EXHIBIT 10.7
STOCK PURCHASE AGREEMENT BETWEEN GASCO ENERGY, INC.
AND FIRST XXXX.XXX, INC.
STOCK PURCHASE AGREEMENT
between
GASCO ENERGY, INC
and
FIRST XXXX.XXX, INC.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, is made as of the 5th day of July,
2001, between Gasco Energy, Inc., a Nevada corporation ("Gasco"), and First
Xxxx.xxx, Inc., a Nevada corporation ("FECC.")
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES A PREFERRED STOCK.
(a) Gasco shall adopt and file with the Secretary of State of
Nevada on or before the Closing (as defined below) the Certificate of
Designation in the form attached hereto as Exhibit A (the "Certificate of
Designation").
(b) Subject to the terms and conditions of this Agreement,
FECC shall purchase at the Closing and Gasco shall sell and issue to FECC at the
Closing 1,000 shares of Gasco's Series A Preferred Stock (the "Shares") for the
aggregate purchase price of $19,000,000 (the "Purchase Price").
1.2 CLOSING. The purchase and sale of the Shares shall take place
at the offices of Gasco's counsel, at 10:00 A.M., on a date agreed to by the
parties which shall not be more than five days after all the conditions set
forth in Section 6 shall have been satisfied (which time and place are
designated as the "Closing"). At the Closing Gasco shall deliver to FECC a
certificate representing the Shares against payment of the Purchase Price
therefor by wire transfer, to an account designated at least three days before
the Closing by Gasco in writing, or at the option of FECC by the forgiveness of
indebtedness owed by Gasco to FECC, or by a combination of cash and forgiveness
of indebtedness.
2. REPRESENTATIONS AND WARRANTIES OF GASCO. Gasco hereby represents and
warrants to FECC that, except as set forth in the Gasco Annual Report on Form
10-KSB for 2000 (the "Gasco 10-K") and all other reports filed with the SEC
thereafter to the date hereof:
2.1 VALID ISSUANCE OF PREFERRED AND CONVERSION STOCK. The Shares
have been duly and validly authorized and, when issued, sold and delivered in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws. The Common Stock issuable upon conversion of the Shares
has been duly and validly reserved for issuance and, when issued upon conversion
of the Shares in accordance with the terms of the Certificate of Designations,
will be duly and validly issued, fully paid, and nonassessable and will be free
of restrictions on transfer other than restrictions on transfer under this
Agreement and under applicable state and federal securities laws.
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2.2 ORGANIZATION. Each of Gasco and its Subsidiaries
(collectively, the "Gasco Subsidiaries") is a corporation or duly organized,
validly existing and is in good standing under the laws of the jurisdiction of
its incorporation and has the requisite power and authority to carry on its
business as now being conducted. Gasco and each of the Gasco Subsidiaries is
duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing could not reasonably be expected to have a Material Adverse Effect on
Gasco or prevent or materially delay the consummation of the Reorganization.
Gasco has delivered to FECC complete and correct copies of the Articles of
Incorporation of Gasco and By-laws of Gasco and has made available to FECC the
Articles of incorporation and by-laws of each of the Gasco Subsidiaries.
2.3 SUBSIDIARIES. Gasco's only subsidiaries are Pannonian Energy,
Inc., a Delaware corporation, and San Xxxxxxx Oil & Gas Ltd., a Nevada
corporation. All of the outstanding shares of capital stock of each Gasco
Subsidiary have been validly issued and are fully paid and nonassessable. All of
the outstanding shares of capital stock of each Gasco Subsidiary are owned by
Gasco or by another Gasco Subsidiary free and clear of all Liens. Except for the
capital stock owned by Gasco, directly or indirectly, in the Gasco Subsidiaries,
neither Gasco nor any of the Gasco Subsidiaries owns, directly or indirectly,
any capital stock or other ownership interest in any corporation, partnership,
joint venture, limited liability company or other entity.
2.4 CAPITAL STRUCTURE. The authorized capital stock of Gasco
consists of 105,000,000 shares of capital stock, of which 100,000,000 shares are
authorized to be issued as common stock (the "Common Stock"), and 5,000,000
shares are authorized to be issued as preferred stock. On the date hereof, Gasco
has (i) 25,700,000 shares of common stock issued and outstanding and no shares
of preferred stock outstanding; (ii) no shares of stock held in its treasury;
(iii) 3,300,000 shares of common stock reserved for issuance upon exercise of
outstanding stock options (the "Gasco Stock Options") and (iv) 768,333 shares of
common stock that it may be required to issue under agreements. Except as set
forth above and as contemplated by this Agreement there are no shares of capital
stock of Gasco or shares of capital stock of any Gasco Subsidiary issued,
reserved for issuance or outstanding, and there are no stock appreciation
rights, phantom stock rights or other contractual rights the value of which is
determined in whole or in part by the value of any capital stock of Gasco or any
Gasco Subsidiary. The Gasco Stock Options and any other security convertible
into or exercisable or exchangeable for Common Stock (each of which shall be
determined on an as if converted, exercised or exchanged basis) are herein
referred to as "Gasco Stock Equivalents." Each outstanding share of Common Stock
is, and each share of common stock which may be issued pursuant to the Gasco
Stock Options will be, when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. There are no outstanding
bonds, debentures, notes or other indebtedness of Gasco or any Gasco Subsidiary
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matter on which Gasco's stockholders may vote
except for that certain promissory note dated May 15, 2001 payable to FECC.
Except as set forth above, there are no securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind
obligating Gasco or any of the Gasco Subsidiaries
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to issue, deliver or sell or create, or cause to be issued, delivered or sold or
created, additional shares of capital stock or other voting securities or Gasco
Stock Equivalents or stock equivalents of any of the Gasco Subsidiaries or
obligating Gasco or any of the Gasco Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking.
There are no outstanding contractual obligations of Gasco or any of the
Gasco Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Gasco or any of the Gasco Subsidiaries.
