SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "Agreement") is made and entered into as
of _____, 2010 by and among Sun River Energy, Inc., a Colorado corporation
("Buyer"), and Xxxxx X. Xxxxxxx, Xx. ("Xxxxxxx") and Xxxxxxxx X. Xxxxxxx
("Xxxxxxx"), residents of the State of Texas (individually a "Seller" and
collectively, the "Sellers"). Certain other capitalized terms used in this
Agreement are defined in the Definitions Exhibit attached hereto.
Recitals:
(a) Sellers are record and beneficial owners of all of the issued and
outstanding shares of PC Operating Texas Inc., a Texas corporation (the
"Company").
(b) Buyer wishes to purchase from Sellers and Sellers are willing to sell
to Buyer all of the issued and outstanding shares of the Company (the "Purchased
Interests") upon the terms hereof and in connection with entering into
Employment Agreements with each of Xxxxxxx and Xxxxxxx in substantially the form
attached hereto as Exhibit A and Exhibit B (each, an "Employment Agreement" and
collectively, the "Employment Agreements") and the Purchase and Sale Agreement
by and between FTP Oil and Gas LP and Buyer in substantially the form attached
hereto as Exhibit C (the "PSA").
Agreement:
In consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties to this Agreement, intending to be
legally bound, hereby agree as follows:
SECTION 1. PURCHASE AND SALE OF PURCHASED INTERESTS; CLOSING
1.1 Purchase and Sale of the Purchased Interests. Upon the terms and subject to
the conditions of this Agreement and on the basis of the representations,
warranties, covenants and agreements contained herein, at the Closing, the
Sellers will sell, transfer, assign, convey and deliver the Purchased
Interests to Buyer, free and clear of any Encumbrances, and Buyer will
purchase and acquire the Purchased Interests from the Sellers.
1.2 Purchase Price. The purchase price (the "Purchase Price") for the Purchased
Interests shall consist of (a) the issuance of [125,000] shares of Buyer
Common Stock to Xxxxxxx (the "Xxxxxxx Stock Consideration") and (b) the
issuance of [125,000] shares of Buyer Common Stock to Xxxxxxx (the "Xxxxxxx
Stock Consideration", and together with the Xxxxxxx Stock Consideration,
the "Stock Consideration").
1.3 Closing. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of PC Operating
Texas Inc., 0000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx, at 10:00 a.m.
on [______], 2010 (the "Closing Date"), or at such other time and place as
Buyer and Sellers agree.
SECTION 2. REPRESENTATIONS AND WARRANTIES RELATING TO THE SELLERS
Each Seller severally (and not jointly) represents and warrants to Buyer,
with respect to such Seller only, as follows:
2.1 Authorization. Each Seller is an individual residing in Texas and has all
requisite legal capacity to execute and deliver this Agreement and the
Related Agreements to which it is a party, and to consummate the
transactions contemplated hereby and thereby. This Agreement and each
Related Agreement to which the Sellers are party have been duly authorized
and duly executed and delivered by each Seller and constitute the legal,
valid and binding obligation of such Seller, enforceable against such
Seller in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency, reorganization, moratorium
and the enforcement of creditors' rights generally, and (ii) rules of law
governing specific performance, injunctive relief and other equitable
remedies.
2.2 No Seller Conflicts or Consents. Each Seller's execution and delivery of
this Agreement does not and will not, and the performance thereof by such
Seller will not: (i) conflict with or violate any Contract to which Seller
is a party or any currently existing Legal Requirement or Order applicable
to such Seller or by which such Seller is bound or affected; or (ii) result
in or constitute (with or without notice or lapse of time) any breach of or
default under, or result (with or without notice or lapse of time) in the
creation of any Encumbrance on any of the Purchased Interests held by such
Seller pursuant to, any Contract to which such Seller is a party or by
which such Seller is bound or affected, except where such conflict,
violation, breach, default of Encumbrance would not reasonably be expected
to have a Material Adverse Effect on the Sellers
2.3 Title to Purchased Interests. Each Seller owns beneficially and of record
(free and clear of any Encumbrances) to, the Membership Interests (as
defined below) described opposite such Seller's name in Part 3.3(b)(i), and
such Seller does not directly or indirectly own any Membership Interests or
other securities of the Company, or any option, warrant or other right to
acquire (by purchase, conversion or otherwise) any additional Membership
Interests or other securities of the Company.
2.4 Legal Proceedings - Sellers.
(a) Each Seller is not subject to any Legal Requirement or Order
that would reasonably be expected to have a Material Adverse Effect on
the Sellers.
(b) There is no Legal Proceeding pending, and, to such Seller's
Knowledge, no Person has threatened to commence any Legal Proceeding,
that would reasonably be expected to have a Material Adverse Effect on
the Sellers.
2.5 Restricted Securities. Each Seller understands that:
(a) the shares of Buyer Common Stock comprising the Stock
Consideration (the "Shares") to be delivered pursuant to this
Agreement are "restricted securities" under the federal securities
laws of the United States inasmuch as they have not been registered
under the Securities Act, and shall be acquired from Buyer in a
transaction exempt from registration under the Securities Act pursuant
to Section 4(2) thereof and Regulation D promulgated thereunder;
(b) the Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is
exempt from registration. Each Seller represents that he is familiar
with Rule 144 promulgated under the Securities Act, as currently in
effect, and understands the resale limitations imposed thereby and by
the Securities Act;
(c) the Shares will bear a legend to such effect; and
(d) Buyer will cause its transfer agent to make a notation on its
transfer books to such effect.
2.6 Accredited Investor; Purchase Entirely for Own Account. Each
Seller is an accredited investor as defined in Regulation D under
the Securities Act. Each Seller is acquiring the Shares pursuant
to this Agreement for investment only for his own account, not as
a nominee or agent, and not with a view to the resale or
distribution of any part thereof and shall not offer to sell or
otherwise dispose of any of the Shares so acquired by each Seller
in violation of the registration requirements of the Securities
Act or the securities laws of any other jurisdiction applicable to
the transactions contemplated hereby. By executing this Agreement,
each Seller further represents that he does not have any Contract,
undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third
Person, with respect to any of the Shares.
2.7 Disclosure of Information.
(a) Each Seller has conducted his own independent investigation,
review and analysis of the business, operations, assets, liabilities,
results of operations, financial condition and prospects of Buyer; and
(b) Each Seller acknowledges that, except as set forth in this
Agreement, none of Buyer nor any of its Affiliates makes or has made
any representation or warranty, either express or implied, as to the
accuracy or completeness of any of the information provided or made
available to any Seller or any of his Affiliates.
2.8 Investment Experience. Each Seller has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits
and risks of the investment in the Shares. Each Seller is able to bear the
economic risk of his investment in the Shares for an indefinite period of
time and can afford a complete loss of his investment in the Shares.
2.9 General Solicitation. No Seller was offered or sold the Shares, directly or
indirectly, by means of any form of general solicitation or general
advertisement.
2.10 Reliance. Each Seller understands and acknowledges that: (i) the Shares are
being offered and sold to him without registration under the Securities Act
in a transaction that is exempt from the registration provisions of the
Securities Act and (ii) the availability of such exemption depends in part
on, and Buyer will rely upon the accuracy and truthfulness of, the
foregoing representations and each Seller hereby acknowledges and consents
to such reliance.
2.11 Sale Valid. Assuming the accuracy of the representations and warranties of
Buyer contained in Section 4, the offer and sale --------- of the
Membership Interests will be exempt from the registration requirements of
the Securities Act, and will have been registered or qualified (or are
exempt from registration and qualification) under the registration, permit
or qualification requirements of all applicable state securities laws
within the required statutory periods. Neither Sellers nor any agent on
their behalf has solicited or will solicit any offers to sell or has
offered to sell or will offer to sell all or any part of the Membership
Interests to any person or persons so as to bring the sale of such
Membership Interests by Buyer within the registration provisions of the
Securities Act or any state securities laws.
SECTION 3. REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
The Sellers jointly and severally represent and warrant to
Buyer as follows (except as otherwise set forth on the numbered or lettered Part
of the Company Disclosure Schedule corresponding to each representation or
warranty below):
3.1 No Subsidiaries; Due Organization; Etc.
(a) The Company has no Subsidiaries and does not otherwise own any
capital stock of, or any equity interest of any nature in, any Entity. The
Company has not agreed, or is not otherwise obligated to make, or is not
bound by any Contract under which it may be obligated to make, any future
investment in, or capital contribution to, any other Entity.
(b) The Company is a Texas corporation duly organized, validly
existing and in good standing under the laws of the State of Texas. The
Company has all necessary power and authority: (i) to conduct its business
as now conducted; (ii) to own, lease and use its assets in the manner in
which its assets are currently owned, leased and used; and (iii) to perform
its obligations under all Company Contracts.
(c) The Company is not, and is not required to be qualified,
authorized, registered or licensed to do business as a foreign Entity in
any jurisdiction other than the jurisdictions identified in Part 3.1(c) in
which the failure to so qualify would reasonably be expected to have a
Material Adverse Effect on the Company.
3.2 Corporate Records. The Company has delivered to Buyer: (1) true, correct
and complete copies of the certificate of formation and company agreement
of the Company, in each case as amended and in effect on the date hereof;
(2) all membership interest records and registers of the Company; and (3)
all minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a
meeting) of the members of the Company (the items described in (1), (2) and
(3) above, collectively, the "Constituent Documents"). The books of
account, membership interest records, minute books and other records of the
Company are accurate, up-to-date and complete in all material respects, and
have been maintained in accordance with Legal Requirements and prudent
business practices.
3.3 Capitalization, Etc.
(a) The authorized equity interests of the Company consist solely of
membership interests (the "Membership Interests"). As of the date hereof,
all of the Membership Interests, including the Purchased Interests, are
held beneficially and of record by the Sellers. All of the issued and
outstanding Membership Interests, including the Purchased Interests, were
duly authorized for issuance and are validly issued, fully paid and
non-assessable and were not issued in violation of any purchase or call
option, right of first refusal, subscription right, preemptive right or any
similar rights. All of the issued and outstanding Membership Interests,
including the Purchased Interests, were issued in compliance in all
material respects with all applicable securities laws and other applicable
Legal Requirements.
(b) Part 3.3(b)(i) identifies each holder of Membership Interests in
the Company, the number of Membership Interests held by such holder, and
such holder's percentage share of all Membership Interests. Except as set
forth in Part 3.3(b)(ii): (A) none of the outstanding Membership Interests
are entitled or subject to any preemptive right, right of participation,
right of maintenance or any similar right and (B) none of the outstanding
Membership Interests are subject to any right of first refusal or similar
right in favor of the Company or any other Person.
