim by Purchaser must be commenced within twelve (12) months following the Closing.
8.13 WAIVER
OF TRIAL BY JURY. TO THE MAXIMUM EXTENT NOT PROHIBITED BY APPLICABLE LAW, EACH PARTY HERETO, HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT, OR PROCEEDING,
DIRECTLY OR INDIRECTLY, AT ANY TIME ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
* * * * *
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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Sincerely, |
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PLUSPETROL RESOURCES CORPORATION |
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By: |
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Name: |
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Title: |
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Signature Page to Offer Letter
A-94
ANNEX B
Jefferies
LLC
520 Madison Avenue
New York, NY 10022
tel 212.284.2300
Jefferies.com
October 2,
2014
The Board of Directors
Apco Oil and Gas International
Inc.
One Williams Center
MD 35-8
Tulsa, OK 74172
Members of the Board:
We understand that Apco Oil and Gas International Inc. (the Company), Pluspetrol Resources Corporation (Parent), and
Pluspetrol Black River Corporation, a wholly-owned subsidiary of Parent (Merger Sub), propose to enter into an Agreement and Plan of Merger (the Merger Agreement), pursuant to which Merger Sub will merge with and into the
Company (the Merger) in a transaction in which (i) each outstanding ordinary share, par value $0.01 per share, of the Company (the Ordinary Shares), and (ii) each outstanding Class A share, par value $0.01 per
share, of the Company (the Class A Shares, together with the Ordinary Shares, the Company Shares) other than Company Shares owned by Merger Sub, Parent or any direct or indirect wholly owned subsidiary of Parent or of the
Company, all of which shares will be canceled, will be converted into the right to receive US$14.50 in cash (the Consideration). The terms and conditions of the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Consideration to be received by the holders of Company Shares pursuant to the Merger
Agreement is fair, from a financial point of view, to such holders.
In arriving at our opinion, we have, among other things:
i. |
reviewed a draft dated September 30, 2014 of the Merger Agreement; |
ii. |
reviewed certain publicly available financial and other information about the Company; |
iii. |
reviewed certain information furnished to us by the Companys management, including financial forecasts and analyses, relating to the business, operations and prospects of the Company; |
iv. |
held discussions with members of senior management of the Company concerning the matters described in clauses (ii) and (iii) above; |
v. |
reviewed the share trading price history and valuation multiples for the Company Shares and compared them with those of certain publicly traded companies that we deemed relevant; |
vi. |
compared the proposed financial terms of the Merger with the financial terms of certain other transactions that we deemed relevant; |
vii. |
analyzed the discounted unlevered free cashflows of the Company; and |
viii. |
conducted such other financial studies, analyses and investigations as we deemed appropriate. |
B-1
In our review and analysis and in
rendering this opinion, we have assumed and relied upon, but have not assumed any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made
available by the Company or that was publicly available (including, without limitation, the information described above), or that was otherwise reviewed by us. We have relied on assurances of the management of the Company that it is not aware of any
facts or circumstances that would make such information inaccurate or misleading. In our review, we did not obtain any independent evaluation or appraisal of any of the assets or liabilities of, nor did we conduct a physical inspection of any of the
properties or facilities of, the Company, nor have we been furnished with any such evaluations or appraisals, nor do we assume any responsibility to obtain any such evaluations or appraisals.
With respect to the financial forecasts provided to and examined by us, we note that projecting future results of any company is inherently
subject to uncertainty. The Company has informed us, however, and we have assumed, that such financial forecasts were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of the
Company as to the future financial performance of the Company. We express no opinion as to the Companys financial forecasts or the assumptions on which they are made.
Our opinion is based on economic, monetary, regulatory, market and other conditions existing and which can be evaluated as of the date hereof.
We expressly disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting our opinion of which we become aware after the date hereof.
We have made no independent investigation of any legal or accounting matters affecting the Company, and we have assumed the correctness in all
respects material to our analysis of all legal and accounting advice given to the Company and its Board of Directors, including, without limitation, advice as to the legal, accounting and tax consequences of the terms of, and transactions
contemplated by, the Merger Agreement to the Company and its stockholders. In addition, in preparing this opinion, we have not taken into account any tax consequences of the transaction to any holder of Company Shares. We have assumed that the final
form of the Merger Agreement will be substantially similar to the last draft reviewed by us in all respects material to our opinion. We have also assumed that in the course of obtaining the necessary regulatory or third party approvals, consents and
releases for the Merger, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on the Company, Parent or the contemplated benefits of the Merger.
In addition, we were not requested to and did not provide advice concerning the structure, the specific amount of the Consideration, or any
other aspects of the Merger, or to provide services other than the delivery of this opinion. We were not authorized to and did not solicit any expressions of interest from any other parties with respect to the sale of all or any part of the Company
or any other alternative transaction. We did not participate in negotiations with respect to the terms of the Merger and related transactions. Consequently, we have assumed that such terms are the most beneficial terms from the Companys
perspective that could under the circumstances be negotiated among the parties to such transactions, and no opinion is expressed whether any alternative transaction might result in consideration more favorable to the Companys stockholders than
that contemplated by the Merger Agreement.
It is understood that our opinion is solely for the use and benefit of the Board of Directors
of the Company in its consideration of the Merger, and our opinion does not address the relative merits of the transactions contemplated by the Merger Agreement as compared to any alternative transaction or opportunity that might be available to the
Company, nor does it address the underlying business decision by the Company to engage in the Merger or the terms of the Merger Agreement or the documents referred to therein. Our opinion does not constitute a recommendation as to how any holder of
Company Shares should vote on the Merger or any matter related thereto. In addition, you have not asked us to address, and this opinion does not address, the fairness to, or
B-2
any other consideration of, the holders of any class of securities, creditors or other constituencies of the Company, other than the holders of Company Shares. We express no opinion as to the
price at which Company Shares will trade at any time. Furthermore, we do not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable or to be received by any of the Companys
officers, directors or employees, or any class of such persons, in connection with the Merger relative to the Consideration to be received by holders of Company Shares. Our opinion has been authorized by the Fairness Committee of Jefferies LLC.
We have been engaged by the Company to act as financial advisor to the Company in connection with the Merger and will receive a fee for our
services upon delivery of this opinion. We also will be reimbursed for expenses incurred. The Company has agreed to indemnify us against liabilities arising out of or in connection with the services rendered and to be rendered by us under such
engagement. We may maintain a market in the securities of the Company, and in the ordinary course of our business, we and our affiliates may trade or hold securities of the Company or Parent and/or their respective affiliates for our own account and
for the accounts of our customers and, accordingly, may at any time hold long or short positions in those securities. In addition, we may seek to, in the future, provide financial advisory and financing services to the Company, Parent or entities
that are affiliated with the Company or Parent, for which we would expect to receive compensation. Except as otherwise expressly provided in our engagement letter with the Company, our opinion may not be used or referred to by the Company, or quoted
or disclosed to any person in any manner, without our prior written consent.
Based upon and subject to the foregoing, we are of the
opinion that, as of the date hereof, the Consideration to be received by the holders of Company Shares pursuant to the Merger Agreement is fair, from a financial point of view, to such holders.
Very truly yours,
JEFFERIES LLC
B-3
Annex C
Annex C Dissenter Rights
Companies Law (2013 Revision)
Rights of dissenters
238. (1) A member of a constituent company incorporated under this Law shall be entitled to payment of the fair value of his shares upon dissenting from a
merger or consolidation.
(2) A member who desires to exercise his entitlement under subsection (1) shall give to the constituent company,
before the vote on the merger or consolidation, written objection to the action.
(3) An objection under subsection (2) shall include a
statement that the member proposes to demand payment for his shares if the merger or consolidation is authorised by the vote.
(4) Within
twenty days immediately following the date on which the vote of members giving authorisation for the merger or consolidation is made, the constituent company shall give written notice of the authorisation to each member who made a written objection.
(5) A member who elects to dissent shall, within twenty days immediately following the date on which the notice referred to in subsection
(4) is given, give to the constituent company a written notice of his decision to dissent, stating-
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(a) |
his name and address; |
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(b) |
the number and classes of shares in respect of which he dissents; and |
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(c) |
a demand for payment of the fair value of his shares. |
(6) A member who dissents shall do so
in respect of all shares that he holds in the constituent company.
(7) Upon the giving of a notice of dissent under subsection (5), the
member to whom the notice relates shall cease to have any of the rights of a member except the right to be paid the fair value of his shares and the rights referred to in subsections (12) and (16).
(8) Within seven days immediately following the date of the expiration of the period specified in subsection (5), or within seven days
immediately following the date on which the plan of merger or consolidation is filed, whichever is later, the constituent company, the surviving company or the consolidated company shall make a written offer to each dissenting member to purchase his
shares at a specified price that the company determines to be their fair value; and if, with in thirty days immediately following the date on which the offer is made, the company making the offer and the dissenting member agree upon the price to be
paid for his shares, the company shall pay to the member the amount in money forthwith.
(9) If the company and a dissenting member fail,
within the period specified in subsection (8), to agree on the price to be paid for the shares owned by the member, within twenty days immediately following the date on which the period expires-
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(a) |
the company shall (and any dissenting member may) file a petition with the Court for a determination of the fair value of the shares of all dissenting members; and |
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(b) |
the petition by the company shall be accompanied by a verified list containing the names and addresses of all members who have filed a notice under subsection (5) and with whom agreements as to the fair value of their
shares have not been reached by the company. |
C-1
Companies Law (2013 Revision)
(10) A copy of any petition filed under subsection (9)(a) shall be
served on the other party; and where a dissenting member has so filed, the company shall within ten days after such service file the verified list referred to in subsection (9)(b).
(11) At the hearing of a petition, the Court shall determine the fair value of the shares of such dissenting members as it finds are involved,
together with a fair rate of interest, if any, to be paid by the company upon the amount determined to be the fair value.
(12) Any member
whose name appears on the list filed by the company under subsection (9)(b) or (10) and who the Court finds are involved may participate fully in all proceedings until the determination of fair value is reached.
(13) The order of the Court resulting from proceeding on the petition shall be enforceable in such manner as other orders of the Court are
enforced, whether the company is incorporated under the laws of the Islands or not.
(14) The costs of the proceeding may be determined by
the Court and taxed upon the parties as the Court deems equitable in the circumstances; and upon application of a member, the Court may order all or a portion of the expenses incurred by any member in connection with the proceeding, including
reasonable attorneys fees and the fees and expenses of experts, to be charged pro rata against the value of all the shares which are the subject of the proceeding.
(15) Shares acquired by the company pursuant to this section shall be cancelled and, if they are shares of a surviving company, they shall be
available for re-issue.
(16) The enforcement by a member of his entitlement under this section shall exclude the enforcement by the
member of any right to which he might otherwise be entitled by virtue of his holding shares, except that this section shall not exclude the right of the member to institute proceedings to obtain relief on the ground that the merger or consolidation
is void or unlawful.
C-2
ANNEX D
EXECUTION
THIS LIMITED POWER OF
ATTORNEY is made on 2 October 2014.
