LLC INTEREST PURCHASE AGREEMENT
This LLC Interest Purchase Agreement (this "Agreement") is made and
entered into as of this 9th day of March, 2005 by Maverick Oil and Gas, Inc., a
Nevada corporation having its principal place of business at 00 Xxxx Xxxxxxxx,
Xxxxxx, Xxxxxx Xxxxxxx X0X 0XX ("Maverick") and the various members listed on
Schedule 4.3 hereto (the "Members") of Hurricane Energy, LLC, a Delaware limited
liability company with its principal address at 0000 Xxxx Xxx Xxxx Xxxxxxxxx,
Xxxx Xxxxxxxxxx, Xxxxxxx 00000 ("Hurricane").
WITNESSETH:
WHEREAS, the Members are the owners of all the issued and outstanding
Membership Interests (as hereinafter defined) of Hurricane.
WHEREAS, the Members desire to sell, assign and convey to Maverick
their respective Membership Interests on and subject to the terms and conditions
of this Agreement; and
WHEREAS, Maverick desires to purchase and acquire the Membership
Interests from the Members on and subject to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the respective representations and
warranties hereinafter set forth and of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used herein, the following terms shall have the following meanings:
1.1 "Assets" shall mean:
(a) all cash of Hurricane on hand, in any bank, money market
account, mutual fund, and all certificates of deposit, letters of credit in
favor of Hurricane and all other readily marketable securities or other cash
equivalents of Hurricane;
(b) all accounts receivable, notes receivable and other rights of
Hurricane to receive payments, all as described in Schedule 1.1(b) attached
hereto (the "Receivables");
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(c) all equipment, vehicles, furniture and fixtures, and all other
fixed assets owned or leased by Hurricane, constituting all such items necessary
for the continued operation of Hurricane's business, all as described in
Schedule 1.1(c) attached hereto (the "Fixed Assets");
(d) all rights and benefits under all contracts, agreements,
leases, licenses, purchase commitments and sales orders to which Hurricane is a
party (collectively, the "Contracts"), constituting all such Contracts which are
necessary or beneficial to the operation of Hurricane's business, all as
described in Schedule 1.1(d) attached hereto;
(e) all patents, patent rights, copyrights, trademarks, trademark
rights, trade names, trade name rights and patent, copyright or trademark
applications, which Hurricane owns, all as described in Schedule 1.1 (e)
attached hereto, and all ideas, know-how, trade secrets, inventions, technology,
designs and any other proprietary rights which Hurricane owns;
(f) any and all other assets of Hurricane not described above and
included on the balance sheet contained in the Financial Statements (as defined
below).
1.2 "Closing Date" shall mean March 9, 2005, or such other date as the
parties may mutually agree.
1.3 "Escrow Agent" shall mean Blank Rome LLP, or such other party as is
mutually agreed to by the parties hereto.
1.4 "Escrow Agreement" shall mean the Escrow Agreement, dated the
Closing Date, by and among Maverick, the Members' Agent and the Escrow Agent,
which shall be in the form attached hereto as Exhibit A.
1.5 "Financial Statements" shall mean the balance sheet of Hurricane as
of February 28, 2005 and the profit and loss statement of Hurricane for the year
ended December 31, 2004 and the period ended February 28, 2005, attached to this
Agreement as Schedule 4.8.
1.6 "Founders" shall mean V. Xxx Xxxxxx, Xxxx Xxxxx and Xxxxx Xxxxxxx.
1.7 "Investor Members" shall mean Xxxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxx
X. XxXxxx, Xxxxx Xxxxxxxxx, Xxxxxxxxx Xxxxx' II, Xxxxxxx X. Xxxxx, Xxxxxxx X.
Xxxxx and Xxxx X. Xxxxxx.
1.8 "Members" shall mean the Founders and the Investor Members.
1.9 "Membership Interests" shall mean Hurricane's Limited Liability
Company Interests, as defined in the Delaware Limited Liability Company Act.
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ARTICLE II
SALE AND PURCHASE
2.1 Sale and Purchase of the Membership Interests. Subject to the
provisions and conditions contained herein, the Members hereby agree to sell,
transfer, assign, convey and deliver to Maverick at the Closing, as hereinafter
defined, and Maverick hereby agrees to purchase and accept from the Members, all
of their respective right, title and interest in and to the Membership
Interests, free and clear of any liens, pledges, security interests, claims or
encumbrances of any kind.
2.2 The Purchase Price. The purchase price (the "Purchase Price")
payable by Maverick for the Membership Interests shall consist of:
(a) Four Million Five Hundred Thousand (4,500,000) shares (the
"Maverick Shares") of Maverick's common stock, par value $.001 (the "Common
Stock"), to the Members in the respective amounts set forth on Schedule 4.3
attached hereto; provided, however, that 3,375,000 of such Maverick Shares (the
"Escrowed Shares"), distributed among the Members as indicated on Schedule 4.3
attached hereto, shall be deposited by Maverick with the Escrow Agent on the
Closing Date to be held for one year from the Closing pursuant to the Escrow
Agreement.
(b) Options and warrants of Maverick to purchase an aggregate of
Four Million Five Hundred Thousand (4,500,000) shares of the Common Stock as
follows:
(i) 3,690,000 incentive stock options to the Founders granted
under the Maverick 2005 Stock Option Plan to purchase 3,690,000 shares of the
Common Stock in the respective amounts set forth on Schedule 4.3 attached
hereto, and on the terms and conditions set forth in the form of incentive stock
option agreement attached hereto as Exhibit B.
(ii) 810,000 warrants to the Investor Members to purchase 810,000
shares of the Common Stock in the respective amounts set forth on Schedule 4.3
attached hereto, and on the terms and conditions set forth in the two forms of
warrant attached hereto as Exhibits D and E.
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ARTICLE III
CLOSING; CONDITIONS TO CLOSING; DELIVERIES
3.1 Closing. The closing of this transaction (the "Closing") shall be
held on the Closing Date at or about 10:00 a.m. Eastern Standard Time, at the
Houston, Texas offices of Maverick, or at such other time and place upon which
the parties shall agree.
3.2 Conditions to Maverick's Obligation. Maverick's obligation
hereunder to purchase and pay for the Membership Interests is subject to the
satisfaction, on or before the Closing Date, of the following conditions, any of
which may be waived, in whole or in part, by Maverick in its sole discretion,
and the Founders shall use their respective best efforts to cause such
conditions to be fulfilled:
(a) Representations and Warranties Correct; Performance of
Covenants; Satisfaction of Conditions. The representations and warranties of the
Members contained in this Agreement (including the Exhibits and Schedules
hereto) and those otherwise made in writing by or on behalf of the Members in
connection with the transactions contemplated by this Agreement shall be true,
complete and accurate in all material respects both when made and on and as of
the Closing Date as though such representations and warranties were made at and
as of such date The Members shall have duly and properly performed, complied
with, satisfied and observed each of their respective covenants, agreements,
conditions to closing and obligations contained in this Agreement to be
performed, complied with, satisfied and observed on or before the Closing Date.
(b) Purchase Permitted by Applicable Laws. The purchase of and
payment for the Membership Interests to be purchased by Maverick hereunder shall
not be prohibited by any applicable law or governmental regulation (all required
approvals having been received) and shall not subject Maverick to any tax,
penalty, liability or other onerous condition under or pursuant to any
applicable law or governmental regulation.
(c) Employment Agreements. Each of the Founders shall have entered
in an employment agreement with Maverick in the form attached hereto as Exhibit
C.
(d) No Adverse Decision. There shall be no action, suit,
investigation or proceeding pending or threatened by or before any court,
arbitrator or administrative or governmental body which seeks to restrain,
enjoin, prevent the consummation of or otherwise affect the transactions
contemplated by this Agreement or questions the validity or legality of any such
transactions or seeks to recover damages or to obtain other relief in connection
with any such transactions.