(c) There are no existing options, warrants, calls, rights or
Contracts to which any Seller or the Company is a party requiring, and
there are no securities of the Company outstanding which upon conversion or
exchange would require, the issuance, sale or transfer of any additional
Membership Interests or other equity interests of the Company or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase Membership Interests, including the Purchased
Interests, or other equity interests of the Company. Except as set forth in
Part 3.3(c), there are no obligations, contingent or otherwise, of the
Company to provide material funds to, or make any material investment in
(in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any Person. Except as set
forth on Part 3.3(c), there are no outstanding equity appreciation, phantom
equity, profit participation or similar rights with respect to the Company.
There are no bonds, debentures, notes or other Indebtedness of the Company
having the right to vote or consent (or, convertible into, or exchangeable
for, securities having the right to vote or consent) on any matters on
which members (or other equity holders) of the Company may vote. Except for
the Company Agreement of the Company (the "Company Agreement"), there are
no voting trusts, irrevocable proxies or other Contracts or understandings
to which the Company or a Seller is a party or is bound with respect to the
voting of, registration of, consent of or restricting any Person from
purchasing, selling, pledging or otherwise disposing of (or granting any
option or similar right with respect to), any Membership Interests,
including the Purchased Interests.
(d) As of the Closing and after giving effect to the transactions
contemplated hereby, all of the Membership Interests, including the
Purchased Interests, will be held by Buyer free and clear of any
Encumbrances (other than restrictions imposed by securities laws applicable
to unregistered securities generally or pursuant to the Company Agreement).
3.4 Financial Controls. The Company maintains accurate books and records
reflecting its assets and liabilities and maintains proper and adequate
internal accounting controls for privately held companies of this size
within this industry so that: (i) transactions are executed with
management's authorization; (ii) transactions are recorded as necessary to
permit preparation of the financial statements of the Company and to
maintain accountability for the assets of the Company; (iii) access to the
assets of the Company is permitted only in accordance with management's
authorization; (iv) the reporting of the assets of the Company is compared
with existing assets at regular intervals; and (v) accounts, notes and
other receivables are recorded accurately, and proper and adequate
procedures are implemented to effect the collection thereof on a current
and timely basis.
3.5 Absence of Changes. Since inception, there has not been any Material
Adverse Effect on the Company, and no event has occurred or circumstance
has arisen that, in combination with any other events or circumstances,
could reasonably be expected to have a Material Adverse Effect on the
Company.
3.6 Title to Assets.
(a) The Company owns, and has good, valid and marketable title to all
assets purported to be owned by it. Except as set forth in Part 3.6(a), all
assets owned by the Company are owned by the Company free and clear of any
Encumbrances, except for Permitted Encumbrances.
(b) Part 3.6(b) identifies all assets of the Company that are being
leased or licensed to or by the Company (the "Company Leases").
3.7 Bank Accounts; Receivables; Loans to Employees.
(a) Sellers have provided accurate information with respect to each
account maintained by or for the benefit of the Company at any bank or
other financial institution including the name of the bank or financial
institution and the account number.
(b) Part 3.7(b) provides an accurate and complete breakdown and aging
of all accounts receivable, notes receivable and other receivables of the
Company as of March 31, 2010. None of the accounts receivable of the
Company are subject to any refunds, disputes, setoffs or counterclaims.
(c) There are no loans and advances made by the Company to any
employee, director, consultant or independent contractor, other than
routine travel advances made to employees in the ordinary course of
business and consistent with past practice.
3.8 Tangible Assets; Leaseholds.
(a) All material items of equipment and other tangible assets owned by
or leased to the Company are adequate for the uses to which they are being
put, are in good condition and repair (ordinary wear and tear excepted) and
are adequate for the conduct of the Company's business in the manner in
which such business is currently being conducted.
(b) The Company does not own any real property or any interest in real
property, except for the leasehold interest created under the Company
Leases identified in Part 3.6(b). With respect to the Company Leases, to
the Knowledge of the Sellers, the Company has not received any written
notices of default from the lessors under such Company Leases and, to the
Knowledge of the Sellers, holds a valid leasehold interest in the property
leased pursuant to the Company Leases (whether real or personal property),
which leasehold interests are free of any Encumbrances except for Permitted
Encumbrances.
3.9 Intellectual Property. Part 3.9 contains a true and complete list of all of
the Intellectual Property owned or used by the Company that is material to
the operation of the business of the Company. The Company owns or, to the
Knowledge of the Sellers, has the right to use pursuant to a valid,
binding, and enforceable license all such Intellectual Property. To the
Knowledge of the Sellers, the Company is not infringing any Intellectual
Property of any third party and no other party has infringed or is
infringing any of the Intellectual Property owned or used by the Company.
3.10 Contracts.
(a) Part 3.10(a) identifies each Company Contract, including, but not
limited to, the following:
(i) contracts with any seller or its affiliate or any current or former officer,
member or affiliate of the company;
(ii) each company contract (a) relating to the employment of, or the performance
of services by, any employee, consultant or independent contractor; (b) pursuant
to which the company is or may become obligated to make any severance,
retention, change in control, termination or similar payment to any current or
former employee, or (c) pursuant to which the company is or may become obligated
to make any bonus or similar payment (whether in the form of cash, stock, or
other securities but excluding payments constituting base salary) to any current
or former employee;
(iii) each company contract imposing any restriction on the right or ability of
the company (a) to compete with, or solicit any customer of, any other person,
(b) to acquire any product or other asset or any services from any other person,
(c) to solicit, hire or retain any person as an employee, consultant or
independent contractor, (d) to develop, sell, supply, distribute, offer, support
or service any product or any technology or other asset to or for any other
person, (e) to perform services for any other person, or (f) to transact
business or deal in any other manner with any other person;
(iv) each company contract (a) relating to the acquisition, issuance, voting,
registration, sale or transfer of any securities, (b) providing any person with
any preemptive right, right of participation, right of maintenance or similar
right with respect to any securities, or (c) providing the company with any
right of first refusal with respect to, or right to repurchase or redeem, any
securities;
(v) each company lease;
(vi) each company contract that may not be terminated by the company (without
penalty) within 30 days after the delivery of a termination notice by the
company (other than routine nondisclosure agreements entered into by the company
in the ordinary course of business and consistent with past practice);
(vii) management contracts and contracts with independent contractors or
consultants (or similar arrangements) that are not cancelable without penalty or
further payment and without more than 30 days' notice;
(viii) any company contract under which the consummation of the transactions
contemplated by this agreement would give rise to or expand any rights in favor
of, or any obligations on the part of, the company or any other person; and
(ix) any other company contract.
(b) The Company has delivered or made available to Buyer accurate and
complete copies of all written Company Contracts. Part 3.10(b) provides an
accurate description of the terms of each Company Contract that is not in
written form. Each Company Contract is valid, binding and in full force and
effect and enforceable in accordance with its terms, except as such
enforceability may be limited by (i) laws of general application relating
to bankruptcy, insolvency, reorganization, moratorium and the enforcement
of creditors' rights generally, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 3.10(c):
(i) the company has not violated or breached, or committed any default under,
any company contract which would reasonably be expected to have a material
adverse effect on the company, and, to the knowledge of the sellers, no other
person has violated or breached, or committed any default under, any company
contract in any material respect;
(ii) to the knowledge of the sellers, no event has occurred, and no circumstance
or condition exists, that (with or without notice or lapse of time) could
reasonably be expected to (a) result in a violation or breach by the company of
any of the provisions of any company contract in any material respect, (b) give
any person the right to declare a default or exercise any remedy under any
company contract, (c) give any person the right to accelerate the maturity or
performance of any company contract, or (d) give any person the right to cancel,
terminate or modify any company contract;
(iii) to the knowledge of the sellers, the company has not received any written
notice or other communication regarding any actual or alleged violation or
breach of, or default under, any company contract in any material respect; and
(iv) the company has not waived any of its material rights under any company
contract.
3.11 No Undisclosed Liabilities. The Company does not have any accrued,
contingent or other liabilities or Indebtedness of any nature, either
matured or unmatured (whether or not required to be reflected in financial
statements in accordance with GAAP, and whether due or to become due),
which, individually or in aggregate, are in excess of $[50,000], except for
(i) liabilities or obligations reflected or reserved against in the Company
Financial Statements (or the notes thereto), (ii) liabilities incurred by
the Company in the ordinary course of business, (iii) liabilities under the
Company Contracts, to the extent the nature and magnitude of such
liabilities can be specifically ascertained by reference to the text of
such Company Contracts, and (iv) the liabilities identified in Part 3.11.
3.12 Compliance with Legal Requirements; Governmental Authorizations.
(a) The Company is not in conflict with, or in default or in violation
of any applicable Legal Requirements which would reasonably be expected to
have a Material Adverse Effect on the Company. Except as set forth in Part
3.12(a), to the Knowledge of the Sellers, the Company has not received any
notice or other communication from any Governmental Body regarding any
actual or possible violation of, or failure to comply with, any Legal
Requirement. To the Knowledge of the Sellers, the Company is not under
investigation with respect to the violation of any Legal Requirement.
(b) Part 3.12(b) identifies each material Governmental Authorization
held by the Company, and the Company has delivered to Buyer accurate and
complete copies of all material Governmental Authorizations identified in
Part 3.12(b). The Governmental Authorizations identified in Part 3.12(b)
are valid and in full force and effect, and collectively constitute all
material Governmental Authorizations necessary to enable the Company to
conduct its business in the manner in which it is currently being
conducted. The Company is in substantial compliance with the terms and
requirements of the respective Governmental Authorizations identified in
Part 3.12(b). To the Knowledge of the Sellers, the Company has not received
any notice or other communication (in writing or otherwise) from any
Governmental Body regarding (A) any actual or possible violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual or possible revocation, withdrawal,
suspension, cancellation, termination or modification of any Governmental
Authorization.
3.13 Tax Matters.
(a) Each of the Tax Returns required to be filed by or on behalf of
the Company with any Governmental Body prior to the Closing Date (the
"Company Returns"):
(i) was filed on or before the applicable due date (including any extensions of
such due date);
(ii) was complete and accurate and prepared in all material respects in
compliance with all applicable legal requirements; and
(iii) all taxes owed by the company have been either paid to the respective
governmental bodies, set aside in accounts for such purpose, or accrued,
reserved against, and entered upon the books and records of the company.
