EXECUTION VERSION
STOCK PURCHASE AGREEMENT,
DATED AS OF APRIL 6, 2005
AMONG
XXXXXX X. XXXXXX,
XXXXX X. XXXXX,
XXXXXX X. XXXXXX,
XXXXXX X. XXXXXX,
XXXXXX X. XXXXXXX,
XXXXXX X. XXXXXXX, AND
YORKTOWN ENERGY PARTNERS IV, L.P.,
AS SELLERS;
CAMDEN RESOURCES, INC.
AS COMPANY;
AND
MAVERICK OIL AND GAS, INC.
AS BUYER
021594 000001 DALLAS 1868194.5 iv
TABLE OF CONTENTS
ARTICLE I DEFINITIONS..........................................................1
ARTICLE II EFFECTIVE DATE; CLOSING.............................................7
2.1 Effective Date; Closing......................................7
2.2 Proceedings at Closing.......................................7
ARTICLE III SALE AND PURCHASE OF SHARES; CONSIDERATION.........................7
3.1 Sale and Purchase of Shares..................................7
3.2 Amount and Form of Consideration.............................7
3.3 Payment of Consideration.....................................8
3.4 Purchase Price Adjustments...................................8
3.5 Excluded Items...............................................8
3.6 Employee Stock Options.......................................8
3.7 Seller Loans.................................................9
3.8 Xxxxxxx Money................................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF COMPANY..........................10
4.1 Organization and Power......................................10
4.2 Authorizations; Execution and Validity......................10
4.3 Capitalization..............................................10
4.4 Financial Statements........................................11
4.5 Consents....................................................11
4.6 No Defaults or Conflicts....................................11
4.7 Agreements, Contracts and Commitments.......................12
4.8 Litigation..................................................12
4.9 Labor Matters...............................................12
4.10 Employee Benefit Matters....................................12
4.11 Taxes.......................................................13
4.12 Fees........................................................15
4.13 Absence of Certain Changes or Events........................15
4.14 Compliance with Laws........................................15
4.15 Transactions with Related Parties...........................16
4.16 Indebtedness................................................16
4.17 Agents......................................................16
4.18 Commission Contracts........................................16
4.19 Books and Records...........................................16
4.20 Information Furnished.......................................17
4.21 Directors and Officers......................................17
4.22 Bank Accounts...............................................17
4.23 Owned Real Property.........................................17
4.24 Leased Real Property........................................17
4.25 Insurance...................................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLERS...........................18
5.1 Organization and Good Standing..............................18
5.2 Authorization of Agreement..................................18
5.3 Conflicts, Consents of Third Parties........................19
5.4 Brokers.....................................................19
5.5 Litigation..................................................19
5.6 Ownership of Stock..........................................19
5.7 Marketable Title............................................19
5.8 No Default..................................................19
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER............................20
6.1 Organization and Good Standing..............................20
6.2 Authorization of Agreement..................................20
6.3 Conflicts, Consents of Third Parties........................20
6.4 No Default..................................................20
6.5 Litigation..................................................21
6.6 Investment Intent...........................................21
6.7 Disclosure of Information...................................21
6.8 Brokers.....................................................21
ARTICLE VII ADDITIONAL AGREEMENTS.............................................21
7.1 Further Actions.............................................21
7.2 Conduct of Business Pending Closing.........................21
7.3 Title and Environmental Defects.............................22
7.4 Access to Information.......................................23
7.5 Regulatory Approvals........................................23
7.6 Employee Matters............................................23
7.7 Agreement to Defend.........................................24
7.8 Certain Consents by Sellers.................................24
7.9 Excluded Items..............................................24
7.10 Other Actions...............................................24
7.11 LIMITATION AND DISCLAIMER OF IMPLIED
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 24
7.12 Assumption of Employee Benefit Plans........................25
7.13 Preparation of Payroll and Bonus Checks and Overhead
Reimbursement........25
7.14 Change of Company Name......................................25
7.15 Relationship Among Sellers..................................25
7.16 Assumption of Office Lease..................................26
7.17 Amendment of Schedules......................................26
7.18 Audit.......................................................26
ARTICLE VIII CONDITIONS TO CLOSING............................................27
8.1 Buyer's Conditions..........................................27
8.2 Sellers' Conditions.........................................28
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ARTICLE IX DELIVERIES AT CLOSING..............................................28
9.1 Deliveries by Seller to Buyer...............................28
9.2 Deliveries by Buyer to Seller...............................29
ARTICLE X TERMINATION.........................................................29
10.1 Termination.................................................29
10.2 Effect of Termination.......................................30
ARTICLE XI INDEMNIFICATION....................................................30
11.1 Seller Indemnification......................................30
11.2 Buyer Indemnification.......................................30
11.3 Indemnification Procedures..................................30
11.4 Limits on Indemnification...................................31
ARTICLE XII TAXES.............................................................32
12.1 Tax Returns and Payments....................................32
12.2 Cooperation.................................................33
12.3 Sales and Use Taxes; Property Taxes.........................33
ARTICLE XIII GENERAL..........................................................33
13.1 Amendments..................................................33
13.2 Waivers.....................................................33
13.3 Notices.....................................................33
13.4 Successor and Assigns, Parties in Interest..................34
13.5 Severability................................................34
13.6 Entire Agreement............................................35
13.7 Governing Law...............................................35
13.8 Remedies....................................................35
13.9 Expenses....................................................35
13.10 Release of Information; Confidentiality.....................36
13.11 Schedules...................................................36
13.12 Certain Construction Rules..................................36
13.13 Counterparts................................................36
iii
INDEX OF EXHIBITS:
EXHIBIT DESCRIPTION
Exhibit "A" Excluded Items
Exhibit "B" Oil and Gas Properties
Exhibit "C" Option Cancellation Agreement
Exhibit "D" Termination Agreement
INDEX OF SCHEDULE REFERENCES:
Schedule
Schedule 3.4
Schedule 4.3(a)
Schedule 4.3(b)
Schedule 4.3(c)
Schedule 4.4
Schedule 4.5
Schedule 4.7
Schedule 4.8
Schedule 4.10
Schedule 4.11
Schedule 4.12
Schedule 4.13
Schedule 4.15
Schedule 4.16
Schedule 4.17
Schedule 4.21
Schedule 4.22
Schedule 4.23
Schedule 4.24
Schedule 4.25
Schedule 5.4
Schedule 7.6
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement dated as of April 6, 2005 (the
"Agreement") is entered into by and among Maverick Oil and Gas, Inc., a Nevada
corporation ("Buyer"), Camden Resources, Inc., a Delaware corporation
("Company") and each of Xxxxxx X. Xxxxxx, Xxxxx X. Xxxxx, Xxxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxx and Yorktown Energy
Partners IV, L.P. (each a "Seller" or collectively referred to herein as
"Sellers") pertaining to the purchase and sale of 100% of the capital stock of
the Company. Camden Oil & Gas, Inc., a Delaware corporation ("COG") joins in
this Agreement for the limited purpose set forth in this Agreement.
WHEREAS, the Sellers own all the outstanding shares of capital stock
(the "Shares") of the Company; and
WHEREAS, Buyer desires to purchase from Sellers and Sellers desire to
sell to Buyer all of the Shares on the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements,
representations, warranties and subject to the conditions contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement:
"2004 Financial Statements" has the meaning specified in Section 7.18.
"Affiliate" means, as to any Person which, directly or indirectly,
controls, is controlled by, or is under common control with such Person.
"Agreement" has the meaning specified in the preamble hereof.
"Basket Amount" has the meaning specified in Section 11.4.
"Buyer" has the meaning specified in the preamble hereof.