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(e) Approvals and Consents. The Members shall have duly obtained
all authorizations, consents, rulings, approvals, licenses, franchises, permits
and certificates, or exemptions therefrom, by or of all governmental authorities
and non-governmental administrative or regulatory agencies, domestic or foreign,
having jurisdiction over the parties hereto, their respective assets, this
Agreement, the Membership Interests or the transactions contemplated hereby,
including, without limitation, the consents of all third parties pursuant to
existing agreements or instruments by which Hurricane or any of the Members may
be bound, which are required for the execution, delivery and performance by the
Members of this Agreement and the consummation of the transactions contemplated
hereby, at no cost or other adverse consequence to Maverick, and all thereof
shall be in full force and effect at the time of Closing, and , if requested by
Maverick, the Founders shall have each delivered to Maverick a certificate
signed by them and dated the Closing Date, to such effect.
(f) Securities Law Compliance. All actions and steps necessary to
assure compliance with applicable Federal and state securities laws in
connection with the lawful sale of the Membership Interests pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of the
Closing.
(g) Due Diligence Review. Maverick shall have completed to its
satisfaction a due diligence review of the management, business, prospects and
assets of Hurricane and the Founders. (h) Proceedings: Receipt of Documents. All
corporate and other proceedings taken or required to be taken by the Members in
connection with the transactions contemplated hereby and all documents incident
thereto shall have been taken and shall be satisfactory in form and substance to
Maverick and its counsel, and Maverick shall have received all such information
and such counterpart originals or certified or other copies of such documents as
Maverick may reasonably request.
(i) Delivery of Documents. The Members shall have delivered, or
caused to be delivered, to Maverick the following:
(i) a certificate of good standing from the Secretary of State
of the State of Delaware dated at or about the Closing Date to the
effect that Hurricane is in good standing under the laws of that state;
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(ii) certified copies of the Certificate of Formation and
Operating Agreement of Hurricane; and
(iii) to the extent applicable, certificates evidencing the
Membership Interests duly endorsed in blank or accompanied by powers
endorsed in blank(or other duly executed instruments of transfer);
(iv) a written instrument of assignment executed by each
Member evidencing assignment of his, her or its Membership Interest to
Maverick.
(v) a certificate of incumbency signed by Hurricane's Managing
Member as to the officers of Hurricane, if any.
(vi) duly executed resignations of Hurricane's Managing
Member, and the officers of Hurricane, if any.
(vii) all other consents, agreements, schedules, documents and
exhibits required by this Agreement to be delivered, or reasonably
requested by Maverick, at or before the Closing.
(j) Adverse Change. Since February 28, 2005 up to the Closing
Date, Hurricane shall not have suffered any adverse changes (other than changes
described in the Exhibits or Schedules hereto or any supplement to the Exhibits
or Schedules) and, if requested by Maverick, the Founders shall have delivered
to Maverick a certificate signed by them and dated the Closing Date, to such
effect.
3.3 Conditions to the Obligation of the Members. The obligation of the
Members to consummate the transactions contemplated hereby are subject to the
fulfillment of the following conditions on or prior to the Closing Date, any of
which may be waived, in whole or in part, by the Members in their sole
discretion, and Maverick shall use its best efforts to cause such conditions to
be fulfilled.
(a) Representations and Warranties Correct; Performance. The
representations and warranties of Maverick in this Agreement and those otherwise
made in writing by or on behalf of Maverick shall be true, complete and accurate
when made in all material respects on and as of the Closing Date, as though such
representations and warranties were made at and as of such date, and Maverick
shall have delivered to the Members a certificate signed by its President and
dated the Closing Date, to such effect. Maverick shall have duly and properly
performed, complied with, satisfied and observed each of its covenants,
agreements, conditions to closing and obligations contained in this Agreement to
be performed, complied with, satisfied and observed on or before the Closing
Date, and Maverick shall have delivered to the Founders and the Members a
certificate signed by its President and dated the Closing Date, to such effect.
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(b) Purchase Permitted by Applicable Laws. The purchase of and
payment for the Membership Interests shall not be prohibited by any applicable
law or governmental regulation (all required approvals having been obtained).
(c) Delivery of Purchase Price. Maverick shall have delivered the
Purchase Price due for the Membership Interests as hereinabove contemplated.
(d) Employment Agreements. Maverick shall have entered into an
employment agreement with each of the Founders in the form attached hereto as
Exhibit C.
(e) Registration Rights Agreement. Maverick and the Founders shall
have entered into a registration rights agreement in the form attached hereto as
Exhibit F that provides for the registration by Maverick with the United States
Securities and Exchange Commission of a total of 800,000 of the Maverick Shares
for resale such that 200,000 of the Maverick Shares are registered on a
registration statement declared effective by the Commission on or before the
first anniversary of the Closing Date and 600,000 of the Maverick Shares are
registered on a registration statement declared effective by the Commission on
or before the second anniversary of the Closing Date.
(f) Resignation of Officer. Xxxxxxx Xxxxxxx shall submit his
resignation as an officer of Maverick (but not as a director) effective as of
the Closing Date.
(g) Delivery of Documents. Maverick shall have delivered, or
caused to be delivered, the following:
(i) a certificate of good standing from the Secretary of State
of the State of Nevada, dated at or about the Closing Date, to the effect that
Maverick is in good standing under the laws of said State;
(ii) certified copies of the Certificate of Incorporation and
By-Laws of Maverick; and
(iii) all other consents, agreements, schedules, documents and
exhibits required by this Agreement to be delivered, or reasonably requested by
the Members, at or before the Closing.
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(h) No Adverse Decision. There shall be no action, suit,
investigation or proceeding pending or threatened by or before any court,
arbitrator or administrative or governmental body which seeks to restrain,
enjoin, prevent the consummation of or otherwise affect the transactions
contemplated by this Agreement or questions the validity or legality of any such
transactions or seeks to recover damages or to obtain other relief in connection
with any such transactions.
(i) Approvals and Consents. Maverick shall have duly obtained all
authorizations, consents, rulings, approvals, licenses, franchises, permits and
certificates, or exemptions there from, by or of all governmental authorities
and non-governmental administrative or regulatory agencies, domestic or foreign,
having jurisdiction over the parties hereto, their respective assets, this
Agreement, the Maverick Shares or the transactions contemplated hereby,
including, without limitation, the consents of all third parties pursuant to
existing agreements or instruments by which Maverick may be bound, which are
required for Maverick's execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, and all thereof
shall be in full force and effect at the time of Closing, and Maverick shall
have delivered to the Members a certificate signed by its President and dated
the Closing Date, to such effect.
(j) Proceedings: Receipt of Documents. All corporate and other
proceedings taken or required to be taken by Maverick in connection with the
transactions contemplated hereby and all documents incident thereto shall have
been taken and shall be satisfactory in form and substance to the Members and
their counsel, and the Members shall have received all such information and such
counterpart originals or certified or other copies of such documents as they may
reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE FOUNDERS
The Founders each hereby, jointly and severally, represent and warrant
to Maverick as follows:
4.1 Organization and Good Standing. Hurricane is a limited liability
company, duly formed, validly existing and in good standing under the laws of
the State of Delaware and is in good standing as a foreign limited liability
company in each other jurisdiction where the properties owned, leased or
operated or the business conducted by it requires such qualification.
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4.2 No Breach as to Hurricane. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby does not
and will not result in a breach, violation or default or give rise to an event
which with the giving of notice or after the passage of time, or both, would
result in a breach, violation or default of any of the terms or provisions of
Hurricane's Certificate of Formation, Operating Agreement or other limited
liability company agreement, or of any statute, indenture, mortgage, loan
agreement or other agreement, instrument or restriction to which Hurricane is a
party or by which Hurricane, or any of Hurricane's assets, may be bound or
affected, or any rule or regulation of any court or governmental agency or body
having jurisdiction over Hurricane; the execution and delivery of this Agreement
by the Members have been and, as of the Closing Date, the consummation of the
transactions contemplated hereby will have been duly authorized, and no further
consent, authorization or approval is necessary to enable Hurricane to enter
into and perform same.