2.5 AUTHORITY. The Board of Directors of Gasco, at a meeting duly
called and held, duly adopted resolutions approving this Agreement. The
execution, delivery and performance of this Agreement by Gasco and the
consummation by Gasco of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Gasco. This
Agreement has been duly executed and delivered by Gasco and (assuming the valid
authorization, execution and delivery of this Agreement by FECC) constitutes the
valid and binding obligation of Gasco enforceable against Gasco in accordance
with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights and remedies
generally, and (ii) is subject to general principles of equity (regardless of
whether considered in a proceeding in equity or at law).
2.6 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Securities Act, state securities or "Blue
Sky" laws, the Exchange Act, the NRS, or the rules and regulations of Nasdaq
(collectively, the "Gasco Required Approvals"), neither the execution, delivery
or performance of this Agreement by Gasco nor the consummation by Gasco of the
transactions contemplated hereby will (i) violate or conflict with the Articles
of Incorporation or By-laws of Gasco of any of the Gasco Subsidiaries, (ii)
require any filing with, or permit, authorization, consent or approval of, any
Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings could not
reasonably be expected to have a Material Adverse Effect on Gasco, (iii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Gasco or any of the Gasco Subsidiaries
is a party or by which any of their respective properties are bound, (iv)
violate any law, court order, judgment, decree, or regulation applicable to
Gasco or any of the Gasco Subsidiaries or by which any of their respective
properties are bound, or (v) result in the creation or imposition of any Lien on
any asset of Gasco or the Gasco Subsidiaries, except in the case of clauses
(iii), (iv) or (v) for violations, breaches or defaults that could not
reasonably be expected to have a Material Adverse Effect on Gasco.
2.7 SEC DOCUMENTS AND OTHER REPORTS. Gasco has filed with the SEC
all documents required to be filed by it since it became required to do so under
the Securities Act or the Exchange Act (the "Gasco SEC Documents"). As of their
respective filing dates,
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the Gasco SEC Documents were prepared substantially in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, each
as in effect on the date so filed, and at the time filed with the SEC (or if
amended or superseded by a filing prior to the date hereof, then on the date of
such filing) none of the Gasco SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The financial statements of Gasco included
in the Gasco SEC Documents have been prepared in accordance with generally
accepted accounting principles (except in the case of the unaudited statements
permitted by Form 10-Q under the Exchange Act) applied on a consistent basis
during the periods involved (except as may be indicated therein or in the notes
thereto) and fairly present the consolidated financial position of Gasco and the
consolidated Gasco Subsidiaries as of the respective dates thereof and the
consolidated results of operations and consolidated cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments and to any other adjustments described therein).
2.8 ABSENCE OF MATERIAL ADVERSE CHANGE. Since December 31, 2000,
Gasco and the Gasco Subsidiaries have conducted their respective businesses in
all material respects only in the ordinary course, consistent with past
practices, and there has not been (i) any Material Adverse Change with respect
to Gasco, (ii) any declaration, setting aside or payment of any dividend or
other distribution with respect to its capital stock or any redemption, purchase
or other acquisition of any of its capital stock, (iii) any split, combination
or reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, or (iv) any material change
in accounting methods, principles or practices by Gasco affecting its assets,
liabilities or business, except insofar as may have been required by a change in
generally accepted accounting principles.
2.9 PERMITS; COMPLIANCE WITH LAWS. (a) Each of Gasco and the Gasco
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, charters, easements, variances, exceptions, consents,
certificates, approvals and orders of any Governmental Entity necessary for
Gasco or any of the Gasco Subsidiaries to own, lease and operate its properties
or to carry on its business as it is now being conducted (the "Gasco Permits"),
except where the failure to have any of the Gasco Permits could not,
individually or in the aggregate, have a Material Adverse Effect on Gasco, and,
as of the date of this Agreement, no suspension or cancellation of any of the
Gasco Permits is pending or, to the knowledge of Gasco, threatened, except where
the suspension or cancellation of any of the Gasco Permits could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Gasco. The business of Gasco and the Gasco Subsidiaries is not
being conducted in violation of any law, ordinance or regulation of any
Governmental Entity, except for possible violations that could not reasonably be
expected to have a Material Adverse Effect on Gasco.
2.10 TAX MATTERS. Except as would not have a Material Adverse
Effect on Gasco: (i) Gasco and each of the Gasco Subsidiaries have timely filed
(after taking into account any extensions to file) all Tax Returns required to
be filed by them either on a separate or combined or consolidated basis; (ii)
all such Tax Returns are correct in all respects and
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accurately disclose in all respects all Taxes required to be paid for the
periods covered thereby; (iii) Gasco and the Gasco Subsidiaries have paid or
caused to be paid all Taxes shown as due on such Tax Returns and all Taxes for
which no Tax Return was required to be filed, and the financial statements
contained in the Gasco SEC Documents reflect an adequate reserve as determined
in accordance with generally accepted accounting principles for all material
Taxes payable by Gasco and the Gasco Subsidiaries and not yet due (other than a
reserve for deferred Taxes established to reflect timing differences between
book and Tax treatment) for all taxable periods and portions thereof accrued
through the date of such financial statements; (iv) none of Gasco or any Gasco
Subsidiary has waived in writing any statute of limitations in respect of Taxes;
(v) there is no action, suit, investigation, audit, claim or assessment that has
been formally commenced or proposed to Gasco in writing with respect to Taxes of
Gasco or any of the Gasco Subsidiaries where an adverse determination is
reasonably likely; (vi) there are no Liens for Taxes upon the assets of Gasco or
any Gasco Subsidiary except for Liens relating to current Taxes not yet due;
(vii) all Taxes which Gasco or any Gasco Subsidiary is required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid or accrued on the books of Gasco or such Gasco Subsidiary; (viii)
neither Gasco nor any Gasco Subsidiary has been a member of any group of
corporations filing Tax Returns on a consolidated, combined, unitary or similar
basis other than each such group of which it is currently a member; (ix) no
deduction of any amount that would otherwise be deductible by Gasco or any of
the Gasco Subsidiaries could be disallowed under Section 162(m) of the Code; (x)
neither Gasco nor any of the Gasco Subsidiaries is a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of the
Code; (xi) none of Gasco, FECC or any of their Subsidiaries will be obligated to
make a payment, in connection with the transactions contemplated hereunder or
otherwise, to any employee or former employee of, or individual providing
services to, Gasco or any Gasco Subsidiary that would be a "parachute payment"
to a "disqualified individual" as those terms are defined in Section 280G of the
Code without regard to whether such payment is reasonable compensation for
personal services performed or to be performed in the future; and (xii) none of
Gasco, FECC or any of their Subsidiaries will be obligated to pay any excise
taxes or similar taxes imposed on any employee or former employee of, or
individual providing services to, Gasco or any Gasco Subsidiary under Section
4999 of the Code or any similar provisions as a result of the consummation of
the transactions contemplated hereby, either alone or in connection with any
other event.