"Xxxxx Litigation" means the following: (i) Cause No. DC-01-236; SWEPI,
L.P., (d/b/a Shell Western E&P), KLT Inc. and KLT Gas Inc. vs. Camden Resources,
Inc.; 000xx Xxxxxxxx Xxxxxxxx Xxxxx xx Xxxxx Xxxxxx, Xxxxx; (ii) Cause No.
03-00255-I; KLT Inc. and KLT Gas Inc. v. Camden Resources, Inc.; 000xx Xxxxxxxx
Xxxxx xx Xxxxxx Xxxxxx, Xxxxx; (iii) Cause No. GN 50045; SWEPI, L.P. v. Railroad
Commission of Texas; 345th Judicial District Court of Xxxxxx County, Texas,
appeal from Orders entered by Railroad Commission in R.R.C. Docket Nos.
00-0000000 and 00-0000000 and (iv) Cause No. GN500038, KLT Gas, Inc. v. Railroad
Commission of Texas; 53rd Judicial District Court of Xxxxxx County, Texas,
appeal from Orders entered by Railroad Commission in R.R.C. Docket Nos.
00-0000000 and 00-0000000.
1
"Closing" has the meaning specified in Section 2.1.
"Closing Date" has the meaning specified in Section 2.1.
"Closing Date Payment" has the meaning specified in Section 3.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"COG" has the meaning specified in Section 3.5.
"Common Stock" means the common stock, par value $.01 per share, of the
Company.
"Company" has the meaning specified in the preamble hereof.
"Company's Knowledge" means actual knowledge of the Company's President
and/or Executive Vice President.
"Company Working Capital" means (i) the amount of the Company's net
working capital on April 1, 2005 calculated on a cash basis and (ii) a working
capital adjustment based on the Company's net working capital on April 1, 2005
calculated on an accrual basis, which shall reflect, among other things, (a) an
amount equal to the fees and expenses of legal counsel to the Company in
connection with the transactions contemplated by this Agreement, (b) the fees
and expenses of Xxxxxxx Xxxxx in connection with its services as financial
advisor to the Company in connection with the transactions contemplated by this
Agreement and (c) 50% of the aggregate fees of each of XX Xxxxxx and Xxxxxxxxxx
Xxxx & Co. in connection with their services as financial advisor to the Company
in connection with the transactions contemplated by this Agreement, provided
that the remaining 50% of such fees and expenses shall be borne by Buyer.
"Confidentiality Agreement" means that certain Confidentiality Agreement
by and between the Company and Hurricane Energy, LLC, the predecessor of Buyer,
dated as of January 31, 2005.
"Contract" means any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
insurance policy or commitment, whether written or oral.
"Defect Notice" has the meaning specified in Section 7.3.
"Xxxxxxx Money" has the meaning specified in Section 3.8.
"Effective Date" has the meaning specified in Section 2.1.
"Employee Benefit Plans" has the meaning specified in Section 4.10.
"Employee Options" shall have the meaning specified in Section 3.6.
2
"ERISA" has the meaning specified in Section 4.10.
"Excluded Items" means the properties and related liabilities of the
Company described on Exhibit "A" attached hereto and made a part hereof for all
purposes.
"Final Schedule 3.4" has the meaning specified in Section 3.4.
"Final Statement" has the meaning specified in Section 3.4.
"Financial Statements" has the meaning specified in Section 4.4.
"GAAP" means accounting principles generally accepted in the United
States of America as in effect from time to time and applied on a basis
consistent with the preparation of the Financial Statements.
"Governmental Authority" means any federal, state, local or foreign
government or governmental regulatory body and any of their respective
subdivisions, agencies, instrumentalities, authorities, courts or tribunals.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"Hydrocarbons" means oil, condensate, gas, casinghead gas and other
liquid or gaseous hydrocarbons.
"Indebtedness" means the indebtedness (including the current portion
thereof, but excluding capitalized leases) set forth on Schedule 4.16.
"Indemnified Party" has the meaning specified in Section 11.3(a).
"Indemnifying Party" has the meaning specified in Section 11.3(a).
"Injunction" means a temporary restraining order, preliminary or
permanent injunction or other order issued by a court of competent jurisdiction,
an order of a Governmental Entity having jurisdiction over any party hereto, or
any legal restraint or prohibition.
"Interim Financial Statements" has the meaning specified in Section 4.4.
"Lands" has the meaning specified in the definition of "Oil and Gas
Properties."
"Latest Balance Sheet" has the meaning specified in Section 4.4.
"Law" means any federal, state, local or foreign law, statute, rule,
ordinance, code or regulation.
"Leases" has the meaning specified the definition of "Oil and Gas
Properties."
3
"Legal Proceeding" means any judicial, administrative or arbitral
action, suit, proceeding (public or private), litigation, investigation,
complaint, claim or governmental proceeding.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, attachment, right of first refusal, option, easement, covenant,
encroachment, or any other adverse claim whatsoever.
"Litigation" shall mean the Legal Proceedings, Orders and Official
Actions listed on Schedule 4.8.
"Losses" has the meaning specified in Section 11.1.
"Material Adverse Effect" shall mean:
(i).....As to Buyer, any breach of Buyer's representations and
warranties, which individually or in the aggregate would materially
impair Buyer's ability to consummate the transactions contemplated by
this Agreement or prevent the consummation of any of the transactions
contemplated hereby.
(ii) As to any Seller, any breach of such Seller's
representations and warranties, which individually or in the aggregate
would materially impair such Seller's ability to consummate the
transactions contemplated by this Agreement or prevent the consummation
of any of the transactions contemplated hereby.
(iii) As to the Company, any breach of such Company's
representations and warranties, which, in Buyer's reasonable estimation,
made in good faith and in accordance with customary industry standards,
would individually or in the aggregate reduce the value of the Company
by an amount in excess of $5,000,000 calculated on a present value basis
utilizing a 10% discount rate and on a pre-tax basis.
"Material Contract" has the meaning specified in Section 4.7.
"Office Lease Agreement" shall mean that certain Lease Agreement, dated
April 25, 2000, by and between the Company and Xxxx-Xxxx Texas Property, L.P.,
as amended by that certain First Amendment to Lease Agreement, dated May 5,
2003, by and between the Company and Xxxx-Xxxx Texas Property, L.P.
"Official Action" shall mean any domestic or foreign decision, order,
writ, injunction, decree, judgment, award or any determination, both as
presently existing and effective or presently existing and as may become
effective in the future, by any court, administrative body, or other tribunal.
"Oil and Gas Properties" means all right, title, interest and estate,
real or personal, recorded or unrecorded, movable or immovable, tangible or
intangible, in and to: (i) Hydrocarbon leases, Hydrocarbon and mineral leases,
subleases and other leaseholds, royalties, overriding royalties, net profit
interests, mineral fee interests, carried interests and
4
other properties and interests (the "Leases") and the lands covered thereby
("Land(s)") and any and all Hydrocarbon, water or injection xxxxx thereon or
applicable thereto (the "Xxxxx"); (ii) any pools or units which include all or a
part of any Land or include any Well (the "Units") and including without
limitation all right, title and interest in production from any such Unit,
whether such Unit production comes from xxxxx located on or off of the Lands,
and all tenements, hereditaments and appurtenances belonging to, used or useful
in connection with the Leases, Lands and Units; (iii) interests under or derived
from all contracts, agreements and instruments applicable to or by which such
properties are bound or created, to the extent applicable to such properties,
including, but not limited to, operating agreements, gathering agreements,
marketing agreements (including commodity swap, collar and/or similar derivative
agreements), transportation agreements, processing agreements, seismic,
geological and geophysical agreements, unitization, pooling and communitization
agreements, declarations and orders, joint venture agreements, and farmin and
farmout agreements; (iv) easements, permits, licenses, servitudes,
rights-of-way, surface leases and other surface rights appurtenant to, and used
or held for use to the extent applicable to such properties; and (v) equipment,
machinery, fixtures and other tangible personal property and improvements
located on or used or obtained in connection with such properties. Attached
hereto as Exhibit "B" is a description of each Lease and the Units and the Xxxxx
applicable thereto and a description, organized by prospect, of the items listed
above in subparagraphs (iii), (iv) and (v), which Exhibit "B" shall be a part of
the definition of "Oil and Gas Properties." The respective "net revenue
interest" and "working interest" described on Exhibit "B" shall be a part of the
definition of "Oil and Gas Properties."
