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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
ENERGY AUCTION EXCHANGE, INC.
AND
THE SHAREHOLDERS OF
THE OIL & GAS ASSET CLEARINGHOUSE, INC.
JUNE 1, 1999
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TABLE OF CONTENTS
1. Definitions..............................................................................................1
2. Purchase and Sale of the Shares..........................................................................7
(a) Basic Transaction...............................................................................7
(b) Determination of Adjusted Purchase Price........................................................7
(c) Payment of Adjusted Purchase Price. ............................................................7
(d) Post-Closing Adjusted Purchase Price Adjustments................................................8
(e) Allocation of Purchase Price Among the Sellers..................................................8
(f) The Closing.....................................................................................8
(g) Deliveries at the Closing. .....................................................................9
(h) Cash Distribution. .............................................................................9
(i) Escrow..........................................................................................9
3. Representations and Warranties Concerning the Transaction................................................9
(a) Representations and Warranties of the Sellers...................................................9
(i) Authorization of Transaction..........................................................10
(ii) Noncontravention......................................................................10
(iii) Brokers' Fees.........................................................................10
(iv) OGAC Shares...........................................................................10
(b) Representations and Warranties of the Buyer. ..................................................11
(i) Organization of the Buyer.............................................................11
(ii) Authorization of Transaction..........................................................11
(iii) Noncontravention......................................................................11
(iv) Brokers' Fees.........................................................................11
(v) Investment............................................................................11
4. Representations and Warranties Concerning OGAC..........................................................12
(a) Organization, Qualification, and Corporate Power...............................................12
(b) Capitalization.................................................................................12
(c) Noncontravention...............................................................................12
(d) Brokers' Fees..................................................................................13
(e) Title to Assets................................................................................13
(f) Subsidiaries...................................................................................13
(g) Financial Statements...........................................................................13
(h) Events Subsequent to Most Recent Fiscal Year End...............................................13
(i) Undisclosed Liabilities. ......................................................................15
(j) Legal Compliance...............................................................................16
(k) Tax Matters....................................................................................16
(l) Real Property..................................................................................17
(m) Intellectual Property..........................................................................18
(n) Tangible Assets................................................................................20
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(o) Contracts......................................................................................20
(p) Notes Receivable...............................................................................21
(q) Powers of Attorney.............................................................................21
(r) Insurance......................................................................................21
(s) Litigation.....................................................................................22
(t) Employees......................................................................................22
(u) Employee Benefits..............................................................................22
(v) Environmental, Health, and Safety Matters......................................................23
(w) Certain Business Relationships with OGAC.......................................................24
(x) Disclosure.....................................................................................24
(y) Year 2000......................................................................................24
(z) Broker-Dealer..................................................................................25
(aa) Filings........................................................................................25
(bb) Auctioneers....................................................................................25
(cc) Board Attendance...............................................................................26
(dd) Qualification and Registration.................................................................26
(ee) Sellers' Representative........................................................................26
5. Pre-Closing Covenants...................................................................................26
(a) General........................................................................................26
(b) Notices and Consents...........................................................................26
(c) Operation of Business..........................................................................26
(d) Preservation of Business.......................................................................26
(e) Full Access....................................................................................26
(f) Notice of Developments.........................................................................27
(g) Exclusivity....................................................................................27
(h) Confidentiality Agreements.....................................................................27
(i) Broker/Dealer Insurance........................................................................27
6. Post-Closing Covenants..................................................................................28
(a) General........................................................................................28
(b) Litigation Support. ...........................................................................28
(c) Transition.....................................................................................28
(d) Confidentiality................................................................................28
(e) Sellers' Representative Covenant Not to Compete................................................29
(f) Sellers Covenant Not to Compete................................................................29
7. Conditions to Obligation to Close.......................................................................30
(a) Conditions to Obligation of the Buyer..........................................................30
(b) Conditions to Obligation of the Sellers. ......................................................32
8. Remedies for Breaches of This Agreement.................................................................33
(a) Survival of Representations and Warranties.....................................................33
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(b) Indemnification Provisions for Benefit of the Buyer............................................34
(c) Indemnification Provisions for Benefit of the Sellers..........................................35
(d) Matters Involving Third Parties................................................................36
(e) Determination of Adverse Consequences. ........................................................37
(f) Other Indemnification Provisions...............................................................37
9. Certain Tax Matters.....................................................................................37
(a) S Corporation Status...........................................................................37
(b) Tax Periods Ending on or Before the Closing Date...............................................38
(c) Cooperation on Tax Matters.....................................................................38
(d) Tax Sharing Agreements.........................................................................38
(e) Certain Taxes..................................................................................38
10. Termination.............................................................................................39
(a) Termination of Agreement.......................................................................39
(b) Effect of Termination..........................................................................39
11. Miscellaneous...........................................................................................40
(a) Press Releases and Public Announcements........................................................40
(b) No Third-Party Beneficiaries...................................................................40
(c) Entire Agreement...............................................................................40
(d) Succession and Assignment......................................................................40
(e) Counterparts...................................................................................41
(f) Headings.......................................................................................41
(g) Notices. ......................................................................................41
(h) Governing Law..................................................................................42
(i) Amendments and Waivers.........................................................................42
(j) Severability...................................................................................42
(k) Expenses.......................................................................................42
(l) Construction...................................................................................42
(m) Incorporation of Exhibits, Annexes, and Schedules..............................................42
(n) Specific Performance...........................................................................42
(o) Submission to Jurisdiction.....................................................................43
(p) Execution......................................................................................43
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EXHIBITS, ANNEXES AND SCHEDULES
Exhibit A--Financial Statements
Exhibit B--Form of Employment Agreement
Exhibit C--Form of Voting Agreement
Exhibit D--Form of Shareholders Agreement
Exhibit E--Form of Stock Option Plan
Exhibit F--Form of Promissory Note
Exhibit G--Form of Opinion of Counsel to the Sellers
Exhibit H--Form of Opinion of Counsel to the Buyer
Exhibit I--Form of Release
Exhibit J--Form of Security Agreement
Exhibit K--Form of Stock Option Agreement
Annex I--Exceptions to the Buyer's Representations and Warranties
Concerning the Transaction
Disclosure Schedule--Exceptions to the Sellers' Representations and Warranties
Concerning the Transaction and the Representations and Warranties
Concerning OGAC
Purchase Price Adjustment Schedule
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into on
June 1, 1999, by and among Energy Auction Exchange, Inc., a Delaware corporation
(the "Buyer"), and Xxxxxxx X. Xxxxx, Xx., Xxxxx X. Xxxx, Xxxxx X. Xxxx, Xxxxx X.
Xxxx, Xxxxxxxxx Xxxx Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxxxxx, Xx., R.E.
Xxxxxxxxx and Xxxxxxx X. X'Xxxxxxxxxxx, each an individual (collectively the
"Sellers"). The Buyer and the Sellers are referred to collectively herein as the
"Parties."
RECITALS
The Sellers in the aggregate own all of the outstanding capital stock
of The Oil & Gas Asset Clearinghouse, Inc., a Texas corporation ("OGAC").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Sellers, and the Sellers will sell to the Buyer, 8,000 shares
of the outstanding capital stock of OGAC (the "Shares") in return for cash.
AGREEMENT
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accountant" has the meaning set forth in Section 2(d) below.
"Actual Adjustment" has the meaning set forth in Section 2(d) below.
"Additional Payment" has the meaning set forth in Section 2(d) below.
"Adjusted Purchase Price" has the meaning set forth in Section 2(b)
below.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of
Code Section 1504(a) or any similar group defined under a similar provision of
state, local or foreign law.
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"Agreement" has the meaning set forth in the preface above.
"Annual Financial Statements" has the meaning set forth in Section 4(g)
below.
"Applicable Rate" means the prime rate of interest as published from
time to time in the Denver, Colorado edition of the Wall Street Journal.
"Balance Sheet" means the statement of financial condition of OGAC as
of December 31, 1998 included in the Annual Financial Statements.
"Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
"Basket" has the meaning set forth in Section 8(b)(iv) below.
"Breach Notice" has the meaning set forth in Section 5(f) below.
"Buyer" has the meaning set forth in the preface above.
"CERCLA" has the meaning set forth in Section 4(v)(v) below.
"Closing" has the meaning set forth in Section 2(f) below.
"Closing Date" has the meaning set forth in Section 2(f) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code Section 4980B.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $.10 per share, of
OGAC.
"Confidential Information" means any information concerning the
businesses and affairs of OGAC that is not already generally available to the
public.
"Controlled Group" has the meaning set forth in Code Section 1563.
"Current Assets" means the current assets of OGAC as determined in
accordance with GAAP.
"Current Liabilities" means the current liabilities of OGAC as
determined in accordance with GAAP.
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"Defense Notice" has the meaning set forth in Section 8(d)(ii) below.
"Deposit" has the meaning given such term in the Letter of Intent.
"Disclosure Schedule" has the meaning set forth in Section 3(a) below.
"Distribution" has the meaning set forth in Section 2(f) below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Employment Agreement" has the meaning set forth in Section 7(a)(viii)
below.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single
employer with OGAC for purposes of Code Section 414.
"Estimate" has the meaning set forth in Section 2(b) below.
"Final Date" has the meaning set forth in Section 2(f) below.
"Final Purchase Price" means the Adjusted Purchase Price, plus or minus
the Actual Adjustment, as the case may be.
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"Financial Statements" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Gross Purchase Price" has the meaning set forth in Section 2(b) below.
"Indemnified Party" has the meaning set forth in Section 8(d)(i) below.
"Indemnifying Party" has the meaning set forth in Section 8(d)(i)
below.
"Independent Accountant" has the meaning set forth in Section 2(d)
below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier profiles, lists and information, historic auction
information and statistics, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software, databases, profile
information, source codes and system processes (including data and related
documentation), (g) all other proprietary rights, including Internet web sites,
and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
"Interim Financial Statements" has the meaning set forth in Section
4(g) below.
"Knowledge" means actual knowledge after reasonable investigation.
"Letter of Intent" means the letter dated March 1, 1999 from Xxxxxxx
Energy Services, LLC to OGAC, and accepted and agreed to by OGAC and the Sellers
on March 1, 1999, as amended by those certain amendment letters thereto dated
March 31, 1999, April 1, 1999, April 12, 1999 and April 13, 1999, regarding the
transaction contemplated by this Agreement.