4.3 Membership Interests. Schedule 4.3 attached hereto sets forth a
true and complete list of Hurricane's Members of record and the Membership
Interests owned of record by each of them. Except as set forth on Schedule 4.3,
there are no outstanding liens, encumbrances or claims upon the Membership
Interests, or outstanding preemptive, conversion, or other rights, options,
warrants or agreements granted or issued for the purchase or acquisition of a
Membership Interest. The limited liability company interests owned by the
Members in the aggregate constitute 100% of Hurricane's limited liability
company interests.
4.4 Patents, Trademarks, Etc. Except as described on Schedule 4.4
annexed hereto, there are no inventions, licenses, patents, patent applications,
trademarks, copyrights or similar intellectual property; listed in Schedule 4.4
hereto are all such items necessary for the present conduct of Hurricane's
business; and except as specifically described on Schedule 4.4, none of which is
being contested or infringed upon; and the present conduct of Hurricane's
business does not infringe upon or violate the rights of anyone else, nor has
Hurricane or the Members received any notice of any infringement thereof.
4.5 Title to Assets.
(a) Hurricane has good and marketable title to all of its Assets;
and
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(b) Except as described in Schedule 4.5(b) annexed hereto, but
subject to minor imperfections of title that do not affect, in any material
respect, the use or the value of such property and such assets taken as a whole,
none of such Assets or the use thereof: (i) is subject to any easements or
restrictions or to any mortgages, liens, pledges, charges, security interests,
encumbrances or encroachments, or to any rights of others of any kind of nature
whatsoever, (ii) encroaches or infringes on the property or rights of another or
(iii) contravenes in any material respect any applicable law or ordinance or any
other administrative regulation or violates any restrictive covenant or any
provision of law. There are no agreements or arrangements between Hurricane and
any third person which have any material effect upon Hurricane's title to or
other rights respecting the Assets except as set forth on Schedule 4.5(b).
4.6 Compliance With Law. Hurricane is not in violation in any material
respect of any laws, governmental orders, rules or regulations to which
Hurricane or any of its properties or businesses are subject. 4.7 Agreements.
Annexed hereto on Schedule
4.7 is a true and complete list of all material contracts, instruments,
commitments, and agreements, whether oral or written, presently in effect to
which Hurricane is a party or to which Hurricane or the Assets is subject
including, without limitation, the following:
(a) any plan or contract or arrangement, oral or written,
providing for employment or consulting services, bonuses, commissions, pensions,
stock purchase or stock option or other stock rights, deferred compensation,
retirement or severance payments, profit sharing, or the like;
(b) any instrument or arrangement evidencing or relating in any
way to (i) indebtedness for borrowed money by way of direct loan, purchase money
obligation, conditional sale, lease purchase arrangement, guarantee or
otherwise, (ii) confession of judgment or agreed judgment, (iii) liens,
encumbrances or security interests, (iv) guaranties or indemnification or (v)
investments in any person;
(c) any contract containing provisions limiting the freedom of
Hurricane to engage in any business, compete in any line of business or market
any particular type of product, in any geographic area or with or to any person;
(d) any license, sublicense, lease or sublease agreement, whether
as licensor, sublicensor, licensee, sublicensee, lessor, sublessor, lessee,
sublessee or otherwise, or any agreements with dealers, vendors, customers,
suppliers, sales representatives, any governmental entity, fund or university,
or any agents, marketing representatives, brokers or distributors;
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(e) any joint venture contract or arrangement or other agreement
involving a sharing of profits or expenses, or any joint or other technology
development, cooperation or exchange contract or arrangement;
(f) agreements providing for disposition of the business or any
assets or shares of the capital stock of Hurricane; agreements of merger or
consolidation to which Hurricane are a party; or any letters of intent with
respect to the foregoing;
(g) contracts requiring the performance of consulting services,
software development or modification or other services.
Except as described on Schedule 4.7, each such agreement is a valid and
subsisting agreement and is in full force and effect, all payments due to or
from Hurricane thereunder have been made, there are no disputes or suits or
actions at law or otherwise pending or threatened thereunder, and such
agreements are the only agreements or arrangements of this nature. True,
complete, and correct copies of each such agreement have been supplied to
Maverick prior to the date hereof.
4.8 Financial Statements. Attached hereto as Schedule 4.8 is a true and
correct copy of the Financial Statements. The Financial Statements have been
prepared on a consistent basis and fairly present the consolidated financial
position and results of operations of Hurricane for the periods covered thereby.
The books and records respectively maintained by Hurricane upon which the
Financial Statements are based are true and correct in all respects and
accurately reflect the business of Hurricane. Except to the extent reflected or
reserved against in the Balance Sheet or as otherwise by Schedule 4.8, Hurricane
has no liability of any nature, whether absolute, accrued, contingent or
otherwise and whether due or to become due, including, without limitation, any
liability for taxes for any period prior to such date.
4.9 Absence of Changes. Except as set forth on Schedule 4.8 attached
hereto, since February 28, 2005, Hurricane has been operated in the ordinary
course and there has not been:
(a) any declaration, setting aside or payment of any dividend or
other distribution of any assets of any kind whatsoever with respect to any
shares of the capital stock of Hurricane or any direct or indirect redemption,
purchase or other acquisition of any such shares of the capital stock of
Hurricane or any issuance of securities or any rights whatsoever to acquire
securities;
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(b) any difficulty with its labor relations adversely affecting
the business of Hurricane;
(c) any license, sale, transfer, pledge, lien, security interest,
mortgage or other disposition of any tangible or intangible assets;
(d) any write-down or write-up of the value of any asset of
Hurricane or any portion thereof;
(e) any change in the accounting methods or practices followed by
Hurricane, in depreciation or amortization policies or rates theretofore adopted
by Hurricane,
(f) any single capital expenditure or commitment therefor by
Hurricane in excess of $10,000, or such capital expenditures in the aggregate in
excess of $25,000, for additions to property, plant or equipment of Hurricane;
(g) any changes in the matter in which Hurricane extends discounts
or credit or otherwise deals with customers, vendors, suppliers, distributors or
sales representatives;
(h) any agreement or commitment relating to the sale by Hurricane
of any fixed assets;
(i) any outstanding contract or commitment which will result in
any loss to Hurricane upon completion of performance thereof, or any outstanding
contract, bid or sale or service proposal quoting prices which will not result
in a normal profit in the ordinary course of business;
(j) any grant by Hurricane of any power of attorney (whether
revocable or irrevocable) to any person that is or may hereafter be in force for
any purpose whatsoever;
(k) the creation of any lien of record or guarantee, or any
investment in any person; or
(l) any commitment to do any of the acts it things specified in
items (a) though (k) of this Section 4.9.
4.10 Litigation. Except as described in Schedule 4.10, there are no
actions, suits, proceedings or investigations (including any purportedly on
behalf of Hurricane) pending or threatened against or affecting the business or
properties of Hurricane whether at law or in equity or admiralty or before or by
any governmental department, commission, board, agency, court or
instrumentality, domestic or foreign; nor is Hurricane operating under, subject
to, in violation of or in default with respect to, any judgment, order, writ,
injunction or degree of any court or other governmental department, commission,
board, agency or instrumentality, domestic or foreign.