"Option Cancellation Agreement" has the meaning specified in
Section 3.6.
"Option Consideration" has the meaning specified in Section 3.6.
"Order" means any order, judgment, Injunction, ruling, writ, award,
decree, statute, law, ordinance, rule or regulation.
"Permit" means any permit, license, certificate (including a
certificate of occupancy) registration, authorization, application, filing,
notice, qualification, waiver of any of the foregoing or approval of a
Governmental Authority.
"Permitted Liens" means: (a) Liens for Taxes that are not yet due and
payable or that are being contested in good faith by appropriate proceedings and
as to which adequate reserves have been established in accordance with GAAP, (b)
operators' liens and statutory liens, for taxes, assessments, labor and
materials, where payment is not due (or that, if delinquent, are being contested
in good faith); (c) operating agreements, unit agreements, unitization and
pooling designations and declarations, gathering and transportation agreements,
processing agreements, gas, oil and liquids purchase, sale and exchange
agreements and other contracts, agreements and installments; (d) statutory or
regulatory authority of governmental agencies; (e) easements, surface leases and
rights, plat restrictions, pipelines, grazing, logging, canals, ditches,
reservoirs, telephone lines, power lines, railways and similar encumbrances; (f)
liens, charges, encumbrances and irregularities in the chain of title which,
because of remoteness in or passage of time, statutory cure periods, marketable
title acts or other similar reasons, have not materially affected or
interrupted, and are not reasonably expected to materially affect or interrupt,
the claimed ownership of the party or the receipt of production revenues from
the Oil and Gas Properties affected thereby and (g) matters described in
Schedule 4.16 to this Agreement.
5
"Per Share Consideration" has the meaning specified in Section 3.6.
"Person" means any natural person, corporation, partnership, limited
liability company, trust, unincorporated organization, Governmental Authority,
or other entity.
"Post-Signing Event" has the meaning specified in Section 7.17.
"Pre-Closing Returns" has the meaning specified in Section 12.1.
"Preferred Stock" means the preferred stock, par value $.01 per share,
of the Company.
"Pro Rata Share" means with respect to any Seller a fraction, set forth
as a percentage, the numerator of which is the aggregate amount of consideration
received by a Seller pursuant to this Agreement for all of such Seller's Shares
and the Seller's Option Share Consideration, if applicable, and the denominator
of which is the aggregate consideration received by all Sellers pursuant to this
Agreement.
"Purchase Price" has the meaning specified in Section 3.2.
"Real Property Leases" has the meaning specified in Section 4.24.
"Related Party" means (i) any Affiliate of the Company, or (ii) except
for any non-natural Seller, any grandparent, parent, brother, sister, child or
spouse of a Seller.
"Schedule" means a disclosure schedule provided by Seller to Buyer
pursuant to this Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" and "Sellers" have the meaning specified in the preamble
hereof.
"Sellers' Representative" shall have the meaning specified in Section
7.15.
"Shares" has the meaning specified in the preamble hereof.
"Tax" or "Taxes" means all income, profits, franchise, gross receipts,
capital, sales, use, withholding, value added, ad valorem, transfer, employment,
social security, disability, occupation, asset, property, severance,
documentary, stamp, excise and other taxes, duties and similar governmental
charges or assessments imposed by or on behalf of any Governmental Authority and
any interest, fines, penalties or additions relating to any such tax, duty,
charge or assessment.
"Tax Return" means any return, report, information statement, or similar
statement required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim for
refund, amended return and declaration of estimated Tax.
6
"Termination Agreement" has the meaning specified in Section 7.6.
"Title Defect" has the meaning specified in Section 7.3.
"Title Defect Amount" has the meaning specified in Section 7.3.
"Xxxxx" has the meaning specified in the definition of Oil and Gas
Properties.
"Units" has the meaning specified in the definition of Oil and Gas
Properties.
"Voting Agreement" has the meaning specified in Section 7.8.
ARTICLE II
EFFECTIVE DATE; CLOSING
2.1 Effective Date; Closing. The effective date (for accounting purposes
only) of the transactions contemplated hereby shall be at 12:00 a.m., Central
Time, on April 1, 2005 (the "Effective Date"). The Closing of the transactions
contemplated hereby (the "Closing") shall take place at the offices of Xxxxxxxx
& Knight LLP, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx at 10:00 a.m.,
Central Time, on June 10, 2005 or such other place or date as the parties hereto
may mutually agree (the "Closing Date"), provided that Buyer may accelerate the
date of Closing by delivering written notice to the Company and Sellers at least
five days prior to the Buyer's proposed date of Closing.
2.2 Proceedings at Closing. All proceedings to be taken and all
documents to be executed and delivered by all parties at the Closing shall be
deemed to have been taken and executed simultaneously, and no proceedings shall
be deemed taken nor any documents executed or delivered until all have been
taken, executed and delivered.
ARTICLE III
SALE AND PURCHASE OF SHARES; CONSIDERATION
3.1 Sale and Purchase of Shares. On the Closing Date, subject to the
terms and conditions set forth herein, the Sellers will sell, transfer, convey,
assign and deliver to Buyer, and Buyer will purchase from the Sellers, the
Shares.
3.2 Amount and Form of Consideration. The total purchase price to be
paid by Buyer to Sellers in consideration of the Shares is $88,000,000.00 in
United States dollars (the "Base Purchase Price"), subject to adjustment as
provided in Section 3.4 (the Base Purchase Price, as so adjusted is the
"Purchase Price"). The Company and Sellers agree and acknowledge
7
that a portion of the Purchase Price is being paid contemporaneously with the
execution of this Agreement in the form of the Xxxxxxx Money, as described in
Section 3.8.
3.3 Payment of Consideration. In consideration of the sale, transfer,
conveyance, assignment and delivery of the Shares, Buyer will, subject to
adjustment pursuant to Section 3.4 hereof, pay the Sellers an amount equal to
the Purchase Price, as reduced by the amount of the Xxxxxxx Money described in
Section 3.8 which shall be distributed along with any interest accrued thereon
to the Sellers, by wire transfer of immediately available funds on the Closing
Date (the "Closing Date Payment"). A proportionate amount of the Closing Date
Payment described in this Section 3.3 shall be paid to each Seller in accordance
with the ownership interests set forth on Schedule 4.3(a). The Closing Date
Payment shall be paid by wire transfer of immediately available funds to Sellers
(to the accounts thereof specified by each Seller) in accordance with the
instructions of each Seller delivered to Buyer not later than 48 hours prior to
the Closing.