"Liability" means any liability (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
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"Litigation Expenses" has the meaning set forth in Section 8(b)(ii)(C)
below.
"LTD Policy" has the meaning set forth in Section 4(u)(i) below.
"Material Adverse Effect" means a material adverse effect on the
business, financial condition, operations, results of operations, properties or
assets of OGAC.
"Most Recent Fiscal Year End" means December 31, 1998.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"NASD" means the National Association of Securities Dealers, Inc.
"Non-Compete Period" has the meaning set forth in Section 6(f) below.
"OGAC" has the meaning set forth in the Recitals above.
"OGAC Share" means any share of the common stock, par value $.10 per
share, of OGAC.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Other Party" has the meaning set forth in Section 5(f) below.
"Parties" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any other entity.
"Prepayment Amount" has the meaning set forth in Section 2(i) below.
"Prohibited Transaction" has the meaning set forth in ERISA Section 406
and Code Section 4975.
"Promissory Note" has the meaning set forth in Section 2(c) below.
"Purchase Price Adjustment" has the meaning set forth in Section 2(b)
below.
"Purchase Price Adjustment Schedule" has the meaning set forth in
Section 2(b) below.
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"Release" has the meaning set forth in Section 7(a)(xiv) below.
"Reportable Event" has the meaning set forth in ERISA Section 4043.
"Reports" has the meaning set forth in Section 4(aa) below.
"Restated Shareholders Agreement" has the meaning set forth in Section
3(a)(iv) below.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Agreement" has the meaning set forth in Section 7(b)(xii)
below.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for Taxes not yet due and payable or for Taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Sellers" has the meaning set forth in the preface above.
"Sellers' Representative" means Xxxxxxx X. Xxxxx, Xx.
"Shareholders Agreement" has the meaning set forth in Section 7(a)(x)
below.
"Shares" has the meaning set forth in the Recitals above.
"Stock Option Agreement" has the meaning set forth in Section 7(a)(xv)
below.
"Stock Option Plan" has the meaning set forth in Section 7(a)(xi)
below.
"SWDA" has the meaning set forth in Section 4(v)(v) below.
"System" has the meaning set forth in Section 4(y) below.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property,
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sales, use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d)(i) below.
"Voting Agreement" has the meaning set forth in Section 7(a)(ix) below.
"Year 2000 Compliant" has the meaning set forth in Section 4(y) below.
2. Purchase and Sale of the Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Sellers, and the Sellers
agree to sell to the Buyer, the Shares for the consideration specified below in
this Section 2.
(b) Determination of Adjusted Purchase Price. The cash purchase price
for the purchase of the Shares shall be $16,200,000 (the "Gross Purchase
Price"). The Gross Purchase Price shall be subject to adjustment as described
below in this Section 2(b) to arrive at the adjusted cash purchase price for the
purchase of the Shares (the "Adjusted Purchase Price") to be paid by the Buyer
to the Sellers at the Closing in the manner set forth in Sections 2(c), (d) and
(e) below. The Gross Purchase Price shall be increased on a dollar-for-dollar
basis by the amount by which Current Assets on the Closing Date exceed Current
Liabilities on the Closing Date and by the amount of the other items set forth
on the purchase price adjustment schedule (the "Purchase Price Adjustment
Schedule") attached hereto (collectively, the "Purchase Price Adjustment") to
arrive at the Adjusted Purchase Price. An estimate reasonably acceptable to the
Buyer detailing the sources and amounts of Current Assets and Current
Liabilities on the Closing Date and any other items included in the Purchase
Price Adjustment (the "Estimate") shall be delivered by the Sellers to the Buyer
at least two (2) business days prior to the Closing Date for purposes of
calculating the Adjusted Purchase Price to be paid at the Closing.
(c) Payment of Adjusted Purchase Price. At the Closing, the Buyer shall
pay the Adjusted Purchase Price to the Sellers by (i) delivery to the Sellers'
Representative of a promissory note substantially in form and substance as set
forth in Exhibit F attached hereto (the "Promissory Note") in the principal
amount of $5,000,000, (ii) instructing Bank One Denver to deliver the Deposit to
the Sellers' Representative, and (iii) delivery to the Sellers' Representative
of cash payable by wire transfer or delivery of other immediately available
funds of the balance of the Adjusted Purchase Price after deducting the payments
set forth in subsections (i) and (ii) above.
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(d) Post-Closing Adjusted Purchase Price Adjustments. Within forty-five
(45) days after the Closing Date, the Sellers' Representative shall instruct
Xxxxxxxx, Xxxxx & Xxxxxxxx, L.L.P. (the "Accountant") to determine the actual
Purchase Price Adjustment as of the Closing Date (the "Actual Adjustment") and
the amount of accounts receivable included in the Actual Adjustment which have
not been collected by OGAC as of the date of the Accountant's determination of
the Actual Adjustment . Within twenty (20) days thereafter, the Accountant shall
provide its determination of the Actual Adjustment to the Buyer and the Sellers'
Representative. If the Buyer and the Sellers' Representative agree with the
Accountant's determination, such determination shall be binding upon the Buyer
and the Sellers. If the Buyer and the Sellers' Representative do not agree with
the Accountant's determination, the Buyer shall instruct ______________ (the
"Independent Account") to, within twenty (20) days thereafter, determine the
Actual Adjustment and the amount of accounts receivable included in the Actual
Adjustment which have not been collected by OGAC as of the date of the
Independent Accountant's determination of the Actual Adjustment and such
determination shall be binding upon the Buyer and the Sellers. Any accounting
fees and expenses related to the Accountant's and/or the Independent
Accountant's determination of the Actual Adjustment shall be paid one-half by
the Buyer and one-half by the Sellers. If the Actual Adjustment is determined to
be less than the Estimate, the Sellers shall promptly pay to the Buyer by wire
transfer or other immediately available funds within five (5) business days of
the Accountant's or Independent Accountant's, as the case may be, determination
of the Actual Adjustment an amount equal to the difference between the Estimate
and the Actual Adjustment to give effect to the final computation of the
Adjusted Purchase Price. If the Actual Adjustment is determined to be greater
than the Estimate, the Buyer shall pay to the Sellers' Representative by wire
transfer or other immediately available funds within five (5) business days of
the Accountant's determination of the Actual Adjustment an amount equal to the
difference between the Actual Adjustment and the Estimate (the "Additional
Payment") to give effect to the final computation of the Adjusted Purchase
Price. If the Accountant or the Independent Accountant, as the case may be,
determines that the amount of Current Assets included in the Estimate includes
accounts receivable which were not collected as of the date of the determination
of the Actual Adjustment, such accounts receivable shall be assigned by OGAC to
the Sellers' Representative and the Sellers shall promptly pay to OGAC by wire
transfer or other immediately available funds an amount equal to the aggregate
amount of such accounts receivable .
(e) Allocation of Purchase Price Among the Sellers. The Adjusted
Purchase Price and the Additional Payment, if any, shall be allocated among the
Sellers as determined by the Sellers' Representative. Each Seller hereby
acknowledges that the Buyer shall satisfy its obligation to deliver the Adjusted
Purchase Price and the Additional Payment, if any, to the Sellers by delivering
the Adjusted Purchase Price and the Additional Payment, if any, to the Sellers'
Representative.
(f) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxx Xxxxx Xxxxx
Xxxxxxxxx & Xxxxxx LLC, 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, on
such date and time as the Buyer and the Sellers' Representative may mutually
determine (the "Closing Date"); provided, however, that the Closing shall take
place no later than June 1, 1999 (the "Final Date"); provided, further, that (i)
upon the
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written notice of the Buyer to the Sellers' Representative the Final Date may be
extended for up to thirty (30) days but in no case prior to June 11, 1999, or
(ii) upon written notice to the other Party, either Party may extend the Final
Date until such time as the NASD shall have approved the transactions
contemplated by this Agreement, but in no event shall such extension be beyond
August 31, 1999.
(g) Deliveries at the Closing. At the Closing, (i) the Sellers will
deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below, (ii) the Buyer will deliver to the Sellers'
Representative the various certificates, instruments, and documents referred to
in Section 7(b) below, (iii) the Sellers will deliver to the Buyer stock
certificates representing the Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to the Sellers'
Representative the consideration specified in Section 2(c) above.
(h) Cash Distribution. The Parties agree that prior to the Closing,
OGAC may distribute cash on hand to the Sellers (the "Distribution").
(i) Escrow. In order to facilitate the post-closing adjustments
described in Section 2(d) above and the indemnification provisions described in
Section 8 below, the Parties agree that if the Buyer prepays the entire
principal amount of, and all interest then due under the Promissory Note (the
"Prepayment Amount") within ninety (90) days of the Closing Date (excluding any
set-off pursuant to Section 14 of the Promissory Note), the Buyer shall deposit
$1,700,000 of the Prepayment Amount (which amount shall not include any set-off
pursuant to Section 14 of the Promissory Note which has not been finally
settled) with an escrow agent to be mutually agreed upon by the Buyer and the
Sellers' Representative pursuant to an escrow agreement to be mutually agreed
upon and entered into by the Buyer and the Sellers' Representative; provided,
however, that such escrow agreement shall provide that (i) the escrow agent
shall not distribute any funds from the escrow account created thereby except
pursuant to written instructions jointly executed by the Buyer and the Sellers'
Representative or pursuant to a final court order, and (ii) $850,000 (less the
amount (A) of any claim for indemnification by the Buyer pursuant to Section 8
below which has not been finally settled, (B) of any finally settled claim for
indemnification by the Buyer pursuant to Section 8 below which has been paid out
of such escrow or has not been paid, and (C) owing to the Buyer pursuant to
Section 2(d) above which has been paid out of such escrow or has not been paid)
of the funds in the escrow account shall be distributed on the first anniversary
of the Closing Date and the remainder of the funds in the escrow account (less
the amount (X) of any claim for indemnification by the Buyer pursuant to Section
8 below which has not been finally settled, (Y) of any finally settled claim for
indemnification by the Buyer pursuant to Section 8 below which has not been
paid, and (Z) owing to the Buyer pursuant to Section 2(d) above which has not
been paid) shall be distributed on the second anniversary of the Closing Date.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Sellers. Each of the Sellers
severally represents and warrants to the Buyer that the statements contained in
this Section 3(a) are true and
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correct as of the date of this Agreement and will be true and correct as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3(a)) with
respect to himself or herself, except as set forth in the disclosure schedule
attached hereto (the "Disclosure Schedule"). The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3(a) and in Section 4 below.