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BY |
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WPX Energy, Inc., a corporation incorporated under the laws of the State of Delaware whose registered office is situated at 3500 One Williams Center, Tulsa, OK 74103, United States of America (WPX). |
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WHEREAS |
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WPX is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of 20,301,592 Class A Shares (Subject Shares), of a nominal or par value of US$0.01 each, in the capital
of Apco Oil and Gas International Inc. (Company) and, in connection therewith, WPX has determined to irrevocably appoint the Attorney (as defined below) to be WPXs attorney-in-fact for the purposes noted below from the date hereof
through the Termination Time. |
IT IS AGREED AND DECLARED THAT
1. |
Capitalized terms used but not defined in this Power of Attorney shall have the meaning given to them in the merger agreement among Pluspetrol Black River Corporation and the Company, dated as of the date hereof (as may
be modified or amended from time to time) (Merger Agreement). |
2. |
WPX hereby retains Appleby Trust (Cayman) Ltd., whose registered office is situated at Clifton House, 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands (Attorney) for the purpose of voting (or
procuring the vote of) the Subject Shares at every meeting of the shareholders of the Company, and at every adjournment or postponement thereof, and on every action or approval by written consent of the shareholders of the Company and instructs the
Attorney to vote (or procure the vote of) the Subject Shares only as follows: |
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(a) |
in favor of the approval and adoption of the Merger Agreement and the Plan of Merger (which provides for, among other things, the merger of Pluspetrol Black River Corporation with and into the Company (the
Merger) with the Company continuing as the surviving corporation), the approval of the Merger and the other transactions contemplated by the Merger Agreement and the Plan of Merger and any other matter that must be approved by the
shareholders of the Company in order for the transactions contemplated by the Merger Agreement and the Plan of Merger to be consummated; |
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(b) |
against approval of any proposal made in opposition to, made in competition with, or that would result in a breach of, the Merger Agreement, the Plan or Merger or the Merger or any other transactions contemplated by the
Merger Agreement; and |
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(c) |
against any of the following actions (other than those actions in furtherance of the Merger, the Plan of Merger and the Merger Agreement):
(i) any merger, consolidation, business combination, sale of assets, reorganization or recapitalization of or involving the Company or any of its Subsidiaries, (ii) any sale, lease or transfer of all or substantially all of the assets of
the Company or any of its Subsidiaries, (iii) any reorganization, recapitalization, extraordinary dividend, dissolution, liquidation or winding up of the Company or any of its Subsidiaries, (iv) any material change in the capitalization of
the Company or any of its Subsidiaries, or the corporate structure of the Company or any of its Subsidiaries, (v) any Acquisition Proposal with respect to the Company, (vi) to the extent submitted to a shareholder vote, any change in the
business, management or Board of Directors of the Company, or (vii) any other action that (1) is intended, or would reasonably be expected, to materially impede, interfere with, delay, postpone, discourage or adversely affect the Merger or
any other transactions contemplated by the Merger Agreement, (2) would result in a breach in any respect of any covenant, representation or warranty, or any other obligation or agreement of the Company under the Merger
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D-1
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Agreement, or (3) would change in any manner the dividend policy or capitalization of, including the voting rights of any class of equity interests in, the Company, |
collectively, the Subject Votes.
3. |
For the services to be rendered by the Attorney hereunder, the Attorney shall be paid by WPX, concurrently with the Termination Time, a fee (Fee) in an amount equal to the aggregate of (i) US$0.01 for each
time the Attorney attends, participates in or directs the exercise of any voting rights attaching to the Subject Shares (whether at any general meeting, class meeting or other meeting at which such rights are capable of being exercised or sign or
execute written resolution), plus (ii) US$1.00 in connection with the passage or adoption of a resolution of the members of the Company approving the Merger. |
4. |
For the purpose of securing the interest of the Attorney in the Fee, WPX irrevocably and by way of security hereby appoints the Attorney as its true and lawful attorney with authority on its behalf and in its name or
otherwise to exercise all rights, powers and privileges attaching to the Subject Shares or otherwise capable of being exercised by the registered holder of the Subject Shares and for such purpose to do all such acts and things and to execute all
such deeds and other documents as the Attorney shall consider necessary or desirable to effect the Subject Votes, including (without prejudice to the generality of the foregoing), all or any of the following for and on behalf of WPX (in each case in
such manner and on such terms as the Attorney in its absolute discretion shall think fit): |
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(a) |
to attend, participate in and direct the exercise of any voting rights attaching to the Subject Shares at any general meeting, class meeting or other meeting at which such rights are capable of being exercised; and
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(b) |
to approve, complete, or otherwise sign or execute any requisition of any meeting, consent to short notice or waive notice, proxy, written resolution, agreement of the members of the Company (or any of them) or any
other document capable of being signed by the registered holder of the Subject Shares. |
5. |
WPX hereby undertakes not to, and it shall not, exercise any of the rights, powers and privileges attaching to the Subject Shares, or otherwise capable of being exercised by the registered holder of the Subject Shares,
in relation to the Subject Votes without the prior written consent of the Attorney. |
6. |
The Attorney may from time to time, on such terms as it thinks fit, appoint and remove a substitute (who shall not have the power of substitution) and delegate to an agent the exercise of any other power conferred by
this Power of Attorney and may act concurrently with such substitute or agent. The Attorney may delegate all or any of these powers conferred by this Power of Attorney to an officer or officers of the Attorney. |
7. |
WPX hereby ratifies and confirms, and agrees to ratify and confirm, any acts and other things whatsoever that the Attorney shall do or purport to do by virtue of this Power of Attorney including any such acts and things
done between the time of revocation of this Power of Attorney and the time of that revocation becoming known to the Attorney. |
8. |
By the execution of this Power of Attorney, WPX undertakes to indemnify, and hereby indemnifies, each of the persons named above as Attorney (and any substitutes or delegates of such Attorney) of WPX from and against
any and all actions, proceedings, losses, costs, damages, expenses, claims, demands or other liabilities of any nature whatsoever which any or all of them may suffer or otherwise incur by reason of their exercising the powers, acting pursuant to or
in reliance on this Power of Attorney. |
9. |
WPX shall not sell, dispose of, transfer, or assign the Subject Shares or any other ownership interests in the Company and shall cause the Company not to sell, dispose of, transfer, or assign any ownership interests in
any corporation, partnership, limited liability company, other business organization or any division or material amount of assets thereof owned by it as of the date hereof, other as permitted pursuant to the terms and conditions of the Merger
Agreement. |
D-2
10. |
This Power of Attorney shall remain effective and valid until the earlier of (i) termination of the Merger Agreement pursuant to its terms and (ii) immediately prior to the effective time of the Merger and it
shall be deemed to be revoked at that time (such time, the Termination Time) and shall be of no further effect after that time. |
11. |
This Power of Attorney and any non-contractual obligations arising out of or in connection with this Power of Attorney shall be governed by, and construed in accordance with, the laws of the Cayman Islands. The courts
of Cayman Islands shall have exclusive jurisdiction to settle any dispute or claim that arises out of or in connection with this Power of Attorney or its subject matter or formation (including any non-contractual dispute or claim).
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12. |
A copy of this Deed may be deposited at the registered office of the Company or with such other person as may be deemed necessary or desirable to satisfy any requirement of the Companys articles of association or
for any other purpose. |
D-3
IN WITNESS whereof WPX has executed this Power of Attorney as a deed the day and year first above written.
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EXECUTED AS A DEED by WPX Energy, Inc.:
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) |
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/s/ Jeffrey
Schmuhl |
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) |
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Duly Authorised Signatory |
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) |
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) |
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Name: |
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Jeffrey Schmuhl |
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) |
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) |
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Title: |
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Vice President Acquisitions and
Divestitures |
in the presence of:
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/s/ Amy Flakne
Signature of Witness |
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Name: |
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Amy Flakne |
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Address: |
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One Williams Center, 3500
Tulsa, OK 74172 |
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Occupation: |
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Attorney |
D-4
ANNEX E
Step N°1
Amsterdam, The Netherlands, October 2, 2014
Messrs.
WPX ENERGY, INC.
3500 One Williams Center
Tulsa, OK 74172-0135
REF: IRREVOCABLE OFFER N° 001- WPX-TA-2014
Dear Sirs,
In accordance with recent
negotiations, Pluspetrol Resources Corporation, a company duly organized and validly existing under the laws of the Cayman Islands and domiciled in the Cayman Islands (Purchaser), hereby submits this irrevocable stock
purchase offer (the Offer) to WPX ENERGY, INC., a corporation duly organized and validly existing under the laws of Delaware and domiciled in the State of Oklahoma (Seller), subject to the terms
and conditions set forth below (including all schedules hereto).
This Offer shall be deemed accepted if, on or before 11:59 p.m. (New
York time) on October 2, 2014, Seller delivers to Purchaser a written notice of acceptance of the Offer.
If Seller were to accept
this Offer pursuant to the immediately preceding paragraph, the rights and obligations under which Seller and Purchaser will be bound shall be those arising from the terms and conditions of this Offer and those terms and conditions shall govern the
relationship between Seller and Purchaser relating to the subject matter thereof.
TERMS AND CONDITIONS OF THE OFFER
THIS TRANSACTION AGREEMENT (this Agreement) is entered into as of October 2, 2014, between Seller and
Purchaser.
WHEREAS, Seller is the beneficial and record owner of (a) 16,239 shares, par value ARS
1.00 per share (the Apco Argentina Shares), of Apco Argentina S.A., an Argentine corporation (Apco Argentina); and (b) 1,000 common shares, par value $1.00 per share (the
Northwest Common Shares) of Northwest Argentina Corporation, a Utah corporation (Northwest Corporation);
WHEREAS, prior to Closing (as defined below), Seller shall cause the conversion (the
Conversion) of Northwest Corporation into a limited liability company (Northwest LLC and, together with Northwest Corporation, Northwest);
WHEREAS, subsequent to such conversion and immediately prior to Closing, Seller shall own beneficially and
of record, all of the limited liability company interests (the Northwest Interests) in Northwest LLC; and
WHEREAS, Seller desires to sell, and Purchaser desires to purchase, the Apco Argentina Shares owned
beneficially and of record by Seller and the Northwest Interests owned beneficially and of record by Seller at Closing (the Target Interests and the acquisition of the Target Interests, the
Purchase), subject to the terms and conditions set forth herein.
NOW, THEREFORE, in
consideration of the foregoing recitals and the representations, warranties, covenants, and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
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ARTICLE I
Definitions
1.1
Certain Definitions.
Acquisition Inquiry means an inquiry, indication of interest or
request for nonpublic information (other than an inquiry, indication of interest or request for nonpublic information made or submitted by or on behalf of Purchaser or its Affiliates) that could reasonably be expected to lead to an Acquisition
Proposal.
Acambuco Agreements has the meaning set forth in Section 3.4(b).
Acquisition Proposal has the meaning set forth in Section 7.4.
Administrative Services Agreement has the meaning set forth in Section 7.9(b).
Affiliates means, with respect to any Person, any other Person that, directly or
indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person, and the term control (including the terms controlled by and under common control with)
means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
Agreement has the meaning set forth in the recitals.
Apco has the meaning set forth in Section 2.1.
Apco Argentina Board has the meaning set forth in Section 3.11.
Apco Board means the board of directors of Apco.
Apco Shares means, collectively, each issued and outstanding ordinary share of Apco, par value $0.01
per share, and each issued and outstanding Class A Share of Apco, par value $0.01 per share.
Argentine Antitrust Approval means the authorization required by Argentine Antitrust Laws for the
transactions contemplated by this Agreement.
Argentine Antitrust Laws means any Law
of Argentina intended to prohibit, restrict or regulate actions or transactions having the purpose or effect of monopolization, restraint of trade, harm to competition or effectuating foreign investment (including, without limitation, Argentine
Antitrust Law Nº 25,156 as amended by Argentine Legislative Decree N° 396/2001 and implemented by, inter alia, Argentine Regulatory Decree N° 89/2001 and Argentine Resolution SDyCS N° 40/2001, as amended and complemented from time
to time).
Argentine Stock Transfer Notice means a notice, pursuant to
Section 215 of the Argentine Commercial Corporations Law, of the transfer of 16,239 shares, par value ARS 1.00 per share of Apco Argentina S.A., an Argentine corporation.
Balance Sheet Date means June 30, 2014.
Beneficiaries has the meaning set forth in Section 7.15.
Board Designees has the meaning set forth in Section 5.1(c).
Business Day means any day of the year on which national banking institutions in New
York, New York and the Cayman Islands are open to the public for conducting business and are not required or authorized to close.
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Closing has the meaning set forth in Section 2.1.
Closing Date has the meaning set forth in Section 2.1.
Company Disclosure Schedule means the disclosure schedule delivered by Apco to Purchaser prior to the
execution of the Merger Agreement.
Consent Fee has the meaning set forth in
Section 7.2.
Confidentiality Agreement means the confidentiality agreement
among Pluspetrol S.A., Seller and Apco dated October 10, 2013, as amended on August 29, 2014, and as further amended from time to time.
Contract means any contract, agreement, arrangement, understanding, commitment, franchise, trust,
indenture, note, deed, obligation, bond, mortgage, loan, instrument, lease, or license, whether written or otherwise.
Contracting Parties has the meaning set forth in Section 8.12.
Conversion has the meaning set forth in the recitals.
Current Insurance Policy has the meaning set forth in Section 7.15.
Damages means damages, costs, fees, expenses, liabilities, penalties or losses of any kind excluding
special and punitive damages and consequential damages that were not reasonably foreseeable as of the date hereof.
Directors and Officers means Keith E. Bailey, Bryan K. Guderian, Benjamin A. Holman, Michael Kyle,
Robert J. LaFortune, Richard E. Muncrief, Piero Ruffinengo, and J. Kevin Vann.
Existing
Confidentiality Agreement has the meaning set forth in Section 7.4(a).
GAAP means the United States generally accepted accounting principles.