3.4 Purchase Price Adjustments. The Company and Buyer agree that the
estimated amount of adjustments to the Base Purchase Price based on Company
Working Capital are as set forth on Schedule 3.4. The Company and Buyer shall
mutually agree prior to Closing on the total amount of adjustments to the Base
Purchase Price based on Company Working Capital and which shall be set forth on
the final version of Schedule 3.4 to be delivered at or prior to the Closing
(the "Final Schedule 3.4"). On or before sixty (60) days following the Closing
Date, Buyer shall prepare a final settlement statement of the Company Working
Capital showing (i) all monies, proceeds, receipts, credits and income of the
Company, not otherwise reflected on Final Schedule 3.4; and (ii) all costs,
expenses and other amounts of the Company, not otherwise reflected on Final
Schedule 3.4 (the "Final Statement"). The net amount owed to Sellers or Buyer
pursuant to the Final Statement, as mutually agreed by Buyer and Sellers'
Representative, shall be paid by the party owing such amount by wire transfer of
immediately available funds within ten (10) days following receipt of the Final
Statement. For a period of six (6) months following the receipt of the Final
Statement, each party reserves the right to review (at its sole cost and
expense) each of those items in the books and records of the other party which
were a factor in an adjustment being made to the Company Working Capital.
3.5 Excluded Items. On or prior to the Closing Date, the Excluded Items
will be transferred to Camden Oil & Gas, Inc. ("COG") by way of dividend,
assignment and assumption or otherwise. All references herein to the Company's
assets, properties (including, without limitation, its Oil and Gas Properties)
and liabilities do not include or refer to any of the Excluded Items.
3.6 Employee Stock Options. On or prior to the Closing Date, the Company
will enter into agreements (each, an "Option Cancellation Agreement") with each
holder, including each Seller that is a holder, of an outstanding option to
purchase the Company's Common Stock ("Employee Options") granted by the Company
pursuant to stock option agreements, whether or not then vested or exercisable,
in the form attached hereto as Exhibit "C", pursuant to which on the Closing
Date each Employee Option outstanding on the Closing Date and subject to such an
Option Cancellation Agreement shall be canceled and each holder of a canceled
Employee Option shall receive in cancellation and settlement of the Employee
Option, a cash amount
8
(the "Option Consideration") set forth on Final Schedule 3.4 equal to the
product of (i) the number of shares of the Company's Common Stock subject to the
Employee Option as of such time, multiplied by (ii) the excess, if any, of the
Per Share Consideration less the exercise price per share of the Company's
Common Stock subject to the Employee Option. "Per Share Consideration" shall
mean the Purchase Price divided by 2,374,000. As of the date of this Agreement,
the Per Share Consideration is $39.05. As of the Closing Date, each holder of an
Employee Option will be entitled to receive only an amount equal to the Option
Consideration from Buyer and not any shares of the Company's Common Stock or
other securities. All amounts payable under this Section 3.6 shall be paid by
Buyer by wire transfer of immediately available funds to an account designated
by the Company for payment by the Company to each holder of an Employee Option
at the Closing. Except as provided herein, the Company shall not grant or amend
any Employee Options and shall not amend or modify the stock option agreements
after the date hereof. In lieu of the foregoing, the holders of the Employee
Options may exercise such Employee Options prior to the Closing Date. If any
Employee Options are exercised, the shares of Common Stock issuable upon such
exercise shall be considered issued and outstanding for all purposes under this
Agreement and Final Schedule 3.4 shall be adjusted to reflect such exercise.
Notwithstanding anything to the contrary in this Agreement, the exercise of
Employee Options shall not be deemed to be a breach of any representation,
warranty, covenant or agreement on the part of the Company or any Seller
contained in this Agreement. Any holder of Employee Options who is not a party
hereto shall promptly following the exercise of Employee Options become a party
to this Agreement as a "Seller" by executing a joinder agreement in form and
substance as mutually agreed by Buyer and the Company.
3.7 Seller Loans. Each Seller (other than Yorktown Energy Partners IV,
L.P.) will receive from Buyer only the amount of Purchase Price in excess of any
such promissory notes or other indebtedness as set forth on Final Schedule 3.4
and no such Seller will assert any claim against Buyer or the Company regarding
any such promissory notes or other indebtedness. All amounts payable under this
Section 3.7 shall be paid by Buyer by wire transfer of immediately available
funds at or prior to the Closing.
3.8 Xxxxxxx Money. Contemporaneous with Buyer's execution of this
Agreement, Buyer shall pay to the Company by wire transfer of immediately
available funds, to be held in a separate bank account owned by the Sellers'
Representative for the benefit of the Sellers, an amount equal to $5,000,000.00,
which is equal to 5.6% of the Base Purchase Price (the "Xxxxxxx Money"). No
funds of the Company, COG or any Seller will be commingled with any any of the
Xxxxxxx Money in such account. In the event the Closing occurs, the Xxxxxxx
Money shall be applied (without interest) against and reduce the Purchase Price
on a dollar-for-dollar basis. If the Closing does not occur, the Xxxxxxx Money
shall be retained by the Company in accordance with this paragraph. In the event
Buyer fails or refuses to close the transaction contemplated hereby on the
Closing Date, the Company shall retain the Xxxxxxx Money as liquidated damages
in lieu of all other damages (and as Sellers' and the Company's sole remedy in
such event), unless such failure or refusal to close was the result of Sellers
or the Company committing a willful breach of their respective representations
or agreements contained in this Agreement, the effect of which is a Loss to
Buyer in amount of at least $10,000,000, in which case the Xxxxxxx Money shall
be refunded to Buyer. The parties hereto hereby acknowledge that the extent of
9
damages to Sellers and the Company occasioned by such failure or refusal by
Buyer would be impossible or extremely impractical to ascertain and that the
amount of the Xxxxxxx Money is a fair and reasonable estimate of such damages
under the circumstances.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company hereby represents and warrants to Buyer as of the date
hereof and as of the Closing Date as follows:
4.1 Organization and Power. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is qualified and in good standing to transact business in each
jurisdiction in which such qualification is required by Law, except where the
failure to be so qualified would not have a Material Adverse Effect. The Company
has all requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby. The Company has heretofore delivered to Buyer complete and
correct copies of its certificate of incorporation and bylaws, each as amended
to date.
4.2 Authorizations; Execution and Validity. The execution and delivery
of this Agreement by Company, the performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby and
thereby to be consummated by it, have been duly authorized by all necessary
corporate action and no other corporate action on the part of the Company is
necessary with respect thereto. This Agreement has been duly executed and
delivered by the Company and, when duly and validly executed and delivered, will
constitute a valid and binding obligation of the Company, as applicable, and is
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization and
similar laws affecting creditors generally and by the availability of equitable
remedies.
4.3 Capitalization. The authorized capital stock of the Company consists
solely of 4,900,000 shares of Common Stock and 100,000 shares of Preferred
Stock. There are an aggregate of 2,259,000 shares of Common Stock issued and
outstanding (exclusive of zero shares of treasury stock), all of which Shares
are owned of record and beneficially, free and clear of any Liens (other than
pledges in connection with indebtedness in favor of the Company which shall be
released at Closing and pursuant to applicable securities laws), by Sellers with
each Seller owning the number of Shares shown on Schedule 4.3(a), and have been
duly authorized and validly issued, and are fully paid and non-assessable. No
shares of Preferred Stock are issued and outstanding. As of the Effective Date,
the Company had outstanding options which had been issued to the individuals and
entities listed on Schedule 4.3(b) totaling 115,000 Shares. As of the Effective
Date, the issued and outstanding amount of the Company's Common Stock on a fully
diluted basis, excluding treasury stock, is 2,374,000 Shares. As of the Closing
Date, there shall be no outstanding options, subscriptions, warrants, calls,
commitments, pre-emptive rights or other rights obligating the Company to issue
or sell any shares of its capital stock or any
10
securities convertible into or exercisable for any shares of its capital stock,
or otherwise requiring Sellers or the Company to give any Person the right to
receive any benefits or rights similar to any rights enjoyed by or accruing to
the holders of shares of capital stock of Sellers or the Company or any rights
to participate in the equity or net income of Sellers or the Company. All of the
issued shares of the Company's capital stock were issued, and to the extent
purchased or transferred, have been so purchased or transferred, in compliance
with all applicable Laws, including federal and state securities laws, and any
preemptive rights and any other statutory or contractual rights of any Seller.