(b) The Company has delivered to Buyer accurate and complete copies of
(i) all Company Returns, (ii) all letter rulings, technical advice
memoranda, examination reports, statements of deficiencies assessed against
or agreed to by the Company, and similar documents issued by a Governmental
Body relating to the federal, state, local or foreign Taxes due from or
with respect to the Company, and (iii) any closing letters or agreements
entered into by the Company with any Governmental Bodies with respect to
Taxes.
(c) The Company has timely withheld proper and accurate amounts from
its employees, independent contractors, customers, members and other
Persons from whom it is or was required to withhold Taxes, including all
payroll, sales and use Taxes, in compliance with all applicable Legal
Requirements.
(d) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the
dates thereof in accordance with GAAP.
(e) Except as set forth in Part 3.13(e), to the Knowledge of the
Sellers, there have been no examinations or audits of any Company Return.
The Company has delivered to Buyer accurate and complete copies of all
audit reports and similar documents (to which the Company has access)
relating to the Company Returns. No extension or waiver of the limitation
period applicable to any of the Company Returns has been granted (by the
Company or any other Person), and no such extension or waiver has been
requested from or by the Company. The Company is not subject to nor has the
Company sought any private ruling from, or agreement with, a foreign,
federal, state or local taxing authority. No foreign, federal, state or
local taxing authority in a jurisdiction where the Company does not file
Tax Returns has ever claimed in writing or asserted in writing that the
Company is or may be subject to taxation by that jurisdiction.
(f) Except as set forth in Part 3.13(f), no claim or Legal Proceeding
is pending or, to the Knowledge of the Sellers, has been threatened against
or with respect to the Company in respect of any Tax, nor, to the Knowledge
of Sellers, has the Company received from any Governmental Body in any
jurisdiction (including jurisdictions where the Company has not filed Tax
Returns) any (i) notice indicating an intent to open an audit or other
review, (ii) request for information related to Tax matters, or (iii)
notice of deficiency or proposed adjustment for any amount of Tax proposed,
asserted or assessed by any taxing authority or other Governmental Body
against the Company. There are no liens for Taxes upon any of the assets of
the Company except liens for Taxes not yet due and payable.
(g) Part 3.13(g) accurately describes all material elections with
respect to Taxes affecting the Company.
3.14 Employee and Labor Matters; Benefit Plans.
(a) Part 3.14(a) sets forth, with respect to each current employee of
the Company as of the date of this Agreement:
(i) the name of such employee and the date as of which such employee was
originally hired by the company; and
(ii) the aggregate dollar amount of the compensation (including wages, salary,
commissions, board fees, bonuses, profit-sharing payments, distributions or
withdrawals by employees who are also company members, and other payments or
benefits of any type other than immaterial reimbursable expenses) received by or
payable to such employee from the company with respect to services performed in
2009 on behalf of the company.
(b) Part 3.14(b) contains (i) a list of all "employee benefit plans"
(as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), pension, profit-sharing, retirement,
cafeteria plan, flexible spending arrangement, sick leave and vacation
policy, bonus, stock option, stock purchase, restricted stock, incentive
compensation, deferred compensation, severance, medical, dental, life,
disability, or other welfare benefit plan, and all other fringe benefit
plans, policies or arrangements, whether sponsored, established, maintained
or contributed to or required to be contributed to currently by the Company
for the benefit of any current employees or former employees or for which
the Company has any liability. There is no corporation or trade or business
(whether or not incorporated) which, as of the date of this Agreement or at
any time within the six years preceding the date hereof, would be treated
as a "single employer" with the Company under Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended.
(c) All employee benefit plans maintained or contributed to by the
Company are in compliance with all applicable provisions of ERISA and the
Internal Revenue Code of 1986, as amended, and all other Legal Requirements
and the Company has no delinquent liabilities or obligations with respect
to any such employee benefit plans, whether or not accrued, contingent or
otherwise.
3.15 Environmental Matters. The Company possesses all material permits and other
material Governmental Authorizations required under applicable
Environmental Laws, and is in material compliance with the terms and
conditions thereof. To the Knowledge of the Sellers, the Company has not
received any written notice or other communication from any Governmental
Body that alleges that the Company is not in compliance with any
Environmental Law. To the Knowledge of the Sellers, (a) all property that
is leased to, controlled by or used by the Company, and all surface water,
groundwater and soil associated with or adjacent to such property, is free
of any material environmental contamination of any nature, (b) none of the
real property leased to, controlled by or used by the Company contains any
underground storage tanks, asbestos, equipment using PCBs, underground
injection xxxxx, and (c) none of the property leased to, controlled by or
used by the Company contains any septic tanks in which process wastewater
or any Materials of Environmental Concern have been disposed of. To the
Knowledge of the Sellers, the Company has never sent or transported, or
arranged to send or transport, any Materials of Environmental Concern to a
site that, pursuant to any applicable Environmental Law, (i) has been
placed on the "National Priorities List" of hazardous waste sites or any
similar state list, (ii) is otherwise designated or identified as a
potential site for remediation, cleanup, closure or other environmental
remedial activity, or (iii) is subject to a Legal Requirement to take
"removal" or "remedial" action as detailed in any applicable Environmental
Law or to make payment for the cost of cleaning up any site.
3.16 Insurance. The Company has delivered to Buyer current, complete and
accurate copies of (i) policies for all primary, excess and umbrella
policies, bonds and other forms of insurance currently owned or held by or
on behalf of and/or providing insurance coverage to the Company and its
businesses, properties and assets, and (ii) insurance claim histories since
January 31, 2008. All such policies are in full force and effect. Except as
set forth in Part 3.16, to the Knowledge of the Sellers, the Company has
not received a written notice of default under any such policy and has not
received written notice of any pending or threatened termination or
cancellation, coverage limitation or reduction, or material premium
increase with respect to any such policy.
3.17 Related Party Transactions. Except as set forth in Part 3.17:
(a) no Related Party (as defined below) has any direct or indirect
interest in any material asset used in or otherwise relating to the
business of the Company;
(b) no Related Party is indebted to the Company;
(c) no Related Party has any direct or indirect financial interest in,
any material Contract, transaction or business dealing involving the
Company;
(d) no Related Party is competing, directly or indirectly, with the
Company; and
(e) no Related Party has any claim or right against the Company (other
than rights to receive compensation for services performed as an employee
of the Company or the right to receive distributions as a member of the
Company).
(f) For purposes of this Section 3.17, each of the following shall be
deemed to be a "Related Party": (i) each individual who is an officer or
member of the Company; (ii) each member of the immediate family of each of
the individuals referred to in clause "(i)" above; and (iii) any trust or
other Entity (other than the Company) in which any one of the individuals
referred to in clauses "(i)" and "(ii)" above holds (or in which more than
one of such individuals collectively hold), beneficially or otherwise, a
material voting, proprietary, equity or other financial interest.
3.18 Legal Proceedings; Orders.
(a) Part 3.18(a) sets for all Legal Proceedings that involve the
Company or any of the assets owned, used or controlled by the Company. No
claim, dispute or Legal Proceeding disclosed in Part 3.18(a) would, if
determined adversely to the Company, reasonably be expected to have a
Material Adverse Effect on the Company.
(b) There is no order, writ, injunction, judgment or decree to which
the Company, or any of the assets owned or used by the Company, is subject.
3.19 Non-Contravention; Consents. Except as set forth in Part 3.19(a), neither
(1) the execution, delivery or performance of this Agreement, nor (2) the
consummation of the transactions contemplated by this Agreement, will
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of any of the
provisions of the Constituent Documents of the Company;
(b) contravene, conflict with, require notice to or a filing with, or
result in a violation of, or give any Governmental Body or other Person the
right to challenge the transactions contemplated by this Agreement, or to
exercise any remedy or obtain any relief under, any Legal Requirement or
any order, writ, injunction, judgment or decree to which the Company, or
any of the assets owned, used or controlled by the Company, is subject
except where such contravention, conflict, failure to provide notice to or
make a filing with, violation, challenge, remedy or relief would not
reasonably be expected to have a Material Adverse Effect on the Company;
(c) contravene, conflict with, require notice to or a filing with, or
result in a violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate
or modify, any Governmental Authorization that is held by the Company or
that otherwise relates to any of the assets owned, used or controlled by
the Company except where such contravention, conflict, failure to provide
notice or to a filing with, violation, revocation, withdrawal, suspension,
cancelation, termination or modification would not reasonably be expected
to have a Material Adverse Effect on the Company; or
(d) contravene, conflict with, require notice to, or result in a
violation or breach of, or result in a default under, any provision of any
Company Contract or give any Person the right to (i) declare a default or
exercise any remedy under any such Company Contract, (ii) accelerate the
maturity or performance of any obligation under any Company Contract or
(iii) cancel, terminate or modify any material term of any Company Contract
except where such contravention, conflict, failure to provide notice to,
violation, breach or default would not reasonably be expected to have a
Material Adverse Effect on the Company.
3.20 Financial Advisors. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of any Seller or the Company.
3.21 Full Disclosure. The representations and warranties made by Sellers in this
Agreement and in any Related Agreement do not (i) contain any
representation, warranty or information that is false or misleading with
respect to any material fact, or (ii) omit to state any material fact
necessary in order to make the representations, warranties and information
contained herein and therein, in the light of the circumstances under which
such representations, warranties and information were or will be made or
provided, not false or misleading.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers as follows
(except as otherwise set forth on the number or lettered Part of the Buyer
Disclosure Schedule corresponding to each representation or warranty below):
4.1 Corporate Existence and Power. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation, and has all corporate power required to conduct its
business as now conducted.
4.2 Authority; Binding Nature of Agreement. Buyer has the absolute and
unrestricted right, power and authority to perform its obligations under
this Agreement and under each Related Agreement to which it is a party; and
the execution, delivery and performance by Buyer of this Agreement and each
Related Agreement to which it is a party have been duly authorized by all
necessary action on the part of Buyer. This Agreement constitutes the
legal, valid and binding obligation of Buyer, and such other Related
Agreements, when executed and delivered by Buyer, will constitute the
legal, valid and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii)
rules of law governing specific performance, injunctive relief and other
equitable remedies.