(i) Authorization of Transaction. The Seller has full power
and authority to execute and deliver this Agreement and to perform his
or her obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Seller, enforceable in accordance
with its terms and conditions, except as such enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally. Except as set forth in
Section 3(a) of the Disclosure Schedule, the Seller need not give any
notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency, including,
without limitation, the SEC and the NASD, in order to consummate the
transactions contemplated by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Seller is subject , (B) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which the Seller is a party or by
which he or she is bound or to which any of his or her assets is
subject, or (C) result in a breach of any confidentiality,
non-competition or similar agreement to which the Seller is a party.
(iii) Brokers' Fees. Except as set forth in Section 3(a) of
the Disclosure Schedule, the Seller has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
the Buyer could become liable or obligated.
(iv) OGAC Shares. The Seller holds of record and owns
beneficially the number of OGAC Shares set forth next to his or her
name in Section 4(b) of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, equities,
claims, and demands. The Seller is not a party to any option, warrant,
purchase right, or other contract or commitment that could require the
Seller to sell, transfer, or otherwise dispose of any capital stock of
OGAC. The Seller is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital
stock of OGAC (other than the Restated Shareholders Agreement dated as
of
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April 28, 1998 by and among OGAC, the Sellers and their spouses, and
Xxxxxxxx X. Xxxxxxxx, Xx. and his spouse (the "Restated Shareholders
Agreement")).
(b) Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Sellers that the statements contained in this Section 3(b)
are true and correct as of the date of this Agreement and will be true and
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3(b)), except as set forth in Annex I attached hereto.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power
and authority (including full corporate power and authority) to execute
and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of
the Buyer, enforceable in accordance with its terms and conditions,
except as such enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights
generally. Except as set forth in Section 3(b) of Annex I, the Buyer
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency, including, without limitation, the SEC and the NASD, in order
to consummate the transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Buyer is subject or any provision of its charter or
bylaws, (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject, or (C) result in a breach of any
confidentiality, non-competition or similar agreement to which the
Buyer or Xxxx X. Xxxxxxx or any of his Affiliates is a party.
(iv) Brokers' Fees. The Buyer has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
any Seller could become liable or obligated.
(v) Investment. The Buyer is acquiring the Shares solely for
its own account for investment purposes and not with a view to or for
sale in connection with any distribution thereof within the meaning of
the Securities Act. Buyer is an "accredited investor" as defined in
Regulation D under the Securities Act.
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4. Representations and Warranties Concerning OGAC. The Sellers
represent and warrant to the Buyer that the statements contained in this Section
4 are true and correct as of the date of this Agreement and will be true and
correct as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4),
except as set forth in the Disclosure Schedule.
(a) Organization, Qualification, and Corporate Power. OGAC is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. OGAC is duly authorized to
conduct business and is in good standing under the laws of each jurisdiction
where such qualification is required, except where the failure to be so
qualified individually or in the aggregate would not have a Material Adverse
Effect. OGAC and its employees (contract or otherwise) have full power and
authority (including with respect to OGAC, full corporate power and authority)
and all licenses, permits, and authorizations, including, without limitation all
such licenses, permits and authorizations required by the SEC and the NASD,
necessary to carry on the businesses in which it is engaged, and to own and use
the properties owned and used by it, except where the failure to have any such
licenses, permits or authorizations individually or in the aggregate would not
have a Material Adverse Effect. OGAC has made available to the Buyer correct and
complete copies of all such licenses, permits and authorizations. Section 4(a)
of the Disclosure Schedule lists the directors and officers of OGAC and the
jurisdictions in which OGAC is duly authorized to conduct business and is in
good standing. OGAC has delivered to the Buyer correct and complete copies of
the charter and bylaws of OGAC (as amended to date). The minute books
(containing the records of meetings of the stockholders, the board of directors,
and any committees of the board of directors), the stock certificate books, and
the stock record books of OGAC are correct and complete. OGAC is not in default
under or in violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of OGAC
consists of 1,000,000 OGAC Shares, of which 10,000 OGAC Shares are issued and
outstanding. All of the issued and outstanding OGAC Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the respective Sellers as set forth in Section 4(b) of the Disclosure
Schedule. There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or other
contracts or commitments that could require OGAC to issue, sell, or otherwise
cause to become outstanding any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to OGAC. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the capital
stock of OGAC (other than the Restated Shareholders Agreement). Section 4(b) of
the Disclosure Schedule sets forth (i) the record holders of the OGAC Shares and
the number of OGAC Shares to be held by each such record holder immediately
subsequent to the Closing and (ii) the pro rata portion of the Adjusted Purchase
Price delivered to the Sellers' Representative at Closing to which such Seller
is entitled.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute,
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regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any governmental agency, or court to which OGAC is subject or any
provision of the charter or bylaws of OGAC, (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which OGAC is a party or by which it is bound or to which any of
its assets is subject (or result in the imposition of any Security Interest upon
any of its assets), or (iii) result in a breach of any confidentiality, non-
competition or similar agreement to which OGAC is a party. Except as set forth
in Section 4(c) of the Disclosure Schedule, OGAC does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency, including, without
limitation, the SEC or the NASD, in order for the Parties to consummate the
transactions contemplated by this Agreement.
(d) Brokers' Fees. Except as set forth in Section 4(d) of the
Disclosure Schedule, OGAC has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
(e) Title to Assets. OGAC has good and indefeasible title to, or a
valid leasehold interest in, the properties and assets used in its business,
located on its premises, or shown on the Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the Most Recent
Fiscal Year End and certain personal items of employees of de minimis value.
(f) Subsidiaries. OGAC has no subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit A are the
following financial statements (collectively the "Financial Statements"): (i)
audited statements of financial condition, income, changes in shareholders'
equity, and cash flow as of and for the fiscal years ended December 31, 1996,
1997, and 1998 for OGAC (collectively, the "Annual Financial Statements"); and
(ii) unaudited statements of financial condition, income, changes in
shareholders' equity, and cash flows as of and for the four-month period ended
April 30, 1999 for OGAC (the "Interim Financial Statements"). The Financial
Statements (including the notes thereto) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered thereby,
present fairly the financial condition of OGAC as of such dates and the results
of operations of OGAC for such periods and are consistent with the books and
records of OGAC; provided, however, that the Interim Financial Statements are
subject to normal year-end adjustments (which will not be material individually
or in the aggregate) and lack footnotes and other presentation items.
(h) Events Subsequent to Most Recent Fiscal Year End. Except for
changes in laws or regulations of general applicability and changes in general
economic conditions, since the Most Recent Fiscal Year End there has not been
any Material Adverse Effect. Without limiting the generality of the foregoing
and except in the Ordinary Course of Business or as set forth in Section 4(h) of
the Disclosure Schedule, since that date:
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(i) OGAC has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, with a fair market value in excess
of $10,000;
(ii) OGAC has not entered into, amended or terminated any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) involving more than
$10,000;
(iii) no party (including OGAC) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses)
involving more than $10,000 to which OGAC is a party or by which it is
bound;
(iv) OGAC has not imposed any Security Interest upon any of
its assets, tangible or intangible;
(v) OGAC has not made any capital expenditure (or series of
related capital expenditures) involving more than $10,000;
(vi) OGAC has not made any capital investment in, any loan to,
or any acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions)
involving more than $10,000;
(vii) OGAC has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving
more than $5,000 singly or $10,000 in the aggregate;
(viii) OGAC has not delayed or postponed the payment of
accounts payable and other Liabilities;
(ix) OGAC has not canceled, compromised, waived, or released
any right or claim (or series of related rights and claims) involving
more than $10,000;
(x) OGAC has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of OGAC;
(xii) OGAC has not issued, sold, or otherwise disposed of any
of its capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
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(xiii) OGAC has not declared, set aside, or paid any dividend
or made any distribution with respect to its capital stock (whether in
cash or in kind), other than distributions for payment by the
shareholders of Taxes with respect to OGAC and the Distribution, except
in accordance with past business practices, or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiv) OGAC has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property which
individually or in the aggregate would have a Material Adverse Effect;
(xv) OGAC has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees (other
than the payment of compensation for services rendered to OGAC or
reimbursement of expenses in accordance with the policies of OGAC);
(xvi) OGAC has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms
of any existing such contract or agreement;
(xvii) OGAC has not granted any increase in the base
compensation of any of its directors, officers, and employees;
(xviii) OGAC has not adopted, amended, modified, or terminated
any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
(xix) OGAC has not made any other change in employment terms
for any of its directors, officers, and employees;
(xx) OGAC has not made or pledged to make any charitable or
other capital contribution;
(xxi) to the Knowledge of the Sellers, there has not been any
other material occurrence, event, incident, action, failure to act, or
transaction involving OGAC; and
(xxii) OGAC has not committed to any of the foregoing.
(i) Undisclosed Liabilities. OGAC has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them giving
rise to any Liability), except for (i) Liabilities which are disclosed or
reserved for in the Annual Financial Statements for the Most Recent Fiscal Year
End and the Interim Financial Statements and (ii) Liabilities which have arisen
after the date of the Interim Financial Statements in the Ordinary Course of
Business (none of which results from, arises out of, relates to, is in the
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nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law by OGAC).
(j) Legal Compliance. OGAC has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), except for violations of such laws which
individually or in the aggregate would not have a Material Adverse Effect, and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against OGAC alleging any failure
so to comply.
(k) Tax Matters.
(i) OGAC has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by OGAC (whether or not shown on any Tax
Return) have been paid (other than sales taxes not yet due and
payable). OGAC is not currently the beneficiary of any extension of
time within which to file any Tax Return.
(ii) OGAC has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third
party.