The Company does not own, directly or indirectly, any capital of or
other equity interest in or has any other investment in or outstanding loans to
any corporation, partnership or other entity or organization. Except as set
forth on Schedule 4.3(c), there are no stockholders' agreements, voting trusts
or other agreements or understandings between or among Sellers or to which the
Company is a party or by which it is bound with respect to the transfer or
voting of any capital stock of the Company, none of which shall be in effect
following the Closing.
4.4 Financial Statements. Attached hereto on Schedule 4.4 are correct
and complete copies of the audited consolidated balance sheet of the Company as
of December 31, 2003 (the "Latest Balance Sheet"), December 31, 2002 and
December 31, 2001, together with cash basis unaudited consolidated balance
sheets through both December 31, 2004 and February 28, 2005 (the "Interim
Financial Statements"), with the related statements of operations for the
periods ended on such dates (the "Financial Statements"). The Financial
Statements present fairly the financial position of the Company as of the dates
indicated, and the results of its operations for the periods prepared in
conformity with GAAP, consistently applied, except that, in the case of the
Interim Financial Statements, such Interim Financial Statements (i) have not
been prepared in conformity with GAAP, consistently applied, and (ii) are
unaudited and are subject to normal recurring year-end adjustments and the
absence of footnotes.
4.5 Consents. Neither the execution and delivery by the Company of this
Agreement nor consummation or performance by the Company of the transactions
contemplated by this Agreement to be consummated or performed by it will require
prior to the Closing (on the part of the Company) any consent from,
authorization or approval or other action by, notice to or declaration, filing
or a registration with, any Governmental Authority or any other third party,
except, if required, to comply with the HSR Act or as specified in Schedule 4.5.
4.6 No Defaults or Conflicts. Neither the execution and delivery by the
Company of this Agreement nor the consummation or performance by the Company of
the transactions contemplated by this Agreement to be consummated or performed
by it (i) results or will result in any violation of the certificate of
incorporation or bylaws of the Company; (ii) violates or conflicts with, or
constitutes a breach of any of the terms or provisions of or a default under, or
results in the creation or imposition of any Lien upon any property or asset of
the Company, the trigger of any charge, payment or requirement of consent, or
the acceleration or increase of the maturity of any payment date under: (A) any
Contract or (B) any applicable Law or Order to which the Company or any of their
respective properties is subject.
11
4.7 Agreements, Contracts and Commitments. Except for the Oil and Gas
Properties, the Company has listed in Schedule 4.7 all leases, contracts,
agreements and instruments to which it is a party as of the date hereof
involving payment by or to the Company of more than $1,000,000 and extending for
a term of more than six months from the date of this Agreement and not
terminable without payment or penalty upon less than 60 days' notice (true and
correct copies of each such document have been previously delivered or made
available to Buyer) (the "Material Contracts"). Except as set forth in Schedule
4.7, the Company has not breached, nor to the Company's Knowledge is there any
claim or any legal basis for a claim that the Company or any third party has
breached, any of the terms or conditions of any Material Contract if any such
breach, whether considered individually or in the aggregate, could result in the
imposition of damages or the loss of benefits in an amount or of a kind material
to the Company.
4.8 Litigation. Schedule 4.8 lists all Legal Proceedings pending or, to
the Company's Knowledge, threatened against or affecting the Company or any of
its assets. Except as disclosed on Schedule 4.8, the Company is not subject to
any Order or Official Action. There are no Legal Proceedings pending against or,
to the Company's Knowledge, threatened in writing against, the Company that
questions the validity or legality of any of this Agreement or any action taken
or to be taken by the Company in connection herewith or therewith.
4.9 Labor Matters. There is no collective bargaining or other labor
union agreement applicable to any of the employees of the Company. No organized
work stoppage, labor strike, labor dispute, or slowdown against the Company is
pending or, to the Company's Knowledge, threatened against or involving the
Company. The Company has not received written notice of any unfair labor
practice and no such complaints are pending before the National Labor Relations
Board or other similar governmental authority. To the Company's Knowledge, the
Company is not engaged in any unfair labor practice. No grievance or other labor
dispute or proceeding or any arbitration proceeding arising out of or under any
collective bargaining or other employee agreement is pending or, to the
Company's Knowledge, threatened against the Company.
4.10 Employee Benefit Matters. Schedule 4.10 contains a complete and
accurate list of all Employee Benefit Plans (as such term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or any other employee benefit arrangements or payroll practices,
including, without limitation, COBRA insurance coverages, employment agreements,
severance agreements, board of directors and executive compensation
arrangements, incentive programs or arrangements, sick leave, severance pay
policies, plant closing benefits, salary continuation for disability, consulting
or other compensation arrangements, workers' compensation, retirement, deferred
compensation, bonus, stock purchase, hospitalization, medical insurance, life
insurance, tuition reimbursement or scholarship programs, any plans providing
benefits or payments in the event of a change of control, change in ownership,
or sale of a substantial portion (including all or substantially all) of the
assets of the Company, maintained by the Company or to which the Company has
contributed or is or was obligated to make payments, in each case with respect
to any employees (or, if the Company has any existing liability, former
employees) of the Company (hereinafter, the "Employee Benefit
12
Plans"). Except as disclosed on Schedule 4.10: (a) none of the Employee Benefit
Plans is a multiemployer plan within the meaning of ERISA nor has the Company
made contributions to a multiemployer plan or an employee pension plan subject
to Section 412 of the Code within the last five years; (b) none of the Employee
Benefit Plans promises or provides medical or life insurance benefits following
termination of employment to any person following the Closing Date except as is
required under Section 4980B of the Code; (c) each Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified, has
received a favorable determination letter from the IRS that it is so qualified
and nothing has occurred since the date of such letter to affect the qualified
status of such Employee Benefit Plan; and (d) each Employee Benefit Plan has
been operated in all material respects in accordance with its terms and the
requirements of applicable law; and (e) there are no claims against any of the
Employee Benefit Plans other than claims for benefits provided in the ordinary
course of operation of the Employee Benefit Plans.
4.11 Taxes. Except as disclosed on Schedule 4.11:
(a) All Tax Returns required to be filed on or before the
Closing Date by or on behalf of, or in which is required to be reported
the income or other items of, the Company have been or will be filed
within the time prescribed by Law (including extensions of time
permitted by Law). There are no deferred intercompany transactions
(within the meaning of Treas. Reg. 1.1502-13) that would impact a Tax
Return post Closing.
(b) The Company has paid, on a timely basis, all Taxes of the
Company that are due on or before February 28, 2005 or has reserved for
such Taxes in the Financial Statements.
(c) There are no Liens for Taxes upon any of the properties or
assets of the Company (except for Permitted Liens).
(d) There are no pending Orders, audits, actions, proceedings,
investigations, disputes or claims instigated by any Governmental
Authority with respect to any Taxes payable by or asserted against the
Company. The Company has not received notice from any taxing authority
of its intent to examine or audit any of its Tax Returns. All
deficiencies asserted as a result of any examination of any Tax Return
of the Company have been paid in full or reserved in the Financial
Statements.
(e) The Company is not and has not been subject to tax or done
business in any country other than the United States.