4.3 Non-Contravention; Consents. Neither (1) the execution, delivery or
performance of this Agreement, nor (2) the consummation of the transactions
contemplated by this Agreement, will directly or indirectly (with or
without notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the certificate of incorporation, bylaws or other charter
or organizational documents of Buyer; or (ii) any resolution adopted by the
Company's shareholders, the board of directors or any committee of the
board of directors of Buyer;
(b) contravene, conflict with, provide notice to or make a filing
with, or result in a violation of, or give any Governmental Body or other
Person the right to challenge the transactions contemplated by this
Agreement, or to exercise any remedy or obtain any relief under, any Legal
Requirement or any order, writ, injunction, judgment or decree to which
Buyer is subject except where such contravention, conflict, failure to
provide notice to or make a filing with, violation, challenge, remedy or
relief would not reasonably be expected to have a Material Adverse Effect
on the Buyer;
(c) contravene, conflict with, provide notice to or make a filing
with, or result in a violation of any of the terms or requirements of, or
give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by the
Buyer or that otherwise relates to any of the assets owned, used or
controlled by the Buyer except where such contravention, conflict, failure
to provide notice to or make a filing with, violation, revocation,
withdrawal, suspension, cancelation, termination or modification would not
reasonably be expected to have a Material Adverse Effect on the Buyer; or
(d) contravene, conflict with, provide notice to or result in a
violation or breach of, or result in a default under, any provision of any
Buyer Contract or give any Person the right to (i) declare a default or
exercise any remedy under any such Buyer Contract, (ii) accelerate the
maturity or performance of any obligation under any Buyer Contract or (iii)
cancel, terminate or modify any material term of any Buyer Contract except
where such contravention, conflict, failure to provide notice to,
violation, breach or default would not reasonably be expected to have a
Material Adverse Effect on the Buyer.
4.4 Offering Valid. Assuming the accuracy of the representations and warranties
of Sellers contained in Section 2, the offer, sale and issuance of the
Shares will be exempt from the registration requirements of the Securities
Act, and will have been registered or qualified (or are exempt from
registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws within
the required statutory periods. Neither Buyer nor any agent on its behalf
has solicited or will solicit any offers to sell or has offered to sell or
will offer to sell all or any part of the Shares to any person or persons
so as to bring the sale of such Shares by Buyer within the registration
provisions of the Securities Act or any state securities laws.
4.5 Capitalization.
(a) The authorized capital stock of Buyer consists of 100,000,000
shares of Buyer Common Stock, 1,000 shares of which are issued and
outstanding. All of the issued and outstanding capital stock of Buyer are
duly authorized for issuance and are validly issued, fully paid and
non-assessable and have not been issued in violation of any purchase or
call option, right of first refusal, subscription right, preemptive right
or any similar rights. When issued in accordance with the terms of this
Agreement, the Shares issued pursuant hereto will be duly authorized for
issuance and validly issued, fully paid and non-assessable and are not
being issued in violation of any purchase or call option, right of first
refusal, subscription right, preemptive right or any similar rights. The
Buyer has taken all steps necessary to make inapplicable to this offering
of the Shares and any future issuance of shares of Buyer Common Stock to
the Sellers or their Affiliates any restrictions on business combinations
with interested shareholders.
(b) Except as set forth on Part 4.5(b), there are no existing options,
warrants, calls, rights, contracts or other agreements to which Buyer is a
party requiring, and there are no securities of Buyer outstanding which
upon conversion or exchange would require, the issuance, sale or transfer
of any additional equity interests of Buyer or other securities convertible
into, exchangeable for or evidencing the right to subscribe for or purchase
Buyer's capital stock, including the Shares, or other equity interests of
Buyer. There are no obligations, contingent or otherwise, of Buyer or any
Subsidiary of Buyer to (i) repurchase, redeem or otherwise acquire any
capital stock or other equity securities of Buyer or any Subsidiary, or
(ii) provide material funds to, or make any material investment in (in the
form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any Person. There are no
outstanding equity appreciation, phantom equity, profit participation or
similar rights with respect to Buyer or any of its Subsidiaries. There are
no bonds, debentures, notes or other Indebtedness of Buyer or any of its
Subsidiaries having the right to vote or consent (or, convertible into, or
exchangeable for, securities having the right to vote or consent) on any
matters on which stockholders (or other equity holders) of Buyer or any of
its Subsidiaries may vote. There are no voting trusts, irrevocable proxies
or other agreements, contracts or understandings to which Buyer or any
Subsidiary or, to Buyer's Knowledge, any of its stockholders is a party or
is bound with respect to the voting or consent of any equity interests of
Buyer or the equity interests of any of Buyer's Subsidiaries.
4.6 Buyer SEC Reports. Buyer has filed with the SEC, and has heretofore made
available to Sellers true and complete copies of, each form, registration
statement, report, schedule, proxy or information statement and other
document (including exhibits and amendments thereto), including its Annual
Reports to Shareholders incorporated by reference in certain of such
reports, required to be filed with the SEC since September 29, 1999 under
the Securities Act or the Exchange Act (collectively, the "Buyer SEC
Reports"). As of the respective dates such Buyer SEC Reports were filed or,
if any such Buyer SEC Reports were amended, as of the date such amendment
was filed, each of the Buyer SEC Reports, including any financial
statements or schedules included therein, (a) complied in all material
respects with all applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and the applicable rules and regulations
promulgated thereunder, and (b) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.7 Intentionally Left Blank.
4.8 No Undisclosed Liabilities. Except as set forth in the Buyer SEC Reports,
there are no debts, claims, liabilities, or obligations with respect to
Buyer, whether liquidated, unliquidated, accrued, absolute, contingent or
otherwise, other than those incurred in the ordinary course of business
consistent with prior practice. Except as set forth in the Buyer SEC
Reports, Buyer is not a guarantor or indemnitor of any Indebtedness of any
other Person. Buyer has not at any time, (i) made a general assignment for
the benefit of creditors, (ii) filed, or had filed against it, any
bankruptcy petition or similar filing, (iii) suffered the attachment or
other judicial seizure of all or a substantial portion of its assets, or
(iv) admitted in writing its inability to pay its debts as they become due.
4.9 Compliance with Laws. Buyer has complied and is in compliance in all
material respects with all applicable Legal Requirements. There is no order
issued, investigation, or proceeding pending or, to Buyer's Knowledge,
threatened, or, to Buyer's Knowledge, written notice served with respect to
any violation of any Legal Requirement issued by any Governmental Body
applicable to Buyer.
4.10 Legal Proceeding. Except as set forth in the Buyer SEC Reports, there are
no Legal Proceedings pending or, to Buyer's Knowledge, threatened relating
to Buyer, at law or in equity, before any Governmental Body, including,
without limitation, any unfair labor practice or grievance proceeding or
otherwise, or before any private arbitration or mediation firm or panel.
There are no material judgments, or Orders (whether rendered by a court or
administrative agency or by arbitration) relating to Buyer.
4.11 Restricted Securities. Buyer understands that:
(a) the Membership Interests to be delivered pursuant to this
Agreement are "restricted securities" under the federal securities laws of
the United States inasmuch as they have not been registered under the
Securities Act, and shall be acquired from Sellers in a transaction exempt
from registration under the Securities Act;
(b) the Membership Interests must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from registration. Buyer represents that it is familiar with Rule
144 promulgated under the Securities Act, as currently in effect, and
understands the resale limitations imposed thereby and by the Securities
Act; and
(c) the Membership Interests will bear a legend to such effect.
4.12 Accredited Investor; Purchase Entirely for Own Account. Buyer is an
accredited investor as defined in Regulation D under the Securities Act.
Buyer is acquiring the Membership Interests pursuant to this Agreement for
investment only for its own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof and shall not
offer to sell or otherwise dispose of any of the Membership Interests so
acquired by Buyer in violation of the registration requirements of the
Securities Act or the securities laws of any other jurisdiction applicable
to the transactions contemplated hereby. By executing this Agreement, Buyer
further represents that it does not have any Contract, undertaking,
agreement or arrangement with any Person to sell, transfer or grant
participations to such Person or to any third Person, with respect to any
of the Membership Interests.
4.13 Disclosure of Information.
(a) Buyer has conducted its own independent investigation, review and
analysis of the business, operations, assets, liabilities, results of
operations, financial condition and prospects of the Company; and
(b) Buyer acknowledges that, except as set forth in this Agreement,
none of Sellers nor any of their Affiliates makes or has made any
representation or warranty, either express or implied, as to the accuracy
or completeness of any of the information provided or made available to
Buyer or any of its Affiliates.
4.14 Investment Experience. Buyer has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
the investment in the Membership Interests. Buyer is able to bear the
economic risk of his investment in the Membership Interests for an
indefinite period of time and can afford a complete loss of his investment
in the Membership Interests.
4.15 General Solicitation. Buyer was not offered or sold the Membership
Interests, directly or indirectly, by means of any form of general
solicitation or general advertisement.
4.16 Reliance. Buyer understands and acknowledges that: (i) the Membership
Interests are being offered and sold to it without registration under the
Securities Act in a transaction that is exempt from the registration
provisions of the Securities Act and (ii) the availability of such
exemption depends in part on, and the Sellers will rely upon the accuracy
and truthfulness of, the foregoing representations and Buyer hereby
acknowledges and consents to such reliance.
4.17 Financial Advisors. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Buyer.
4.18 Full Disclosure. The representations and warranties made by Buyer in this
Agreement and in any Related Agreement do not (i) contain any
representation, warranty or information that is false or misleading with
respect to any material fact, or (ii) omit to state any material fact
necessary in order to make the representations, warranties and information
contained herein and therein, in the light of the circumstances under which
such representations, warranties and information were or will be made or
provided, not false or misleading.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 Further Assurances. At or after Closing, and without further consideration,
each Seller will execute and deliver to Buyer such further instruments of
conveyance and transfer as Buyer may reasonably request to more effectively
convey and transfer the Purchased Interests to Buyer, free and clear of any
Encumbrance and subject to no legal or equitable restrictions of any kind,
or to exercising rights with respect to such Purchased Interests.
5.2 Employee Benefits. Buyer agrees that on the Closing Date it shall assume
all of the Company's health and welfare plans (including group medical,
dental, vision, short and long-term disability, accidental death and
disability, and group life insurance), vacation and personal leave
programs, and 401(k) plans or implement new plans on terms no less
favorable to the employees of the Company that the Company's current plans.