Governmental Body means any government or governmental or regulatory body thereof, or political
subdivision thereof, whether federal, state, local or foreign, or any agency, instrumentality or authority thereof, or any court or arbitrator (public or private).
Hydrocarbons means petroleum, natural gas and all related hydrocarbons (including liquid hydrocarbons)
and all other substances, whether liquids, gases or solids and whether hydrocarbons or not, produced in association with petroleum, natural gas or related hydrocarbons.
Hydrocarbons Concession means the concessions rights granted by Governmental Bodies which entitles the
holder thereof to explore for, drill for, recover, produce, develop, remove, and dispose of Hydrocarbons.
Indebtedness means, with respect to any Person, without duplication: (a) any obligations for borrowed money;
(b) any obligations evidenced by bonds, notes, debentures, letters of credit or similar instruments; (c) any obligations under conditional sale, title retention or similar agreements or arrangements creating an obligation with respect to
the deferred purchase price of securities or similar assets (including earn-out payments) and any obligations under any conditional sale, title retention or similar agreements or arrangements with respect to the deferred purchase price
of goods or services that are due more than 90 days following entry into such agreements or arrangements; (d) any obligations relating to advance payments for goods or services; (e) any capital lease obligations; (f) any net
obligations in respect of interest rate, currency or commodity swaps, collars, caps,
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hedges, futures contract, forward contract, option or other derivative instruments or arrangements; (g) any accrued interest, premiums, penalties, breakages, make whole amounts
and other obligations relating to the foregoing that would be payable in connection with the repayment of the foregoing; and (h) any obligations to guarantee any of the foregoing types of obligations on behalf of any Person; provided,
however, that, with respect to the Company, Indebtedness shall not be deemed to include any intercompany Indebtedness owing by Northwest to any of its wholly-owned Subsidiaries, by a wholly-owned Subsidiary of
Northwest to Northwest or by one wholly-owned Subsidiary of Northwest to another wholly-owned Subsidiary of Northwest.
Intentional Breach means, with respect to any representation, warranty, agreement or covenant, an
action or omission (including a failure to cure circumstances) taken or omitted to be taken on or after the date hereof that the breaching Person intentionally takes (or fails to take) and knows would, or would reasonably be expected to, cause or
constitute a material breach of such representation, warranty, agreement or covenant.
Knowledge
(including the term Known) means, with respect to Seller, the actual knowledge of the individuals set forth on Schedule 1.1(a) to this Agreement after due and reasonable inquiry of any other senior executives having responsibility
for such matters.
Law means any and all domestic (federal, state or local), statute, code,
ordinance, tribal or foreign laws, rules, regulations, orders, judgments, writs, stipulations, awards, injunctions or decrees promulgated by any Governmental Body.
Legal Proceedings means any claim, suit, action, litigation, arbitration, mediation, proceeding or
investigation.
Liability means mortgages, charges, security interests, claims,
obligations, liabilities, debts, commitments and duties of any kind whatsoever, whether, fixed, contingent or absolute, matured or unmatured, liquidated or unliquidated, accrued or not accrued, asserted or not asserted, known or unknown, determined,
determinable or otherwise, whenever or however arising (including, whether arising out of contract or tort, based on negligence or strict liability) and whether or not the same would be required by GAAP to be reflected in financial statements or
disclosed in the notes thereto.
Lien means liens (statutory or other), claims,
mortgages, encumbrances, pledges, security interests (including, in respect of shares, depositary receipts for such shares having been issued), easements, hypothecation, rights-of-way, claims, covenants, conditions, restrictions (including transfer
restrictions), options, rights of first offer or refusal, third-party rights, limitations on voting rights, encroachments, title defects or charges of any kind or nature whatsoever, whether secured or unsecured, choate or inchoate, filed or unfiled,
scheduled or unscheduled, recorded or unrecorded, contingent or non-contingent, material or non-material, known or unknown.
Merger has the meaning set forth in Section 2.1.
Merger Agreement has the meaning set forth in Section 2.1.
Merger Agreement Acquisition Proposal means any offer or proposal (other than an offer or proposal
made or submitted by or on behalf of Purchaser) relating to any Merger Agreement Acquisition Transaction.
Merger Agreement Acquisition Transaction means an Acquisition Transaction (as
defined in the Merger Agreement).
Merger Agreement Adverse Recommendation Change
means an Adverse Recommendation Change (as defined in the Merger Agreement).
Merger Agreement
Termination Fee means the Termination Fee (as defined in the Merger Agreement).
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Merger Closing Date means the Merger Closing Date (as
defined in the Merger Agreement).
Negative Antitrust Decision has the meaning set
forth in Section 7.1(c).
Nonparty Affiliates has the meaning set forth in
Section 8.12.
Northwest has the meaning set forth in the
recitals.
Northwest Board has the meaning set forth in Section 3.11.
Northwest Common Shares has the meaning set forth in the recitals.
Northwest Corporation has the meaning set forth in the recitals.
Northwest Interests has the meaning set forth in the recitals.
Northwest LLC has the meaning set forth in the recitals.
Order means any order, injunction, judgment, decree, ruling, writ, assessment or arbitration award of
a Governmental Body.
Parent Disclosure Schedule means the disclosure schedule
delivered by Purchaser to Apco prior to the execution of the Merger Agreement.
Permit means any approvals, authorizations, consents, licenses, permits or certificates of a
Governmental Body, including, without limitation, any Hydrocarbons Concession.
Person means any individual, corporation, partnership, limited liability company, firm, joint venture,
association, joint-stock company, trust, unincorporated organization, Governmental Body or other entity.
Power of Attorney means the Power of Attorney set forth as Exhibit B to the Merger Agreement.
PRC has the meaning set forth in Section 2.1.
Purchase has the meaning set forth in the recitals.
Purchase Price has the meaning set forth in Section 2.2.
Purchaser has the meaning set forth in the preamble.
Purchaser Disclosure Schedule means the disclosure schedule delivered by Purchaser to Seller prior to
the execution of this Agreement.
Purchaser Documents has the meaning set forth in
Section 4.2.
Replacement Insurance Policy has the meaning set forth in
Section 7.15.
Representatives means, with respect to any Person, any
Subsidiary of such Person and such Persons and each of its respective Subsidiaries directors (in their capacity as such), officers, employees, investment bankers, financial advisors, attorneys, accountants or other advisors or
representatives.
Restraints has the meaning set forth in Section 5.1(a).
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SEC means the United States Securities and Exchange
Commission.
Securities Act means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Seller has the meaning set forth in
the preamble.
Seller Disclosure Schedule means the disclosure schedule delivered by
Seller to Purchaser prior to the execution of this Agreement.
Seller Documents has
the meaning set forth in Section 3.2.
Subsidiary means, with respect to any
Person, a Person of which a majority of the outstanding share capital, voting securities or other voting equity interests are owned, directly or indirectly, by the first Person.
Target Boards has the meaning set forth in Section 3.11.
Tax means any and all taxes, assessments, fees, levies, duties, tariffs, imposts, and other similar
charges (together with any and all interest, penalties, additions to tax, additional amounts in respect of the foregoing, and any obligations or payments to any Person with respect to any of the foregoing) imposed by any Governmental Body or taxing
authority including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; customs duties, tariffs, and similar charges.
Tax Return means any return, declaration, report information statement, claim for refund or other
document, including any schedule or attachment thereto filed or required to be filed with any Governmental Body in connection with the determination, assessment or collection of any Tax of any party or the administration of any laws, regulations or
administrative requirements relating to any Tax.
Target Companies means Apco
Argentina and Northwest.
Target Interests has the meaning set forth in the
recitals.
Third Party means any Person or group other than Purchaser or its
Affiliates.
Unaudited Balance Sheet means the balance sheet of Northwest for the
year ended June 30, 2014.
1.2 Other Definitional and Interpretive Matters.
(a) Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply
Calculation of Time Period. When calculating the period of time before which, within which or following which any act is to be done or step
taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non-Business Day, the period in question shall end on the next succeeding Business Day.
Dollars. Any reference in this Agreement to $ shall mean U.S. dollars.
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Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby incorporated
and made a part hereof and are an integral part of this Agreement. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms
used in any Schedule or Exhibit but not otherwise defined therein shall be defined as set forth in this Agreement.
Gender and
Number. Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.
Headings. The division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for
convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement. All references in this Agreement to any Section are to the corresponding Section of this Agreement unless otherwise
specified.
Including. The word including or any variation thereof means (unless the context of its usage otherwise
requires) including, without limitation and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it.
(b) The parties hereto have participated jointly in the negotiation and drafting of this Agreement and, in the event an ambiguity or question
of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this
Agreement.
ARTICLE II
Sale and Purchase of Securities
2.1 Sale and Purchase of Securities. Seller is selling and delivering to Purchaser, and Purchaser is purchasing and accepting from
Seller, all right, title, and interest of Seller in and to the Target Interests, free and clear of all Liens and in connection with the Agreement and Plan of Merger (the Merger Agreement), dated as of October 2, 2014,
by and among Pluspetrol Resources Corporation, a Cayman Island exempted company limited by shares (PRC), Pluspetrol Black River Corporation, a Caymans Island exempted company limited by shares and a wholly-owned Subsidiary
of PRC, and Apco Oil and Gas International, Inc., a Cayman Islands exempted company limited by shares (Apco). The closing of the purchase and sale of the Target Interests (the Closing) shall take
(a) place at the place and time of the closing of the transactions contemplated by the Merger Agreement (the Merger) or (b) such other time or date as agreed to in writing by the parties hereto. The date on
which the Closing occurs is referred to in this Agreement as the Closing Date.
2.2 Purchase Price. The
aggregate consideration for the Target Interests payable hereunder shall be an amount in cash equal to $2.00 (the Purchase Price). On the Closing Date, Purchaser shall pay the Purchase Price to Seller by wire transfer.
Contemporaneously with the delivery of the Purchase Price, Seller will cause to be delivered to Purchaser (or its designee) the certificates (or evidence of book-entry delivery) representing the Target Interests to be sold hereunder by the Seller.
ARTICLE III
Representations and Warranties of Seller
Seller hereby represents and warrants to Purchaser as follows:
3.1 Organization.
(a)
Seller is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation as set forth above and has all requisite corporate power and authority to own, lease and operate its properties and
to conduct its business as it is now being conducted.
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(b) As of the date hereof, Northwest is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation as set forth above and has the requisite corporate power and authority to conduct its business as it is now being conducted. Following the Conversion, Northwest will be a limited
liability company validly existing and in good standing under the laws of the State of Utah and will have all requisite limited liability company power and authority to conduct its business as it is now being conducted.
(c) Each of Seller and Northwest is duly qualified or licensed as a foreign entity to do business, and (to the extent applicable) is in good
standing, in each jurisdiction in which the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except where the failure to be so licensed, qualified or in good
standing would not be material to Apco and its Subsidiaries, taken as a whole.
3.2 Authorization. Seller has all
requisite corporate power, authority and legal capacity to execute and deliver this Agreement and each other agreement, document, or instrument or certificate contemplated by this Agreement or to be executed by Seller in connection with the
consummation of the transactions contemplated by this Agreement (together with this Agreement, the Seller Documents), and to consummate the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and each of the Seller Documents and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all required corporate action on the part of Seller. This Agreement has
been, and each of the Seller Documents will be at or prior to the Closing, duly and validly executed and delivered by Seller, and (assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each Seller Document, when so executed and delivered will constitute, the legal, valid and binding obligation of the Seller, enforceable against Seller in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity).
3.3 Conflicts; Consents of Third
Parties.
(a) Except as set forth on Section 3.3(a) of the Seller Disclosure Schedule, none of the execution and delivery by Seller of
this Agreement or the Seller Documents, the consummation of the transactions contemplated hereby or thereby, or compliance by Seller with any of the provisions hereof or thereof will conflict with, or result in any violation or breach of or default
(with or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the certificate of incorporation and by-laws (or other organizational and governing documents) of
Seller, Northwest or Apco Argentina; (ii) any Contract or Permit to which Seller, Northwest or Apco Argentina is a party or is bound or to which any of the properties or assets of Seller, Northwest or Apco Argentina are subject; (iii) any
Order of any Governmental Body applicable to Seller, Northwest or Apco Argentina or by which any of the properties or assets of Seller, Northwest or Apco Argentina are bound; or (iv) any Law applicable to Seller, Northwest or Apco Argentina or
any of the properties or to which any of the assets of Seller, Northwest or Apco Argentina are subject.