2.11 LIABILITIES. Except for the $500,000 principal amount
promissory note made by Gasco in favor of FECC, Gasco and the Gasco
Subsidiaries, taken as a whole, do not have any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a consolidated
balance sheet of Gasco and the Gasco Subsidiaries or in the notes thereto that
were not set forth in the March 31, 2001 balance sheet in Gasco's quarterly
report on Form 10-Q for the quarter then ended, other than (i) liabilities and
obligations incurred in the ordinary course of business since March 31, 2001 or
(ii) liabilities arising after March 31, 2001 which could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect on
Gasco.
2.12 BENEFIT PLANS; EMPLOYEES AND EMPLOYMENT PRACTICES. Except for
the Pannonian Employee Royalty Trust Agreement, neither Gasco nor any of the
Gasco
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Subsidiaries has adopted or agreed to create, adopt or contribute to any Gasco
Benefit Plan. Except as between Gasco and each of Xxxx Xxxxxx, Xxxx Xxxxxxxx,
Xxxx Xxxxx and Xxxxxxx Xxxxxx, there exist no material employment, consulting,
severance, bonus, incentive or termination agreements between Gasco or any of
the Gasco Subsidiaries and any current or former employee, officer or director
of Gasco or any of the Gasco Subsidiaries.
2.13 LITIGATION. As of the date of this Agreement there is no suit,
action, proceeding or investigation pending or, to Gasco's knowledge,
threatened, against Gasco or any of the Gasco Subsidiaries before any
Governmental Entity that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Gasco. Neither Gasco nor any of
the Gasco Subsidiaries is subject to any outstanding judgment, order, writ,
injunction or decree that could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Gasco.
2.14 ENVIRONMENTAL MATTERS. Gasco is conducting its businesses in
material compliance with all applicable laws, including Environmental Laws, and
has and is in compliance with all licenses and permits required under any such
laws, unless failure to so comply would not reasonably be expected to have a
Material Adverse Effect. None of Gasco's operations or properties is the subject
of federal, state or local investigation evaluating whether any material
remedial action is needed to respond to a release of any Hazardous Materials
into the environment or to the improper storage or disposal (including storage
or disposal at offsite locations) of any Hazardous Materials, unless such
remedial action would not reasonably be expected to have a Material Adverse
Effect. Gasco is not responsible (and to the best knowledge of Gasco, no Person
has filed any notice indicating that Gasco is responsible) for the improper
release into the environment, or the improper storage or disposal, of any
material amount of any Hazardous Materials. To the best knowledge of Gasco, no
Hazardous Materials have been improperly released by any other Person or are
improperly stored or disposed of, upon any property of Gasco, unless such
release, storage or disposal would not reasonably be expected to have a Material
Adverse Effect.
2.15 INTELLECTUAL PROPERTY. The Intellectual Property Rights
consist solely of items and rights which are: (i) owned by Gasco or the Gasco
Subsidiaries; (ii) in the public domain; or (iii) rightfully used by Gasco or
the Gasco Subsidiaries pursuant to a license, and, with respect to Intellectual
Property Rights owned by Gasco or the Gasco Subsidiaries, Gasco or the Gasco
Subsidiaries own the entire right, title and interest in and to such
Intellectual Property Rights free and clear of any Liens. Gasco and the Gasco
Subsidiaries have all rights in the Intellectual Property Rights necessary to
carry out their businesses substantially as currently conducted except as could
not reasonably be expected to have a Material Adverse Effect on Gasco. The
Intellectual Property Rights do not infringe on any proprietary right of any
Person, except to the extent that any such infringement, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
Gasco. As of the date of this Agreement, no claims against Gasco or any Gasco
Subsidiary (or, to Gasco's knowledge, against any other holder of Intellectual
Property Rights) (x) challenging the validity, effectiveness, or ownership by
Gasco or the Gasco Subsidiaries of any of the Intellectual Property Rights, or
(y) to the effect that the Intellectual Property Rights infringe or will
infringe on any intellectual property or other proprietary right of any Person
have
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been asserted or, to Gasco's knowledge, are threatened by any Person nor to
Gasco's knowledge are there any valid grounds for any bona fide claim of any
such kind. To Gasco's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Intellectual Property Rights by
any third party, employee or former employee of Gasco or the Gasco Subsidiaries.
2.16 BROKERS. Except for Canaccord Capital (Europe) Ltd.
("Canaccord") the fees and expenses of which will be paid by Gasco (and are
reflected in agreements with Gasco, true and correct copies of which have been
furnished to and accepted by FECC), no broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Gasco. In no event shall the cash amounts paid or payable by Gasco to Canaccord
in connection with the transactions contemplated by this Agreement exceed
$1,500,000 in the aggregate. In addition, Gasco is obligated to issue
125,000 shares of Common Stock to Canaccord and has issued warrants to purchase
900,000 shares of Common Stock to Wet Coast Management.
2.17 CONTRACTS. Except as set forth in the Gasco 10-K and as
otherwise referred to herein, and except for this Agreement, and the agreements
referenced hereby, neither Gasco nor any of the Gasco Subsidiaries is a party to
or bound by: (i) any "material contract" (as such term is defined in Schedule
601(b)(10) of Regulation S-K of the SEC) or any agreement, contract or
commitment the loss or termination of which could have a Material Adverse Effect
on Gasco; (ii) any non-competition agreement or any similar agreement or
obligation which materially limits or could materially limit Gasco or any of the
Gasco Subsidiaries from engaging in the business of petroleum and natural gas
exploration; or (iii) any management agreement, technical services agreement or
other agreement whereby Gasco or any of the Gasco Subsidiaries is providing or
is required to provide management or technical services to any other Person.