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4.11 Taxes. Except as described in Schedule 4.11, Hurricane has filed,
or caused to be filed, with all appropriate governmental agencies all required
tax and information returns ("Tax Returns") due on or before the Closing Date
and has paid, caused to be paid or accrued all taxes (including, without
limitation, all net income, gross income, gross revenue, gross receipts, net
receipts, ad valorem, franchise, profits, transfer, sales, excise, use, social
security, Medicare, employment, unemployment, disability, license, withholding,
payroll, privilege, value-added, severance, stamp, occupation, property,
customs, duties, real estate and/or other taxes, assessments, levies, fees, or
charges of any kind whatsoever imposed by any governmental authority, together
with any interest and penalty related thereto ("Taxes"). Except as described on
Schedule 4.11, Hurricane has no liability, contingent or otherwise, for any
Taxes, other than amounts adequately reserved for. Hurricane has not received
directly or indirectly notice of, nor is it otherwise aware of an audit or
examination; Hurricane is not a party directly or indirectly to any action or
proceeding by any governmental authority for assessment or collection Taxes; nor
has any claim for assessment and collection been asserted against Hurricane
directly or indirectly; nor has Hurricane executed a waiver of any statute of
limitations with respect thereto. Hurricane has at all times been taxed as a
partnership for federal, state and local income tax purposes.
4.12 Salaries. Schedule 4.12 annexed hereto sets forth a true and
complete list, as of the date of this Agreement, of all of the persons who are
employed by Hurricane, together with their current compensation, fringe benefits
and bonuses paid or to be paid or the methods of computing such compensation and
bonuses, for the current fiscal year. Except as set forth on Schedule 4.12
annexed hereto, no such employee is employed by Hurricane under a written
contract of employment, nor since February 28, 2005 has Hurricane incurred any
outstanding liability for payment of wages, vacation pay (whether accrued or
otherwise), salaries, bonuses, pensions or contributions under any labor or
employment contract, whether oral or written, or by reason of any past practices
with respect to such employees based upon or accruing with respect to services
of present or former employees of Hurricane.
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4.13 Non-Compete and Confidentiality Agreements. Annexed hereto on
Schedule 4.13 is a true and complete list of any and all non-competition or
confidentiality agreements presently in effect between Hurricane and any third
parties.
4.14 Compliance with the Securities Act. All offers and sales of
Membership Interests or other securities of Hurricane by Hurricane or the
Members since the formation of Hurricane through the date hereof, have been made
in compliance with the Securities Act of 1933, as amended, or pursuant to a
valid exemption from registration.
4.15 No Untrue Representation or Warranty. No representation or
warranty made by the Founders contained in this Agreement or any attachment,
statement, schedule, exhibit, certificate or instrument furnished or to be
furnished to Maverick by the Founders pursuant hereto, or otherwise furnished in
writing by the Founders in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary to make the statements contained
herein or therein not misleading.
4.16 No Conflict. The performance of this Agreement and the
consummation of the transactions contemplated herein will not result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any statute, any indenture, mortgage, deed of trust, loan agreement, or
other agreement or instrument to which Hurricane is a party or by which
Hurricane is bound, or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over Hurricane or the property
of Hurricane.
4.17 Consents and Approval. All consents, approvals, authorizations and
orders necessary for the execution and delivery of this Agreement by the
Founders have been obtained, and the Founders have the full right, power and
authority to enter into this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
The Members each hereby, severally and not jointly, represent and
warrant to, and agree with Maverick, as follows: 5.1 Authority. Such Member has
full right, power and authority to enter into this Agreement, the Escrow
Agreement and any other documents executed and delivered by such Member in
connection with the transactions contemplated hereby (the "Ancillary
Documents"), and to convey to Maverick such Member's Membership Interest. The
execution and delivery of this Agreement and the Ancillary Documents, and the
consummation of the transactions contemplated hereby and thereby, have been duly
authorized by all requisite corporate or other action on the part of such
Member.
5.2 No Breach as to Each Member. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby does not,
and will not, result in a breach, violation or default or give rise to an event
which with the giving of notice or after the passage of time, or both, would
result in a breach, violation or default of any agreement or instrument to which
such Member is a party.
5.3 Title to Membership Interests. Such Member has good and valid title
to his, her or its Membership Interest to be sold hereunder, free and clear of
all liens, encumbrances or claims except as described on Schedule 4.3, and upon
payment therefore pursuant hereto, good and valid title to such Membership
Interest, free and clear of all liens, encumbrances or claims (other than those
created by Maverick) will pass to Maverick.
5.4 Brokers. There has been no broker or finder involved on behalf of
Hurricane in any manner in the negotiation leading up to the execution of this
Agreement or the consummation of any transactions contemplated hereby, and such
Member agrees to indemnify Maverick against, and hold Maverick harmless from,
any claim made by any party for a broker's or finder's fee or other similar
payment based upon any agreements, arrangements or understanding directly made
by such Member with such party.
5.5 Qualified Investors.
(a) Such Member is acquiring the Maverick Shares comprising the
consideration for their own account for investment only and not with a view
toward the public sale or distribution thereof and not with a view to or for
sale in connection with any distribution thereof.
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(b) Such Member is an "accredited investor" as that term is
defined in Rule 501 of the General Rules and Regulations under the Securities
Act of 1933, as amended (the "Securities Act"), and such Member is (i)
experienced in making investments of the kind described in this Agreement and
the related documents, (ii) able, by reason of his, her or its business and
financial experience of and the business and financial experience of his, her or
its professional advisors (if any) to protect his, her or its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iii) able to afford the entire loss of his, her or its
investment in the Maverick Shares.
(c) All subsequent offers and sales of the Maverick Shares by such
Member shall be made pursuant to registration of the Maverick Shares under the
Securities Act or pursuant to an exemption from registration.
(d) Such Member acknowledges that the Maverick Shares are being
offered and sold in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that
Maverick is relying upon the truth and accuracy of, and such Member's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of such Member set forth herein in order to determine the
availability of such exemptions and the eligibility of the Members to acquire
the Maverick Shares.
(e) Such Member and his, her or its advisor, if any, has reviewed
all filings made by Maverick with the United States Securities and Exchange
Commission, including but not limited to Maverick's Form 10-KSB for Maverick's
fiscal year ended August 31, 2004, Such Member and his, her or its advisor, if
any, has read the Risk Factors set forth in such Form 10-KSB and understands
that his, her or its investment in the Maverick Shares involves a high degree of
risk. In addition to the foregoing, such Member and his, her or its advisor, if
any, has been furnished with materials relating to the business, finances and
operations of Maverick and materials relating to the offer and sale of the
Maverick Shares which have been requested by such Member, and has been afforded
the opportunity to ask questions of Maverick relating to such filings and
materials or any other matter, and has received complete and satisfactory
answers to any such inquiries.
(f) The Shareholders understand that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Maverick Shares.
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(g) Such Member acknowledges that: (i) the Maverick Shares have
not been and are not being registered under the provisions of the Securities Act
and may not be transferred unless (A) subsequently registered thereunder or (B)
such Member has delivered to Purchaser an opinion of counsel, reasonably
satisfactory in form, scope and substance to Maverick, to the effect that the
Maverick Shares to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration; and (ii) any sale of the Maverick Shares
made in reliance on Rule 144 promulgated under the Securities Act may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Maverick Shares under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the Securities Act, may require compliance
with some other exemption under the Securities Act or the rules and regulations
of the Securities and Exchange Commission ("SEC") promulgated thereunder.
(h) Such Member acknowledges and agrees that until such time as
the Maverick Shares have been registered under the Securities Act, the Maverick
Shares shall bear a restrictive legend in substantially the following form:
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR
OTHER EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF MAVERICK
Maverick represents and warrants to the Members as follows:
6.1 Organization and Good Standing. Maverick is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada and is in good standing as a foreign corporation in each other
jurisdiction where the properties owned, leased or operated or the business
conducted by it requires such qualification.