(b) No consent, waiver, approval,
Order, Permit or authorization of, or declaration or filing with, or notification to, any Person or Governmental Body is required on the part of Seller in connection with the execution and delivery of this Agreement or the Seller Documents, or the
compliance by Seller with any of the provisions hereof or thereof, or the consummation of the transactions contemplated hereby and thereby, except for such consents, waivers, approvals, Orders, Permits or authorizations the failure of which to
obtain would not materially impair Apco Argentina, Northwest and its Subsidiaries (taken as a whole) or Sellers ability to consummate the transactions contemplated hereby.
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3.4 Ownership and Transfer of Target Interests.
(a) The authorized capital stock of Apco Argentina consists of 324,786 shares of common stock, par value ARS 1.00 per share, of which
324,786 shares are issued and outstanding. Apco is the sole record and beneficial owner of 308,547 shares of Apco Argentina. The Apco Argentina Shares (i) represent five percent (5%) of the entire allotted, duly authorized and validly
issued share capital of Apco Argentina and (ii) are duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive rights. The Apco Argentina Shares represent five percent (5%) of the voting rights of shareholders
of Apco Argentina and are not subject to any restrictions as to voting. Other than the Apco Argentina Shares and the shares of Apco Argentina owned by Apco, there are no outstanding shares of capital stock or other equity interests of Apco
Argentina.
(b) As of the date hereof through the Conversion, the authorized capital stock of Northwest consists of 1,000 shares of common
stock, par value $1.00 per share, of which 1,000 shares are issued and outstanding. As of the date hereof through the Conversion, the Northwest Common Shares represent one hundred percent (100%) of the entire allotted, duly authorized and
validly issued share capital of Northwest and are duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive rights. Following the Conversion, the authorized limited liability company interests of Northwest will consist
of one class of outstanding limited liability company interests. Following the Conversion, the Northwest Interests will represent one hundred percent (100%) of the entire allotted, duly authorized and validly issued limited liability company
interests of Northwest and will be duly authorized, validly issued, fully paid, nonassessable and not subject to preemptive rights. As of the date hereof through the Conversion, the Northwest Common Shares represent one hundred percent
(100%) of the voting rights of shareholders of Northwest and are not subject to any restrictions as to voting. Following the Conversion, the Northwest Interests will represent one hundred percent (100%) of the voting rights of members of
Northwest and will not be subject to any restrictions as to voting. Other than the Northwest Common Shares, or, following the Conversion, the Northwest Interests, there are no outstanding shares of capital stock or other equity interests of
Northwest or any outstanding securities convertible into or exchangeable or exercisable for any such capital stock or equity interests. There is no Person (other than Purchaser) who is entitled to acquire or receive any shares of capital stock or
other securities or equity interests of Northwest. Northwest has not conducted any operations other than those directly related to its participating interest in Acambuco pursuant to the (i) Agreement among YPF Sociedad Anónima, Bridas
S.A.P.I.C, Acambuco S.A., Apco Argentina and Northwest as of August 29, 1991 (ii) Decreto 2175/91 as of October 21, 1991; (iii) Public deed 301 as of December 17, 1991; (iv) Agreement among Bridas S.A.P.I.C., Apco
Argentina and Northwest, effective as of April 23, 1984 and (v) Unión Transitoria de Empresas Área Acambuco among Bridas S.A.P.I.C., Apco Argentina, Northwest and YPF Sociedad Anónima, effective as of
September 28, 1994, as amended on November 29, 1999 and as further amended on October 19, 2007 (collectively, the Acambuco Agreements).
(c) Seller is the record and beneficial owner of, and has good, valid and marketable title to, the Apco Argentina Shares and the Northwest
Common Shares, free and clear of any and all Liens and, following the Conversion, will be the record and beneficial owner of, and has good, valid and marketable title to, the Target Interests, free and clear of any and all Liens. Seller has the
corporate power and authority to sell, transfer, assign and deliver such Target Interests as provided in this Agreement, and such delivery will convey to Purchaser good title to such Target Interests, free and clear of any and all Liens or any other
restrictions on transfer (other than any restrictions on transfer under the Securities Act and any state securities Laws).
(d) Northwest
does not own, directly or indirectly, any capital stock, equity interest, beneficial interest or other voting or equity securities or interest in any Person. Northwest does not act or carry on business in partnership with any other Person and is not
party to any joint venture agreement.
(e) Prior to the date hereof, Seller has made available to Purchaser complete and correct copies of
the articles of association, charter and bylaws (or similar organizational documents) of Northwest. Other than the organizational documents made available to Purchaser pursuant to the foregoing sentence, there are no Contracts, arrangements,
shareholder agreements, voting trusts, proxies or understandings which relate to the governance of the voting, registration, transfer or issuance of shares or equity interests of any company of Northwest.
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3.5 No Undisclosed Liabilities. Northwest does not have any Liabilities of any nature
whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, liquidated or unliquidated, or otherwise that are required by GAAP to be reflected or reserved against on a balance sheet (or
the notes thereto) of Northwest except for Liabilities (i) that are specifically stated and adequately reserved against in the Unaudited Balance Sheet or, (ii) that have been incurred in the ordinary course of business consistent with past
practice since the Balance Sheet Date and are not, individually or in the aggregate, material to Northwest.
3.6 Contracts. Other
than the Acambuco Agreements and Contracts between Northwest and its Affiliates disclosed on Section 4.26 of the Company Disclosure Schedule, Northwest is not party to any Contract.
3.7 Legal Proceeding. As of the date hereof, there is no Legal Proceeding pending, or to the Knowledge of Seller, threatened, against
Northwest, Northwests properties (tangible or intangible) or any of Northwests officers or directors (in their capacities as such). As of the date hereof, there is no investigation or other proceeding pending or, to the Knowledge of
Seller, threatened, against Northwest, any of Northwests properties (tangible or intangible) or any of Northwests officers or directors (in their capacities as such) by or before any Governmental Body.
3.8 Tax. Effective as of the Closing Date, Northwest LLC will be disregarded as an entity separate from Seller for purposes of U.S.
federal income tax law and any applicable state or local law.
3.9 Financial Advisors.
(a) No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission from Apco or any of its
Subsidiaries or Northwest or any of its Subsidiaries in connection with the Purchase or the Merger or any of the other transactions contemplated by this Agreement or the Merger Agreement based upon arrangements made by or on behalf of Seller or any
of its Affiliates (other than Apco and its Subsidiaries).
3.10 Big Boy Representation. Seller acknowledges that
(i) it is a sophisticated institution engaged in the business of assessing and assuming investment risks in respect of securities, including securities such as the Target Interests, (ii) it initiated and still desires to consummate the
sale of the Target Interests to Purchaser, (iii) it is fully satisfied with the Purchase Price, and the Purchase Price is all that Seller is or will be entitled to receive for the Target Interests and (iv) Purchaser is consummating this
transaction with Seller in reliance on the foregoing acknowledgements.
3.11 Board Matters. Section 3.11 of
the Seller Disclosure Schedule sets forth a true, correct and complete list of Sellers designees to the board of directors or applicable governing body of (a) Apco Argentina (the Apco Argentina Board), and
(b) Northwest (the Northwest Board and, together with the Apco Argentina Board, the Target Boards).
3.12 No Other Representations or Warranties. Except for the representations and warranties expressly set forth in this ARTICLE
III and those representations and warranties expressly made by Apco set forth in Article IV of the Merger Agreement, none of Seller or any of its Affiliates nor any other Person on behalf of Seller makes or has made any express or implied
representation or warranty with respect to Seller, the Target Companies or their respective businesses or with respect to any other information provided, or made available, to Purchaser or their respective Representatives or Affiliates in connection
with the transactions contemplated hereby, including the accuracy or completeness thereof. Seller acknowledges and agrees that, except for the representations and warranties made by Purchaser in ARTICLE IV (as qualified by the applicable
items disclosed in the Purchaser Disclosure Schedule) and those representations and warranties expressly set forth in Article V of the Merger Agreement (as qualified by the applicable items disclosed in the Parent Disclosure Schedule), none of
Purchaser or any other Person is making or has made any representations or warranty, expressed or implied, at
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law or in equity, with respect to or on behalf of Purchaser or any of its Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future
operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any
information regarding Purchaser or any of its Subsidiaries or any other matter furnished or provided to Seller or made available to the Company in any data rooms, virtual data rooms, management presentations or in any other
form in expectation of, or in connection with, this Agreement or the transactions contemplated hereby or thereby. Seller is not relying and specifically disclaims that it is relying upon or has relied upon any such other representations or
warranties that may have been made by any Person, and acknowledges and agrees that Purchaser and its Affiliates have specifically disclaimed and do hereby specifically disclaim any such other representations and warranties. Seller acknowledges and
agrees that the representations and warranties contained in ARTICLE IV (as qualified by the applicable items disclosed in the Purchaser Disclosure Schedule) and Article V of the Merger Agreement (as qualified by the applicable item
disclosed in the Parent Disclosure Schedule) are for risk allocation purposes and not necessarily assertions of truth.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to Seller as follows:
4.1 Organization. Purchaser is a company duly organized, validly existing and in good standing under the laws of the Cayman Islands and
has all requisite corporate or similar entity power and authority to own, lease and operate properties and conduct business as it is being conducted.
4.2 Authorization. Purchaser has all necessary power and authority to execute and deliver this Agreement and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be executed by Purchaser in connection with the consummation of the transactions contemplated hereby and thereby (the Purchaser Documents), and to
consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Purchaser of this Agreement and each of the Purchaser Documents and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all required corporate or similar entity action on behalf of Purchaser. This Agreement has been, and each Purchaser Document will be at or prior to the Closing, duly executed and delivered by Purchaser and
(assuming the due authorization, execution and delivery by the other parties hereto and thereto) this Agreement constitutes, and each Purchaser Document when so executed and delivered will constitute, the legal, valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
4.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Section 4.3 of the Purchaser Disclosure Schedule, none of the execution and delivery by Purchaser of this Agreement
or the Purchaser Documents, the consummation of the transactions contemplated hereby or thereby, or the compliance by Purchaser with any of the provisions hereof or thereof will conflict with, or result in any violation or breach of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of termination or cancellation under, any provision of (i) the organizational documents of Purchaser; (ii) any Contract or Permit to which Purchaser is a party or
is bound or to which Purchaser or any of the properties or assets of Purchaser are subject; (iii) any Order of any Governmental Body applicable to Purchaser or by which any of the properties or assets of Purchaser are bound; or (iv) any
applicable Law, other than, in the case of clauses (ii) and (iv), for any such violation, breach, default, right, termination, or cancellation that would not materially impair Purchasers ability to consummate the transactions contemplated
hereby.
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(b) No consent, waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, any Person or Governmental Body is required on the part of Purchaser in connection with the execution and delivery of this Agreement or the Purchaser Documents, the compliance by Purchaser with any of the provisions hereof
or thereof, the consummation of the transactions contemplated hereby and thereby or the taking by Purchaser of any other action contemplated hereby, except for such consents, waivers, approvals, orders, Permits or authorizations the failure of which
to obtain would not have a material adverse effect on Purchasers ability to consummate the transactions contemplated hereby.
4.4
Securities Law Matters. Purchaser (i) is acquiring the Target Interests solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof, (ii) acknowledges
that the Target Interests are not registered under the Securities Act, or any state securities laws, and that the Target Interests may not be transferred or sold except pursuant to the registration provisions of the Securities Act or pursuant to an
applicable exemption therefrom and subject to state securities laws and regulations, as applicable, (iii) has knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of purchasing
the Target Interests being purchased by it hereunder and (iv) is able to bear the economic risk of an investment in the Target Interests for an indefinite period, including the risk of a complete loss of any such investment.
4.5 Financial Advisors. No Person has acted, directly or indirectly, as a broker, finder or financial advisor for Purchaser in
connection with the transactions contemplated by this Agreement and no Person is entitled to any fee or commission or like payment in respect thereof.
4.6 Financial Capability. Purchaser has or will have sufficient funds to consummate the Purchase and at the Closing will have
sufficient funds to pay the Purchase Price and consummate the Purchase.