(Taken as a whole, the contracts and agreements required to be filed by Gasco
with the SEC are collectively referred to as the "Gasco Contracts"). With such
exceptions as, individually or in the aggregate, have not had, and could not be
reasonably expected to have, a Material Adverse Effect on Gasco, (x) each of the
Gasco Contracts is valid and in full force and effect (except to the extent they
have previously expired in accordance with their terms), and (y) neither Gasco
nor any of the Gasco Subsidiaries has violated any provision of, or committed or
failed to perform any act which, with or without notice, lapse of time, or both,
would constitute a default under the provisions of any Gasco Contract. To the
knowledge of Gasco, no counterparty to any such contract, agreement or
commitment has violated any provision of, or committed or failed to perform any
act which, with or without notice, lapse of time, or both would constitute a
default or other breach under the provisions of, such Gasco Contract, except for
defaults or breaches which, individually or in the aggregate, have not had, or
would not reasonably be expected to have, a Material Adverse Effect on Gasco.
Neither Gasco nor any of the Gasco Subsidiaries is a party to, or otherwise a
guarantor of or liable with respect to, any interest rate, currency or other
swap or derivative transaction, other than any such transactions which are not
material to the business of Gasco or the Gasco Subsidiaries. Gasco has provided
or made available to FECC a copy of each agreement described in subparts (i),
(ii) and (iii) above. The designation or definition of Gasco Contracts for
purposes of this Section 2.17 and the disclosures made pursuant hereto shall not
be construed or utilized to expand, limit or
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define the terms "material" and "Material Adverse Effect" as otherwise
referenced and used in this Agreement.
2.18 TRANSACTIONS WITH AFFILIATES. Except for the agreements
referred to in Section 2.12, to Gasco's knowledge, no director or executive
officer of Gasco or any 5% or greater stockholder of Gasco is at the date hereof
a party to any transaction with Gasco or any of the Gasco Subsidiaries in which
the amount involved exceeds $50,000, including any contract or arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property (including intellectual property) to or from, or otherwise
requiring payments to or from Gasco or any of the Gasco Subsidiaries.
2.19 EXECUTIVE COMMITTEE. The resolutions attached hereto as
Exhibit B have been adopted by the Gasco Board of Directors and are in full
force and effect on the date hereof.
2.20 LEASES. Gasco holds good and defensible title to the leases
set forth on Schedule C in accordance with standards generally acceptable in the
oil and gas industry, free and clear of any mortgage, lien, charge, encumbrance,
easement or title imperfection, except liens for (i) taxes or assessments not
due and payable, or which are being contested in good faith by appropriate
proceedings, (ii) liens for current costs of development and operation under
operating agreements, none or which is in default, (iii) development obligations
under the leases, the breach of which will result in failure of title only as to
portions of the property subject to the lease where producing units have not
been established and (iv) title imperfections that do not in the aggregate
materially detract from the value or materially interfere with the current use
of the properties leased by Gasco as a whole. Each lease set forth on Schedule C
is valid and subsisting and there is not any existing default under any such
lease, with such exceptions as in the aggregate are not material to all of such
leases taken as a whole.
3. REPRESENTATIONS AND WARRANTIES OF FECC. FECC hereby represents and
warrants that:
3.1 AUTHORIZATION. FECC has full corporate power and authority to
enter into this Agreement, and this Agreement constitutes its legal valid and
binding obligation, enforceable against FECC in accordance with its terms.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares and the Common
Stock issuable upon conversion thereof (the "Conversion Stock" and, collectively
with the Shares, the "Securities") will be acquired for investment for FECC's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof except in compliance with applicable securities
laws.
3.3 INVESTMENT EXPERIENCE. FECC acknowledges that it can bear the
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the shares. FECC represents that it has not been
organized for the purpose of acquiring the Shares.
3.4 ACCREDITED INVESTOR. FECC is an "accredited investor" within
the meaning of Securities and Exchange Commission ("SEC") Rule 501 of Regulation
D, as presently in effect.
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3.5 RESTRICTED SECURITIES. FECC understands that the Securities
are "restricted securities" under the federal securities laws inasmuch as they
are being acquired from Gasco in a transaction not involving a public offering
and that under such laws and applicable regulations the Securities may be resold
without registrations under the Act only in certain limited circumstances. FECC
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
4. COVENANTS OF GASCO AND FECC.
4.1 DELIVERY OF FINANCIAL INFORMATION; AUDITOR
4.1.1 Gasco shall deliver to FECC financial information about
Gasco sufficiently ahead of the deadlines for filing reports with the SEC to
permit FECC to prepare and file such reports on a timely basis. Gasco
acknowledges that its results of operations will be material to FECC's financial
statements. Gasco shall provide preliminary information regarding its results of
operations to FECC when and as the same becomes available with the understanding
that the information is subject to change. Final results of operations of Gasco
shall in any event be delivered to FECC at least ten business days before the
same are required to be included in a report that FECC is required to file with
the SEC.
4.1.2 Gasco shall engage and retain the same firm of
certified public accountants to audit its financial statements for any period as
audits FECC's financial statements for the period that such FECC statements
include Gasco financial information for such period.
4.2 INSPECTION. Gasco shall permit FECC, at FECC's expense, to
visit and inspect Gasco's properties, to examine its books of account and
records and to discuss Gasco's affairs, finances and accounts with its officers,
all at such reasonable times as may be requested by FECC.
4.3 USE OF PROCEEDS. Gasco shall use the proceeds from the sale of
the Shares solely to:
(i) drill, complete and equip natural gas xxxxx
(commonly referred to as "obligation xxxxx") necessary to retain the
mineral leases
(a) owned by Gasco today in the Green River
Basin and
(b) to be acquired from Ultra Petroleum by
Gasco in the future (these leases
commonly referred to as the old Chevron
leases);
(ii) drill, complete and equip xxxxx in the Uinta
Basin;
(iii) pay up to $1,600,000 and $3,600,000 of general
and administrative expenses in 2001 and 2002, respectively, and in
addition pay expenses incurred in connection with the negotiation of
the terms of and the issuance and sale of the Shares to FECC;
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(iv) pay up to $700,000 to the Seller as partial
consideration for the acquisition of LTM Energy Corporation; and
(v) repay all amounts owed to FECC under that
certain $500,000 principal amount promissory note dated May 15, 2001,
which note Gasco shall repay in cash in full as soon or practicable
after the date hereof.