(f) No agreements relating to allocation or sharing of, or
liability or indemnification for, Taxes exist between the Company and
any other Person. Any internal tax allocation agreement shall terminate
at the Closing.
(g) All Taxes required to be withheld, collected or deposited by
the Company (including, but not limited to, amounts required to be
withheld, collected or deposited
13
with respect to amounts paid or owing to any employee, creditor,
independent contractor or other Person) have been timely withheld,
collected or deposited and, to the extent required, have been timely
paid to the relevant taxing authority. All persons characterized as
independent contractors, and not as employees, were properly so
characterized for all purposes under all applicable laws (including,
without limitation), their characterization as independent contractors
for income and employment tax withholdings and payments.
(h) No disclosure statement pursuant to Section 6662 of the Code
or any comparable disclosure with respect to foreign, state and/or local
tax statutes has been filed with respect to any item relating to the
Company.
(i) The Company has not made any payments, is not obligated to
make any payments, and is not a party to any agreement that could
obligate it to make any payments that will not be deductible under
Section 280G of the Code.
(j) The Company has never been a member of an affiliated group
of corporations (as defined in Section 1504(a) of the Code). The Company
does not have any liability for the Taxes of any Person under Treas.
Reg. ss. 1.1502-6 (or any similar provision of state, local or foreign
law), as transferee or successor by contract or otherwise.
(k) No material claim has been made against the Company by any
taxing authority in any jurisdiction where the Company did not file
sales, use, value-added, or similar Tax Returns or did not pay sales,
use, value-added, goods and services, or similar Taxes, that the Company
is or may be subject to sales, use, value-added, or similar taxation by
that jurisdiction.
(l) No material claim has been made against the Company by any
taxing authority in any jurisdiction where the Company did not file
payroll, unemployment, social security or social insurance, or similar
Tax Returns or did not pay payroll, unemployment, social security or
social insurance, or similar Taxes, that the Company is or may be
subject to payroll, unemployment, social security or social insurance,
or similar taxation by that jurisdiction.
(m) There are no outstanding agreements or waivers that would
extend the statutory period in which a taxing authority may assess or
collect a Tax against the Company.
(n) No closing agreements or settlement agreements pursuant to
any provision of any tax law has been entered into with any taxing
authority by or with respect to the Company which requires the Company
to include any item of income in, or exclude any item of deduction from,
any Tax Return for any taxable period ending after the Closing Date.
14
(o) The Company has not agreed to make any adjustment pursuant
to Section 481 of the Code or pursuant to any other provision of the tax
laws of any jurisdiction, which could materially increase Taxes or
taxable income, or materially reduce any tax credits, net operating
losses or capital losses of the Company in any taxable period ending
after the Closing Date. The Company does not have any application
pending with any taxing authority requesting permission for any changes
in any accounting method. No taxing authority has proposed, in writing,
any such adjustment or change in accounting method. The Company has not
failed to comply with all the applicable provisions related to filing
any application for any accounting method change that would cause the
application to be rejected.
4.12 Fees. Except as listed on Schedule 4.12, the Company has not paid
or become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated hereby for which
the Company or Buyer shall have liability following the Closing.
4.13 Absence of Certain Changes or Events. Except as set forth on
Schedule 4.13 or as disclosed in the Financial Statements, since February 28,
2005, as of the date hereof there has not been any transaction or occurrence in
which the Company has:
(a) declared, set aside or paid any dividend or other
distribution (whether in cash, stock or property) with respect to any of
its outstanding capital stock, or made any redemption, purchase or other
acquisition of any of its equity securities;
(b) cancelled any debts or waived any receivables, claims or
rights in excess of $10,000 individually;
(c) disposed of or permitted to lapse any rights to the use of
any Intellectual Property or application therefor;
(d) suffered any uninsured casualty loss or damage in excess of
$50,000 individually;
(e) amended any material term of any equity security of the
Company; or
(f) made any change in its accounting methods, principles or
practices.
4.14 Compliance with Laws. The Company holds all Permits necessary for
the lawful conduct of its business and is in compliance in all material
respects, with all Laws and Orders applicable to its business and has filed with
the proper authorities all statements and reports required by the Laws and
Orders to which the Company or any of its properties or operations are subject.
No claim has been made by any Governmental Authority (and, to the Company's
Knowledge, no such claim is anticipated) to the effect that the business
conducted by the Company fails to comply, in any respect, with any Law.
15
4.15 Transactions with Related Parties. Except as set forth on Schedule
4.15:
(a) No Related Party of the Company has entered into, or has had
any direct or indirect financial interest in, any Material Contract,
transaction or business dealings involving the Company.
(b) No Related Party of the Company is a director or officer of,
or has any direct or indirect interest in (other than the ownership of
not more than 5% of the publicly traded shares of), any person or entity
which is a customer, supplier, vendor, landlord, sales representative or
competitor of the Company;
(c) No Related Party of the Company owns or has any interest in,
directly or indirectly, in whole or in part, any tangible or intangible
property used in the conduct of the business of the Company;
(d) Other than amounts owed to the Company pursuant to any
intercompany debts, or expense advance reimbursements in the ordinary
course of business, no Related Party of the Company owes any money to,
nor is any such Related Party owed any money by, the Company; and
(e) The Company has not, directly or indirectly, guaranteed or
assumed any indebtedness for borrowed money or otherwise for the benefit
of any Affiliate of the Company.
4.16 Indebtedness. As of the Closing, the Company will not be liable for
(i) any Indebtedness to any financial institution or any third party (other than
capitalized leases or other property as described on Schedule 4.16, which
schedule includes the dollar amount outstanding under each scheduled item as of
the Closing Date); (ii) any intercompany indebtedness incurred through the
Closing Date and not reflected in the Financial Statements; or (iii) any
indebtedness to Sellers of the Company incurred through the Closing Date and not
reflected in the Financial Statements. To the extent any intercompany amounts
were owed prior to the Closing, such indebtedness has been cancelled prior to
the Closing.
4.17 Agents. Except as set forth on Schedule 4.17, the Company has not
designated or appointed any person or other entity to act for it or on its
behalf pursuant to any power of attorney or any agency which is presently in
effect (other than such of the Company's directors, officers and employees to
whom the Company has given the authority to act for the Company in the ordinary
course of its business) or shall continue after the Closing Date.
4.18 Commission Contracts. The Company does not employ or have any
relationship with any individual, corporation, partnership, or other entity
whose compensation from the Company is in whole or in part determined on a
commission basis and for which the Company shall have any liability from and
after the Closing.
4.19 Books and Records. The minute books and records of the Company are
current as of the Effective Date (and shall be current as of the Closing) with
respect to all undertakings
16
and authorizations, and contain a true, complete and correct record of all
actions taken at all meetings and by all written consents in lieu of meetings of
the Company's board of directors, or any committees thereof, and Sellers of the
Company. The stock ledger and related stock transfer records of the Company
contain a true, complete and correct record of the original issuance, transfer
and other capitalization matters of the capital stock of the Company. The
accounting, financial reporting, tax and business books and records of the
Company accurately and fairly reflect in all material respects the business and
condition of the Company and the transactions and the assets and liabilities of
the Company with respect thereto. Without limiting the generality of the
foregoing, the Company has not engaged in any transaction with respect to its
business or operations, maintained any bank account therefor or used any funds
of the Company in the conduct thereof except for transactions, bank accounts and
funds that have been and are reflected in the normally maintained books and
records of the business.
4.20 Information Furnished. The Company has made available to Buyer and
its directors, officers, employees, counsel, representatives, financing sources,
customers, creditors, accountants and auditors, true and correct copies of all
agreements, documents, and other items listed on the Schedules to this Agreement
and all books and records of the Company.