6.2 Corporate Authority. Maverick has full authority to execute and to
perform this Agreement in accordance with its terms; the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
does not and will not result in a breach,
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violation or default or give rise to an event which, with the giving of notice
or after the passage of time, would result in a breach, violation or default of
any of the terms or provisions of Maverick's Certificate of Incorporation,
By-Laws or of any indenture, agreement, judgment, decree or other instrument or
restriction to which Maverick is a party or by which Maverick, Maverick Shares
or any of its assets may be bound or affected; the execution and delivery of
this Agreement have been and, as of the Closing Date, the consummation of the
transactions contemplated hereby will have been, duly authorized, and no
authorization or approval, whether of the Members or directors of Maverick or of
governmental bodies or otherwise, will be necessary in order to enable Maverick
to enter into and perform same; and this Agreement constitutes a valid and
binding obligation enforceable against Maverick in accordance with its terms.
6.3 No Untrue Representation or Warranty. No representation or warranty
made by Maverick contained in this Agreement or any attachment, statement,
schedule, exhibit, certificate or instrument furnished or to be furnished to the
Members by Maverick pursuant hereto, or otherwise furnished in writing by
Maverick in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make the statements contained herein or
therein not misleading.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
7.1 Survival of Representations and Warranties. The representations and
the warranties of Maverick shall expire, merge and terminate at Closing. The
representations and warranties of the Founders and the Members shall survive for
a period of one year following the Closing Date.
7.2 Indemnity by the Founders Against Claims.
The Founders, jointly and severally, agree to indemnify and hold
Maverick harmless from and against the following:
(a) Any and all liabilities, losses, damages, claims, costs, taxes
and expenses of Hurricane of any nature, whether absolute, contingent or
otherwise, which are not specifically disclosed to Maverick in this Agreement or
the Schedules thereto;
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(b) Any and all liabilities, losses, damages, claims, costs and
reasonable expenses suffered by Maverick (whether awarded against Maverick or
paid by Maverick in settlement of a claim or otherwise suffered), resulting from
any misrepresentation, breach of any warranty, or non-fulfillment of any
covenant or agreement on the part of the Founders contained in this Agreement or
in any written statement, attachment, schedule, exhibit or certificate furnished
or to be furnished by Hurricane or the Founders to Maverick pursuant hereto or
in connection with the transactions contemplated hereby; and
(c) Any and all actions, suits, proceedings, demands, assessments
or judgments, costs and reasonable expenses (including reasonable attorneys'
fees) incident to any of the foregoing.
7.3 Indemnity by Members Against Claims.
Each of the Members, severally and not jointly, agrees to indemnify and
hold Maverick harmless from and against the following:
(a) Any and all liabilities, losses, damages, claims, costs and
reasonable expenses suffered by Maverick, (whether awarded against Maverick or
paid by Maverick in settlement of a claim or otherwise suffered), resulting from
any misrepresentation, breach of any warranty, or non-fullfillment of any
covenant or agreement on the part of such Member contained in this Agreement or
in any written statement, attachment, schedule, exhibit or certificate furnished
or to be furnished by such Member to Maverick pursuant hereto or in connection
with the transactions contemplated hereby; and
(b) Any and all actions, suits, proceedings, demands, assessments
or judgments, costs and reasonable expenses (including reasonable attorneys'
fees) incident to any of the foregoing.
7.4 Notice of Claim, Assumption of Defense and Settlement of Claims.
(a) Any person entitled to indemnification under this Agreement
(the "Indemnitee") shall promptly give notice (an "Indemnification Notice") in
accordance with Section 11.1 hereof to the parties required to provide
indemnification (collectively the "Indemnifying Party") after the Indemnitee
shall have knowledge of any demands, claims, actions or causes of action
(singly, a "Claim" and hereinafter referred to collectively, as "Claims") which
might give rise to a Claim by the Indemnitee against the Indemnifying Party
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stating the nature and basis of said Claim and amount thereof, to the extent
known. A failure to give notice hereunder shall not relieve the Indemnifying
Party from any obligation hereunder unless (x) such failure to give notice shall
materially and adversely affect the Indemnifying Party's ability to defend the
Claim; or (y) notice is received after the expiration of the applicable survival
period specified in this Agreement. Each such Indemnification Notice shall
specify in reasonable detail the nature and amount of the Claim and shall, to
the extent available to the Indemnitee, include such supporting documentation as
shall reasonably be necessary to apprise the Indemnifying Party of the facts
giving rise to the Claim. After the delivery of an Indemnification Notice
certifying that the Indemnitee has incurred or had asserted against it any
liabilities, claims, losses, damages, costs or expenses for which indemnity may
be sought in accordance with the terms of this Article VII (the "Damages"), the
Indemnitee shall make a claim in an amount equal to the incurred Damages or
asserted Damages, as the case may be (which, in the case of any asserted Damages
shall include the Indemnitee's reasonably estimated cost of the defense thereof,
hereinafter the "Estimated Defense Costs") and the Indemnifying Party shall
promptly reimburse the Indemnitee for the Damages for which the Indemnitee has
incurred and not been indemnified. In the event the Indemnifying Party shall
dispute the nature or amount of the Damages asserted, any such dispute shall be
resolved in accordance with the dispute resolution provisions contained in
Section 7.5 hereof.
(b) With respect to any third party Claims made subsequent to the
Closing Date, and prior to the expiration of the applicable survival period, the
following procedures shall be observed:
(i) Promptly after delivery of an Indemnification Notice in
respect of a Claim, the Indemnifying Party may elect, by written notice
to the Indemnitee, to undertake the defense thereof with counsel
reasonably satisfactory to the Indemnitee and at the sole cost and
expense of the Indemnifying Party. In the event the Indemnifying Party
elects to assume the defense of any such Claim, it shall not, except as
provided in Section 7.4(b)(ii) be liable to the Indemnitee for any
legal fees, costs and expenses incurred by the Indemnitee after the
date thereof, in connection with such defense. The Indemnitee shall
have the right to participate in, but not control the conduct of, any
such action through counsel of its own choosing, at its own expense.
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(ii) Unless and until the Indemnifying Party assumes the
defense of the third party Claim as provided in Section 7.4(b)(i), or
in the event the Indemnifying Party ceases to diligently conduct such
defense, the Indemnified Party may defend against the third party Claim
in any manner it reasonably may deem appropriate, at the expense of the
Indemnifying Party.
(iii) Failure by the Indemnifying Party to notify the
Indemnitee of its election to defend any such action within 45 days
after notice thereof shall have been given, shall be deemed a waiver by
the Indemnifying Party of its right to defend such action. If the
Indemnifying Party assumes the defense of any such Claim, its
obligations hereunder as to such Claim shall be limited to taking all
steps necessary in the defense or settlement of such Claim and to
holding the Indemnitee harmless from and against any and all losses,
damages, expenses and liabilities awarded in any such proceeding or
arising out of any settlement approved by the Indemnifying Party or any
judgment in connection with such Claim.
(iv) The Indemnifying Party shall not, in the defense of any
such Claim, 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 Indemnitee (which consent shall not be unreasonably
withheld, conditioned or delayed), except that no consent of the
Indemnitee shall be required if the judgment or proposed settlement (x)
involves only the payment of money damages to be paid by the
Indemnifying Party and does not impose any injunction or other
equitable relief upon the Indemnitee, (y) includes as an unconditional
term thereof a full dismissal of the litigation or proceeding with
prejudice and the delivery by the claimant or plaintiff to the
Indemnitee of a release from all liability with respect to such claim
or litigation, and (z) does not by its terms attribute liability to the
Indemnitee.
(v) In no event will the Indemnitee 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, which consent shall not be unreasonably withheld, conditioned or
delayed.