4.4 GASCO BOARD REPRESENTATION. Gasco shall use its best efforts
to cause a person designated by FECC (who shall be Xxxxxxx X. Xxx unless FECC
otherwise notifies Gasco) to become and remain a director of Gasco (the "FECC
Designee") and to cause that person to become and remain a member of the
executive committee as constituted on the date hereof as evidenced by the Gasco
board of directors resolutions attached hereto as Exhibit B.
4.5 FECC LOCKUP
4.5.1 Except as permitted by Sections 4.5.2 and 5.2, FECC
shall not sell, exchange, transfer or otherwise dispose of any of the Securities
during the Lockup Period. As used herein, "Lockup Period" shall mean the period
commencing on the date hereof and ending on the earliest to occur of the
following:
(i) the third anniversary of the date hereof;
(ii) the commencement of a public offer to purchase
at least half of the outstanding Common Stock of Gasco that is open to
all stockholders of Gasco;
(iii) the execution and delivery by Gasco of an
agreement to merge with another person in a transaction of which Gasco
is not the surviving person;
(iv) FECC's receipt of notice from the SEC staff to
the effect that it is the view of the SEC that FECC is an investment
company, as that term is defined in the Investment Company Act of 1940,
as amended, by virtue of its ownership of the Securities.
4.5.2 Nothing contained in Section 4.5.1 shall preclude FECC
from selling up to 10% of the Conversion Stock after the first anniversary, and
up to an additional 10% of the Conversion Stock after the second anniversary, in
any event subject to compliance by FECC with Section 4.6.
4.6 RIGHT OF FIRST REFUSAL. During the Lockup Period, FECC shall
not sell, exchange, transfer or otherwise dispose of any of the Securities
except pursuant to Section 5.2 unless the requirements of this Section 4.6 shall
have been satisfied.
4.6.1 FECC shall in writing offer to sell to Gasco the
Securities it plans to transfer. Such offer shall set forth in reasonable detail
the price and other terms of the offer.
4.6.2 Gasco shall have 60 days after receiving the offer in
which to accept the offer in writing and to acquire the Securities by delivering
the full purchase price therefor
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to FECC and otherwise complying with the other terms to be complied with during
such period.
4.6.3 If Gasco does not accept the offer and acquire the
Securities as required by Section 4.6.2, then FECC shall be free to sell the
Securities so offered to Gasco to another person on the same terms or on terms
more favorable to FECC for a period of six months commencing upon the expiration
of the 60-day period referred to in Section 4.6.2 (or upon the delivery of a
binding, irrevocable, written notice by Gasco to FECC that Gasco declines the
offer).
4.7 REGISTRATION RIGHTS
4.7.1 Definitions. For purposes of this Section 4.7:
(a) The term "Act" means the Securities Act of 1933, as
amended.
(b) The term "1934 Act" shall mean the Securities Exchange
Act of 1934, as amended.
(c) The term "register", "registered," and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(d) The term "Registrable Securities" means the Conversion
Shares and any other Common Stock owned by FECC.
4.7.2 REQUEST FOR REGISTRATION.
(a) If Gasco shall receive at any time after the Lockup
Period, or a reasonable interval before the expiration of the Lockup Period so
as to allow a registration statement to be declared effective by the SEC on the
day after the Lockup Period expires, a written request from FECC that Gasco file
a registration statement under the Act covering the registration of any
Registrable Securities, then Gasco shall effect as soon as practicable, and in
any event within 120 days of the receipt of such request, the registration under
the Act of all Registrable Securities that FECC requested be registered, subject
to the limitations of subsection (c) and (d).
(b) If FECC intends to distribute the Registrable
Securities by means of an underwriting, it shall so advise Gasco as a part of
its request. The underwriter will be selected by the FECC. In such event, FECC
shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.
(c) Notwithstanding the foregoing, if Gasco shall furnish
to FECC a certificate signed by the Chief Executive Officer of Gasco stating
that in the good faith judgment of the Board of Directors of Gasco, it would be
seriously detrimental to Gasco and its shareholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, Gasco shall have the right to defer taking action with
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respect to such filing for a period of not more than 180 days after receipt of
the request of FECC; provided, however, that Gasco may not utilize this right
more than once in any two-year period.
(d) In addition, Gasco shall not be obligated to effect, or
to take any action to effect, any registration after Gasco has effected three
registrations pursuant to this Section 4.7 and such registrations have been
declared or ordered effective or at any time before the Lockup Period has
expired.
4.7.3 Obligations of Gasco. Whenever required under this
Section 4.7 to effect the registration of any Registrable Securities, Gasco
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of FECC,
keep such registration statement effective for a period of up to one hundred
eighty (180) days or until the distribution contemplated in the registration
statement has been completed; provided, however, that (i) such 180-day period
shall be extended for a period of time equal to the period the FECC refrains
from selling any securities included in such registration at the request of
Gasco; and (ii) in the case of any registration of Registrable Securities on
Form S-3 which are intended to be offered on a continuous or delayed basis, the
registration statement shall be kept effective until all such Registrable
Securities are sold.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to FECC such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as it may reasonably request in order to
facilitate the disposition of Registrable Securities owned by it.
(d) Use its best efforts to register and quality the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by FECC;
provided that Gasco shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. FECC shall also
enter into and perform its obligations under such an agreement.
(f) Notify FECC at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue
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statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(g) Cause all such Registrable Securities registered
pursuant hereto to be listed on each securities exchange on which similar
securities issued by Gasco are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Furnish, at the request of FECC, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration, if such securities are being sold through underwriters, or,
if such securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of counsel representing Gasco for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
FECC and (ii) a letter dated such date, from the independent certified public
accountants of Gasco, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to FECC.