4.21 Directors and Officers. Schedule 4.21 lists all of the directors
and officers of the Company as of the date hereof.
4.22 Bank Accounts. Attached hereto as Schedule 4.22 is a list of all
banks or other financial institutions with which the Company has an account,
showing the type and account number of each such account, and the names of the
persons authorized as signatories thereon or to act or deal in connection
therewith.
4.23 Owned Real Property. Other than the Oil and Gas Properties,
Schedule 4.23 contains a complete and correct list of all real property owned by
the Company. No covenants, easements, rights-of-way, or regulations of record
impair in any material respect the uses of these respective properties of the
Company for the purposes for which they are now operated. The Company has
provided to Buyer true and complete copies of all surveys, appraisals and title
insurance policies relating to these real properties.
4.24 Leased Real Property. Other than the Oil and Gas Properties and the
Office Lease Agreement, Schedule 4.24 contains a complete and correct list of
all real property leases and any and all amendments thereto relating to the
leased real property to which the Company is a party or is bound (the "Real
Property Leases"). The Company has provided to Buyer correct and complete copies
of the Real Property Leases. Except as disclosed in Schedule 4.24, (i) each of
the Real Property Leases is in full force and effect, and, to the Company's
Knowledge, is enforceable against the landlord which is party thereto in
accordance with its terms (except as such enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting creditors
generally and by the availability of equitable remedies), (ii) there are no
subleases under the Real Property Leases and none of the Real Property Leases
has been assigned, (iii) no notices of default or notices of termination have
been received by the Company with respect to the Real Property Leases which have
not been withdrawn or canceled and (iv) the Company is not, and to the Company's
Knowledge, no other party is, in default under any Real
17
Property Lease. There is no Company Knowledge of, nor has there been receipt of
any written notice of a proceeding in eminent domain or other similar proceeding
affecting property listed on Schedule 4.24.
4.25 Insurance. Schedule 4.25 contains a true and complete list of all
insurance policies, directors and officers liability policies, and formal
self-insurance programs, and other forms of insurance and all fidelity bonds
held by or applicable to the Company and its owned or leased properties,
employees or Employee Benefit Plan fiduciaries. Schedule 4.25 describes (a)
whether each insurance policy listed on Schedule 4.25 is occurrence-based or
claims made based and (b) each pending claim thereunder for more than $50,000
per claim and a history of all claims made against any such insurance policy of
the Company for the past three (3) years. All insurance policies listed on
Schedule 4.25 have been made available to Buyer and are subject to the
deductibles or retentions referenced on Schedule 4.25. The Company maintains
insurance for its benefit, in coverages and amounts to be customary and adequate
in the oil and gas industry. The Company is not in default with respect to any
provision in any current policy maintained for its benefit, and all such
insurance is in full force and effect. The Company has not received, nor is
there any Company Knowledge of, any notice of cancellation or nonrenewal of any
such insurance policy. The Company has not failed to give any notice or present
any claim for more than $50,000 under any of the policies for the benefit of the
Company in due and timely fashion. The Company has not been refused any
insurance with respect to its assets, properties or businesses, nor has any such
coverage been materially limited by any insurance carrier to which the Company
has applied for any such insurance or with which the Company has carried
insurance during the past three (3) years. Other than as described on Schedule
4.25, no further payments of premiums will be due following the Closing by the
Company with respect to insurance coverages prior to the Closing. Neither this
Agreement nor any of the transactions contemplated by this Agreement to occur at
the Closing will adversely affect the Company's coverage under the terms of the
insurance policies with respect to periods prior to the Closing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers hereby severally (but only in proportion to their
respective Pro Rata Share) and not jointly represents and warrants to Buyer and
to each other Seller as follows:
5.1 Organization and Good Standing. Such Seller (if Seller is not a
natural Person) is duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is organized and has all requisite
power and authority and, if such Seller is a natural Person, capacity, to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby and thereby to be consummated by
it. Such Seller is not a "foreign person" within the meaning of Section 1445 of
the Code.
5.2 Authorization of Agreement. The execution and delivery of this
Agreement by such Seller and the performance of the transactions contemplated
herein by such Seller (if such Seller is not a natural Person) have been duly
authorized by all necessary action, and no other
18
action on the part of such Seller is necessary to authorize this Agreement or
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by such Seller and constitutes a valid and
binding obligation of such Seller and is enforceable against such Seller in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization and similar laws affecting creditors
generally and by the availability of equitable remedies.
5.3 Conflicts, Consents of Third Parties. Neither the execution and
delivery by such Seller of this Agreement nor consummation or performance by
such Seller of the transactions contemplated hereby to be consummated or
performed by such Seller will: (a) violate any Law, (b) violate the certificate
of incorporation or bylaws of such Seller, (c) violate any Order to which such
Seller is a party or by which such Seller is bound or (d) require any consent
from, authorization or approval or other action by, and no notice to or
declaration, filing or registration with any Governmental Authority, except to
comply if necessary with the HSR Act.
5.4 Brokers. Except as set forth on Schedule 5.4, such Seller has not
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary in connection with the transactions contemplated hereby for which
the Buyer shall have any liability following the Closing.
5.5 Litigation. As of the date of this Agreement there is no suit,
action or proceeding pending, or, to the knowledge of such Seller, threatened
against or affecting such Seller that is reasonably likely to have a Material
Adverse Effect on such Seller or the transactions contemplated in this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against such Seller that is
reasonably likely to have a Material Adverse Effect on such Seller.
5.6 Ownership of Stock. Each Seller is the record and beneficial owner
of the number of Shares of the Company's Common Stock set forth opposite that
Seller's name in Schedule 4.3(a), and those Shares are owned by such Seller free
and clear of all Liens, (other than pledges in connection with indebtedness in
favor of the Company and pursuant to applicable securities laws), including,
without limitation, voting trusts or stockholders agreements. Except as set
forth in Schedule 4.3(c), each Seller has full authority to transfer pursuant to
this Agreement all of the Shares of the Company's Common Stock owned by such
Seller free and clear of all Liens (other than pledges in connection with
indebtedness in favor of the Company and pursuant to applicable securities
laws), including, without limitation, voting trusts or stockholders agreements.
5.7 Marketable Title. The delivery by Sellers to Buyer at the Closing of
the certificates representing the Shares, duly endorsed in blank or accompanied
by stock powers endorsed in blank will vest Buyer on the Closing Date with good
and marketable title to all of the Shares, free and clear of all Liens (other
than restrictions on transfer pursuant to applicable securities laws).
5.8 No Default. Except as would not reasonably be expected to have a
Material Adverse Effect on such Seller, such Seller is not in default or
violation of any term, condition or
19
provision of (a) the certificate of incorporation or bylaws of such Seller, (b)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license to which such
Seller is now a party or by which such Seller or any of their properties or
assets is bound, or (c) any Order applicable to such Seller.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
6.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. Buyer has all requisite power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the transactions
contemplated hereby and thereby to be consummated by it.
6.2 Authorization of Agreement. The execution and delivery of this
Agreement by Buyer and the performance of the transactions contemplated herein
by the Buyer have been duly authorized by all necessary action by the Buyer, and
no other action on the part of Buyer is necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors generally and by
the availability of equitable remedies.