4.7 No Other Representations and Warranties. Except for
the representations and warranties expressly set forth in this ARTICLE IV, none of Purchaser or any of its respective Affiliates nor any other Person on behalf of any of them makes or has made any express or implied representation or warranty
(and there is and has been no reliance by Seller or any of its Affiliates or Representatives on any such representation or warranty) with respect to Purchaser or its businesses or with respect to any other information provided, or made available, to
Seller or any of its Representatives or Affiliates in connection with the transactions contemplated hereby, including the accuracy or completeness thereof. Purchaser acknowledges and agrees that, except for the representations and warranties made by
Seller in ARTICLE III (as qualified by the applicable items disclosed in the Seller Disclosure Schedule) and the representations and warranties expressly set forth in Article IV of the Merger Agreement (as qualified by the applicable items
disclosed in the Company Disclosure Schedule), neither Seller nor any other Person is making or has made any representations or warranty, expressed or implied, at law or in equity, with respect with respect to or on behalf of the Seller, the Target
Companies or any of their respective Subsidiaries, their businesses, operations, assets, liabilities, financial condition, results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including
the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding the Target Companies or their respective Subsidiaries or any other matter
furnished or provided to Purchaser or made available to Purchaser in any data rooms, virtual data rooms, management presentations or in any other form in expectation of, or in connection with, this Agreement or the
transactions contemplated hereby or thereby. Purchaser is not relying and specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person (other than the
representations and warranties made by Apco under the Merger Agreement), and acknowledges and agrees that the Seller, the Target Companies and their respective Affiliates have specifically disclaimed and do hereby specifically disclaim any such
other representations and warranties. Purchaser acknowledges and agrees that the representations and warranties contained in ARTICLE III (as qualified by the applicable items disclosed in the Seller Disclosure Schedule) and Article IV of the
Merger Agreement (as qualified by the applicable items disclosed in the Company Disclosure Schedule) are for risk allocation purposes and not necessarily assertions of truth.
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4.8 Doing Business in Argentina. Purchaser acknowledges that (i) it is acquiring
companies doing business in Argentina, (ii) it is familiar with the risks of doing business in Argentina and (iii) has obtained all necessary advise in this respect.
ARTICLE V
Conditions
to Closing
5.1 Conditions Precedent to Obligations of Purchaser. The obligation of Purchaser to consummate the
transactions contemplated by this Agreement is subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Purchaser in its sole discretion in whole or in part to the extent
permitted by applicable Law):
(a) No Actions. No Governmental Body of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any Law or Order (collectively, Restraints), or threatened or commenced any Legal Proceeding, which is then pending or in effect and seeks to enjoin or otherwise prohibit, or has the effect
of enjoining or otherwise prohibiting, the consummation of the transactions contemplated by this Agreement.
(b) Performance;
Representations and Warranties True and Correct. Seller shall have performed in all material respects all of its obligations hereunder to be performed by Seller at or prior to the Closing Date, and (i) each of the representations and
warranties set forth in Section 3.4(a), Section 3.4(b) and Section 3.4(c) (Ownership and Transfer of Target Interests) and Section 3.9 (Financial Advisors) shall be true and correct in all respects as of the date of this
Agreement and as of the Closing, except, with respect to Section 3.4(a) and Section 3.4(b), to the extent that any inaccuracies would be de minimis and (ii) each of the other representation and warranties set forth in ARTICLE
III shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date, in each case with the same effect as if then made (except to the extent such representations and warranties expressly relate to
an earlier date, in which case they shall be tested as of such earlier date);
(c) Board Matters. (i) Those individuals set
forth on Schedule 5.1(c) to this Agreement shall have been duly and validly elected to the Target Boards, with such election to be effective immediately following the Closing; and (ii) each member of Sellers designees
(collectively, the Board Designees) to the Target Boards prior to the Closing (other than those members included on Schedule 5.1(c) to this Agreement) shall have duly and validly delivered to the applicable Target
Company his or her executed resignation as a director of the applicable Target Company, subject to and effective immediately following the Closing.
(d) Deliveries. Seller shall have delivered, or caused to be delivered, to Purchaser the documents described in Section 7.10;
(e) Conversion of Northwest Corporation to Limited Liability Company. At least two days prior to the Closing Date, Seller shall
have (i) effectively converted Northwest Corporation into a limited liability company pursuant to the laws of the State of Utah, and (ii) transferred the relevant certificates of conversion to Purchaser, and Seller shall not have filed an
election to cause such limited liability companies to be treated as corporations for U.S. federal, state or local tax purposes; and
(f)
Consummation of Other Transactions. The transactions contemplated by the Merger Agreement shall have been consummated or shall be consummated substantially concurrently with the Closing.
5.2 Conditions Precedent to Obligations of Seller. The obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, on or prior to the Closing Date, of each of the following conditions (any or all of which may be waived by Seller in its sole discretion in whole or in part to the extent permitted by applicable Law):
(a) No Actions. There shall be no Restraints and no Governmental Body has threatened or commenced any Legal Proceeding, which is then
pending or in effect and seeks to enjoin or otherwise prohibit, or has the effect of enjoining or otherwise prohibiting, the consummation of the transactions contemplated by this Agreement.
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(b) Performance; Representations and Warranties True and Correct. Purchaser shall have
performed in all material respects all of its obligations hereunder to be performed by Purchaser at or prior to the Closing Date, and each of the representations and warranties contained in ARTICLE IV shall be true and correct in all
respects, in each case, as of the date of this Agreement and as of the Closing Date, in each case with the same effect as if then made (except to the extent such representations and warranties expressly relate to an earlier date, in which case they
shall be tested as of such earlier date), except for such failures to be true and correct as would not reasonably be expected to, individually or in the aggregate, materially impair the ability of Purchaser to consummate the Purchase.
(c) Deliveries. Purchaser shall have delivered, or caused to be delivered, to Seller (or its designee(s)) the Purchase Price by wire
transfer of immediately available funds and (ii) a certificate dated the Closing Date and signed by an executive officer of Seller certifying that the conditions set forth in Section 5.2(b) shall have been satisfied.
(d) Consummation of Other Transactions. The transactions contemplated by the Merger Agreement shall have been consummated or shall be
consummated substantially concurrently with the Closing.
5.3 Frustration of Closing Conditions. Neither of Purchaser or Seller may
rely on the failure of any condition set forth in Section 5.1 or Section 5.2, as the case may be, if such failure was caused by such partys failure to comply with any provision of this Agreement.
ARTICLE VI
Termination
6.1
Termination. This Agreement:
(a) may be terminated and the transactions contemplated hereby may be abandoned at any time prior to
the Closing by mutual written consent of Seller and Purchaser; or
(b) shall automatically be terminated, without any further action by
any party, and the transactions contemplated hereby shall be abandoned at any time prior to the Closing if the Merger Agreement has been terminated in accordance with its terms.
6.2 Procedure Upon Termination. In the event of termination and abandonment by Purchaser or Seller, or both, pursuant to Section
6.1, written notice thereof shall forthwith be given to the other party or parties, and this Agreement shall terminate, and the purchase of the Target Interests hereunder shall be abandoned, without further action by Purchaser or Seller.
6.3 Effect of Termination. In the event of any termination of this Agreement in accordance with Section 6.1, except as set forth
in this Section 6.3, this Agreement shall be terminated, and there shall be no further liability or obligation hereunder by the part of any party hereto; provided, that if (x) such termination resulted, directly or indirectly,
from the Intentional Breach of any representation, warranty, covenant or other agreement contained herein or (y) the Intentional Breach of any representation, warranty, covenant or other agreement contained herein shall cause the Closing not to
occur, then, notwithstanding such termination, such breaching party shall be fully liable for any and all Damages, to the extent proven, as a result of such Intentional Breach regardless of whether or not the Termination Fee or the Merger Agreement
Termination Fee has been paid or is payable; provided, further that the Confidentiality Agreement, and the provisions of Section 3.9 (Financial Advisors), Section 4.5 (Financial Advisors), Section 7.7 (Public
Statements), ARTICLE I, ARTICLE VI and ARTICLE VIII shall survive any termination of this Agreement pursuant to this ARTICLE VI.
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6.4 Future Sale Fee.
(a) If this Agreement is terminated pursuant to Section 6.1(b) and a Merger Agreement Termination Fee is payable to Purchaser pursuant
to Section 8.3(a)(i) or 8.3(a)(ii) of the Merger Agreement, within one Business Day of Seller or its Affiliates receipt of consideration in connection with a related Merger Agreement Acquisition Proposal, Seller shall pay to Purchaser by wire
transfer of immediately available funds an amount equal to the excess, if any, of (x) the consideration actually paid to Seller or its Affiliates in connection with the related Merger Agreement Acquisition Proposal (whether paid in one
transaction or a series of transactions, in cash, securities or any other form and including any deferred purchase price payments, dividends, seller notes and earn-out payments) over (y) $15.00 multiplied by the number of Apco
Shares in respect of which Seller received consideration in such Merger Agreement Acquisition Proposal.
(b) (i) If this Agreement is
terminated (A) pursuant to Section 6.1(b) and a Merger Agreement Termination Fee is payable to Purchaser pursuant to Section 8.3(a)(iii) of the Merger Agreement (following a termination of the Merger Agreement pursuant to
Section 8.1(d)(ii)(B) thereof) or (B) pursuant to Section 6.1(a) or Section 6.1(b) and prior to such termination Seller shall have committed an Intentional Breach of any of its obligations contained in Section 7.4 and
(ii) within 12 months of the termination of this Agreement the Company enters into a definitive agreement with respect to a Merger Agreement Acquisition Proposal with a Third Party (whether or not such Third Party made an Acquisition Proposal
prior to termination) or a Merger Agreement Acquisition Proposal (whether or not the applicable Third Party made an Acquisition Proposal prior to termination) is consummated, then Seller shall pay to Purchaser by wire transfer of immediately
available funds an amount equal to the excess, if any, of (x) the consideration actually paid to Seller or its Affiliates in connection with such Merger Agreement Acquisition Proposal (whether paid in one transaction or a series of
transactions, in cash, securities or any other form and including any deferred purchase price payments, dividends, seller notes and earn-out payments) over (y) $15.00 multiplied by the number of Apco Shares in respect of which
Seller received consideration in such Merger Agreement Acquisition Proposal.
(c) (i) If the Agreement is terminated
(A) pursuant to Section 6.1(b) and the Merger Agreement was terminated by Purchaser or Seller, as applicable, pursuant to Section 8.1(d)(i) or 8.1(d)(ii)(B) of the Merger Agreement or (B) pursuant to Section 6.1(a) or
Section 6.1(b) and prior to such termination Seller shall have committed an Intentional Breach of any of its obligations contained in Section 7.4 of this Agreement, and (ii) (A) within 12 months of the termination of this
Agreement following a termination of the Merger Agreement pursuant to Section 8.1(d)(i) or 8.1(d)(ii)(B) of the Merger Agreement or (B) within 12 months of the termination of this Agreement following an Intentional Breach by Seller of any
of its obligations under Section 7.4 of this Agreement, Seller enters into an agreement to sell, dispose or transfer of all or any of the Apco Shares (or the economic benefit thereof) held by Seller as of the date hereof in a transaction or a
series of transactions (a Subsequent Share Sale), Seller shall pay to Purchaser by wire transfer of immediately available funds an amount equal (x) the excess if any of (1) the per Apco Share consideration
actually paid to Seller in connection with the Subsequent Share Sale (whether paid in cash, securities or any other form and including any deferred purchase price payments, seller notes and earn-out payments and including any
consideration paid or payable for the Target Interests) over (2) $15.00 multiplied by (y) the number of Apco Shares sold by Seller in such Subsequent Share Sale.
(d) If the Agreement is (i) terminated pursuant to Section 6.1(b) and the Merger Agreement was terminated by Purchaser or Seller
pursuant to Section 8.1(b)(i), (ii) Seller receives an Acquisition Proposal prior to any such termination and (iii) within 3 months of any such termination of this Agreement, Seller enters into a Subsequent Share Sale, Seller shall
pay to Purchaser by wire transfer of immediately available funds an amount equal (x) the excess if any of (1) the per Apco Share consideration actually paid to Seller in connection with the Subsequent Share Sale (whether paid in cash,
securities or any other form and including any deferred purchase price payments, seller notes and earn-out payments and including any consideration paid or payable for the Target Interests) over (2) $15.00 multiplied by
(y) the number of Apco Shares sold by Seller in such Subsequent Share Sale.
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(e) If the consideration received by Seller in respect of any Merger Agreement Acquisition
Proposal subject to Section 6.4(a) or Section 6.4(b) or any Subsequent Share Sale subject to Section 6.4(c) or Section 6.4(d) is not all in the form of cash, then the value of such non-cash
consideration shall equal: (i) in the case of non-cash consideration in the form of securities listed on a national securities market, the volume weighted average price for such securities for (x) the five consecutive trading days ending
on the trading day immediately preceding Sellers receipt of such securities or (y) the five consecutive trading days starting with the first trading day following Sellers receipt of such securities if such securities are first
listed upon the consummation of such Merger Agreement Acquisition Proposal or Subsequent Share Sale, as applicable or (ii) in the case of all other non-cash consideration, the fair market value of such non-cash consideration as agreed between a
willing buyer and a willing seller, neither under any compulsion to transact, as determined by a third-party valuation firm of international reputation that is reasonably acceptable to both Purchaser and Seller.