4.7.4 FURNISH INFORMATION. It shall be a condition precedent
to the obligations of Gasco to take any action pursuant to this Section 4.7 with
respect to the Registrable Securities that FECC shall furnish to Gasco such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be required to effect
the registration of the Registrable Securities.
4.7.5 Expenses of Demand Registration. Gasco shall pay all
expenses other than underwriting discounts and commissions incurred in
connection with registrations, filings or qualifications pursuant to Section
4.7, including (without limitation) all registration, filing and qualification
fees, printers' and accounting fees, fees and disbursements of counsel for Gasco
and the fees and disbursements of one counsel for FECC.
4.7.6 INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under this Section 4.7:
(a) To the extent permitted by law, Gasco will indemnify
and hold harmless FECC, any underwriter (as defined in the Act) for FECC and
each person, if any, who controls FECC or such underwriter within the meaning of
the Act or the 1934 Act, against losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Act, or the 1934 Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any
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amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by Gasco of the Act, the 1934 Act, any state securities law or any
rule or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and Gasco will pay to FECC and each underwriter or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that this indemnity shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of Gasco (which consent shall
not be unreasonably withheld), nor shall Gasco be liable in any such case for
any such loss, claim, damage, liability, or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by FECC or any such underwriter or controlling person.
(b) To the extent permitted by law, FECC will indemnify and
hold harmless Gasco, each of its directors, each of its officers who has signed
the registration statement, each person, if any, who controls Gasco within the
meaning of the Act, any underwriter, and any controlling person of any such
underwriter, against any losses, claims, damages, or liabilities (joint or
several) to which any of the foregoing persons may become subject, under the
Act, or the 1934 Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereto) arise out of or
are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information provided to Gasco by FECC for the purpose of being used in
connection with such registration; and FECC will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection, in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that this
indemnity shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of FECC, which consent shall not be unreasonably withheld; and further provided
that in no event shall any indemnity under this subsection exceed the gross
proceeds from the offering received by FECC.
(c) Promptly after receipt by an indemnified party of
notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party, deliver to the indemnifying party a written notice of
the commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party (together with all other indemnified parties which may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if prejudicial to its ability
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to defend such action, shall relieve such indemnifying party of any liability to
the indemnified party.
(d) If the indemnification provided for herein is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement of omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in an underwriting
agreement entered into in connection with an underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of Gasco and FECC under this Section
4.7.6 shall survive the completion of any offering of Registrable Securities in
a registration statement under this Section 4.7, and otherwise.
4.7.7 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and
after the date of this Agreement, Gasco shall not, without the prior written
consent of FECC, enter into any agreement with any holder or prospective holder
of any securities of Gasco that would allow such holder or prospective holder to
include such securities in any registration filed under Section 4.7 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the Registrable
Securities included therein.
4.8 FECC BOARD REPRESENTATION. FECC shall use its best efforts to
cause a person designated by Gasco (who shall be Xxxx Xxxxxx unless Gasco
otherwise notifies FECC) to become and remain a director of FECC.
5. Covenants and Representations of Certain Stockholders
5.1 VOTING AGREEMENT. Xxxx Xxxxxxxx and Xxxx Xxxxxx (the
"Principal Stockholders") shall vote whatever voting securities of Gasco they
now own or hereafter acquire in favor of the election of the FECC Designee to
the Board of Directors of Gasco.
5.2 TAG ALONG RIGHTS. Except as set forth in Section 5.2.4, until
the later of (i) the fifth anniversary hereof and (ii) the date on which FECC no
longer owns any securities, the
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Principal Stockholders shall not sell, exchange, transfer or otherwise dispose
of any Common Stock of Gasco unless the requirements of this Section 5.2 shall
have been satisfied.
5.2.1 The selling Principal Stockholder shall in writing
notify FECC that he has received an offer to purchase Common Stock, which he
plans to accept. Such notice shall set forth in reasonable detail the price and
other terms of the offer. FECC may at its option elect to sell up to the Pro
Rata Amount of Common Stock owned by FECC to the prospective purchaser in lieu
of Common Stock owned by the selling Principal Stockholder. As used herein, "Pro
Rata Amount" means a fraction, the numerator of which is the number of shares of
Common Stock owned, or issuable upon exercise or conversion of Gasco securities
owned, by FECC, and the denominator of which is the total number of shares of
Common Stock owned, or issuable upon exercise or conversion of Gasco securities
owned, by Gasco and FECC.
5.2.2 FECC shall have 20 days after receiving the notice in
which to notify the selling Principal Stockholder in writing that it wishes to
participate in the offer. If it does so notify the selling Principal
Stockholder, then it shall deliver certificates representing the Common Stock it
has elected to sell, free and clear of any lien or encumbrance, to the selling
Principal Stockholder at least two business days before the Principal
Stockholder is required to deliver them to the prospective purchaser, and the
selling Principal Stockholder shall deliver them to the prospective purchaser in
lieu of Common Stock owned by him and deliver the consideration therefor to FECC
by no later than the next business day.
5.2.3 If FECC does not accept the offer to participate in the
offer to purchase the selling Principal Stockholder's Common Stock, he is free
to accept the offer himself.
5.2.4 Neither Principal Stockholder need meet the
requirements of this Section 5.2 set forth above with respect to the sale each
year of up to ten percent of the Common Stock owned by him at the beginning of
such year.
5.3 STOCK OWNERSHIP. Each Principal Stockholder represents and
warrants to FECC that he beneficially owns the number of issued and outstanding
shares of Gasco Common Stock, and no more and no fewer, set forth opposite his
name below:
Xxxx Xxxxxx 2,847,192
Xxxx Xxxxxxxx 2,307,358
5.4 13D GROUPS. Each Principal Stockholder covenants with FECC
that he will not join or remain a member of any group, as that term is used in
Section 13(d) of the Securities Exchange Act of 1934, if such group would have a
combined voting power equal to 25% or more of the combined voting power of the
outstanding Common Stock and Series A Preferred Stock of Gasco.