For purposes of the assumption of the Company's plans and programs or the
entering into of new plans and programs, all employees of the Company shall
be credited with their service on behalf of the Company or any Affiliate of
the Company for purposes of eligibility to participate in the Company's
plans or programs or the new plans or programs. For the assumed Company's
plans or programs or under any new plans or programs, the Buyer shall cause
the Company to use its commercially reasonable efforts to cause its health
plan insurance to (x) credit amounts paid by the Continuing Employees for
deductibles and co-payments under the Company's health plans prior to the
Closing toward any deductibles or co-payments limits under the assumed
plans or the new plans and (y) waive any pre-existing conditions or
exclusions. Specifically, any personal or vacation time accrued by any
Continuing Employee prior to the Closing shall be credited by the Buyer
under any assumed or new personal and vacation time off programs. The Buyer
is obligated to make offers of continuing employment to all employees of
the Company on the Closing Date.
5.3 Certain Tax Matters.
(a) Any Tax Return to be prepared by Sellers pursuant to the
provisions of this Section 5.3 shall be prepared in a manner consistent
with practices followed in prior years with respect to similar Tax Returns,
except for changes required by changes in Legal Requirement or fact. Buyer
shall not file an amended Tax Return for any period ending prior to the
Closing Date without the consent of the Sellers, which consent may not be
unreasonably withheld, delayed, or conditioned. The following provisions
shall govern the allocation of responsibility as between Buyer and the
Sellers for certain Tax matters on or following the Closing Date:
(i) the sellers shall prepare or cause to be prepared and file or cause to be
filed all tax returns for the company for all periods ending prior to the
closing date regardless of when they are to be filed. the sellers shall permit
the buyer 10 days to review and comment on each such tax return described in the
preceding sentence prior to filing. the sellers shall be responsible for all
taxes attributable to the company with respect to such periods. to the extent
that a reserve for taxes owed by the company is made in the balance sheet of the
company's most recent financial statements, the sellers shall be given credit
for the payment of such taxes.
(ii) buyer shall prepare or cause to be prepared and file or cause to be filed
any tax returns of the company for tax periods that begin on the closing date
and end after the closing date. buyer shall permit the sellers 10 days to review
and comment on each such tax return described in the preceding sentence prior to
filing. the sellers shall reimburse buyer within 30 days after payment by buyer
or the company of such taxes relating to any period prior to the closing date
(based on an interim closing of the books of the company, except in the case of
margin, franchise, property, or similar taxes imposed on the company which are
based on the outstanding equity of the company, in which case, the allocation
will be based on the percentage of days in the tax year ending before the
closing date and the percentage of days in the tax year ending on or after the
closing date) in excess of the amount, if any, reserved on the face of the
balance sheet in the company's most recent financial statements with respect to
such taxes.
(b) All information, books, and records relating to the Company shall
be transferred to Buyer. However, after the Closing Date, Buyer, upon
request by either Seller, shall grant and cause the Company to grant to the
Sellers access at all reasonable times to all of the information, books and
records relating to any taxable year of the Company beginning prior to the
Closing Date and within the possession of Buyer or the Company (including
work papers and correspondence with taxing authorities), and shall afford
the Sellers the right (at the Sellers' expense) to make copies thereof, to
the extent reasonably necessary to permit the Sellers to prepare Tax
Returns and to conduct negotiations with taxing authorities.
(c) Buyer shall be responsible for the payment of all Transfer Taxes
resulting from the transactions contemplated by this Agreement.
(d) After the Closing Date, in the case of any audit, examination, or
other proceeding with respect to Taxes ("Tax Proceeding") relating to any
period ending prior to the Closing Date and for which the Sellers are or
may be liable pursuant to this Agreement, Buyer shall inform the Sellers
within 15 days of the receipt of any notice of such Tax Proceeding. Buyer
shall execute or cause to be executed powers of attorney or other documents
necessary to enable the Sellers to take all actions desired by the Sellers
with respect to such Tax Proceeding and shall grant to Sellers the right to
control any such Tax Proceedings and to initiate any claim for refund, file
any amended return, or take any other action which the Sellers deem
appropriate with respect to such Taxes.
(e) Refunds of Taxes paid or payable with respect to Taxes
attributable to the Company shall be promptly paid as follows (or to the
extent payable but not paid due to offset against other Taxes shall be
promptly paid by the party receiving the benefit of the offset as follows):
(i) to the Sellers if attributable to Taxes allocable (as determined in a
manner consistent with this Section 5.3) to any period ending prior to the
Closing Date) or in the case of a Tax year beginning before and ending
after the Closing Date to the extent allocable (as determined in a manner
consistent with this Section 5.3) to the period prior to the Closing Date;
and (ii) to Buyer if attributable to Taxes with respect to any Tax year
beginning on or after the Closing Date or in the case of a Tax year
beginning before and ending after the Closing Date to the extent allocable
(as determined in a manner consistent with Section 5.3) to the period
beginning on or after the Closing Date.
5.4 Preservation of Records. Subject to any retention requirements relating to
the preservation of Tax records, Sellers and Buyer agree that each of them
shall (and shall cause the Company to) preserve and keep the records held
by them relating to the respective businesses of the Company for a period
of four years from the Closing Date and shall make such records and
personnel available to the other as may be reasonably required by such
party in connection with, among other things, any insurance claims by,
legal proceedings against or governmental investigations of Sellers, the
Company, Buyer or any of their Affiliates or in order to enable Sellers or
Buyer to comply with their respective obligations under this Agreement and
each other agreement, document or instrument contemplated hereby or
thereby.
5.5 Confidentiality. All confidential and proprietary information provided by
one party or its Representatives to the other party or its Representatives,
including without limitation the existence and terms of this Agreement,
will be kept in strict confidence by such other party and will only be used
to evaluate the other party in conjunction with the transactions
contemplated by this Agreement, except as otherwise required by applicable
law (including applicable securities laws). If either party is required by
applicable law to disclose the confidential information of the other party
as provided in the preceding sentence, such party shall give the party to
whom such information belongs prompt written notice of such requirement by
law prior to such disclosure and assistance in obtaining an order
protecting the confidential information from public disclosure. The parties
may disclose information to their Representatives for the sole purpose of
evaluating the transactions contemplated in this Agreement, so long as the
Representatives agree to keep such information confidential. Each party
agrees to be responsible for any breach of this Agreement by its
Representatives. If this Agreement is terminated, all documents or other
media containing such information will be returned to the appropriate party
or, if the material is integrated with other information of the other
party, destroyed; provided, that if the receiving party elects to destroy
such information, it shall promptly certify in writing to the disclosing
party that it has destroyed all such information in accordance with this
Agreement. Notwithstanding the foregoing, counsel to each party shall be
entitled to retain a copy of all confidential materials for the purpose of
defending any claim of non-compliance of this provision by either party,
and any such retained confidential materials shall remain subject to this
Section 5.5.
5.6 Publicity. Neither the Company, Sellers, Buyer nor any of their respective
Affiliates shall issue or cause the publication of any press release or
other announcement with respect to this Agreement or the transactions
contemplated hereby without the prior consultation of the other party,
except as may be required by law and will use reasonable efforts to provide
copies of such release or other announcement to the other party hereto, and
give due consideration to such comments as such other party may have, prior
to such release.
5.7 Employment Agreements. On the Closing Date, each Seller will enter into an
employment agreement with Buyer in the forms attached hereto as Exhibit A
and Exhibit B.
SECTION 6. CONDITIONS TO CLOSING
6.1 Conditions to the Obligation of Each Party.
(a) All Governmental Authorizations, or the expiration of waiting
periods imposed by, any Governmental Body necessary for the consummation of
the transactions contemplated by this Agreement shall have been filed,
occurred or been obtained.
(b) No action, suit or proceeding shall have been instituted or
threatened before any court or Governmental Body seeking to
challenge or restrain the transactions contemplated by this
Agreement.
6.2 Conditions of Obligation of Buyer. The obligation of Buyer to effect the
transactions contemplated by this Agreement is subject to the satisfaction
at or prior to the Closing Date of the following conditions:
(a) Each Seller shall have performed in all material respects his
obligations under this Agreement required to be performed by him at or
prior to the Closing Date and the representations and warranties of the
Company and each Seller contained in this Agreement, to the extent
qualified with respect to materiality shall be true and correct in all
respects, and to the extent not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement and at
and as of the Closing Date as if made at and as of such time, except as
expressly contemplated by the Company Disclosure Schedule or this Agreement
and except that the accuracy of representations and warranties that by
their terms speak as of the date of this Agreement or some other date will
be determined as of such date, and Buyer shall have received a certificate
from each Seller as to the satisfaction of this condition.
(b) Sellers shall have delivered to Buyer copies of resolutions, the
certificate of formation and the Company Agreement, certified by an
authorized officer of the Company as to the authorization of this Agreement
and all of the transactions contemplated hereby.
(c) Sellers shall have delivered to Buyer (i) a certificate of account
status with respect to the Company issued by the Texas Comptroller of
Public Accounts, (ii) a certificate of entity status with respect to the
Company issued by the Secretary of State of the State of Texas, and (iii) a
certificate of good standing with respect to the Company for each state in
which the Company is qualified to do business as a foreign Entity, all of
which shall be of a recent date which shall be not more than five business
days prior to the Closing Date.
(d) From the date of this Agreement through the Closing Date, there
shall not have occurred any change in the financial condition, business or
operations of the Company, taken as a whole, that would constitute a
Material Adverse Effect on the Company.
(e) Sellers shall have executed and delivered to Buyer the Employment
Agreements.
(f) FTP Oil and Gas LP shall have executed and delivered to Buyer the
PSA.
(g) Each Seller shall have delivered or caused to be delivered to
Buyer the original certificate from each Seller representing the Purchased
Interests, if any, duly endorsed in blank or accompanied by transfer powers
with all requisite transfer tax stamps attached and otherwise sufficient to
transfer the Purchased Interests to Buyer free and clear of all
Encumbrances (which certificate will be canceled by the Company).
(h) Sellers shall have delivered to Buyer a certificate in the name of
Buyer representing the Purchased Interests.
(i) Sellers shall have delivered to Buyer the consents, waivers,
approvals and notices set forth in Part 3.19(a), each in a form reasonably
satisfactory to Buyer.
(j) The Sellers shall have delivered to Buyer all instruments and
documents necessary to release any and all Encumbrances on the Purchased
Interests, including appropriate UCC financing statement amendments
(termination statements).
6.3 Conditions to the Obligations of Each Seller. The obligation of each Seller
to effect the transactions contemplated by this Agreement is subject to the
satisfaction at or prior to the Closing Date of the following conditions:
(a) Buyer shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior
to the Closing Date and the representations and warranties of Buyer
contained in this Agreement, to the extent qualified with respect to
materiality shall be true and correct in all respects, and to the extent
not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and at and as of the Closing
Date as if made at and as of such time, except that the accuracy of
representations and warranties that by their terms speak as of the date of
this Agreement or some other date will be determined as of such date, and
Sellers shall have received a certificate of an officer of Buyer as to the
satisfaction of this condition.