6.5 Termination Fee.
(a) If: (i) the Agreement is terminated by either Purchaser or Seller pursuant to Section 6.1; (ii) prior to such
termination, Seller committed an Intentional Breach of any of its obligations contained in Section 7.4; and (iii) no Merger Agreement Termination Fee is payable by Apco pursuant to the terms of the Merger Agreement, then Seller shall pay
to Purchaser an amount equal to $15,450,000 (the Termination Fee) by wire transfer within two Business Days after the termination of this Agreement; provided that the Purchaser and Seller acknowledge that Purchaser
shall not be entitled to receive both the Termination Fee and the Merger Agreement Termination Fee.
6.6 Failure to Pay Amounts
Due.
(a) If Seller fails to pay the Termination Fee or any amounts payable by it pursuant to Section 6.4, when due, and, in
order to obtain such payment, Purchaser commences a suit that results in a judgment against Seller for such amount, Seller shall pay to Purchaser its costs and expenses (including attorneys fees and expenses) in connection with such suit,
together with interest on such amount from the date such payment was required to be made pursuant to Section 6.4 or Section 6.5 until the date of payment at the rate per annum three hundred (300) basis points over the prime
rate (as announced by JP Morgan or any successor thereto) in effect on the date such awarded amount was originally required to be paid.
ARTICLE VII
Covenants
7.1
Consents; Regulatory Approvals.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties
hereto shall (and shall cause each of their applicable Affiliates and Subsidiaries to) use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate, as promptly as practicable, the Purchase and the other transactions contemplated by this Agreement. Without limiting the foregoing, each of the parties agrees to use its respective
reasonable best efforts to (i) cause the conditions to the Purchase set forth in ARTICLE V to be satisfied as promptly as practicable, (ii) obtain any consents, approvals (including any post-Closing approvals), orders, waivers and
authorizations of, actions or nonactions by, any Governmental Bodies or any third party necessary in connection with consummation of the transactions contemplated by this Agreement, including the Purchase and (iii) execute and deliver any
additional instruments necessary to consummate the Purchase and any other transactions to be performed or consummated by such party in accordance with the terms of this Agreement and to carry out fully the purposes of this Agreement. Notwithstanding
anything to the contrary contained herein, nothing in this Agreement shall require Purchaser or any of its Affiliates, or permit Northwest or any of their Subsidiaries (without the prior consent of Purchaser), to (x) litigate with any
Government Body to obtain approval, authorization or consent to the Purchase, (y) agree to (A) any license, sale or other disposition or holding separate (through establishment of a trust or otherwise) of any shares of Northwest, Purchaser
or any of
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their respective Subsidiaries or Affiliates or of any amount (other than a de minimis amount) of such entities businesses, assets or properties, (B) the imposition of any limitation
(other than a de minimis limitation) on the ability of Northwest, Purchaser, or any of their respective Subsidiaries or Affiliates to conduct their respective businesses or own any shares or assets or to acquire, hold or exercise full rights of
ownership of their respective businesses, or (C) the imposition of any impediment (other than a de minimis impediment) on Purchaser or any of their respective Subsidiaries or Affiliates under any Laws or (z) pay any amounts (other than de
minimis amounts) or otherwise agree to provide any benefit or undertaking to be subject to any limitation or restriction to any Governmental Body or any other Person in connection with any approval by a Governmental Body other than in respect of
customary and established filing fees and other payments required as of the date hereof by Law.
(b) To the extent not expressly
prohibited by Law, Purchaser and Seller shall reasonably cooperate with respect to all discussions, submissions, negotiations and other communications with all Governmental Bodies in connection with all waiting periods, authorizations, consents or
waivers (including any post-Closing approvals) required to consummate the transactions contemplated by this Agreement, and, subject to reasonable concerns regarding confidentiality, each party shall keep the other reasonably informed with respect to
such matters. In connection with the actions and procedures referenced in this Section 7.1, each party shall, and shall cause its Representatives to: (i) promptly and fully inform the other party of any written or material oral
communication received from or given to any Governmental Body, (ii) permit the other party to review any submission required to be made by Northwest or any of their respective Subsidiaries to any Governmental Body, (iii) consult with the
other party in advance of any meeting, conference or material discussion required by any Governmental Body and (iv) if permitted to do so by the relevant Governmental Body, give the other party the opportunity to attend and participate in any
such meetings, conferences and discussions. Notwithstanding anything to the contrary contained in this Agreement, nothing in this Section 7.1 shall require (x) Purchaser to take or (y) Seller to cause Apco to take any action not
required under Section 6.3 of the Merger Agreement.
(c) Each of the parties hereto shall (and shall cause its Affiliates and
Subsidiaries to) as soon as practicable but in no event later than one (1) calendar week following the Closing Date, take all actions necessary to make the filings required under the Argentine Antitrust Laws. Upon request by Purchaser, Seller
shall (and shall cause its Affiliates and Subsidiaries to) use its reasonable best efforts to obtain, or cause to be obtained, any applicable consents, authorizations, orders, clearances, and approvals from all Governmental Bodies required in
connection with the transactions contemplated by this Agreement and the Merger Agreement. Seller shall cooperate fully with the Purchaser and its Affiliates and use reasonable best efforts to promptly seek to obtain all such consents,
authorizations, orders, clearances, and approvals (including any post-Closing approvals) and to make all required registrations, declarations and filings with, and notices to, any Governmental Bodies (including in connection with any applicable
Antirust Law). To the extent not expressly prohibited by Law, Seller shall reasonably cooperate with Purchaser with respect to all discussions, submissions, negotiations and other communications with all Governmental Bodies in connection with all
authorizations, consents, waivers or approvals (including any post-Closing approvals) required in connection with the transactions contemplated by the Merger Agreement, and, subject to reasonable concerns regarding confidentiality, each party shall
keep the other reasonably informed with respect to such matters. In connection with the actions and procedures referenced in this Section 7.1(c), Seller shall, and shall cause its Representatives to: (i) promptly and fully inform
Purchaser of any written or material oral communication received from or given to any Governmental Body, (ii) permit Purchaser to review any submission required to be made by Seller to any Governmental Body, (iii) consult with Purchaser in
advance of any meeting, conference or material discussion required by any Governmental Body and (iv) if permitted to do so by the relevant Governmental Body, give Purchaser the opportunity to attend and participate in any such meetings,
conferences and discussions. For the avoidance of doubt, Purchaser acknowledges that the Argentine Antitrust Approval shall not be a condition to Closing and agrees to assume all the risks related to the Argentine Antitrust Approval (or the lack
thereof) and that Seller and its Affiliates shall not be required to return the Purchase Price in the event the Argentine Antitrust Approval is delayed, rejected or conditioned (a Negative Antitrust Decision). Purchaser
shall be solely responsible to perform any and all actions required by a Negative Antitrust Decision at its own risk and cost. Seller and its Affiliates shall not be liable for any losses arising out of a Negative Antitrust Decision.
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7.2 Third-Party Consents. Without limiting any covenant contained in Section 7.1,
Purchaser and Seller shall each, and shall each cause their respective Subsidiaries to use reasonable best efforts to obtain all consents and approvals of third parties (including parties to Company Material Contracts (as defined in the Merger
Agreement) and other Contracts of Apco and its Subsidiaries) that are required in connection with the consummation of the transactions contemplated by this Agreement. Notwithstanding the foregoing, in no event shall Purchaser or any of its
Affiliates or Seller, Northwest or any of their respective Subsidiaries be obligated to bear any expense or pay any fee or grant any concession, other than de minimis expenses, fees or concessions (any such expense, fee or concession, a
Consent Fee) in connection with obtaining any waivers, permits, approval, authorizations, qualifications or consents that are required in in connection with the consummation of the transactions contemplated hereby pursuant
to the terms of any Contract to which Seller or Northwest or any of their respective Subsidiaries is a party; provided that Seller shall (x) promptly inform Purchaser in writing of any request or demand for a Consent Fee received by it,
Northwest or their respective Subsidiaries and (y) pay any monetary Consent Fee if Purchaser undertakes to reimburse Seller for amounts paid in respect of such Consent Fee.
7.3 Notification of Certain Matters. Seller shall give prompt written notice to the Purchaser, and Purchaser shall give prompt written
notice to Seller, of the occurrence, or failure to occur, of any event which occurrence or failure to occur has resulted in or would reasonably be expected to result in the failure to satisfy or be able to satisfy any of the conditions specified in
Section 5.1 or Section 5.2, as applicable. For the avoidance of doubt, notices provided to either party hereto pursuant to Section 9.2 of the Merger Agreement shall be deemed delivered under this Section 7.3.
7.4 Non-Solicitation; No Transfer.
(a) From the date of this Agreement until the date and time at which the Merger becomes effective or, if earlier, the termination of this
Agreement in accordance with its terms, Seller will not, nor shall it authorize or permit any of its Subsidiaries to, and shall cause its and their respective Representatives not to, directly or indirectly (i) initiate, solicit or knowingly
encourage or knowingly facilitate the making of any bona fide proposal or offer (provided, that Seller shall be entitled substantially contemporaneously with the public announcement of the Merger Agreement, to waive the dont
ask/dont waive provisions of any standstill provisions contained in any confidentiality agreement in effect on the date of this Agreement (such agreement, an Existing Confidentiality Agreement); provided
further; that Seller shall notify Purchaser as to the identity of the other parties to the Existing Confidentiality Agreements to the extent not prohibited by such Existing Confidentiality Agreement and, in the event that one or more Existing
Confidentiality Agreements prohibit such notification to Parent, the waiver of the dont ask/dont waive provisions for such Existing Confidentiality Agreements shall be conditioned upon the party to such Existing
Confidentiality Agreement acknowledging that Seller shall not be prohibited from notifying Purchaser as to the identity of such party) concerning, (x) any sale or transfer of all or a material portion of the assets of Apco and its Subsidiaries,
taken as a whole; or all or a material portion of the assets of Northwest and its Subsidiaries, taken as a whole; (y) any sale or transfer of any Apco Shares or the Target Interests or (z) any conversion, consolidation, recapitalization,
merger, liquidation, dissolution or similar transaction involving Apco and its Subsidiaries or Northwest and its Subsidiaries (an Acquisition Proposal) or any Acquisition Inquiry, (ii) other than informing Third
Parties of the existence of the provisions contained in this Section 7.4, engage in negotiations or discussions with, or furnish any non-public information concerning Apco, Northwest or any of their respective Subsidiaries to, any Third Party
who has made or in response to an Acquisition Proposal or any Acquisition Inquiry or (iii) resolve or agree to do any of the foregoing. Seller shall, and shall cause its Subsidiaries to and shall cause its and their respective Representatives
to (i) immediately cease and cause to be terminated all existing discussions or negotiations with any Person conducted heretofore with respect to any Acquisition Proposal, or any Acquisition Inquiry and (ii) promptly request that all
confidential information provided by or on behalf of Seller or any of its Affiliates to any such Person in connection with such discussions or negotiations be returned or destroyed. Notwithstanding anything to the contrary in this Section
7.4, any actions taken by Apco, the Apco Board, the Subsidiaries or Representatives of Apco (including those Representatives of Apco that are also employees of the Seller) in accordance with the provisions of Section 6.5 of the Merger
Agreement shall not constitute a breach by Seller of this Section 7.4.
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(b) Seller shall promptly (and in any event within 24 hours after any director, officer or
financial advisor of Seller is notified of the receipt thereof) advise Purchaser in writing in the event that Seller receives any Acquisition Proposal or Acquisition Inquiry, and in connection with such notice, provide to Purchaser the material
terms and conditions (including the identity of the Third Party making any such Acquisition Proposal) of any such Acquisition Proposal. For the avoidance of doubt, any notices provided to either party hereto as required pursuant to Section 6.5
of the Merger Agreement shall be deemed delivered under this Section 7.4(b).
(c) Seller shall not (solely with respect to the
Target Companies), and shall cause the Target Companies not to, sell, dispose of, transfer, or assign any ownership interests in any corporation, partnership, limited liability company, other business organization or any division or material amount
of assets thereof owned by any of them as of the date hereof, other than asset sales or dispositions in the ordinary course of business.