6. CONDITIONS OF FECC'S OBLIGATIONS AT CLOSING. The obligations of FECC
under subsection 1.1(b) of this Agreement are subject to the fulfillment at or
before the Closing of each of the following conditions:
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6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Gasco contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
6.2 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Shares shall be duly obtained and effective as of the Closing.
6.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to FECC's counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request
6.4 OPINION OF COMPANY COUNSEL. FECC shall have received from
counsel for Gasco, an opinion dated as of the Closing to the effect that the
Securities have been duly authorized and that the Shares have been and the
Conversion Stock when issued will be validly issued, fully paid and
nonassessable.
6.5 ENGINEER'S REPORT. FECC shall have received and its Board of
Directors shall have approved a report of a qualified independent engineer (who
shall be Xxxxx Xxxxxx if he is available) with respect to the potential natural
gas reserves of Gasco.
7. CONDITIONS OF GASCO'S OBLIGATIONS AT CLOSING. The obligations of Gasco
to FECC under this Agreement are subject to the fulfillment at or before the
Closing of each of the following conditions by FECC:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of FECC contained in Section 3 shall be true on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of the Closing.
7.2 PAYMENT OF PURCHASE PRICE. FECC shall have delivered the
Purchase Price.
7.3 QUALIFICATIONS. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Shares pursuant to this Agreement shall be duly obtained and effective as of
the Closing.
8. MISCELLANEOUS.
8.1 SURVIVAL. The representations, warranties and covenants of
Gasco and FECC contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of FECC or Gasco.
8.2 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement shall not
be assignable by any party hereto without the prior written consent thereto, and
any purported assignment
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in violation hereof shall be null and void. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
8.3 GOVERNING LAW; JURISDICTION. This Agreement shall be governed
in all respects by the laws of the United States of America and by the laws of
the State of Nevada, excluding its conflict of law provisions. The parties
hereby irrevocably and unconditionally consent to submit to the exclusive
jurisdiction of the courts of the State of Nevada and of the United States of
America located in Nevada (the "Nevada Courts") for any litigation arising out
of or relating to this Agreement and the transactions contemplated hereby, waive
any objection to the laying of venue of any such litigation in the Nevada Courts
and agree not to plead or claim in any Nevada Court that such litigation brought
therein has been brought in an inconvenient forum; PROVIDED that any judgment
obtained in any such litigation may be enforced in any court having jurisdiction
over a party or its assets.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.5 TITLES. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
8.6 NOTICES. All notices and other communications hereunder shall
be validly given or made if in writing, when delivered personally (by courier
service or otherwise), when delivered by telecopy, or when actually received
when mailed by first-class certified or registered United States mail,
postage-prepaid and return receipt requested, in each case to the address of the
party to receive such notice or other communication set forth below, or at such
other address as any party hereto may from time to time advise the other parties
pursuant to this subsection:
If to Gasco, to:
Gasco Energy, Inc.
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxx X, Xxxxx 000
Englewood, Colorado 80112
Attention: Xxxx Xxxxxxxx
Facsimile:
with a copy to:
Xxxx, Dill, Carr, Xxxxxxxxxx & Xxxxxxxxx, P.C.
Xxxxx 000
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
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Attention: Xxx X. Xxxxxxxxx
Facsimile: 000-000-0000
if to FECC, to:
First Xxxx.xxx, Inc.
00 Xxxxxxxxxx Xxxx
00xx Xxxxx
Xxx Xxxx
Xxxx Xxxx SAR
Attention: Xxxxxxx X. Xxx
Facsimile: 852.2804.6291
with a copy to:
Xxxxxxxx Xxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: D. Xxxxx Xxxxx, Esq.
Telecopy: (000) 000-0000
8.7 EXPENSES. Gasco and FECC each shall pay all costs and expenses
that it incurs with respect to the negotiation, execution, delivery and
performance of this Agreement.
8.8 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of Gasco and FECC.
8.9 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms. Any provision of this Agreement held invalid or unenforceable only in
part or degree will remain in full force and effect to the extent not held
invalid or unenforceable.
8.10 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and negotiations,
both written and oral, between the parties with respect to the subject matter
hereof. No representation, inducement, promise, understanding, condition or
warranty not set forth herein or therein has been made or relied upon by either
party hereto. Neither this Agreement nor any provision hereof or thereof, is
intended to confer upon any person other than the parties hereto rights or
remedies hereunder or thereunder.
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8.11 DEFINITIONS. As used in this Agreement, the following terms
have the meanings given to them below:
"Action" shall mean any action, suit, arbitration, inquiry, proceeding
or investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
"Affiliate" shall mean with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person provided that, for purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York City, are authorized or required by law to
close.
"Closing" shall have the meaning set forth in Section 2.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended.
"Environmental Laws" shall mean any applicable statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to or regulating or imposing liability or standards of conduct with respect to
pollution, protection of the environment or environmental regulation or control
or regarding Hazardous Substances or occupational health or safety.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, together with the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean (i) any corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Code) as Gasco; (ii) any partnership, trade or business (whether or not
incorporated) which on the day before the Closing Date was under common control
(within the meaning of Section 414(c) of the Code) with Gasco; and (iii) any
entity which is a member of the same affiliated service group (within the
meaning of Section 414(m) of the Code) as either Gasco, any corporation
described in clause (i) or any partnership, trade or business described in
clause (ii).
"ERISA Benefit Plan" shall mean a Gasco Benefit Plan maintained as of
the date of this Agreement which is also an "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) or which is also an "employee welfare benefit
plan" (as defined in Section 3(1) of ERISA).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
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"Final Order" shall mean action by the applicable Governmental Entity
which is in full force and effect, with respect to which no petition or other
request for such Governmental Entity or court stay, reconsideration or review of
any kind is pending, and as to which all time periods have expired within which
a Governmental Entity may be asked to stay, reconsider or review the action or
may stay, reconsider or review the action sua sponte.
"Gasco Benefit Plan" shall mean any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical, life insurance, supplemental unemployment
benefits, employee stock purchase, stock appreciation, restricted stock or other
employee benefit plan, policy, arrangement or agreement providing benefits to
any current or former employee, officer or director of Gasco or any of the Gasco
Subsidiaries or with respect to which Gasco or any of the Gasco Subsidiaries
(or, in the case of an ERISA Benefit Plan, any of the Gasco's ERISA Affiliates)
may have any liability.