(b) Buyer shall have issued or caused to be issued to each Seller the
certificates representing the Stock Consideration.
(c) Buyer shall have executed and delivered to each Seller the
Employment Agreements with such Employment Agreements to be effective on
the Closing Date.
(d) Buyer shall have executed and delivered to FTP Oil and Gas LP and
each Seller the PSA with the closing of the transactions contemplated by
the PSA to be on the Closing Date.
(e) From the date of this Agreement through the Closing Date, there
shall not have occurred any change in the financial condition, business or
operations of Buyer and its Subsidiaries, taken as a whole, that would
constitute a Material Adverse Effect on the Buyer.
SECTION 7. INDEMNIFICATION, ETC.
7.1 Survival of Representations, Etc.
(a) The representations, warranties, covenants and obligations of the
Company and the Sellers (including the representations and warranties set
forth in Sections 2 and 3) and the Company Disclosure Schedule shall
survive the Closing as provided in this Section 7.1. The representations,
warranties, covenants and obligations of the Buyer (including the
representations and warranties set forth in Section 4) and the Buyer
Disclosure Schedule shall survive the Closing as provided in this Section
7.1.
(b) All representations and warranties of the Sellers and the Company
set forth in Sections 2 and 3 and the Company Disclosure Schedule and of
Buyer set forth in Section 4 and the Buyer Disclosure Schedule, shall
expire on the Expiration Date other than Sections 2.1, 2.3, 2.5, 2.6, 2.7,
2.8, 2.9, 2.10, 2.11, 4.2, 4.4, 4.6, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.16
which shall survive indefinitely and Sections 3.13 and 3.14 which shall
survive for the applicable statute of limitations; provided, however, any
representation or warranty subject to the Expiration Date or the applicable
statute of limitations in respect of which indemnity may be sought under
this Section 7 shall survive the time at which it would otherwise terminate
pursuant to the foregoing provisions of this Section 7.1, if notice of the
inaccuracy or breach thereof giving rise to such right to indemnity shall
have been given to the party against whom such indemnity may be sought
prior to the Expiration Date or statute of limitations, as applicable..
(c) Claims for indemnification, compensation and reimbursement brought
in accordance with and subject to this Section 7 shall be the sole and
exclusive remedy of any Indemnitee for monetary damages from and after the
Closing with respect to breaches of this Agreement. Without limiting the
generality of the foregoing, nothing contained in this Agreement shall
limit the rights of any Indemnitee to seek or obtain injunctive relief or
any other equitable remedy to which such Indemnitee is otherwise entitled.
7.2 Indemnification of Buyer.
(a) From and after the Closing Date (but subject to Section 7.1,
Section 7.2(d), and Section 7.4), the Sellers, jointly and severally (with
the exception of any breach of any Individual Representations, for which
such Seller shall be severally, but not jointly, liable), shall hold
harmless and indemnify each of the Buyer Indemnitees from and against, and
shall compensate and reimburse each of the Buyer Indemnitees (without
duplication) for, any Damages which are suffered or incurred by any of the
Buyer Indemnitees or to which any of the Buyer Indemnitees may otherwise
become subject (regardless of whether or not such Damages relate to any
third-party claim) and which arise from or as a result of, or are connected
with:
(i) any inaccuracy in or breach of any representation or warranty set forth in
section 2 or section 3 as of the date of this agreement;
(ii) any material breach of any covenant or obligation of any seller set forth
in this agreement; and
(iii) any taxes attributable to the company for any tax year ending before the
closing date and/or for any tax year beginning before and ending after the
closing date to the extent allocable (as determined in a manner consistent with
section 5.3(a)) to the portion of such period ending prior to the closing date);
provided, however, that no right to indemnity shall exist to the extent that the
damages are the result of actions of buyer or its affiliates taken or effected
on or after the closing date.
(b) In the event the Company suffers, incurs or otherwise becomes
subject to any Damages as a result of or in connection with any inaccuracy
in or breach or alleged breach of any representation, warranty, covenant or
obligation, then (without limiting any of the rights of the Company as a
Buyer Indemnitee) Buyer shall also be deemed, by virtue of its ownership of
the Purchased Interests of the Company, to have incurred Damages as a
result of and in connection with such inaccuracy or breach.
(c) The Buyer Indemnitees shall not be entitled to recover any Damages
under Section 7.2(a)(i) until such time as the cumulative amount of all
Damages (including the Damages arising from such inaccuracy or breach and
all other Damages under Section 7.2(a)(i)) that have been directly or
indirectly suffered or incurred by any one or more of the Buyer
Indemnitees, or to which any one or more of the Buyer Indemnitees has or
have otherwise become subject, exceeds $25,000 in the aggregate, in which
case the Sellers shall be liable to Buyer only for the Damages in excess of
such amount; provided, however, the limitation shall not apply to Sections
2.11, 3.13 and 3.14.
(d) The Sellers' total liability under Section 7.2(a)(i) shall not, in
the aggregate, exceed the Purchase Price with the Stock Consideration be
valued based on the closing price of the Buyer Common Stock on the Closing
Date.
7.3 Indemnification of Sellers.
(a) From and after the Closing Date, Buyer shall hold harmless and
indemnify the Seller Indemnitees, from and against, and shall compensate
and reimburse each of the Seller Indemnitees (without duplication) for, any
Damages which are suffered or incurred by any of the Seller Indemnitees or
to which any of the Seller Indemnitees may otherwise become subject
(regardless of whether or not such Damages relate to any third-party claim)
and which arise from or as a result of, or are connected with:
(i) any inaccuracy in or breach of any representation or warranty set forth in
section 4 as of the date of this agreement;
(ii) any material breach of any covenant or obligation of buyer set forth in
this agreement; and
(iii) any taxes attributable to the company for any tax year ending on or after
the closing date and/or for any tax year beginning before and ending after the
closing date to the extent allocable (as determined in a manner consistent with
section 5.3(a)) to the portion of such period ending on or after the closing
date).
(b) The Seller Indemnitees shall not be entitled to recover any
Damages under Section 7.3(a)(i) until such time as the cumulative amount of
all Damages (including the Damages arising from such inaccuracy or breach
and all other Damages under Section 7.3(a)(i)) that have been directly or
indirectly suffered or incurred by any one or more of the Seller
Indemnitees, or to which any one or more of the Seller Indemnitees has or
have otherwise become subject, exceeds $25,000 in the aggregate, in which
case the Buyer shall be liable to Sellers only for the Damages in excess of
such amount; provided, however, the limitation shall not apply to Section
4.4.
(c) The Buyer's total liability under Section 7.3(a)(i) shall not, in
the aggregate, exceed the Purchase Price with the Stock Consideration be
valued based on the closing price of the Buyer Common Stock on the Closing
Date.
7.4 Express Negligence; Limitations.
(a) THE FOREGOING INDEMNITIES ARE INTENDED TO BE ENFORCEABLE AGAINST
THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF
NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE, DOCTRINE RELATING TO
INDEMNIFICATION FOR STRICT LIABILITY OR ANY SIMILAR DIRECTIVE THAT WOULD
PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE NEGLIGENCE (WHETHER
SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF
ANY OF THE INDEMNIFIED PARTIES.
(b) TO THE EXTENT THAT AN INDEMNITEE MAKES ANY CLAIM AGAINST ANOTHER
PARTY UNDER THE PROVISIONS OF SECTION 7, THE OTHER PARTY MAY NOT ASSERT AND
HEREBY EXPRESSLEY WAIVER AS A DEFENSE, COUNTERCLAIM OR OTHERWISE THAT THE
INDEMNITEE HAS BEEN NEGLIGENT IN CONDUCTING ITS DUE DILIGENCE OR HAS FAILED
TO CONDUCT ITS DUE DILIGENCE IN A PROPER OR ADEQUATE MANNER.
(c) THE RIGHT TO INDEMNIFICATION BASED UPON BREACH OF REPRESENTATIONS,
WARRANTIES, COVENANTS, AGREEMENTS OR OBLIGATIONS SET FORTH HEREIN WILL NOT
BE AFFECTED BY ANY INVESTIGATION, CONDUCTED WITH REPSECT TO, OR KNOWLEDGE
ACQUIRED (OR CAPABLE OF BEING ACQUIRED) AT ANY TIME, WHETHER BEFORE OR
AFTER THE CLOSING DATE, WITH RESPECT TO THE ACCURACY OR INACCURACY OF OR
COMPLIANCE WITH ANY SUCH REPRESENTATIONS, WARRANTY, COVENANT, AGREEMENT OR
OBLIGATION.
(d) ANY LIMITATIONS ON THE INDEMNIFICATION OBLIGATIONS OF EITHER PARTY
AS SET FORTH IN THIS AGREEMENT SHALL NOT APPLY TO ANY DAMAGES ARISING
DIRECTLY OR INDIRECTLY FROM ANY CIRCUMSTANCE INVOLVING INTENTIONAL
MISREPRESENTATION OR FRAUD.
7.5 Indemnification Procedures.
(a) A claim for indemnification for any matter not involving a third
party claim may be asserted by notice to the party from whom
indemnification is sought; provided, that failure to so notify the
indemnifying party shall not preclude the indemnified party from any
indemnification which it may claim in accordance with this Section 7.