(vi) The Indemnitee will cooperate fully with the Indemnifying
Party in the conduct of any proceeding as to which the Indemnifying
Party assumes the defense hereunder. Such cooperation shall include (a)
providing the Indemnifying Party and its counsel access to all books
and records of the Indemnitee to the extent reasonably related to such
proceeding, (b) furnishing information about the Indemnitee to the
Indemnifying Party and their counsel, (c) making employees available to
counsel to the Indemnifying Party, and (d) preserving the existence of
and maintaining all books and records of the Indemnitee that may
reasonably be deemed to be potentially relevant to any such proceeding
until the proceeding is finally concluded.
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7.5 Dispute Resolution. In the event a dispute arises under this
Agreement, such disputes shall be resolved in the manner set forth in this
Section 7.5.
(a) If a dispute arises under this Agreement, Maverick and the
Members may invoke the dispute resolution procedure set forth in this Section
7.5 by giving written notice to the other party. The parties shall enter into
discussions concerning this dispute. If the dispute is not resolved as a result
of such discussion in 10 days, an attempt will be made to resolve the matter by
a formal nonbinding mediation with an independent neutral mediator agreed to by
the parties. If the parties cannot agree on a mediator within a period of 10
days after expiration of the 10 day period for resolution by discussion, then
either party may apply to any court of competent jurisdiction for appointment of
a mediator, which appointment shall be binding and nonappealable. Upon
commencement of the mediation process, the parties shall promptly communicate
with respect to a procedure and schedule for the conduct of the proceeding and
for the exchange of documents and other information related to the dispute. The
mediation process shall be deemed ended if the dispute has not been resolved
within 30 days after appointment of the mediator.
(b) All claims, disputes or other matters in question between the
parties to this Agreement arising out of or relating to this Agreement which are
not resolved by mediation in accordance with Section 7.5(a) within 30 days after
appointment of the mediator shall be submitted for, subject to and decided by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association currently in effect as of the date of this Agreement
("AAA Rules"), except to the extent those rules are inconsistent with this
Section 7.5. Any arbitration must be held in Broward County, Florida by a single
arbitrator mutually selected by the parties hereto or, if the parties hereto
cannot agree on the appointment of such arbitrator within 10 days following the
date notice of the dispute is given by a party to the adverse party, an
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arbitrator selected according to the AAA Rules. The arbitrator's award shall be
final, conclusive and binding upon all parties to this Agreement, and judgment
may be entered upon it in accordance with the Federal Arbitration Act in any
court of general jurisdiction or any United States District Court in the state
in which the arbitration is held. The arbitrator shall be required to provide in
writing to the parties the basis for the award or order of such arbitrator, and
a court reporter shall record all hearings (unless otherwise agreed to by the
parties), with such record constituting the official transcript of such
proceedings. Maverick and the Members specifically desire this Arbitration
clause to be governed by the United States Federal Arbitration Act, and not by
the arbitration laws of any state.
(c) In the event of arbitration filed or instituted between the
parties pursuant to this Section 7.5, the prevailing party will be entitled to
receive from the adverse party all costs, damages and expenses, including
reasonable attorney's fees, incurred by the prevailing party in connection with
that action or proceeding, whether or not the controversy is reduced to judgment
or award. The prevailing party will be that party who is determined by the
arbitrator to have prevailed on the major disputed issues.
7.6 Limitations on Liability.
(a) The obligations of the Indemnifying Party with respect to any
indemnifiable Claim are subject to the limitation that an Indemnitee may not
make or bring any claim against an Indemnifying Party in respect of any such
indemnifiable Claim unless the aggregate amount of all indemnifiable damages
from time to time incurred by all Indemnitees collectively exceeds Twenty Five
Thousand Dollars ($25,000) (the "Basket Amount"). Once the aggregate amount
exceeds the Basket Amount, then the aggregate amount of Damages shall be
indemnifiable.
(b) The parties to this Agreement agree that indemnifiable Claims
arising under this Agreement shall be limited to Five Hundred Thousand Dollars
($500,000)
7.7 Right to Set Off. Notwithstanding anything to the contrary set
forth in this Agreement or any Schedule hereto, in the event that Maverick shall
have a Claim against any Member for which Maverick has not been fully and
completely indemnified as contemplated above, Maverick shall have the right to
set off the amount of such Claim against such Member, against any amounts due to
such Member hereunder or otherwise.
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7.8 Remedies Cumulative. The remedies provided to an Indemnified Party
herein shall be cumulative and shall not preclude an Indemnified Party from
asserting any other rights or seeking any other remedies against an Indemnitor
or his or its respective heirs, successors or assigns. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent or subsequent assertion or employment of any other appropriate right
or remedy.
ARTICLE VIII
COVENANTS
8.1 Due Diligence Investigation by Maverick. During the period from the
date of this Agreement to and including the Closing Date, the Members shall
cause Maverick to be given free access at reasonable times and during normal
business hours, to the offices, plants, records, files, minute books, books of
account and copies of tax returns of Hurricane for the purpose of conducting an
investigation of the financial condition, legal status, liabilities, contracts,
sales, administration, business operations, property and title thereto,
litigation, patents, trademarks, copyrights and all other matters relating to
the business, properties and assets of Hurricane, through Maverick's employees,
independent accountants or other outside consultants. The Members shall cause
Hurricane's personnel to reasonably assist Maverick in making such
investigation. During such investigation, Maverick shall have the right to make
copies of such records, files, tax returns and other materials as it may deem
advisable.
8.2 Board Membership. Maverick shall nominate V. Xxx Xxxxxx as a member
of its board of directors in connection with any meeting of its shareholders in
which directors are to be elected, subject to Maverick's by-laws, all applicable
law, and the requirement that Xx. Xxxxxx be the Chief Executive Officer of
Maverick at the time of such nomination.
8.3 Further Assurances. Each of the parties hereto agree that, at any
time after the Closing Date, upon the request of the other, they will do,
execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged and delivered, all such further acknowledgments, deeds,
assignments, bills of sale, transfers, conveyances, instruments, consents and
assurances as may reasonably be required for the better assuring and confirming
to the other, its successors and assigns, absolute ownership to the respective
shares to be sold hereunder.
8.4 Cooperation. The parties shall cooperate with each other fully with
respect to actions required or requested to be undertaken with respect to tax
audits, administrative actions or proceedings, litigation and any other matters
that may occur after the Closing Date, and each party shall maintain and make
available to the other party upon request all corporate, tax and other records
reasonably required or requested in connection with such matters.
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ARTICLE IX
CONDUCT OF BUSINESS PENDING THE CLOSING
Between the date hereof and the Closing, and except as otherwise
expressly consented to in writing in advance or approved in writing in advance
by Maverick:
9.1 Certain Changes. Except as permitted by this Agreement, without the
prior written consent of Maverick, the Members agree to not cause Hurricane to:
(a) Borrow or agree to borrow any funds or incur, or assume or
become subject to, whether directly or by way of guarantee or otherwise, any
material obligation or liability (absolute or contingent);
(b) Pay, discharge or satisfy any material claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and consistent with
past practice of liabilities or obligations reflected or reserved against in the
Balance Sheet or thereafter incurred in accordance with this Agreement;
(c) Prepay any obligation having a fixed maturity of more than 90
days from the date such obligation was issued or incurred;
(d) Permit or allow any of its material property or assets (real,
personal or mixed, tangible or intangible) to be subjected to any lien;
(e) Cancel any material debts or waive any claims or rights or
sell, transfer, or otherwise dispose of any of its properties or assets;
(f) Grant any material increase in the compensation of officers or
employees, institute or amend any sales compensation plan, severance plan or
other arrangement for its officers or employees, or enter into any plan or
agreement with respect thereto;
(g) Make any capital expenditures or commitments for additions to
or replacement of property, plant, equipment or intangible capital assets;
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(h) Pay, loan or advance any material amount to, or sell, transfer
or lease any material properties or assets to, or enter into any agreement or
arrange with, any of its employees, officers or directors or any affiliate
thereof, except for directors fees and compensation to employees, officers or
directors at rates not exceeding rates consistent with prior years;
(i) Issue, or grant any options with respect to the issuance of,
any shares of its capital stock, or purchase shares of capital stock or make any
equity investment in, or agree to purchase or make any equity investment in, any
other entity, corporate or otherwise;
(j) Declare, set aside or pay any dividend or other distribution
of any assets of any kind whatsoever with respect to any shares of the capital
stock of Hurricane, or redeem, purchase or otherwise acquire, directly or
indirectly, any shares of the capital stock of Hurricane; or
(k) Agree, whether in writing or otherwise, to do any of the
foregoing.