"Gasco Contracts" shall have the meaning set forth in Section 2.17.
"Gasco Employee" shall mean any employee of Gasco or any of the Gasco
Subsidiaries.
"Gasco Permits" shall have the meaning set forth in Section 2.9.
"Gasco Required Approvals" shall have the meaning set forth in Section
2.6.
"Gasco SEC Documents" shall have the meaning set forth in Section 2.7.
"Gasco Stock Equivalents" shall have the meaning set forth in Section
2.4.
"Gasco Stock Options" shall have the meaning set forth in Section 2.4.
"Gasco Subsidiaries" shall have the meaning set forth in Section 2.2.
"Governmental Entity" shall mean any federal, state or local government
or any court, tribunal, administrative agency or commission or other
governmental or other regulatory authority or agency, domestic, foreign or
supranational.
"Hazardous Materials" means any substances regulated under any
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"Indebtedness" of any Person at any date shall mean (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under financing leases, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such Person and with respect to
unpaid reimbursement obligations
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related to letters of credit issued for the account of such Person and (e) all
liabil ities secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof.
"Intellectual Property Rights" shall mean any right to use, all
patents, patent rights, trademarks, trade names, trade dress, logos, service
marks, copyrights, know how and other proprietary intellectual property rights
and computer programs held or used by Gasco or any of the Gasco Subsidiaries
that are individually or in the aggregate material to the conduct of the
business of Gasco and the Gasco Subsidiaries, taken as a whole.
"Investment Entity" shall mean an entity in which Gasco or any of the
Gasco Subsidiaries has an Investment Interest.
"Investment Interest" shall mean a direct or indirect ownership of (i)
capital stock, bonds, debentures, partnership, membership interests or other
ownership interests or other securities of any Person; (ii) any deposit with or
advance, loan or other extension of credit (including the purchase of property
from another Person subject to an understanding or agreement, contingent or
otherwise to resell such property to such other Person) to any other Person;
(iii) any revenue or profit interests pursuant to any agreement or license, or
(iv) any agreement, commitment, right, understanding or arrangement with respect
to any of the items referred to in (i), (ii) or (iii) of this definition.
"Knowledge" and "known to" shall mean the actual knowledge of the
executive officers of Gasco or the executive officers of FECC, as the case may
be, who have exercised reasonable due diligence with respect to the
representation and warranty to which such knowledge statement is made.
Liens" shall mean any pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever.
Material Adverse Change" or "Material Adverse Effect" shall mean, when
used in connection with a person, any change or effect (or any development that,
insofar as can reasonably be foreseen, is likely to result in any change or
effect) or fact or condition that is materially adverse to the business,
properties, assets, financial condition or results of operations of that person
and its Subsidiaries taken as a whole, provided, however, that (i) any adverse
change, effect or development that is primarily caused by conditions affecting
the United States economy generally or the economy of any nation or region in
which that person, or its Subsidiaries conducts business that is material to the
business of that person and its Subsidiaries, taken as a whole, shall not be
taken into account in determining whether there has been (or whether there could
reasonably be foreseen) a "Material Adverse Change" or "Material Adverse Effect"
with respect to that person (ii) any adverse change, effect or development that
is primarily caused by conditions generally affecting the industries in which a
person, conducts its business shall not be taken into account in determining
whether there has been (or whether there could reasonably be foreseen) a
"Material Adverse Change" or "Material Adverse Effect" with respect to that
person, and (iii) any adverse change, effect or development that is primarily
caused by the announcement or pendency of this Agreement, the Reorganization or
the transactions contemplated hereby shall not be taken
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into account in determining whether there has been (or whether there could
reasonably be foreseen) a "Material Adverse Change" or "Material Adverse Effect"
with respect to a person; and a "Material Adverse Effect" with respect to a
person, shall include any applicable event, fact or condition with respect to
that party which would reasonably be expected to delay, interfere with, impair
or prevent the transactions contemplated by this agreement in a manner which
would have a material adverse effect on such transactions taken as a whole
considering the intentions and expectations of the parties hereto. "Maximum
Share Amount" shall have the meaning set forth in Section 1.6(e).
"NRS" shall mean the Nevada Revised Statutes, Chapter 78 and 92A.
"Person" shall mean an individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company,
unincorporated syndicate, unincorporated organization, trust, trustee, executor,
administrator or other legal representative, Governmental Entity, political
subdivision, or any group of Persons acting in concert.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Significant Employee" shall mean any Employee of Gasco or any of the
Gasco Subsidiaries who (i) is an officer of Gasco or any of the Gasco
Subsidiaries, (ii) has a written employment contract with Gasco or any of the
Gasco Subsidiaries that calls for annual compensation in excess of $100,000, or
(iii) is compensated by Gasco and/or any of the Gasco Subsidiaries at an annual
rate greater than $100,000.
"Subsidiary" or "subsidiary" of a Person shall mean any Person
(including any corporation, partnership, joint venture, limited liability
company or other entity) in which the Person in question owns, directly or
indirectly, an amount of the voting securities, other voting ownership or voting
partnership interests which is sufficient to elect at least a majority of such
Person's Board of Directors or other governing body (or, if there are no such
voting interests, 50% or more of the equity interests) of such Person.
"Tax" and "Taxes" shall mean any federal, state, local or foreign net
income, gross income, gross receipts, windfall profit, severance, property,
production, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Entity.
"Tax Return" shall mean any return, report or similar statement
required to be filed with respect to any Tax including any information return,
claim for refund, amended return or declaration of estimated tax.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
GASCO ENERGY, INC.
By: /s/ XXXX X. XXXXXXXX
--------------------------------
FIRST XXXX.XXX, INC.
By: /s/ XXXXXXX XXX
--------------------------------
For purposes of Section 5 only:
/s/ XXXX XXXXXX
------------------------------------
Xxxx Xxxxxx
/s/ XXXX XXXXXXXX
------------------------------------
Xxxx Xxxxxxxx
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