7.5 Conduct of Business. From the date of this Agreement until the earlier of the Closing or the termination of this Agreement, without
the prior written consent of Purchaser, Seller shall not, in respect of the Target Companies, and shall cause Northwest not to: (a) except for the Conversion, amend or modify the organizational or constituent documents of the Target Companies,
(b) pay or make any dividends, (c) issue, sell, pledge, dispose of, encumber (or authorize any of the foregoing) or authorize any additional shares of Apco Argentina Shares or Northwest Common Shares, as applicable, or of any preferred
stock or any other capital stock or other equity or voting securities of any of the Target Companies, (d) sell, pledge, dispose of or encumber any material asset of either Target Company, (e) amend, terminate, assign or waive any material
right under any material Contract to which either Target Company is a party other than in the ordinary course of business, (f) incur any Indebtedness, (g) adopt any budget or operating plan or otherwise authorize or make any commitment
with respect to any capital expenditure, (h) settle, waive, release assign or compromise any litigation to which either Target Company is a party, other than for compromises, settlements or agreements that involve only the payment of monetary
damages not in excess of $100,000 in any single instance and $250,000 in the aggregate and in any case without the imposition of equitable relief on, or the admission of wrongdoing by, any Target Company or any of its Subsidiaries or (i) except
for the Conversion or as required by Law or the published interpretation or enforcement thereof, make or rescind any material Tax election, change any material Tax method, file any amended Tax Return that is material, incur any material Tax
Liability, or settle or compromise any material federal, state, provincial, local or foreign income Tax liability.
7.6 Director
Resignations. Seller shall cause each Board Designee to duly and validly deliver to the relevant Target Company his or her executed resignation as a director of such Target Company subject to and effective immediately following the Closing.
7.7 Public Statements.
(a) Each party hereto agrees not to issue any press release or make any other public announcement relating to this Agreement or the
transactions contemplated hereby without the prior written approval (which approval shall not be unreasonably withheld, conditioned or delayed) of the other party, except as may be required by Law, court process or the rules and regulations of any
national securities exchange or national securities quotation system, in which case the other parties hereto shall, to the extent practicable, be given the reasonable opportunity to review and comment on any such press release or other public
announcement prior to its public release. Notwithstanding any other provision of this Agreement, the requirements of this Section 7.7 shall not apply to any disclosure by (a) Seller or Purchaser of any information concerning this
Agreement or the transactions contemplated hereby in connection with any dispute between the parties regarding this Agreement, the Purchase or the transactions contemplated by this Agreement, or (b) Seller or Purchaser, with respect to any
public announcement or public statement with respect to any Merger Agreement Adverse Recommendation Change made in accordance with Section 6.5(d) of the Merger Agreement.
(b) Each of Purchaser and Seller agree that the terms of this Agreement, and the information provided to Purchaser in connection with this
Agreement and the transactions contemplated hereby, shall not be disclosed
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or otherwise made available to the public and that copies of this Agreement shall not be publicly filed or otherwise made available to the public, except where such disclosure, availability or
filing is required by applicable Law and only to the extent required by such Law.
7.8 Preservation of Records. Purchaser shall use
reasonable efforts to preserve and keep the records held by Purchaser or its Affiliates relating to the businesses of the Target Companies for a period of five years from the Closing Date and shall make such records and, as reasonably requested by
Seller, personnel available to Seller, during regular business hours and upon reasonable advance notice and in such a manner as not to materially interfere with the normal operation of Purchaser and its Subsidiaries, as may be reasonably required by
Seller in connection with any insurance claims by, Legal Proceedings or tax audits against or governmental investigations of Seller or any of its Affiliates involving the Target Companies or in order to enable Seller to comply with its obligations
under this Agreement and the Seller Documents. All information obtained by Seller and its Affiliates pursuant to this Section 7.8 shall be treated confidentially by Seller and its Affiliates. If Purchaser wishes to destroy such records after
that time, Purchaser shall first give 90-day written notice to Seller and Seller shall have the right at its option and expense, upon prior written notice given to such party within that 90-day period, to take possession of the records within 180
days after the date of such notice. Seller shall deliver all original records relating to the businesses of the Target Companies to Apco within 15 days of Closing. Notwithstanding anything to the contrary herein or otherwise, Purchaser shall not be
required to provide access to, or cause its Subsidiaries (including, following the Merger, Apco) to provide access to, or disclose any information or documents to the extent that such access would (in the reasonable judgment of Purchaser)
(i) constitute a waiver of the attorney-client, work-product or other doctrine or privilege held by the Purchaser or any of its Subsidiaries or (ii) violate any Contract of Purchaser or any of its Subsidiaries in effect as of the date
hereof with respect to confidentiality or privacy, (iii) materially interfere with the conduct of the business of Purchaser or any of its Subsidiaries or its or their Affiliates or (iv) violate any Laws relating to the exchange of
information or otherwise; provided, that in the case of clauses (i) and (iv), Purchaser shall use its reasonable best efforts to obtain any required consents and take such other action (such as the entry into a joint defense agreement or
other arrangement to avoid loss of attorney client privilege) to permit such access or disclosure; provided further, that in the case of clause (ii), Purchaser shall use reasonable best efforts to obtain a waiver from the counterparty
to any such Contract so as to allow Purchaser to provide access to or furnish the relevant information.
7.9 Access to Information.
(a) From the date of this Agreement to the earlier of the Closing or the date, if any, on which this Agreement is terminated pursuant to
Section 6.1, Seller will, and will cause Apco and Northwest to, and will use reasonable best efforts to cause Apco Argentina to, provide to Purchaser and its authorized Representatives (i) upon reasonable notice, reasonable access during
normal business hours to the Sellers and Apcos and Apcos Subsidiaries and Northwests employees, properties, books, Contracts and records (including Tax Returns, Tax correspondence, Tax work papers, Tax advice,
correspondence with taxing authorities (including any assessments of Tax)), passwords of all platforms and information systems, access to all electronic data repositories, including backups, service and maintenance Contracts, and related licenses,
as Purchaser may reasonably request and (ii) such reasonably available financial and operating information of Apco, Northwest and their respective Subsidiaries as Purchaser may reasonably request. From the date of this Agreement to the earlier
of (x) the later of March 31, 2015 and the date that is three months after the Closing and (y) the date, if any, on which this Agreement is terminated pursuant to Section 6.1, Seller will reasonably assist Purchaser the
transition and migration to Purchaser of all the information and documentation stored by Seller and pertaining to Apco, Apcos Subsidiaries and Northwest, including information concerning administrative, accounting, reporting, planning,
financial, tax and information technology activities. Notwithstanding the foregoing, Seller shall not be required to provide access to, or cause Apco or Northwest to, or use reasonable best efforts to cause Apco Argentina to, provide access to, or
disclose any information or documents to the extent that such access would (in the reasonable judgment of the Seller) (i) constitute a waiver of the attorney-client, work-product or other doctrine or privilege held by the Seller or any of Apco,
Northwest or Apco Argentina, (ii) violate any Contract of Seller or any of Apco, Northwest or Apco Argentina in effect as of the date hereof with respect to confidentiality
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or privacy, (iii) materially interfere with the conduct of the business of Seller or any of Apco, Northwest or Apco Argentina or its or their Affiliates or (iv) violate any Laws
relating to the exchange of information or otherwise; provided, that in the case of clauses (i) and (iv) each party shall use its reasonable best efforts to obtain any required consents and take such other action (such as the entry
into a joint defense agreement or other arrangement to avoid loss of attorney client privilege) to permit such access or disclosure; provided further, that in the case of clause (ii) Seller shall use reasonable best efforts to
obtain a waiver from the counterparty to any such Contract so as to allow Seller to provide access to or furnish the relevant information.
(b) Upon request by Purchaser, Seller shall negotiate in good faith with Purchaser regarding an agreement for the provision of services by
Purchaser to Apco and its Subsidiaries following Closing through the later of (i) March 31, 2015 and (ii) the date that is three months after the Closing; provided that Purchaser may terminate the agreement prior to such date.
The agreement shall be on substantially similar terms to those set forth in the Amended and Restated Administrative Services Agreement, dated May 7, 2013, between Apco and Seller (the Administrative Services Agreement)
and the compensation for the provision of such services shall be on the same terms as those set forth in the Administrative Services Agreement.
7.10 Deliveries. At Closing, Seller shall deliver, or cause to be delivered, to Purchaser (i) the Argentine Stock Transfer
Notice, (ii) stock certificates, any limited liability company interest certificates (if applicable), and/or written confirmation, or other evidence reasonably satisfactory to Purchaser that the Northwest Interests have been transferred,
(iii) the Northwest Limited Liability Company Agreement, duly executed by Seller (iv) stock certificates and/or written confirmation, or other evidence reasonably satisfactory to Purchaser that the Apco Argentina Shares have been
transferred, (v) the Share Registry Book (Registro de Accionistas) reflecting the transfer of the Apco Argentina Shares to Purchaser and (vi) a certificate dated the Closing Date and signed by an executive officer of Seller
certifying that the conditions set forth in Section 5.1(b) shall have been satisfied.
7.11 Disclosure Schedules.
Inclusion of an item in the applicable Schedules, or any references to dollar amounts, shall not constitute an acknowledgement or representation that such item is material, shall not establish any standard of materiality and shall not define further
the meaning of such terms for purposes of this Agreement. Information disclosed in the Schedules shall constitute a disclosure only for the purposes of the representation and warranty that is correspondingly numbered and lettered in the Agreement
and any other numbered and lettered Section of this Agreement to the extent that it is reasonably apparent upon reading the disclosure contained in such section of the applicable Schedule that such disclosure is responsive to such other numbered and
lettered Section of this Agreement.
7.12 Control of Business. Notwithstanding anything in this Agreement to the contrary,
Purchaser acknowledges on behalf of itself and its Affiliates and its and their directors, officers, employees, Affiliates, agents, representatives, successors and assigns that the operation of each Target Company remains in the dominion and control
of such Target Company until the Closing and that none of the foregoing Persons will provide, directly or indirectly, any directions, orders, advice, aid, assistance or information to any director, officer or employee of any Target Company, except
as specifically contemplated or permitted by ARTICLE VIII or as otherwise consented to in advance by an officer of such Target Company.
7.13 Conversion. Prior to the Closing Date, Seller shall cause the Conversion of Northwest from a corporation incorporated under the
laws of the State of Utah to a limited liability company organized under the laws of the State of Utah. In connection with the Conversion, Seller shall cause Northwest to adopt a limited liability company agreement in a form provided by Purchaser
and reasonably acceptable to Seller.
7.14 Federal Tax Status of Northwest. As of the Closing Date, Seller shall cause Northwest
LLC to be disregarded as an entity separate from Seller for U.S. federal income tax purposes.
7.15 Insurance. Seller shall
maintain in full force and effect through the Closing (A) the Management Liability and Company Reimbursement Insurance Policy with XL Specialty Insurance Company (including the
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A-Side, B-Side and C-Side policies associated therewith) (the Current Insurance Policy) or (B) a policy (the Replacement Insurance Policy)
with provisions no less favorable to APCO and its Subsidiaries and their respective officers, directors and employees (the Beneficiaries) than to Seller and its officers, directors and employees. For the six year
period immediately following the Closing, Seller shall continue in full force and effect a directors and officers liability insurance policy to cover the Directors and Officers prior service at Apco that is no less favorable
to such persons than any policy covering Sellers directors and officers. Seller shall use reasonable best efforts to make (or cause to be made) for the benefit of the Beneficiaries all claims available to it under the Current Insurance
Policy or the Replacement Insurance Policy, as applicable, as promptly as practicable, and to the extent Seller shall receive proceeds on account of any claims under any such policy that are applicable to such Beneficiaries, Seller shall pay such
proceeds over to the applicable Beneficiaries promptly following receipt by Seller of such amounts from the insurer.
7.16 Further
Assurances. Subject to the other express provisions of this Agreement, upon the request of the other party, each of Purchaser and Seller shall use reasonable best efforts to undertake as soon as reasonably practicable (or procure the undertaking
as soon as reasonably practicable of) all acts including executing and delivering (or procuring the execution and delivery of) all such other documents, instruments and agreements as may be reasonably necessary for the purpose of carrying out the
intent of this Agreement and the transactions contemplated by this Agreement.