(iii) There is no material dispute or claim concerning any Tax
Liability of OGAC either (A) claimed or raised by any authority in
writing or (B) as to which the Sellers have Knowledge. Section 4(k) of
the Disclosure Schedule lists all federal, state, local, and foreign
income Tax Returns filed with respect to OGAC for taxable periods ended
on or after December 31, 1992, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the
subject of audit. OGAC has delivered to the Buyer correct and complete
copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by OGAC since
December 31, 1992.
(iv) OGAC has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(v) OGAC has not filed a consent under Code Section 341(f)
concerning collapsible corporations. OGAC has not made any material
payments, is not obligated to make any material payments, and is not a
party to any agreement that under certain circumstances could obligate
it to make any material payments that will not be deductible under Code
Section 280G. OGAC has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the
applicable period specified in Code Section 897(c)(1)(A)(ii). OGAC is
not a party to any Tax allocation or sharing agreement. OGAC (A) has
not been a member of an Affiliated Group filing a consolidated federal
income Tax Return (other than a group the common parent of which
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was OGAC) or (B) has no Liability for the Taxes of any Person (other
than OGAC) under Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
(vi) Except as set forth in Section 4(k) of the Disclosure
Schedule, OGAC (and any predecessor of OGAC) has been a validly
electing S corporation within the meaning of Code Sections 1361 and
1362 at all times during its existence and OGAC will be an S
corporation up to and including the Closing Date.
(l) Real Property.
(i) OGAC owns no real property.
(ii) Section 4(l) of the Disclosure Schedule lists and
describes briefly all real property leased or subleased to OGAC. The
Sellers have delivered to the Buyer correct and complete copies of the
leases and subleases listed in Section 4(l) of the Disclosure Schedule
(as amended to date). With respect to each lease and sublease listed in
Section 4(l) of the Disclosure Schedule:
(A) the lease or sublease is legal, valid, binding,
enforceable by OGAC, and in full force and effect;
(B) the lease or sublease will continue to be legal,
valid, binding, enforceable by OGAC, and in full force and
effect on identical terms following the consummation of the
transactions contemplated hereby;
(C) OGAC is not in material breach or default under
the lease or sublease;
(D) to the Knowledge of the Sellers, no other party
to the lease or sublease is in breach or default and no event
has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination,
modification or acceleration thereunder;
(E) neither OGAC nor, to the Knowledge of the
Sellers, any other party to the lease or sublease has
repudiated any provision thereof;
(F) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(G) with respect to each sublease, the
representations and warranties set forth in subsections (A)
through (F) above are true and correct with respect to the
underlying lease;
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(H) OGAC has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold;
(I) all facilities leased or subleased thereunder
have received all approvals of governmental authorities
(including licenses and permits) required in connection with
the operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations in all
material respects; and
(J) all facilities leased or subleased thereunder are
supplied with utilities and other services necessary for the
operation of said facilities.
(m) Intellectual Property.
(i) OGAC owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the businesses of OGAC as
presently conducted. Each item of Intellectual Property owned or used
by OGAC immediately prior to the Closing hereunder will be owned or
available for use by OGAC on identical terms and conditions immediately
subsequent to the Closing hereunder. OGAC has taken all commercially
reasonable efforts in order to maintain and protect each item of
Intellectual Property that it owns or uses.
(ii) To the Knowledge of Sellers, OGAC has not interfered
with, infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of third parties. None of the
Sellers and the directors and officers (and employees with
responsibility for Intellectual Property matters) of OGAC has ever
received any charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or violation
(including any claim that OGAC must license or refrain from using any
Intellectual Property rights of any third party). To the Knowledge of
the Sellers, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of OGAC.
(iii) No patents or registrations have been issued to OGAC
with respect to any of its Intellectual Property and OGAC has no
pending patent application or application for registration with respect
to any of its Intellectual Property. Section 4(m) of the Disclosure
Schedule identifies each license, agreement, or other permission which
OGAC has granted to any third party with respect to any of its
Intellectual Property (together with any exceptions). OGAC has made
available to the Buyer correct and complete copies of all such
licenses, agreements, and permissions (as amended to date) and of all
other written documentation evidencing ownership and prosecution (if
applicable) of each such item, including, without limitation, legal
opinions regarding licenses, permits and authorizations to carry on the
businesses in which it is engaged. Section 4(m) of the Disclosure
Schedule also identifies each trade name, unregistered trademark or
Internet web site used by OGAC
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in connection with any of its businesses. With respect to each item of
Intellectual Property required to be identified in Section 4(m) of the
Disclosure Schedule:
(A) Except as set forth in Section 4(m) of the
Disclosure Schedule, OGAC possesses all right, title, and
interest in and to the item, free and clear of any Security
Interest, license, or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of the Sellers, is threatened which
challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) OGAC has never agreed to indemnify any Person for
or against any interference, infringement, misappropriation,
or other conflict with respect to the item.
(iv) Section 4(m) of the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns and that OGAC
uses pursuant to license, sublicense, agreement, or permission, other
than off-the-shelf software, each with a cost of less than $2,000. OGAC
has delivered to the Buyer correct and complete copies of all such
licenses, sublicenses, agreements, and permissions (as amended to
date). With respect to each item of Intellectual Property required to
be identified in Section 4(m) of the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable by
OGAC, and in full force and effect;
(B) the license, sublicense, agreement, or permission
will continue to be legal, valid, binding, enforceable by
OGAC, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby;
(C) OGAC is not in material breach or default under
the license, sublicense, agreement or permission;
(D) to the Knowledge of the Sellers, no other party
to the license, sublicense, agreement or permission is in
breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default or
permit termination, modification or acceleration thereunder;
(E) neither OGAC nor, to the Knowledge of the
Sellers, any other party to the license, sublicense,
agreement, or permission has repudiated any provision thereof;
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(F) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (E) above are true and correct with respect to the
underlying license;
(G) to the Knowledge of the Sellers, the underlying
item of Intellectual Property is not subject to any
outstanding injunction, judgment, order, decree, ruling, or
charge;
(H) to the Knowledge of the Sellers, no action, suit,
proceeding, hearing, investigation, charge, complaint, claim,
or demand is pending or is threatened which challenges the
legality, validity, or enforceability of the underlying item
of Intellectual Property; and
(I) OGAC has not granted any sublicense or similar
right with respect to the license, sublicense, agreement, or
permission.
(n) Tangible Assets. OGAC owns or leases all buildings, machinery,
equipment, and other tangible assets necessary for the conduct of its businesses
as presently conducted. Each such tangible asset is free from material defects
(patent and latent), has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and
tear), and is suitable for the purposes for which it presently is used.
(o) Contracts. Section 4(o) of the Disclosure Schedule lists the
following contracts and other agreements to which OGAC is a party:
(i) any agreement (or group of related agreements) involving
consideration in excess of $10,000 in the aggregate or involving the
performance or receipt of services over a period of time in excess of
one year;
(ii) any agreement concerning a partnership or joint venture;
(iii) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$10,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(iv) any agreement concerning confidentiality or
noncompetition;
(v) any agreement with any of the Sellers and their
Affiliates;
(vi) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
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(vii) any collective bargaining agreement;
(viii) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $40,000 or providing severance benefits;
(ix) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the
Ordinary Course of Business (other than advances of reimbursable
expenses); and
(x) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect.
OGAC has made available to the Buyer a correct and complete copy of each written
agreement listed in Section 4(o) of the Disclosure Schedule (as amended to date)
and a written summary setting forth the terms and conditions of each oral
agreement referred to in Section 4(o) of the Disclosure Schedule. With respect
to each such agreement: (A) the agreement is legal, valid, binding, enforceable
by OGAC, and in full force and effect; (B) the agreement will continue to be
legal, valid, binding, enforceable by OGAC, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) OGAC is not in material breach or default under the agreement; (D)
to the Knowledge of the Sellers, no other party is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default or permit termination, modification or acceleration under the
agreement; and (E) neither OGAC nor, to the Knowledge of the Sellers, any other
party has repudiated any provision of the agreement.
(p) Notes Receivable. All notes receivable of OGAC shown on the Balance
Sheet are reflected properly on its books and records, are valid receivables
subject to no setoffs or counterclaims and arose in the Ordinary Course of
Business. To the Knowledge of the Sellers, all such notes receivable are
collectible in accordance with their terms at the recorded amounts, subject only
to the reserve for bad debts as reflected on the Balance Sheet, as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of OGAC.
(q) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of OGAC.
(r) Insurance.
(i) Section 4(r) of the Disclosure Schedule sets forth a
complete and correct list of (A) all current policies of insurance
(including property, casualty, liability and workers' compensation
coverage and bond and surety arrangements) maintained by OGAC and (B)
all other "occurrence" basis insurance policies obtained by OGAC at any
time with respect to its business. Except as set forth in Section 4(r)
of the Disclosure Schedule, with respect to
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each such insurance policy: (V) the policy is legal, valid, binding,
enforceable by OGAC, and in full force and effect; (W) the policy will
continue to be legal, valid, binding, enforceable by OGAC, in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (X) OGAC is not in material breach or
default under the policy (including with respect to the payment of
premiums or the giving of notices); (Y) to the Knowledge of the
Sellers, no other party to the policy is in breach or default
(including with respect to the payment of premiums or the giving of
notices), and no event has occurred which with notice or lapse of time
would constitute a breach or default or permit termination,
modification or acceleration under the policy; and (Z) neither OGAC
nor, to the Knowledge of the Sellers, any other party to the policy has
repudiated any provision thereof. Section 4(r) of the Disclosure
Schedule describes any self-insurance arrangements affecting OGAC.
(ii) All of the insurance is sufficient for compliance in all
material respects with requirements of applicable law and of all
contracts to which OGAC is a party. OGAC has not failed to give any
notice or to present any claim under the insurance policies in a due
and timely fashion. No notice of cancellation, termination, reduction
in coverage or increase in premium (other than in the Ordinary Course
of Business) has been received with respect to any of the insurance
policies (other than deductibles under the listed policies).
(s) Litigation. Section 4(s) of the Disclosure Schedule sets forth each
instance in which OGAC (i) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (ii) is a party or, to the Knowledge of the
Sellers, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator.