9.2 Contracts. The Founders agree to not cause Hurricane to enter
into any contract or commitment, or purchase any supplies or services or sell
any assets, except normal contracts or commitments for the purchase of, and
normal purchases of, supplies or services made in the usual and ordinary course
of business, consistent with the past practice of Hurricane, and not in
violation of any other more restrictive provision of this Article IX. In
addition, and not in limitation of the foregoing, the Founders agree to not
cause Hurricane to take any actions to modify or amend any of the documents
comprising Assets without the express prior written consent of Maverick.
9.3 Insurance: Property. The Founders agree to cause Hurricane to
maintain adequate insurance against all ordinary and insurable risks with
respect to all property, real, personal and mixed, owned or leased by them; and
all such property shall be used, operated, maintained and repaired in a careful
and reasonably efficient manner.
9.4 Maintain Books. The Founders agree to cause Hurricane to
maintain its books, accounts and records in accordance with generally accepted
accounting principals applied on a basis consistent with prior years
9.5 Consents and Waivers Without Any Condition. The Founders agree
to not cause Hurricane to enter into any agreement or understanding, not earlier
approved in writing by Maverick.
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ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination. The transactions contemplated herein may
be terminated and/or abandoned at any time, but not later than the Closing:
(a) By mutual written agreement of Maverick and the Members;
(b) By Maverick or the Members if the Closing shall not have
occurred on or prior to April 1, 2005;
(c) By Maverick in its sole discretion from the date of this
Agreement to and including the date 10 business days from the date of this
Agreement, but no later than the Closing Date, if any schedule delivered by the
Members annexed to or other representation made by them herein, contains a
misstatement or omission that could reasonably be determined by Maverick to have
an effect that is mutually adverse to the business, clients, properties, results
of operations or financial condition of Hurricane.
10.2 Procedure upon Termination. In the event of termination and
abandonment pursuant to Section 10.1 hereof, written notice thereof shall
forthwith be given to the other parties hereto and the transactions contemplated
by this Agreement shall be terminated and/or abandoned, without further action
by Maverick, the Founders or the Members. If the transactions contemplated by
this Agreement are terminated/or abandoned as provided herein, each party will
redeliver all documents, work papers and other material of any other party
relating to the transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same. No party hereto
who shall have satisfied in full all of the obligations of such party under this
Agreement which were to have been satisfied by such party prior to the Closing
and who shall have not breached any representation, warranty, covenant or
agreement of such party contained in this Agreement shall have any liability or
further obligation to any other party to this Agreement.
ARTICLE XI
TAX MATTERS
The following provisions shall govern the allocation of responsibility
as between Maverick and the Founders for certain tax matters following the
Closing Date:
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11.1 Tax Returns.
(a) The Founders shall have the exclusive authority and obligation
to prepare, execute on behalf of Hurricane and timely file, or cause to be
prepared and timely filed, all Tax Returns of Hurricane that are due with
respect to any taxable year or other taxable period ending prior to or ending on
and including the Closing Date, including but not limited to final federal,
state and local partnership income tax returns as a result of the termination of
Hurricane as a partnership under Section 708 of the Internal Revenue Code of
1986, as amended. Such authority shall include, but not be limited to, the
determination of the manner in which any items of income, gain, deduction, loss
or credit arising out of the income, properties and operations of the Companies
shall be reported or disclosed in such Tax Returns; provided, however, that such
Tax Returns shall be prepared by treating items on such Tax Returns in a manner
consistent with the past practices with respect to such items. All such Tax
Returns shall be subjected to Maverick's right of review and comment.
(b) Except as provided in Section 11.1(a), Maverick shall have the
exclusive authority and obligation to prepare and timely file, or cause to be
prepared and timely filed, all Tax Returns of Hurricane; provided, however, with
respect to Tax Returns to be filed by Maverick pursuant to this Section 11.1 for
taxable periods beginning before the Closing Date and ending after the Closing
Date, (i) items set forth on such Tax Returns shall be treated in a manner
consistent with the past practices with respect to such items and (ii) such Tax
Returns shall be subject to Founders' right of review and comment. Such
authority shall include, but not be limited to, the determination of the manner
in which any items of income, gain, deduction, loss or credit arising out of the
income, properties and operations of Hurricane shall be reported or disclosed on
such Tax Returns.
11.2 Controversies. Maverick shall promptly notify the Founders in
writing upon receipt by Maverick or any affiliate of Maverick (including
Hurricane after the Closing Date) of written notice of any inquiries, claims,
assessments, audits or similar events with respect to Taxes relating to a
taxable period ending prior to or ending on and including the Closing Date for
which the Founders may be liable under this Agreement (any such inquiry, claim,
assessment, audit or similar event, a "Tax Matter"). The Founders, or their duly
appointed representative (the "Representative"), at its expense on behalf of the
Founders, shall have the authority to represent the interests of Hurricane with
respect to any Tax Matter before the Internal Revenue Service, any other taxing
authority, any other governmental agency or authority or any court and shall
have the sole right to control the defense, compromise or other resolution of
any Tax Matter, including responding to inquiries, filing Tax Returns and
contesting, defending against and resolving any assessment for additional Taxes
or notice of Tax deficiency or other adjustment of Taxes of, or relating to, a
Tax Matter; provided, however, that the Founders shall not enter into any
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settlement of or otherwise compromise any Tax Matter that affects or may affect
the Tax liability of Maverick, Hurricane or any affiliate of the foregoing for
any period ending after the Closing Date, including the portion of a period
beginning before the Closing Date and ending after the Closing Date (the
"Overlap Period") that is after the Closing Date, without the prior written
consent of Maverick. The Founders or Representative shall keep Maverick fully
and timely informed with respect to the commencement, status and nature of any
Tax Matter. The Founders shall, in good faith, allow Maverick, at its sole
expense, to make comments to the Founders or the Representative, regarding the
conduct of or positions taken in any such proceeding.
Except as otherwise provided in this Section 11.2, Maverick shall have
the sole right to control any audit or examination by any taxing authority,
initiate any claim for refund or amend any Tax Return, and contest, resolve and
defend against any assessment for additional Taxes, notice of Tax deficiency or
other adjustment of Taxes of, or relating to, the income, assets or operations
of Hurricane for all taxable periods; provided, however, that Maverick shall
not, and shall cause its affiliates (including Hurricane) not to, enter into any
settlement of any contest or otherwise compromise any issue with respect to the
portion of the Overlap Period ending on or prior to the Closing Date without the
prior written consent of the Representative, which consent shall not be
unreasonably withheld.
11.3 Transfer Taxes. All transfer, documentary, stamp, registration,
sales and use, registration, stamp and similar Taxes and fees (including all
penalties and interest) imposed in connection with the sale of the Membership
Interests or any other transaction that occurs pursuant to this Agreement shall
be borne solely by the Members.
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11.4 Amended Tax Returns. Neither the Founders nor Hurricane shall file
or cause to be filed any amended Tax Return or claims for refund without the
prior written consent of Maverick, which consent shall not be unreasonably
withheld, delayed or conditioned, except for such amended Tax Returns or claims
for refund filed in connection with the resolution of any Tax Matter in
accordance with Section 11.2.