ARTICLE VIII
Miscellaneous
8.1
Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns. Nothing in this Agreement shall create or be deemed to create any third party
beneficiary rights in any person or entity not a party to this Agreement except as provided below. No assignment of this Agreement or of any rights or obligations hereunder may be made by either Seller or Purchaser, directly or indirectly (by
operation of Law or otherwise), without the prior written consent of the other parties hereto and any attempted assignment without the required consents shall be void. No assignment of any obligations hereunder shall relieve the parties hereto of
any such obligations. Upon any such permitted assignment, the references in this Agreement to Purchaser shall also apply to any such assignee unless the context otherwise requires.
8.2 Payment of Sales, Use or Similar Taxes. All sales, use, transfer, intangible, recordation, documentary, stamp or similar Taxes or
charges, applicable to, or resulting from, the transactions contemplated by this Agreement shall be borne by Purchaser.
8.3
Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by facsimile transmission or by e-mail of a .pdf attachment will be effective as delivery of a
manually executed counterparty of this agreement.
8.4 Entire Agreement; Amendments and Waivers. This Agreement (including the
schedules and exhibits hereto) and the Confidentiality Agreement represent the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and thereof. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument making specific reference to this Agreement signed by the party against whom enforcement of any such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including any investigation by or on behalf of any party, shall be deemed to constitute a waiver by the party taking such action of compliance with any representation, warranty, covenant or agreement contained herein. The
waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such
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breach or as a waiver of any other or subsequent breach. No failure on the part of any party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
8.5 Expenses. Except as otherwise provided in this Agreement, each of Seller and Purchaser shall bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other agreement, document and instrument contemplated by this Agreement and the consummation of the transactions contemplated hereby and thereby.
8.6 Governing Law. This Agreement and all claims, actions, proceedings or counterclaims (whether based on contract, tort or otherwise)
based upon, arising out of or relating to this Agreement or the negotiation, execution or performance of this Agreement (including any claim or cause of action based upon, arising out of or relating to any representation or warranty made in
connection with this Agreement or as an inducement to enter into this Agreement) shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law rules (other than New York General
Obligations Law Sections 5-1401 and 5-1402) of such State.
8.7 Submission to Jurisdiction; Consent to Service of Process; Waiver of
Jury Trial. Each of Purchaser and Seller irrevocably submits to the exclusive jurisdiction of any New York federal court (or if jurisdiction is not available therein, a New York state court) sitting in the Borough of Manhattan of the City of New
York, and any appellate court from any thereof, for the purposes of any suit, action, counterclaim or other proceeding (whether based on contract, tort or otherwise) arising out of or relating to this Agreement, the other agreements contemplated
hereby or any transaction contemplated hereby. Each of Purchaser and Seller hereby agree to commence any action, suit or proceeding relating hereto in a New York federal court (or if jurisdiction is not available therein, a New York state court)
sitting in the Borough of Manhattan of the City of New York. To the extent process by mail is permitted by applicable law, each of Purchaser and Seller agrees that service of any process, summons, notice or document by U.S. registered mail to such
partys respective address set forth above shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Section 8.7. Each of Purchaser
and Seller irrevocably and unconditionally waives any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement or the transactions contemplated hereby in any New York federal court sitting in the Borough of
Manhattan of the City of New York, and any appellate court from any thereof, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought in any such
court has been brought in an inconvenient forum. Each of Purchaser and Seller irrevocably waives any objections or immunities to jurisdiction to which it may otherwise be entitled or become entitled (including sovereign immunity, immunity to
pre-judgment attachment, post-judgment attachment and execution) in any legal suit, action or proceeding against it arising out of or relating to this Agreement or the transactions contemplated hereby which is instituted in any such court.
8.8 Specific Performance. Each party hereto agrees that money damages would not be a sufficient remedy for any breach of this Agreement
by any party here and that the other party would suffer irreparable harm as a result of any such breach. Without prejudice to the rights and remedies otherwise available to the parties hereto, each party agrees that the parties shall be entitled,
without the requirement of posting a bond or other security, to equitable relief, including an injunction or specific performance, in the event of any breach or threatened breach of the provisions of this Agreement by the other party. Such remedies
shall not be deemed to be exclusive remedies but shall be in addition to all other remedies available at law or equity to such other party.
8.9 Notices. Any notice, request, demand, or other communication required or permitted to be given hereunder shall be in writing and
shall be deemed to have been duly given if sent by hand delivery, mail (first class, certified mail, postage prepaid), facsimile, email of a .pdf attachment (with confirmation of receipt by non-automated reply e-mail from the recipient) or overnight
courier if to any party hereto, at the address or facsimile
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number set forth below such partys name on the signature pages hereto or to such other address or facsimile number as such party shall have last designated by notice to the other parties
hereto in accordance with this Section 8.9. Notices sent by hand delivery shall be deemed to have been given when received or delivery is refused; notices mailed in accordance with this Section 8.9 shall be deemed to have
been given three days after the date so mailed; notices sent by facsimile shall be deemed to have been given when electronically confirmed; notice sent by e-mail shall be deemed to have been given when electronically confirmed) and notices sent by
overnight courier shall be deemed to have been given on the next business day after the date so sent.
8.10 Severability. If any
term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any law or public policy, all other terms or provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
8.11 Survival. The representations and warranties set forth in this Agreement shall not survive the
consummation of the transactions contemplated hereby other than the representations and warranties set forth in Section 3.4 and Section 3.9 which shall survive indefinitely.
8.12 No Recourse Against Non-Parties. Except to the extent otherwise set forth in the Merger Agreement and Power of Attorney, all
claims, obligations, Liabilities or causes of action (whether in contract or in tort, in law or in equity, or granted by statute) that may be based upon, in respect of, arise under, out or by reason of, be connected with or relate in any manner to
this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in, in connection with, or as an inducement to, this Agreement), may be made by the parties hereto only against (and such
representations and warranties are those solely of) the Persons that are expressly identified as parties in the preamble to this Agreement (the Contracting Parties). Except as set forth in the Power of Attorney and the
Merger Agreement, no Person who is not a Contracting Party, including any current, former or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any Contracting Party, or any current,
former or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any of the foregoing (collectively, the Nonparty Affiliates), shall have any Liability (whether in
contract or in tort, in law or in equity, or granted by statute) for any claims, causes of action, obligations, or Liabilities arising under, out of, in connection with, or related in any manner to this Agreement or based on, in respect of, or by
reason of this Agreement or its negotiation, execution, performance, or breach and, to the maximum extent permitted by Law, each Contracting Party hereby waives and releases all such Liabilities, claims, causes of action, and obligations against any
such Nonparty Affiliates of another Contracting Party. Without limiting the foregoing, to the maximum extent permitted by Law, except with respect to rights, claims, demands and causes of action arising under or in respect of the Merger Agreement
and the Power of Attorney, each Contracting Party hereby waives and releases any and all rights, claims, demands, or causes of action that may otherwise be available at law or in equity, or granted by statute, to avoid or disregard the entity form
of a Contracting Party or otherwise impose Liability of a Contracting Party on any other Contracting Partys Nonparty Affiliate in respect of this Agreement, whether granted by statute or based on theories of equity, agency, control,
instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness, undercapitalization, or otherwise. Notwithstanding anything in this Agreement to the contrary (x) for the avoidance of doubt, nothing in
this Agreement (including the provisions of Section 4.7 or this Section 8.12) shall limit in any way (i) the terms and conditions of the Power of Attorney or the Merger Agreement or any rights that Purchaser or any of its
Affiliates has thereunder or (ii) any parties right to obtain Damages, to the extent proven, against Apco for Intentional Breach of the Merger Agreement and (y) following the Merger, Purchaser shall be entitled to obtain Damages, to
the extent proven, from Seller for any Intentional Breach by Apco of which Seller had Knowledge of (i) the specific representations and warranties made as of the date hereof and set forth in Article IV the Merger
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Agreement or the representations and warranties made as of the Merger Closing Date to the standard set forth in the certificate delivered pursuant to Section 7.2(d) of the Merger Agreement
and (ii) any of the covenants set forth in Article VI of the Merger Agreement to the standard set forth in the certificate delivered pursuant to Section 7.2(d); provided, that any such claim by Purchaser must be commenced within
twelve (12) months following the Closing.
8.13 WAIVER OF TRIAL BY JURY. TO THE MAXIMUM EXTENT NOT PROHIBITED BY APPLICABLE
LAW, EACH PARTY HERETO, HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT, OR PROCEEDING, DIRECTLY OR INDIRECTLY, AT ANY TIME ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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PLUSPETROL RESOURCES CORPORATION |
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Signature Page to Offer Letter
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Step N°2
Tulsa, Oklahoma, October 2, 2014
Messrs.
PLUSPETROL RESOURCES CORPORATION
Muiderstraat 7/A
1011PZ Amsterdam, The Netherlands
REF: IRREVOCABLE OFFER N° 001- WPX-TA-2014
Dear Sirs,
We hereby acknowledge receipt of your only
Irrevocable Offer N° 001- WPX-TA-2014 dated October 2, 2014 (the Offer). Exhibit A hereto reproduces all terms and conditions of the Offer for the sole purpose of its identification. The Offer will be reviewed and
analyzed by us. This document is not, and should not be deemed, as an acceptance to the Offer.
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WPX ENERGY, INC. |
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/s/ Jeffrey Schmuhl |
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Vice President Acquisitions and Divestitures |
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Step N°3
Tulsa, Oklahoma, October 2, 2014
Messrs.
PLUSPETROL RESOURCES CORPORATION
Muiderstraat 7/A
1011PZ Amsterdam, The Netherlands
REF: IRREVOCABLE OFFER N° 001- WPX-TA-2014
Dear Sirs,
We hereby accept your only Irrevocable Offer N°
001- WPX-TA-2014 dated October 2, 2014.
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WPX ENERGY, INC. |
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/s/ Jeffrey Schmuhl |
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Vice President Acquisitions and Divestitures |
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Step N°4
Amsterdam, The Netherlands, October 2, 2014
Messrs.
WPX ENERGY, INC.
3500 One Williams Center
Tulsa, OK 74172-0135
REF: IRREVOCABLE OFFER N° 001- WPX-TA-2014
Dear Sirs,
We hereby acknowledge receipt on the date hereof of
your written notice of acceptance to our only Irrevocable Offer N° 001- WPX-TA-2014.
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PLUSPETROL RESOURCES CORPORATION |
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/s/ Maria Ximena Storni |
Name: |
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Maria Ximena Storni |
Title: |
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Attorney-in-fact |
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IMPORTANT EXTRAORDINARY GENERAL MEETING
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside
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PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Proposals The Board of Directors recommends a vote FOR Proposal 1 and FOR Proposal 2. |
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1. To adopt the Merger Agreement (and the plan of merger exhibited thereto): |
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2. To approve, on a non-binding advisory basis, the golden parachute compensation that will be paid or may become payable to the Companys named
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Change of Address Please print new address below. |
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Comments Please print your comments below. |
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below |
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian,
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Date (mm/dd/yyyy) Please print date below. |
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Signature 1 Please keep signature within the box. |
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Signature 2 Please keep signature within the box. |
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01MPJC
Extraordinary General Meeting of Shareholders
[], 2014
[] [a.m.] local time
One Williams Center
720 level, Community Room
Tulsa, Oklahoma 74172
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Proxy APCO OIL AND GAS INTERNATIONAL INC. |
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY FOR THE
EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS - [], 2014
The undersigned shareholder of Apco Oil and Gas International Inc. hereby appoints MICHAEL KYLE, BRYAN K. GUDERIAN, and AMY FLAKNE jointly
and severally with full power of substitution, as proxies to represent and vote all of the ordinary shares the undersigned is entitled to vote at the extraordinary general meeting of shareholders of Apco Oil and Gas International Inc. to be held on
[], 2014, and at any and all adjournments thereof, on all matters coming before
said meeting.
You are encouraged to specify your choices by marking the appropriate boxes. SEE REVERSE SIDE, but you need not
mark any boxes if you wish to vote in accordance with the Board of Directors recommendations. The proxy cannot be voted unless you sign, date, and return this card.
THIS PROXY, WHEN PROPERLY EXECUTED AND TIMELY RETURNED, WILL BE VOTED AS INDICATED. IF NO VOTING DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1, FOR PROPOSAL 2,
AND, IN THE DISCRETION OF THE PROXY HOLDERS, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING AND AT ANY ADJOURNMENT THEREOF.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON [], 2014. The notice of extraordinary general meeting of shareholders and proxy statement are available at
http://www.proxydocs.com/apco.
(Continued and to be marked, dated and signed, on the other side)