(t) Employees. To the Knowledge of the Sellers, no executive, key
employee, or group of employees (contract or otherwise) has any plans to
terminate employment with OGAC. To the actual knowledge of the Sellers (without
any investigation or inquiry), no executive, key employee or group of employees
(contract or otherwise) will terminate employment with OGAC upon learning of the
transactions contemplated by this Agreement. OGAC is not a party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. OGAC has not committed any unfair labor practice. The Sellers have no
Knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to employees of OGAC.
(u) Employee Benefits.
(i) Except for the Group Long Term Disability insurance policy
set forth on Section 4(r) of the Disclosure Schedule (the "LTD
Policy"), neither OGAC nor any ERISA Affiliate maintains or ever has
maintained or contributes, ever has contributed, or ever has been
required to contribute to any Employee Benefit Plan.
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(A) The LTD Policy complies in form and in operation
in all material respects with the applicable requirements of
ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions, if any,
have been timely filed and distributed appropriately with
respect to the LTD Policy, except where the failure to file or
distribute such reports and descriptions would not have a
Material Adverse Effect. The requirements of COBRA, if any,
have been met with respect to the LTD Policy.
(C) All premiums or other payments for all periods
ending on or before the Closing Date have been paid with
respect to the LTD Policy.
(D) The Sellers have delivered to the Buyer correct
and complete copies of the LTD Policy and all documents,
instruments and agreements related thereto.
(ii) None of OGAC and the other members of the Controlled
Group that includes OGAC contributes to, ever has contributed to, or
ever has been required to contribute to any Multiemployer Plan or has
any Liability (including withdrawal liability as defined in ERISA
Section 4201) under any Multiemployer Plan.
(iii) OGAC does not maintain and never has maintained or
contribute, never has contributed, or never has been required to
contribute to any Employee Welfare Benefit Plan providing medical,
health, or life insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses, or their
dependents (other than in accordance with COBRA).
(v) Environmental, Health, and Safety Matters.
(i) OGAC is in compliance in all material respects with all
Environmental, Health, and Safety Requirements.
(ii) Without limiting the generality of the foregoing, OGAC
has obtained and is in compliance in all material respects with, all
permits, licenses and other authorizations that are required pursuant
to applicable Environmental, Health, and Safety Requirements for the
occupation of its facilities and the operation of its business. A list
of all such permits, licenses and other authorizations is set forth in
Section 4(v)(ii) of the Disclosure Schedule.
(iii) OGAC has not received any written or oral notice, report
or other information regarding any actual or alleged violation of
applicable Environmental, Health, and Safety Requirements, or any
liabilities or potential liabilities of OGAC pursuant to applicable
Environmental, Health and Safety Requirements (whether accrued,
absolute, contingent, unliquidated or otherwise), including any
investigatory, remedial or corrective obligations,
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relating to OGAC or its facilities arising under applicable
Environmental, Health, and Safety Requirements.
(iv) To the actual knowledge of the Sellers (without any
investigation or inquiry), no asbestos-containing material in any form
or condition exists at any property or facility owned or operated by
OGAC.
(v) Except for materials, wastes and substances incidental to
OGAC's Ordinary Course of Business which are managed and handled by
OGAC while in OGAC's possession or control in accordance with
applicable Environmental, Health and Safety Requirements, OGAC has not
treated, stored, disposed of, arranged for the disposal of,
transported, handled, or released any hazardous substance, or owned or
operated any property or facility in a manner that has given or would
give rise to liabilities of OGAC, including any liability for response
costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), the Solid Waste Disposal Act, as amended
("SWDA") or any other applicable Environmental, Health, and Safety
Requirements.
(vi) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any
obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties, pursuant to any of the
so-called "transaction-triggered" or "responsible property transfer"
Environmental, Health, and Safety Requirements.
(vii) OGAC has not either expressly or by operation of law,
assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements which OGAC
would not already have absent such assumption or undertaking.
(w) Certain Business Relationships with OGAC. Except as set forth in
Section 4(w) of the Disclosure Schedule, none of the Sellers and their
Affiliates has been involved in any material business arrangement or
relationship with OGAC (other than normal compensation arrangements for
employees and reimbursement of expenses) within the past twelve (12) months, and
none of the Sellers and their Affiliates owns any material asset, tangible or
intangible, which is used in the business of OGAC.
(x) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
(y) Year 2000. To the Knowledge of the Sellers, there is no matter
which will prevent each system, comprising of software, hardware, databases or
embedded control systems
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(microprocessor controlled, robotic or other device) owned, leased or within the
control of OGAC (collectively, a "System"), that constitutes any part of, or is
used in connection with the use, operation or enjoyment of any material tangible
or intangible asset or real property of OGAC to, by September 30, 1999 (i) be
designed (or modified) to be used prior to and after January 1, 2000, (ii)
operate without error arising from the creation, recognition, acceptance,
calculation, display, reporting, storage, retrieval, accessing, comparison,
sorting, manipulation, processing or other use of dates, or date-based,
date-dependent or date-related data, including, but not limited to, century
recognition, day-of-the-week recognition, leap years, date values and interfaces
of date functionalities, provided that external date data is received in the
proper format, and (iii) not be materially and adversely affected by the advent
of the year 2000 or subsequent years, the advent of the twenty-first century or
the transition from the twentieth century through the year 2000 and into the
twenty-first century (collectively, items (i) through (iii) are referred to
herein as "Year 2000 Compliant"). All licenses for the use of any material
system-related software, hardware, databases or embedded control system are
certified by the manufacturer to be Year 2000 Compliant and to contain the
capabilities required to be Year 2000 Compliant within OGAC computer systems
(hardware and software), or the licenses permit OGAC or a third party to make
all modifications, bypasses, de-bugging, work-arounds, repairs, replacements,
conversions or corrections necessary to permit the System to operate compatibly,
in conformance with their respective specifications, and to be Year 2000
Compliant. The Sellers have no reason to believe that OGAC may incur material
expenses arising from or relating to the failure of any of its Systems as a
result of not being Year 2000 Compliant.
(z) Broker-Dealer. OGAC is duly qualified or registered to do business
as a broker-dealer with the SEC, the NASD and in each jurisdiction which
requires such qualification or registration in connection with the business of
OGAC. Section 4(z) of the Disclosure Schedule lists each such jurisdiction, any
jurisdiction in which such qualification or registration is currently pending
and any jurisdiction in which OGAC does business as a broker-dealer pursuant to
an exemption from the requirements for qualification or registration as a
broker-dealer in such jurisdiction.
(aa) Filings. OGAC has filed with the SEC, the NASD and in each
jurisdiction which so requires, all focus reports and other reports, statements
and filings required to be filed, and OGAC has made available to the Buyer
copies of all such reports, statements and filings (the "Reports"). The Reports
did not (as of their respective filing dates) contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(bb) Auctioneers. Section 4(bb) of the Disclosure Schedule sets forth
the jurisdictions in which OGAC or any employee of OGAC is duly authorized to
conduct business as an auctioneer. OGAC and such employees have obtained and
complied with, and is in compliance in all material respects with, all permits,
licenses and other authorizations that are required to conduct business as an
auctioneer and a list of all such permits, licenses and authorizations is set
forth in Section 4(bb) of the Disclosure Schedule, copies of which have been
delivered to the Buyer by OGAC.
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(cc) Board Attendance. Immediately following the Closing, no Person
other than the then members of the board of directors of OGAC shall have the
right to attend any meeting of the board of directors of OGAC or any committee
thereof.
(dd) Qualification and Registration. Any officer, director, manager or
employee of OGAC (whether full-time, part-time, contract or leased) whose
functions with respect to OGAC require such Person to be qualified or registered
as a broker/dealer, principal or representative under federal or state laws,
rules or regulations or with the SEC or the NASD is so qualified or registered.
(ee) Sellers' Representative. The Sellers' Representative is authorized
to take the actions set forth in this Agreement on behalf of the Sellers and the
Buyer and OGAC shall have no Liability to the Sellers for any act or failure to
act of the Sellers' Representative.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing:
(a) General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 7 below).
(b) Notices and Consents. Each of the Parties will (and the Sellers
will cause OGAC to) give any notices to, make any filings with, and use
commercially reasonable efforts to obtain any authorizations, consents, and
approvals of governments, governmental agencies and other third parties in
connection with the matters referred to in Sections 3(a)(i), 3(a)(ii), 3(b)(ii),
3(b)(iii) and 4(c) above.
(c) Operation of Business. The Sellers will not cause or permit OGAC to
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Sellers will not cause or permit OGAC to (i) declare, set aside,
or pay any dividend or make any distribution with respect to its capital stock
(other than distributions for payment by shareholders of Taxes with respect to
OGAC and the Distribution), except in accordance with past business practices or
redeem, purchase, or otherwise acquire any of its capital stock or (ii)
otherwise engage in any practice, take any action, or enter into any transaction
of the sort described in Section 4(h) above.
(d) Preservation of Business. The Sellers will cause OGAC to use
commercially reasonable efforts to keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensors, suppliers,
customers, and employees.
(e) Full Access. Each of the Sellers will promptly permit, and the
Sellers will cause OGAC to promptly permit, representatives of the Buyer to have
full access upon reasonable notice
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to all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to OGAC, other than those subject to
attorney-client privilege, in which event an explanation thereof shall be
provided to the Buyer. Notwithstanding the foregoing, Buyer shall first obtain
the consent of the Sellers' Representative prior to any discussions with OGAC's
employees, advisors, independent auditors or other representatives of OGAC
(other than Sellers' Representative and OGAC's legal counsel and investment
advisors).
(f) Notice of Developments. Each Party will give prompt written notice
(a "Breach Notice") to the other Party (the "Other Party") of any development or
information which results in a breach of any of his, her or its own
representations, warranties and covenants as set forth in this Agreement. No
disclosure by any Party pursuant to this Section 5(f), however, shall be deemed
to amend or supplement Annex I or the Disclosure Schedule, as the case may be,
or to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant; provided, however, that if the Other Party determines to waive the
applicable closing conditions in Sections 7(a)(i) - (ii) or Sections 7(b)(i) -
(ii), as the case may be, and to effect the Closing after receipt of a Breach
Notice, the Breach Notice shall be deemed to amend and supplement Annex I or the
Disclosure Schedule, as the case may be, and to prevent and cure any
misrepresentation, breach of warranty, or breach of covenant with respect to the
matters set forth in the Breach Notice, and the Party delivering the Breach
Notice shall have no Liability to the Other Party solely with respect to the
matters set forth in the Breach Notice.