(b) In the event that any Legal Proceedings shall be instituted or
that any claim or demand shall be asserted by any third party in respect of
which indemnification may be sought under this Section 7 hereof (a "Third
Party Claim"), the indemnified party shall promptly cause written notice of
the assertion of any Third Party Claim of which it has knowledge which is
covered by this indemnity to be forwarded to the indemnifying party. The
failure of the indemnified party to give reasonably prompt notice of any
Third Party Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent
that the indemnifying party can demonstrate actual material loss and
prejudice as a result of such failure. Subject to the provisions of this
Section 7.5, the indemnifying party shall have the right, at its sole
expense, to provide counsel of its choice to defend against any Third Party
Claim, which must be reasonably satisfactory to the indemnified party, and
to defend against, negotiate, settle or otherwise deal with any Third Party
Claim which relates to any Damages indemnified against by it hereunder;
provided, that the indemnifying party -------- shall have acknowledged in
writing to the indemnified party its unqualified obligation to indemnify
the indemnified party as provided hereunder. If the indemnifying party
elects to defend against, negotiate, settle or otherwise deal with any
Third Party Claim which relates to any Damages indemnified against by it
hereunder, it shall within ten days of the indemnified party's written
notice of the assertion of such Third Party Claim (or sooner, if the nature
of the Third Party Claim so requires) notify the indemnified party of its
intent to do so; provided, that the indemnifying party must --------
conduct its defense of the Third Party Claim actively and diligently
thereafter in order to preserve its rights in this regard. If the
indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Third Party Claim which relates to any Damages
indemnified against by it hereunder, fails to timely notify the indemnified
party of its election as herein provided or contests its obligation to
indemnify the indemnified party for such Damages under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal
with such Third Party Claim as set forth in this Agreement. If the
indemnified party defends any Third Party Claim, then the indemnifying
party shall reimburse the indemnified party for the expenses of defending
such Third Party Claim upon submission of periodic bills. If the
indemnifying party shall assume the defense of any Third Party Claim, the
indemnified party may participate, at his or its own expense, in the
defense of such Third Party Claim; provided, that such indemnified party
shall be entitled to participate in any such defense with separate counsel
at the expense of the indemnifying party if in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make
such separate representation advisable; and provided, further, that the
indemnifying party shall not be required to pay for more than one such
counsel (plus any appropriate local counsel) for all indemnified parties in
connection with any Third Party Claim. Each party hereto agrees to provide
reasonable access to each other party to such documents and information as
may be reasonably requested in connection with the defense, negotiation or
settlement of any such Third Party Claim. Notwithstanding anything in this
Section 7.5 to the contrary, the indemnifying party shall not, without the
prior written consent of the indemnified party, settle or compromise any
Third Party Claim or permit a default or consent to entry of any judgment
unless the claimant (or claimants) provide(s) to the indemnified party an
unqualified release in respect of the Third Party Claim. Notwithstanding
anything in this Section 7.5 to the contrary, the indemnified party shall
not, without the prior written consent of the indemnifying party, settle or
compromise any Third Party Claim or permit a default or consent to entry of
any judgment. If the indemnifying party makes any payment on any Third
Party Claim, the indemnifying party shall be subrogated, to the extent of
such payment, to all rights and remedies of the indemnified party to any
insurance benefits or other claims of the indemnified party with respect to
such Third Party Claim.
(c) After any final decision, judgment or award shall have been
rendered by a Governmental Body of competent jurisdiction and the
expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified party and the indemnifying party
shall have arrived at a mutually binding agreement, in each case with
respect to a Third Party Claim hereunder, the indemnified party shall
forward to the indemnifying party notice of any sums due and owing by the
indemnifying party pursuant to this Agreement with respect to such matter
and the indemnifying party shall pay all of such remaining sums so due and
owing to the indemnified party in accordance with Section 7.5.
7.6 Consequential and Similar Damages. No Indemnified Party shall be entitled
to recover from the Indemnifying Party any incidental, consequential,
special or punitive damages; provided that any incidental, consequential,
special or punitive damages recovered by a third party from an Indemnified
Party entitled to indemnification under this Section 7 shall be included in
the Damages recoverable by such Indemnified Party.
SECTION 8. TERMINATION
8.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
(a) by the mutual written consent of Buyer and each Seller;
(b) by either Buyer, the Company or either Seller by written notice if
there has been a breach of covenant or agreement contained in this
Agreement on the part of the other and such breach of a covenant or
agreement has not been promptly cured after notice has been given to the
breaching party of such breach or to the extent such breach of a covenant
or agreement is not capable of being cured;
(c) by Buyer by written notice to Seller if any of the conditions set
forth in Section 6.1 or 6.2 shall not have been satisfied by [____], 2010;
or
(d) by either Seller by written notice to Buyer if any of the
conditions set forth in Section 6.1 or 6.3 shall not have been satisfied by
[_____], 2010.
8.2 Effect of Termination. In the event of termination of the Agreement and the
abandonment of the transactions contemplated hereby pursuant to this
Section 8, all obligations of the parties shall terminate, except the
obligations of the parties pursuant to this Section 8.2 and except for the
provisions of Sections 5.5, 5.6 and 9.2 (the "Surviving Obligations"), and
except with respect to the Surviving Obligations, such termination shall be
without liability of any party hereto (or any stockholder, member,
director, officer, employee, agent, consultant or representative of such
party) to the other parties to this Agreement and each party shall bear its
own costs and expenses incurred in connection with the transactions
contemplated hereby.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 Further Assurances. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other
documents, and shall take such other actions, as such other party
may reasonably request (prior to, at or after the Closing) for the
purpose of carrying out or evidencing any of the transactions
contemplated by this Agreement.
9.2 Attorneys' Fees. If any Legal Proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is
brought against any party hereto, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the
prevailing party may be entitled).
9.3 Notices. Any notice given hereunder shall be in writing and be
delivered either by personal delivery, by telecopy or similar
facsimile means, by certified or registered mail (postage prepaid
and return receipt requested), or by express courier or delivery
service, addressed to the applicable party hereto as the following
address:
if to Buyer:
Sun River Energy, Inc.
Attn: Xxxxx D'Xxxxxxx
Attn: Xxxxx D'Antonio
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxxxxxx, XX 00000
Telephone:(000) 000-0000
if to the Sellers:
Xxxxx X. Xxxxxxx, Xx.
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.:(000) 000-0000
and
Xxxxxxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
with copy to (which copy shall not constitute notice):
W. Xxxxx Xxxxxxx
Xxxxxx and Xxxxx, LLP
0000 Xxxxxxx Xxx., Xxxxx 000
Xxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
or such other address and number as either party shall have previously
designated by written notice to the other party in the manner hereinafter set
forth. Notices shall be deemed given when received, if sent by telecopy or
similar facsimile means and received at or prior to 5:00 p.m. central time on a
business day in Dallas, Texas or the next business day in Dallas, Texas if
received after 5:00 p.m. central time on a business day in Dallas, Texas or if
received on any other day (confirmation of such receipt by confirmed facsimile
transmission being deemed receipt of communications sent by telecopy or other
facsimile means); and when delivered and receipted for if hand-delivered, sent
by express courier or delivery service, or sent by certified or registered mail.
9.4 Time of the Essence. Time is of the essence of this Agreement.
9.5 Headings. The underlined headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction
or interpretation of this Agreement.
9.6 Counterparts and Exchanges by Fax or Email Transmission. This Agreement may
be executed in several counterparts, each of which shall constitute an
original and all of which, when taken together, shall constitute one
agreement. The exchange of a fully executed Agreement (in counterparts or
otherwise) by fax or email (in .pdf or .tif format) transmission shall be
sufficient to bind the parties to the terms and conditions of this
Agreement.
9.7 Governing Law; Venue.
(a) All questions with respect to the construction, validity and
interpretation of this Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of Texas,
without giving effect to principles of conflicts of laws.
(b) Venue for any Legal Proceeding arising from this Agreement shall
be in the United States District Court for the Northern District of Texas,
Dallas Division or a state district court of competent jurisdiction in
Dallas County, Texas. The parties consent to personal jurisdiction of the
United States District Court for the Northern District of Texas, Dallas
Division or a state district court of competent jurisdiction in Dallas
County, Texas for any Legal Proceeding relating to or arising out of this
Agreement, agree that the United States District Court for the Northern
District of Texas, Dallas Division or a state district court of competent
jurisdiction in Dallas County, Texas shall be deemed to be a convenient
forum and agree not to assert (by way or motion, as a defense or otherwise)
that such Legal Proceeding has been brought in an inconvenient forum, that
the venue of such Legal Proceeding is improper or that this Agreement or
the subject matter of this Agreement may not been enforced in or by such
court.
9.8 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their successors and assigns (if
any). None of the Buyer, the Company or any Seller shall assign this
Agreement or any rights or obligations hereunder (by operation of law or
otherwise) to any Person without the prior written consent of the other
parties.
9.9 Remedies Cumulative; Specific Performance. The rights and remedies of the
parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach
by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to
this Agreement, such other party shall be entitled (in addition to any
other remedy that may be available to it) to (a) a decree or order of
specific performance or mandamus to enforce the observance and performance
of such covenant, obligation or other provision, and (b) an injunction
restraining such breach or threatened breach.
9.10 Waiver. No failure on the part of any Person to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or
remedy and no single or partial exercise of any such power, right,
privilege or remedy shall preclude any other or further exercise thereof or
of any other power, right, privilege or remedy. No Person shall be deemed
to have waived any claim arising out of this Agreement, or any power,
right, privilege or remedy under this Agreement, unless the waiver of such
claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Person;
and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
9.11 Amendments. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of all of the parties hereto.
9.12 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. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof
is invalid or unenforceable, the parties hereto agree that the court making
such determination shall have the power to limit 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. In the event such court does not exercise the
power granted to it in the prior sentence, the parties hereto agree to
replace such invalid or unenforceable term or provision with a valid and
enforceable term or provision that will achieve, to the extent possible,
the economic, business and other purposes of such invalid or unenforceable
term.
9.13 Parties in Interest. Except for the provisions of Section 7 and except for
FTP Oil and Gas LP, none of the provisions of this Agreement is intended to
provide any rights or remedies to any Person other than the parties hereto
and their respective successors and assigns (if any).
9.14 Entire Agreement. This Agreement and the Related Agreements set forth the
entire understanding of the parties hereto relating to the subject matter
hereof and thereof and supersede all prior agreements and understandings
among or between any of the parties relating to the subject matter hereof
and thereof. Each of the parties expressly agrees and acknowledges that,
other than those representations and warranties expressly set forth in this
Agreement, the Company Disclosure Schedule and the Buyer Disclosure
Schedule, it is not relying on any statement, whether oral or written, of
any person or Entity with respect to its entry into this Agreement or to
the consummation of the transactions contemplated by this Agreement.
9.15 Construction.
(a) For purposes of this Agreement, whenever the context requires: the singular
number shall include the plural, and vice versa; the masculine gender shall
include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be
applied in the construction or interpretation of this Agreement, and the
parties hereto hereby acknowledge that they have participated jointly in
the negotiation and drafting of this Agreement.
(c) As used in this Agreement and the Exhibits and Schedules hereto (including
the Company Disclosure Schedule and the Buyer Disclosure Schedule), the
words "include" and "including," and variations thereof, shall not be
deemed to be terms of limitation, but rather shall be deemed to be followed
by the words "without limitation."
(d) Except as otherwise indicated, (i) all references in this Agreement to
"Sections," "Exhibits," and "Schedules" are intended to refer to Sections
of this Agreement, Exhibits, and Schedules to this Agreement, and (ii) all
references in this Agreement to currency (unless otherwise expressly
indicated) are intended to refer to U.S. dollars.