11.5 Indemnification.
(a) The Founders hereby covenant and agree to indemnify, defend
and hold harmless Maverick, its affiliates (including Hurricane) and the
successors to the foregoing (and their respective shareholders, officers,
directors, employees and agents) against (i) all Taxes, losses, claims and
expenses resulting from, arising out of, or incurred with respect to, any claims
that may be asserted by any party based upon, attributable to, or resulting from
the failure of any representation or warranty made with respect to Taxes in this
Agreement, including those made pursuant to Section 4.11 to be true and correct
as of the Closing Date, and (ii) all Taxes imposed on or asserted against the
properties, income or operations of Hurricane for all Pre-Closing Periods.
Maverick shall promptly give the Representative and its representatives written
notice of all Taxes, losses, claims and expenses which Maverick has reasonably
determined may give rise to a right of indemnification under this Section 11.5,
including a computation of the amount of the claimed indemnification with
sufficient detail and particularity to enable the Representative to reasonably
determine the amount of such required indemnification.
(b) In the event that Maverick fails to notify the Founders with
respect to a Tax Matter in accordance with the provisions of Section 11.2, the
Founders shall not be obligated to indemnify Maverick under Section 11.5 to the
extent that such failure to notify the Founders has a material adverse effect on
the Founders ability to defend against such Tax Matter.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered personally,
sent by telex or facsimile transmission or sent by certified, registered or
express trail, postage prepaid. Any such notice shall be deemed given when so
delivered personally or when sent by facsimile transmission or, if mailed by
certified or registered mail, 10 days after the date of deposit in the United
States mail, postage prepaid, if addressed:
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(a) In the case of Maverick: Maverick Oil and Gas, Inc.
0000 Xxxxxx Xxxxxx, 0xx Xxxxx Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx, Esq.
General Counsel
with a copy to:
Xxxx Xxxxxx, Esq.
Xxxxxx & Xxxxx LLP
00 Xxxxxxx Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
(b) in the case of the Members' Agent:
V. Xxx Xxxxxx
0000 X. Xxx Xxxx Xxxxxxxxx
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxx Xxxxxxx, Esq.
Blank Rome LLP
Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX. 00000-0000
(c) in the case of the Members:
To the address of such Member listed on the books and
records of Hurricane as of the Closing Date.
or to such other address or to such other person as Maverick or the Members,
shall have last designated by written notice given as herein provided.
12.2 Members' Agent. The Members hereby appoint V. Xxx Xxxxxx as the
Members' Agent, solely for the limited purpose of voting the Maverick Shares of
the Members under Section 5 of the Escrow Agreement. The Founders pursuant to
this Agreement,
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hereby appoint V. Xxx Xxxxxx as the Members' Agent, who shall be the
Founders' representative and attorney-in-fact for each Founder. The Members'
Agent shall have the authority to act for and on behalf of each of the Founders,
including without limitation, to amend this Agreement, to give and receive
notices and communications, waivers and consents under this Agreement, to act on
behalf of the Founders with respect to any matters arising under this Agreement
or the agreements attached hereto as exhibits, including the Escrow Agreement
and the Registration Rights Agreement, and to authorize delivery to Maverick any
necessary documents or property. The Members' Agent shall act as the exclusive
negotiating party for the Founders under this Agreement and all agreements
attached hereto as exhibits. In addition to and in furtherance of the foregoing,
the Members' Agent shall have the right to (i) employ accountants, attorneys and
other professionals on behalf of the Founders, and (ii) incur and pay all costs
and expenses related to (a) the performance of its duties and obligations as the
Members' Agent hereunder, and (b) the interests of the Founders under this
Agreement and the agreements attached hereto as exhibits. The Members' Agent
shall for all purposes be deemed the sole authorized agent of the Founders until
such time as the agency is terminated with notice to Maverick. Such agency may
be changed by the Founders from time to time upon no less than 30 days prior
written notice to Maverick; provided, however, that the Members' Agent may not
be removed unless a majority of the Founders agree to such removal and to the
identity of the substituted Members' Agent. Any vacancy in the position of the
Members' Agent may be filled by approval of the majority of Founders.. No bond
shall be required of the Members' Agent, and the Members' Agent shall not
receive compensation for its services. Notices or communications to or from the
Members' Agent shall constitute notice to or from each of the Founders during
the agency.
12.3 Modification. This Agreement and the Exhibits and Schedules
annexed hereto contain the entire agreement between the parties hereto and there
are no agreements, warranties or representations that are not set forth herein.
All prior negotiations, representations, warranties, agreements and
understandings are superseded hereby. This Agreement may not be modified or
amended except by an instrument in writing duly signed by or on behalf of the
parties hereto and dated on or subsequent to the date hereof.
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12.4 Governing Law and Dispute Resolution. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Florida applicable to agreements made and to be performed entirely within the
State. The Members hereby irrevocably consent and submit to the jurisdiction of
any Florida State or Federal court located in Broward County, Florida over any
action or proceeding arising out of any dispute directly involving this
Agreement, and between Maverick and a Member. In this regard, Maverick and the
Members irrevocably agree, not to commence any action or proceeding arising out
of any dispute directly involving this Agreement, and between Maverick and a
Member in any other jurisdiction. The Members further irrevocably consent to the
service of process in any such action or proceeding by the mailing of a copy of
such process to the Member.
12.5 Binding Effect; Assignment. This Agreement shall be binding upon
the parties and inure to the benefit of the successors and assigns of the
respective parties hereto; provided, however, that this Agreement and any and
all rights hereunder may not be assigned by the Members without the prior
written consent of Maverick, which may be withheld for any reason.
12.6 Release. In consideration of the Purchase Price, and for other
good and valuable consideration, the sufficiency of which is hereby
acknowledged, each of the Members hereby irrevocably releases and discharges as
of the Closing Date Hurricane, and its successors and assigns, from any and all
claims, demands, causes of action each Member may have, or may hereafter have,
against Hurricane arising contemporaneously with, or prior to, the Closing Date.
12.7 Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
12.8 Paragraph Headings. The paragraph headings in this Agreement are
for convenience of reference only and shall not be deemed to alter or affect any
provision hereof.
12.9 Transaction Expenses. Notwithstanding anything else in this
Agreement to the contrary, the parties hereto shall each be responsible for the
payment of any and all of its, his or her own expenses, including without
limitation, the fees and expenses of counsel, accountants and other advisers,
arising out of or relating directly or indirectly to the transactions
contemplated by this Agreement, whether or not such transactions are consummated
in whole or in part.
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12.10 Waiver. The waiver of one breach or default hereunder shall not
constitute the waiver of any other or subsequent breach or default.
12.11 No Agency. This Agreement shall not constitute any party the
legal representative or agent of the other, nor shall any party have the right
or authority to assume, create, or incur any liability or any obligation of any
kind, express or implied, against or in the name of or on behalf of the other
party.
12.12 Entire Agreement. This Agreement sets forth the entire
understanding of the parties hereto relating to the subject matter hereof and
thereof and supersedes all prior agreements and understanding among or between
any of the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement the day and date first above written.
MAVERICK OIL AND GAS, INC. MEMBERS:
/s/ V. Xxx Xxxxxx
By: /s/ Xxxxxxx Xxxxxxx -------------------------------
---------------------------- V. Xxx Xxxxxx
Name: Xxxxxxx Xxxxxxx /s/ Xxxx Xxxxx
Title: President -------------------------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxxxxx
-------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxxx X. XxXxxx
-------------------------------
Xxxxx X. XxXxxx
/s/ Xxxxx Xxxxxxxxx
-------------------------------
Xxxxx Xxxxxxxxx
/s/ Xxxxxxxxx Xxxxx' II
-------------------------------
Xxxxxxxxx Xxxxx' II
/s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx
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