(g) Exclusivity. During the period commencing on the date of this
Agreement through the earliest to occur of (i) the Closing Date, or (ii) the
termination of this Agreement pursuant to Xxxxxxx 00 xxxxx, xxxx of the Sellers
will (and the Sellers will not cause or permit OGAC to) (x) solicit, initiate,
or encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of OGAC (including any acquisition structured
as a merger, consolidation, or share exchange) or any financing of OGAC, (y)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing, or (z) vote their OGAC Shares in favor of any such acquisition
structured as a merger, consolidation, or share exchange. The Sellers will
notify the Buyer immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing, and shall indicate to the Buyer
in reasonable detail the identity of the offeror and the terms and conditions of
any proposal or offer or any such inquiry or contact.
(h) Confidentiality Agreements. The Sellers will use commercially
reasonable efforts to cause OGAC to enter into confidentiality agreements
reasonably satisfactory in form and substance to the Buyer with Xxxxxx X.
Xxxxxxxxx, W. Xxxxx Xxxxx, Xxxxxx X. Xxxxxx, Xxxxxxxx X. Xxxxxxxx, Xx., and Xxxx
Xxxxxxxxx.
(i) Broker/Dealer Insurance. The Sellers will cause OGAC to use
commercially reasonable efforts to obtain broker/dealer professional liability
insurance coverage in force
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subsequent to the Closing with substantially the same coverage as the coverage
in force prior to the Closing.
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing:
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the Parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8 below).
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving OGAC, each of the other Parties will cooperate
with him, her or it and his, her or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(c) Transition. None of the Sellers will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of OGAC from maintaining the
same business relationships with OGAC after the Closing as it maintained with
OGAC prior to the Closing. Each of the Sellers will refer all customer inquiries
relating to the businesses of OGAC to OGAC from and after the Closing and
continuing during the Non-Compete Period.
(d) Confidentiality. Each of the Sellers will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of the Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in his,
her or its possession. In the event that any of the Sellers is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that Seller will notify the
Buyer promptly of the request or requirement so that the Buyer may seek an
appropriate protective order or waive compliance with the provisions of this
Section 6(d). If, in the absence of a protective order or the receipt of a
waiver hereunder, any of the Sellers is, on the advice of counsel, compelled to
disclose any Confidential Information to any tribunal or else stand liable for
contempt, that Seller may disclose the Confidential Information to the tribunal;
provided, however, that the disclosing Seller shall use his, her or its
reasonable best efforts to obtain, at the request and expense of the
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Buyer, an order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be disclosed as the
Buyer shall designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public immediately
prior to the time of disclosure.
(e) Sellers' Representative Covenant Not to Compete. With respect to
the Sellers' Representative, for the period set forth in Section 7(c) of the
Employment Agreement, he shall not directly or indirectly own, manage, control,
participate in, consult with, render services for, be employed by or in any
manner engage in providing (a) third party acquisition and/or divestiture
advisory, marketing or brokerage services with respect to oil and gas
properties, (b) third party reserve engineering transaction or other technical
services in support of the acquisition and/or divestiture of oil and gas
properties, and (c) third party sell side sealed bid, negotiated sale or
brokerage services for the oil and gas exploration and production industry, that
compete with the business of OGAC or its subsidiaries; provided, however, that
(i) no owner of less than one percent (1%) of the outstanding stock of any
publicly-traded corporation shall be deemed to engage solely by reason thereof
in any of its businesses, and (ii) the Sellers' Representative shall be entitled
to be engaged in the acquisition and/or divestiture of oil and gas properties as
an owner or operator for his or her own account, for the account of an entity
wholly-owned by the Sellers' Representative or for the account of an employer
engaged in the acquisition and/or divestiture of oil and gas properties as part
of such employer's Ordinary Course of Business. If the final judgment of a court
of competent jurisdiction declares that any term or provision of this Section
6(e) is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(f) Sellers Covenant Not to Compete. With respect to the Sellers other
than the Sellers' Representative, for a period of five years from and after the
Closing Date (the "Non-Compete Period"), none of such Sellers will directly or
indirectly own, manage, control, participate in, consult with, render services
for, be employed by or in any manner engage in the business of (a) conducting
oral bid or Internet or electronic related auctions of oil and gas properties,
(b) providing third party or outsourced reserve engineering transaction or other
technical services in support of the acquisition and/or divestiture of oil and
gas properties, and (c) third party or outsourced sell side sealed bid,
negotiated sale or brokerage services for the oil and gas exploration and
production industry (collectively, the "Business"), that compete with the
business of OGAC or its subsidiaries; provided, however, that (i) no owner of
less than one percent (1%) of the outstanding stock of any publicly traded
corporation shall be deemed to engage solely by reason thereof in the Business,
(ii) each such Seller shall be entitled to be engaged in the acquisition and/or
divestiture of oil and gas properties as an owner or operator for his or her own
account, for the account of an entity wholly-owned by such Seller or for the
account of an employer engaged in the acquisition and/or divestiture of oil and
gas properties as part of such employer's Ordinary Course of Business, and (iii)
this Section 6(f) shall
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not apply to any activities of such Seller related to his/her performance of
his/her duties as an officer or director of any company (and its successor and
assigns) engaged in the oil and gas business if such Seller was acting in such
capacity prior to the date of this Agreement. If the final judgment of a court
of competent jurisdiction declares that any term or provision of this Section
6(f) is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(a) and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own the
Shares and to control OGAC, or (D) have a Material Adverse Effect (and
no such injunction, judgment, order, decree, ruling, or charge shall be
in effect);
(iv) OGAC shall have no long term liabilities other than rent
obligations under the real property leases set forth on Section
4(l)(ii) of the Disclosure Schedule which are not yet due and payable;
(v) OGAC's Current Assets shall be greater than or equal to
its Current Liabilities;
(vi) the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in Section 7(a)(i)-(v) is satisfied in all respects;
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(vii) the Parties and OGAC shall have received all material
authorizations, consents, and approvals of governments, governmental
agencies and other third parties referred to in Section 5(b) above;
(viii) the relevant parties shall have entered into and
delivered the Employment Agreement substantially in form and substance
as set forth in Exhibit B attached hereto (the "Employment Agreement")
and the same shall be in full force and effect;
(ix) the relevant parties shall have entered into and
delivered the Voting Agreement substantially in form and substance as
set forth in Exhibit C attached hereto (the "Voting Agreement") and the
same shall be in full force and effect;
(x) the relevant parties shall have entered into and delivered
the Shareholders Agreement substantially in form and substance as set
forth in Exhibit D attached hereto (the "Shareholders Agreement") and
the same shall be in full force and effect;
(xi) The board of directors and shareholders of OGAC shall
have adopted The Oil & Gas Asset Clearinghouse, Inc. 1999 Equity
Incentive Plan substantially in form and substance as set forth in
Exhibit E attached hereto (the "Stock Option Plan") and the same shall
be in full force and effect;
(xii) the Buyer shall have received from counsel to the
Sellers an opinion in form and substance as set forth in Exhibit G
attached hereto, addressed to the Buyer, and dated as of the Closing
Date;
(xiii) the Buyer shall have received the resignations,
effective as of the Closing, of each director of OGAC other than the
Sellers' Representative;
(xiv) the relevant parties shall have entered into and
delivered the Release of Claims substantially in form and substance as
set forth in Exhibit I attached hereto (the "Release") and the same
shall be in full force and effect;
(xv) Xxxx X. Xxxxxxx shall have received a grant of options to
purchase 61,328 shares of Common Stock under the Stock Option Plan
pursuant to the Stock Option Agreement substantially in form and
substance as set forth in Exhibit K attached hereto (the "Stock Option
Agreement") and the same shall be in full force and effect; and
(xvi) all actions to be taken by the Sellers in connection
with consummation of the transactions contemplated hereby, including,
without limitation, the deliveries required by Section 2(g)(iii) above,
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer.
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The Buyer may waive any condition specified in this Section 7(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(b) above shall be true and correct in all material respects at and as
of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iv) the Buyer shall have delivered to the Sellers'
Representative a certificate to the effect that each of the conditions
specified above in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) the Parties and OGAC shall have received all material
authorizations, consents, and approvals of governments, governmental
agencies and other third parties referred to in Section 5(b) above;
(vi) the relevant parties shall have entered into and
delivered the Employment Agreement and the same shall be in full force
and effect;
(vii) the relevant parties shall have entered into and
delivered the Shareholders Agreement and the same shall be in full
force and effect;
(viii) the board of directors and shareholders of OGAC shall
have adopted the Stock Option Plan and the same shall be in full force
and effect;
(ix) the Buyer shall have entered into and delivered the
Promissory Note and the same shall be in full force and effect;
(x) the relevant parties shall have entered into and delivered
the Release and the same shall be in full force and effect;
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(xi) the Sellers' Representative shall have received from
counsel to the Buyer an opinion in form and substance as set forth in
Exhibit H attached hereto, addressed to the Sellers, and dated as of
the Closing Date;
(xii) the relevant parties shall have entered into and
delivered the Security Agreement substantially in form and substance as
set forth in Exhibit J attached hereto (the "Security Agreement") and
the same shall be in full force and effect;
(xiii) Xxxxxxx X. Xxxxx, Xx. shall have received a grant of
options to purchase 61,328 shares of Common Stock under the Stock
Option Plan pursuant to the Stock Option Agreement and the same shall
be in full force and effect;
(xiv) the Buyer shall have delivered to the Sellers'
Representative copies of the Buyer's Restated Certificate of
Incorporation, Bylaws, any shareholders agreements to which the Buyer
is a party and such other documents reasonably requested by the
Sellers' Representative evidencing the equity ownership and control of
the Buyer, each certified by an officer of the Buyer as the true and
correct copies thereof, and such documents shall be reasonably
satisfactory in form and substance to the Sellers' Representative;
(xv) the Buyer shall not have caused OGAC to incur any debt,
the proceeds of which are used to pay any portion of the Adjusted
Purchase Price at Closing; and
(xvi) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby, including,
without limitation, the deliveries required by Section 2(g)(iv) above,
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Sellers'
Representative.