(e) When calculating the period of time before which, within which or following
which any act is to be done or step taken pursuant to this Agreement, the
date that is the reference date in calculating such period shall be
excluded. If the last day of such period is a non-business day, the period
in question shall end on the next succeeding business day.
(f) The words such as "herein," "hereinafter," "hereof," and "hereunder" refer
to this Agreement as a whole and not merely to a subdivision in which such
words appear unless the context otherwise requires.
[Signature Pages Follow]
The parties hereto have caused this Agreement to be executed and delivered as of
the date first set forth above.
BUYER:
Sun River Energy, Inc.
By:
--------------------
Its:
--------------------
SELLERS:
--------------------
Xxxxx X. Xxxxxxx, Xx.
--------------------
Xxxxxxxx X. Xxxxxxx
Definitions Exhibit
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Definitions Exhibit):
"Affiliate" shall mean, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by or under common control with
such Person.
"Agreement" means the Securities Purchase Agreement to which this
Exhibit 1 is attached (including the Company Disclosure Schedule), as it may be
amended from time to time.
"Buyer Common Stock" means the common stock, par value $0.0001 per
share, of Buyer.
"Buyer Contract" means any Contract, including any amendment or
supplement thereto: (a) to which the Buyer is a party; (b) by which the Buyer or
any of its assets is or may become bound or under which the Buyer has, or may
become subject to, any obligation; or (c) under which the Buyer has or may
acquire any right or interest.
"Buyer Disclosure Schedule" means the schedule (dated as of the date of
the Agreement) delivered to the Sellers on behalf of the Buyer on the date of
this Agreement and signed by the Buyer.
"Buyer Indemnitees" means the following Persons: (a) Buyer; (b) Buyer's
current and future Affiliates (including, after the Closing, the Company); (c)
the respective Representatives of the Persons referred to in clauses "(a)" and
"(b)" above; and (d) the respective successors and assigns of the Persons
referred to in clauses "(a)", "(b)" and "(c)" above.
"Company Contract" means any Contract, including any amendment or
supplement thereto: (a) to which the Company is a party; (b) by which the
Company or any of its assets is or may become bound or under which the Company
has, or may become subject to, any obligation; or (c) under which the Company
has or may acquire any right or interest.
"Company Disclosure Schedule" means the schedule (dated as of the date
of the Agreement) delivered to Buyer on behalf of the Sellers on the date of
this Agreement and signed by each Seller.
"Consent" means any approval, consent, ratification, permission, waiver
or authorization (including any Governmental Authorization).
"Contract" means any written, oral or other agreement, contract,
subcontract, lease, understanding, instrument, note, warranty, license,
sublicense, insurance policy, benefit plan or legally binding commitment or
undertaking of any nature, whether express or implied.
"Damages" shall include any loss, damage, injury, decline in value,
liability, claim, demand, settlement, judgment, award, fine, penalty, Tax, fee
(including reasonable attorneys' fees), charge, cost (including costs of
investigation) or expense of any nature.
"Encumbrance" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, claim, infringement, interference,
option, right of first refusal, preemptive right, community property interest or
restriction of any nature affecting property, real or personal, tangible or
intangible, including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any restriction on
the receipt of any income derived from any asset, any restriction on the use of
any asset, any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset, any lease in the nature thereof and any
filing of or agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statute of any jurisdiction).
"Entity" means any corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
"Environmental Law" shall mean all applicable laws (both statutory and
common law), rules, regulations, orders, ordinances, decrees, actions,
guidelines, standards, arrangements, injunctions, policies and requirements
relating to pollution and to protection of the environment (including without
limitation the handling of any polluted, toxic or hazardous materials), all as
amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Expiration Date" shall mean the date that is 18 months after the
Closing Date.
"GAAP" means United States generally accepted accounting principles
consistently applied and maintained throughout the periods indicated.
"Governmental Authorization" means any: (a) approval, permit, license,
certificate, franchise, permission, clearance, registration, qualification or
other authorization issued, granted, given or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement; or (b) right under any Contract with any Governmental Body.
"Governmental Body" means any: (a) nation, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (b) federal, state, local, municipal, foreign or other government; or
(c) governmental, self-regulatory or quasi-governmental authority of any nature
(including any governmental division, department, agency, commission,
instrumentality, official, organization, unit, body or Entity and any court or
other tribunal).
"Indebtedness" of any Person means, without duplication, (i) the
principal, accreted value, accrued and unpaid interest, prepayment and
redemption premiums or penalties (if any), unpaid fees or expenses and other
monetary obligations in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable and other accrued current liabilities arising
in the ordinary course of business and consistent with past practice (other than
the current liability portion of any indebtedness for borrowed money)); (iii)
all obligations of such Person under leases required to be capitalized in
accordance with GAAP; (iv) all obligations of such Person for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction; (v) all obligations of such Person under interest rate or currency
swap transactions (valued at the termination value thereof); (vi) the
liquidation value, accrued and unpaid dividends; prepayment or redemption
premiums and penalties (if any), unpaid fees or expenses and other monetary
obligations in respect of any redeemable preferred stock (or other equity) of
such Person; (vii) all obligations of the type referred to in clauses (i)
through (vi) of any Persons for the payment of which such Person is responsible
or liable, directly or indirectly, as obligor, guarantor, surety or otherwise,
including guarantees of such obligations; and (viii) all obligations of the type
referred to in clauses (i) through (vii) of other Persons secured by (or for
which the holder of such obligations has an existing right, contingent or
otherwise, to be secured by) any Encumbrance on any property or asset of such
Person (whether or not such obligation is assumed by such Person).
"Indemnitees" means the Buyer Indemnitees and the Seller Indemnitees,
as the case may be.
"Individual Representations" means the representations and warranties
set forth in Section 2.
"Intellectual Property" means any: (a) patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, fictitious business name, domain name, service xxxx (whether registered or
unregistered), service xxxx application, copyright (whether registered or
unregistered), copyright application, maskwork, maskwork application, trade
secret, know-how, customer list, franchise, system, computer software (in any
form, including source code and executable or object code), computer program,
database, data collection, development tool, diagram, formulae, invention,
design, user interface, URLs, web site, work of authorship, blueprint,
engineering drawing, laboratory notebook, proprietary product, technology,
proprietary right or other intellectual property right or intangible asset; or
(b) right to use or exploit any of the foregoing.
"Knowledge". An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. References to "the Knowledge of the Sellers," "Sellers'
Knowledge" or similar phrases include the Knowledge of either of the Sellers. A
Person who is not an individual shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer or director or similarly situated
Person of such Person is actually aware of such fact or other matter.
"Legal Proceeding" means any ongoing or threatened action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
"Legal Requirement" means any federal, state, local, municipal, foreign
or international, multinational other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body.
"Material Adverse Effect" means (i) with respect to the Company both
before and after giving effect to the transactions contemplated by this
Agreement, any change, occurrence or effect, direct or indirect, that could
reasonably be expected to have a material adverse effect on the business of the
Company, results of operations, assets, condition (financial or otherwise), or
ability to satisfy obligations or liabilities (whether absolute or contingent)
of the Company; (ii) with respect to the Buyer both before and after giving
effect to the transactions contemplated by this Agreement, any change,
occurrence or effect, direct or indirect, that could reasonably be expected to
have a material adverse effect on the business of the Buyer, results of
operations, assets, condition (financial or otherwise), or ability to satisfy
obligations or liabilities (whether absolute or contingent) of the Buyer; and
(iii) the ability of the Sellers
to consummate the transactions contemplated hereby; provided, however, a
Material Adverse Effect shall not apply to any adverse effect proximately caused
by or resulting from: (i) any change in conditions generally affecting the
industries in which the Company or the Buyer, as applicable, participates or the
U.S. economy as a whole, provided that, such change or event does not have a
disproportionate impact on the Company or Buyer, as applicable, or (ii) with
respect to the Sellers, any change in Legal Requirement, provided that, such
change or event does not have a disproportionate impact on the Company or Buyer,
as applicable.
"Materials of Environmental Concern" include chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other substance that is now or hereafter regulated by any Environmental Law or
that is otherwise a danger to health, reproduction or the environment.
"Order" means any decree, permanent injunction, order or similar
action.
"Part" means a part or section of the Company Disclosure Schedule or
the Buyer Disclosure Schedule, as applicable.
"Permitted Encumbrances" means (i) any encumbrance for Taxes not yet
due and payable, (ii) any encumbrance created by operation of law, such as
materialmen's liens, mechanics' liens and other similar liens, arising in the
ordinary course of business with respect to a liability that is not yet due or
delinquent, (iii) any minor imperfection of title, none of which is substantial
in amount, materially detracts from the value or impairs the use of the property
subject thereto, or impairs the operations of the Company, and (iv) zoning laws
and other land use restrictions that do not impair the present or anticipated
use of the property subject thereto.
"Person" means any individual, Entity or Governmental Body.
"Related Agreements" means the the Employment Agreements, the
Registration Rights Agreement and any other Contracts to be executed in
connection with the transactions contemplated by this Agreement, the Employment
Agreements, the PSA and the Registration Rights Agreement.
"Representatives" means officers, directors, employees, agents,
attorneys, accountants, advisors and representatives.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Seller Indemnitees" means the following Persons: (a) each Seller; (b)
each Seller's current Affiliates; (c) the respective Representatives of the
Persons referred to in clauses "(a)" and "(b)" above; and (d) the respective
successors and assigns of the Persons referred to in clauses "(a)", "(b)" and
"(c)" above.
"Subsidiary" Any Entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly (a) has the power to direct the
management or policies of such Entity or (b) owns, beneficially or of record,
(i) an amount of voting securities or other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board of directors or other governing body, or (ii) at least 50%
of the outstanding equity or financial interests of such Entity.
"Tax" means any tax (including any income tax, franchise tax, margin
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax,
ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), imposed, assessed or collected
by or under the authority of any Governmental Body.
"Tax Return" means any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"Transfer Taxes" means all transfer Taxes (excluding Taxes measured by
income), including sales, use, excise, stock, stamp, documentary, filing,
recording, permit, license, authorization and similar Taxes, filing fees and
similar charges.
EXHIBITS --------
Exhibit 1 Definitions Exhibit
Exhibit A Form of Xxxxxxx Employment Agreement
Exhibit B Form of Xxxxxxx Employment Agreement
Exhibit C Form of PSA