The Sellers' Representative may waive any condition specified in this Section
7(b) if he executes a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Sellers contained in Sections 4(a)-(j) and
Sections 4(l)-(ee) above shall survive the Closing hereunder (even if the Buyer
knew or had reason to know of any misrepresentation or breach of warranty at the
time of Closing) and continue in full force and effect for a period of two (2)
years thereafter. All of the other representations , warranties and covenants of
the Parties contained in this Agreement (including the representations and
warranties of the Sellers contained in Section 4(k) above) shall survive the
Closing (even if the damaged Party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect forever thereafter (subject to any applicable statutes of
limitations or such other limitations as set forth in this Agreement).
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(b) Indemnification Provisions for Benefit of the Buyer.
(i) Subject to Section 5(f) and Section 10(b) hereof, in the
event any of the Sellers breaches (or in the event any third party
alleges facts that, if true, would mean any of the Sellers has
breached) any of his or her representations, warranties, and covenants
contained herein, and, if there is an applicable survival period
pursuant to Section 8(a) above, provided that the Buyer makes a written
claim for indemnification against the Sellers pursuant to Section 11(g)
below within such survival period, then each of the Sellers agrees to
indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer and OGAC may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences
the Buyer may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or the alleged breach); provided, however, that
any such liability of the Sellers resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or alleged
breach) of the representations and warranties set forth in Section 2(a)
or Section 3(a) shall be several and not joint.
(ii) Each of the Sellers jointly and severally agrees to
indemnify the Buyer from and against the entirety of (A) any costs and
expenses incurred by OGAC to become Year 2000 Compliant and any Adverse
Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by becoming Year 2000
Compliant; (B) any Liability or obligation of OGAC or the Sellers to
pay any fees, commissions costs, expenses, indemnity or other payments
to any broker, finder or agent with respect to the transactions
contemplated by this Agreement, including, without limitation, the
Letter Agreements set forth on Section 3(a) and Section 4(d) of the
Disclosure Schedule and any Adverse Consequences the Buyer may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by any such Liability or obligation; and (C) any court costs and
attorneys fees and expenses incurred by OGAC resulting from, arising
out of, relating to, in the nature of or caused by the litigation
matters set forth on Section 4(s) of the Disclosure Schedule (the
"Litigation Expenses"); provided, however, that if at the time the
Buyer makes a claim for indemnification for the Litigation Expenses (X)
the Promissory Note is still outstanding, such indemnification shall
not exceed $1,700,000, (Y) the escrow account described in Section
(2)(i) above exists, such indemnification shall not exceed the balance
of the escrow account at that time, (Z) the Promissory Note is not
outstanding and the escrow account does not exist, the Buyer shall be
entitled to no indemnification with respect to the Litigation Expenses.
(iii) Each of the Sellers jointly and severally agrees to
indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of or caused by (A) any Taxes that OGAC may
owe or be deemed to owe for periods up to and including the Closing
Date in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party or
any fringe benefits or contributions, penalties or fines with respect
to any
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Employee Benefit Plan that OGAC may owe or be deemed to owe for periods
up to and including the Closing Date; and (B) any actions of
Administaff Companies, Inc., with respect to the employees of the
Company (full time, part time, contract, leased or otherwise) for
periods up to and including the Closing Date.
(iv) Each of the Sellers jointly and severally agrees to
indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any successor liability
incurred by OGAC as a result of the failure of The OGA Clearinghouse,
Inc., a Texas corporation, to be qualified or registered as a
broker/dealer under federal or state laws, rules or regulations or with
the SEC or the NASD.
(v) Each of the Sellers jointly and severally agrees to
indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer may suffer resulting from, arising out of,
relating to, in the nature of, or caused by any claim of EBCO U.S.A.,
Incorporated that OGAC committed copyright, trade dress or other
Intellectual Property infringements or otherwise misappropriated
confidential information prior to the Closing.
(vi) Notwithstanding anything in this Agreement to the
contrary, no Seller shall be liable pursuant to Section 8(b) for any
amount in the aggregate in excess of such Seller's pro rata portion of
the Adjusted Purchase Price as set forth in Section 4(b) of the
Disclosure Schedule (subject to a pro rata adjustment based upon the
Actual Adjustment); provided, further, that no Seller shall be liable
pursuant to Section 8(b)(i) for any amount unless and until the
aggregate amounts of all claims for indemnification against all of the
Sellers pursuant to Sections 8(b)(i) and 8(b)(ii)(C) exceed $50,000 in
the aggregate (the "Basket"), in which case the Buyer shall be entitled
to recover the full amount of such claims, including the amounts
included in the Basket, pursuant to the terms of this Agreement
(subject to the limitation set forth above in this Section 8(b)(vi)).
(c) Indemnification Provisions for Benefit of the Sellers. Subject to
Section 5(f) and Section 10(b) hereof, in the event the Buyer breaches (or in
the event any third party alleges facts that, if true, would mean the Buyer has
breached) any of its representations, warranties, and covenants contained
herein, and, if there is an applicable survival period pursuant to Section 8(a)
above, provided that the Sellers make a written claim for indemnification
against the Buyer pursuant to Section 11(g) below within such survival period,
then the Buyer agrees to indemnify the Sellers from and against the entirety of
any Adverse Consequences the Sellers may suffer through and after the date of
the claim for indemnification (including any Adverse Consequences the Sellers
may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or the
alleged breach). Notwithstanding anything in this Agreement to the contrary, the
Buyer shall not be required to pay to Sellers in the aggregate pursuant to this
Section 8(c) or otherwise under this Agreement any amount in excess of the Final
Purchase Price plus reasonable attorneys' fees incurred by the Sellers in
connection with the enforcement of the obligations of the Buyer pursuant to
Sections 2(c), 2(d), 6(a), 6(b) and 8(c) of this Agreement;
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provided, further, that the Buyer shall not be liable pursuant to this Section
8(c) for any amount unless and until the aggregate amounts of all claims for
indemnification against the Buyer pursuant to this Section 8(c) exceed the
Basket, in which case the Sellers shall be entitled to recover the full amount
of such claims, including the amounts included in the Basket, pursuant to the
terms of this Agreement (subject to the limitation set forth above in this
Section 8(c)).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 8, then the
Indemnified Party shall within twenty (20) days notify each
Indemnifying Party thereof in writing; provided, however, that no delay
on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (A)
the Indemnifying Party notifies the Indemnified Party in writing (the
"Defense Notice") within fifteen (15) days after the Indemnified Party
has given notice of the Third Party Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim, and (B) the Indemnifying Party conducts the defense
of the Third Party Claim actively and diligently. If the Indemnifying
Party delivers a Defense Notice, the Indemnified Party shall cooperate
with the Indemnifying Party and the Indemnifying Party's counsel in the
defense of the Third Party Claim, including, without limitation,
furnishing the Indemnifying Party with any books, records or
information reasonably requested by the Indemnifying Party.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8(d)(ii)
above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim; provided, however, that the Indemnifying Party shall control the
defense of the Third Party Claim, (B) the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnifying Party, and (C) the Indemnifying Party will not consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably); provided, however,
that the Indemnifying Party may, without the Indemnified Party's prior
written consent, settle or compromise any such Third Party Claim or
consent to entry of any judgment with respect to any such Third Party
Claim that requires only the payment of money damages by the
Indemnifying Party with no injunction or other equitable relief and
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that includes as an unconditional term thereof the release by the third
party of the Indemnified Party from any and all liability in respect of
such Third Party Claim.
(iv) In the event the Indemnifying Party does not conduct the
defense of the Third Party Claim actively and diligently, however, (A)
the Indemnified Party may defend against, and consent to the entry of
any judgment or enter into any settlement with respect to, the Third
Party Claim in any manner it reasonably may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the Indemnifying
Parties will reimburse the Indemnified Party promptly and periodically
for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (C) the Indemnifying
Party will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 8.
(e) Determination of Adverse Consequences. The Parties shall take into
account the time value of money (using the Applicable Rate as the discount rate
or the interest rate, as the case may be) in determining Adverse Consequences
for purposes of this Section 8. All indemnification payments under this Section
8 shall be deemed adjustments to the Final Purchase Price.
(f) Other Indemnification Provisions. Except for any remedy of specific
performance to which any Party may be entitled, including, without limitation,
as set forth in Section 11(n) below, the indemnification provision set forth in
this Section 8 shall provide the sole and exclusive rights and remedies under
which a Party may assert a claim against another Party with respect to (i) any
and all breaches of any representations or warranties contained herein made to
the Party asserting the claim, (ii) any and all breaches of covenants contained
herein made to the Party asserting the claim or (iii) any other claims, actions,
demands, loss, cost, expense, liability, penalty or other damage relating to or
arising out of this Agreement. Each of the Sellers hereby agrees that he, she or
it will not make any claim for indemnification against OGAC by reason of the
fact that he, she or it was a shareholder, director, officer, employee, or agent
of any such entity or was serving at the request of any such entity as a
partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or demand brought by
the Buyer against such Seller (whether such action, suit, proceeding, complaint,
claim, or demand is pursuant to this Agreement, applicable law, or otherwise).
9. Certain Tax Matters.
(a) S Corporation Status. The Sellers will not (and will not cause OGAC
to) revoke OGAC's election to be taxed as an S corporation within the meaning of
Code Sections 1361 and 1362. The Sellers will not (and will not cause OGAC to)
take or allow any action that would result
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in the termination of OGAC's status as a validly electing S corporation within
the meaning of Code Sections 1361 and 1362.
(b) Tax Periods Ending on or Before the Closing Date. The Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for OGAC for all periods ending on or prior to the Closing Date which are filed
after the Closing Date. The Buyer shall permit the Sellers' Representative to
review and comment on each such Tax Return described in the preceding sentence
prior to filing and shall make such revisions to such Tax Returns as are
reasonably requested by the Sellers' Representative. To the extent permitted by
applicable law, the Sellers shall include any income, gain, loss, deduction or
other tax items for such periods on their Tax Returns in a manner consistent
with the Schedule K-1s furnished by OGAC to the Sellers for such periods.
(c) Cooperation on Tax Matters.
(i) The Buyer, OGAC and the Sellers shall cooperate fully, as
and to the extent reasonably requested by each other, in connection
with the filing of Tax Returns pursuant to this Section 9 and any
audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other's request)
the provision of records and information which are reasonably relevant
to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. OGAC
and the Sellers agree (A) to retain all books and records with respect
to Tax matters pertinent to OGAC relating to any taxable period
beginning before the Closing Date until the expiration of the statute
of limitations (and, to the extent notified by the Buyer or the
Sellers, any extensions thereof) of the respective taxable periods, and
to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other reasonable written notice
prior to transferring, destroying or discarding any such books and
records and, if the other so requests, OGAC or the Sellers, as the case
may be, shall allow the other to take possession of such books and
records.
(ii) The Buyer and the Sellers further agree, upon request, to
use their best efforts to obtain any certificate or other document from
any governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including,
but not limited to, with respect to the transactions contemplated
hereby).
(d) Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving OGAC shall be terminated as of the
Closing Date and, after the Closing Date, OGAC shall not be bound thereby or
have any liability thereunder.
(e) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by the
Sellers when due, and the Sellers will, at their own expense, file all necessary
Tax Returns and other documentation with respect to all such transfer,
documentary, sales,
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use, stamp, registration and other Taxes and fees, and, if required by
applicable law, the Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
10. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Sellers' Representative may terminate
this Agreement by mutual written consent at any time prior to the
Closing;
(ii) the Buyer may, in its sole discretion, terminate this
Agreement by giving written notice to the Sellers' Representative on or
prior to May 21, 1999;
(iii) the Buyer may terminate this Agreement by giving written
notice to the Sellers' Representative at any time prior to the Closing
(A) in the event any of the Sellers has breached any material
representation, warranty, or covenant contained in this Agreement in
any material respect, the Buyer has notified the Sellers'
Representative of the breach, and the breach has continued without cure
for a period of fifteen (15) days after the notice of breach or (B) if
the Closing shall not have occurred on or before the Final Date, or any
extension thereof as provided in Section 2(f) above, by reason of the
failure of any condition precedent under Section 7(a) hereof (unless
the failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement); and
(iv) the Sellers' Representative may terminate this Agreement
by giving written notice to the Buyer at any time prior to the Closing
(A) in the event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any material
respect, the Sellers' Representative has notified the Buyer of the
breach, and the breach has continued without cure for a period of
fifteen (15) days after the notice of breach or (B) if the Closing
shall not have occurred on or before the Final Date, or any extension
thereof as provided in Section 2(f) above, by reason of the failure of
any condition precedent under Section 7(b) hereof (unless the failure
results primarily from any of the Sellers themselves breaching any
representation, warranty, or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach); provided, however, that
the distribution of the Deposit as set forth in this Section 10(b) shall be the
sole Liability of any Party for termination of this Agreement pursuant to
Section 10(a)(i) or Section 10(a)(ii) above; provided further, that if a Breach
Notice is delivered which relates to a matter which occurred , arose or was
discovered subsequent to the date of this Agreement and prior to the Closing
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and such matter (i) did not occur or arise as a result of a breach of a covenant
contained in Section 5 above by the Party delivering the Breach Notice, and (ii)
is not itself a breach, as of the date of this Agreement, of any representation,
warranty or covenant contained in this Agreement, the Other Party may elect to
terminate this Agreement pursuant to Section 10(a)(iii) or Section 10(a)(iv)
above, as the case may be, based upon the matter set forth in the Breach Notice,
in which event the Party delivering the Breach Notice shall have no Liability to
the Other Party other than the distribution of the Deposit as set forth in this
Section 10(b). If the Agreement is terminated pursuant to Section 10(a)(i) or
Section 10(a)(iii) above, the Buyer shall be entitled to retain the Deposit. If
the Agreement is terminated pursuant to Section 10(a)(ii) or Section 10(a)(iv)
above, the Sellers shall be entitled to receive the Deposit. If the Agreement is
terminated pursuant to Section 10(a)(iii)(B) or Section 10(a)(iv)(B) solely due
to the failure to obtain the approval of the transactions contemplated by this
Agreement by the NASD (a) due to information regarding the Buyer provided to the
NASD, the Seller shall be entitled to receive the Deposit, or (b) for any other
reason, the Buyer shall be entitled to retain the Deposit, and neither Party
shall have any Liability to the other Party for such termination other than the
distribution of the Deposit as set forth in this sentence.
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of the
Buyer and the Sellers' Representative; provided, however, that any Party may
make any public disclosure it believes in good faith is required by applicable
law or any listing or trading agreement concerning its publicly-traded
securities (in which case the disclosing Party will use its reasonable best
efforts to advise the other Parties prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof; provided, however, that the Confidentiality Agreement dated March 1,
1999 by and between Xxxxxxx Energy Services, LLC and OGAC shall survive until
the Closing, at which time it shall terminate and be of no further force and
effect.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his,
her or its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and the Sellers' Representative; provided, however, that
the Buyer may (i) assign any or all of its rights and interests hereunder to one
or more of its Affiliates and (ii) designate one or more of its Affiliates to
perform its obligations hereunder (in any
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or all of which cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The Section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Sellers or the Copy to:
Sellers' Representative:
Xxxxxxx X. Xxxxx, Xx. Xxxxx Xxxxxxx & Xxxx LLP
000 X. Xxx Xxxxxxx Xxxxxxx E. 3400 Chase Commerce Tower
Suite 100 600 Xxxxxx
X.X. Xxx 000000 Xxxxxxx, Xxxxx 00000-0000
Xxxxxxx, Xxxxx 00000-0000 Attn: Xxxxx Xxxxx, Esq.
Telephone No.: 000-000-0000 Telephone No.: 000-000-0000
Fax No.: 000-000-0000 Fax No. 000-000-0000
If to the Buyer: Copy to:
Energy Auction Exchange, Inc. Xxxxxx Xxxxx Xxxxx Xxxxxxxxx & Xxxxxx, LLC
0000 Xxxx Xxxxx Xxxxxx 0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx 0000 Xxxxxx, Xxxxxxxx 00000
Xxxxxx, Xxxxxxxx 00000 Attn: Xxxxxx X. Xxxxxxx, Esq.
Attn: Xxxx X. Xxxxxxx Telephone No.: 000-000-0000
Telephone No.: 000-000-0000 Fax No.: 000-000-0000
Fax No.: 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
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(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Sellers' Representative. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. Each of the Parties and OGAC will bear his, her or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Sellers agree that OGAC has not borne or will not bear any of the Sellers' costs
and expenses (including any of their legal fees and expenses) in connection with
this Agreement or any of the transactions contemplated hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of
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the Parties agrees that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 11(o) below), in addition to any other remedy to which they may
be entitled, at law or in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Denver, Colorado, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. The
Sellers appoint the Sellers' Representative as his or her agent to receive on
his or her behalf service or of copies of the summons and complaint and any
other process that might be served in the action or proceeding. Any Party may
make service on any other Party by sending or delivering a copy of the process
(i) to the Party to be served at the address and in the manner provided for the
giving of notices in Section 11(g) above or (ii) if to the Sellers in care of
the Sellers' Representative at the address and in the manner provided for the
giving of notices in Section 11(g) above. Nothing in this Section 11(o),
however, shall affect the right of any Party to serve legal process in any other
manner permitted by law or at equity. Each Party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be enforced by
suit on the judgment or in any other manner provided by law or at equity.
(p) Execution. The Parties shall be entitled to rely on delivery by
facsimile machine of an executed copy of this Agreement and such facsimile copy
shall be effective to create a valid and binding agreement among the parties in
accordance with the terms hereof.
* * * * *
43
49
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
ENERGY AUCTION EXCHANGE, INC.
/s/
----------------------------------
By:
-----------------------------
Its:
------------------------------
/s/ Xxxxxxx X. Xxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxx, Xx.
/s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx
Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx
/s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx
/s/ Xxxxxxxxx Xxxx Xxxxxx
----------------------------------
Xxxxxxxxx Xxxx Xxxxxx
/s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxxxx, Xx.
----------------------------------
Xxxxxx X. Xxxxxxxxx, Xx.
/s/ R.E. Xxxxxxxxx
----------------------------------
R.E. Xxxxxxxxx
/s/ Xxxxxxx X. X'Xxxxxxxxxxx
----------------------------------
Xxxxxxx X. X'Xxxxxxxxxxx
44
50
EXHIBIT A
FINANCIAL STATEMENTS
51
EXHIBIT B
FORM
OF
EMPLOYMENT AGREEMENT
52
EXHIBIT C
FORM
OF
VOTING AGREEMENT
53
EXHIBIT D
FORM
OF
SHAREHOLDERS AGREEMENT
54
EXHIBIT E
FORM
OF
STOCK OPTION PLAN
55
EXHIBIT F
FORM
OF
PROMISSORY NOTE
56
EXHIBIT G
FORM
OF
OPINION OF COUNSEL TO THE SELLERS
57
EXHIBIT H
FORM
OF
OPINION OF COUNSEL TO THE BUYER
58
EXHIBIT I
FORM
OF
RELEASE
59
EXHIBIT J
FORM
OF
SECURITY AGREEMENT
60
EXHIBIT K
FORM
OF
STOCK OPTION AGREEMENT
61
ANNEX I
EXCEPTIONS TO THE BUYER'S
REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
62
ANNEX I
Section 3(b)
In connection with the transactions contemplated by this Agreement,
OGAC must notify the NASD of the contemplated change in ownership of OGAC
pursuant to the NASD Continued Membership Application process (the "Process").
In connection with the Process, the Buyer and its officers, directors and
shareholders may be required to supply information to, attend interviews with,
give notices to, make filings with or obtain the authorization, consent or
approval of the NASD. The Buyer may also be required to take similar actions in
the states where OGAC is registered (or such registration is pending) as a
broker-dealer.
63
DISCLOSURE SCHEDULE
EXCEPTIONS TO THE SELLERS' REPRESENTATIONS
AND WARRANTIES CONCERNING THE TRANSACTION
AND THE REPRESENTATIONS AND WARRANTIES
CONCERNING OGAC
64
PURCHASE PRICE ADJUSTMENT SCHEDULE