6.3 Conflicts, Consents of Third Parties. Neither the execution and
delivery by Buyer of this Agreement nor consummation or performance by Buyer of
the transactions contemplated hereby to be consummated or performed by Buyer
will: (a) violate any Law, (b) violate the certificate of incorporation or
bylaws of Buyer, (c) violate any Order to which Buyer is a party or by which
Buyer is bound (d) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise,
or license applicable to Buyer, (iii) any joint venture or other ownership
arrangement of Buyer or (e) require any consent from, authorization or approval
or other action by, and no notice to or declaration, filing or registration with
any Governmental Authority, except to comply if necessary with the HSR Act.
6.4 No Default. Except as would not reasonably be expected to have a
Material Adverse Effect on Buyer, Buyer is not in default or violation of any
term, condition or provision of (a) the certificate of incorporation or bylaws
of Buyer, (b) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, permit, concession, franchise or license
to which Buyer is now a party or by which Buyer or any of their properties or
assets is bound, or (c) any Order applicable to Buyer.
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6.5 Litigation. As of the date of this Agreement there is no suit,
action or proceeding pending, or, to the knowledge of Buyer, threatened against
or affecting Buyer that is reasonably likely to have a Material Adverse Effect
on Buyer, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against Buyer that is reasonably
likely to have a Material Adverse Effect on Buyer.
6.6 Investment Intent. Buyer is acquiring the Shares for its own account
and not with a view towards distribution within the meaning of Section 2(11) of
the Securities Act.
6.7 Disclosure of Information. Buyer represents that it has had an
opportunity to ask questions of and receive answers from the Company regarding
the Company and its business, assets, results of operation, and financial
condition. Buyer expressly disclaims and disavows any reliance on Xxxxxxxxxx
Xxxx & Co., XxXxxxx Petroleum Consultants, Ltd., Xxxxxxx Xxxxx or their
employees, agents or representatives in connection with the transactions
contemplated hereby.
6.8 Brokers. Buyer has not paid or become obligated to pay any fee or
commission to any broker, finder or intermediary in connection with the
transactions contemplated hereby for which the Sellers shall have any liability
following the Closing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Further Actions. At any time from and after the Closing, at the
request of a party and without further consideration, each other party shall
promptly execute and deliver such further agreements, certificates, instruments
and documents and perform such other actions as the requesting party may
reasonably request in order to fully consummate the transactions contemplated
hereby and carry out the purposes and intent of this Agreement. The parties
hereto agree and acknowledge that the foregoing sentence is not intended to
encompass services relating to the transition of the Company's business
following Closing, provided that Buyer and COG may, but are not required to,
enter into an agreement relating to transition services on terms and conditions
mutually agreeable to Buyer and COG in the event that Buyer and COG mutually
agree that such services are necessary.
7.2 Conduct of Business Pending Closing . Prior to the Closing Date, the
Company will (except as consented to in writing by Buyer or otherwise permitted
under this Agreement, including both by express permission or implied
permission, such as where the imposition of an adjustment to the Base Purchase
Price under Section 3.4 will result on account of the action):
(a) carry on its business only in the ordinary course of
business and in a manner consistent with past practice;
(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present,
ordinary wear and tear excepted;
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(c) not acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any material
amount of assets other than in the ordinary course of business and as to
which the aggregate acquisition purchase price thereof does not exceed
$500,000;
(d) not sell, lease, encumber or otherwise dispose of, or agree
to sell, lease (whether such lease is an operating or capital lease),
encumber or otherwise dispose of any portion of its assets, other than
the Excluded Items or in the ordinary course consistent with past
practice;
(e) (i) not increase or agree to increase the compensation
payable or to become payable to any of its officers, directors or
employees; (ii) not grant any severance or termination pay to, or enter
into any employment or severance agreement with any executive officer,
director, or employee; (iii) not enter into any collective bargaining
agreement; or (iv) not establish, adopt, enter into or amend any
Employee Benefit Plan;
(f) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(g) use all commercially reasonable efforts to maintain and
preserve its business organization intact, retain its present officers
and key employees and maintain its relationships with suppliers,
vendors, customers, creditors and others having business relations with
it; and
(h) except for (i) the transfer of the Excluded Items by the
Company to COG and (ii) entering into the Option Cancellation Agreements
with the holders of Employee Options or issuing Common Stock in
connection with the exercise of Employee Options as contemplated by this
Agreement, not declare, set aside or pay any dividend or other
distribution (whether in stock or property) with respect to any of its
outstanding capital stock, or make any redemption, purchase or other
acquisition of any of its equity securities.
7.3 Title and Environmental Defects. Buyer shall have access to the Oil
and Gas Properties for the purposes of conducting field and environmental
inspections on the Oil and Gas Properties, provided that such inspections shall
be conducted by Buyer at Buyer's sole risk and the Company shall be entitled to
have representatives of the Company present during such inspections. Buyer shall
also have an opportunity to perform a due diligence review with respect to title
matters on the Oil and Gas Properties. In the event the Buyer intends to assert
that there are matters that are defects in title to the Oil and Gas Properties,
other than the Permitted Liens and as determined in accordance with customary
industry standards ("Title Defects"), Buyer shall give the Company written
notice of all such Title Defects (a "Defect Notice") by 5:00 p.m. Central
Daylight Savings Time on or before May 6, 2005. Buyer and the Company shall
mutually agree on the amount attributable to each Title Defect (the "Title
Defect Amount"). Upon receipt of such notice, the Company shall have the right
and opportunity, but not the
22
obligation, to cure (as determined in accordance with customary industry
standards), at its sole cost and expense, any Title Defect. Buyer shall waive
any Title Defect not included in such a Defect Notice.
7.4 Access to Information. Upon reasonable notice, the Company shall
afford to Buyer's officers, employees, accountants, counsel and other
representatives access, from the date hereof until the Closing Date, to all its
properties, books, contracts, commitments, files and records, as well as to its
officers and employees and, during such period, the Company shall furnish to
Buyer (a) a copy of each material report, schedule, registration statement and
other document filed or received by it during such period and (b) all other
information concerning its business, properties and personnel as such other
party may reasonably request. Buyer agrees that it will not, and will cause its
respective representatives not to, use any information obtained pursuant to this
Section 7.4 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. The Confidentiality Agreement shall apply with
respect to the information furnished thereunder and hereunder and any other
activities contemplated thereby. Buyer shall indemnify, defend and hold harmless
the Company and the Sellers from and against any and all claims, actions, causes
of action, demands, assessments, losses, damages, liabilities, judgments,
settlements, penalties, costs and expenses (including reasonable attorneys' fees
and expenses), of any nature whatsoever asserted against or suffered by the
Company or the Sellers relating to, resulting from or arising out of
examinations or inspections made by Buyer or its representatives pursuant to
this Section 7.4.
7.5 Regulatory Approvals. Each party hereto shall cooperate and use its
reasonable best efforts to promptly prepare and file all necessary documentation
to effect all necessary applications, notices, petitions, filings and other
documents, and use all commercially reasonable efforts to obtain (and will
cooperate with each other in obtaining) any consent, acquiescence,
authorization, order or approval of, and any exemption or nonopposition by, any
Governmental Entity required to be obtained or made by Company, the Sellers or
Buyer or any of their respective Affiliates in connection with the transactions
contemplated hereby or the taking of any action contemplated thereby or by this
Agreement.
7.6 Employee Matters.
(a) Buyer shall have no obligation to offer employment or
otherwise with respect to the Company's employees; provided, that at
Closing the Company shall remain obligated to pay the compensation
described in Schedule 7.6; and provided further that prior to Closing,
the Company shall enter into a Termination Agreement (each, a
"Termination Agreement") in the form attached hereto as Exhibit "D" with
each party to an employment agreement and Buyer shall become a party to
each such Termination Agreement. In such agreements, Buyer will agree to
cause the Company following the Closing to fulfill its obligations
pursuant to the agreements and will agree to contribute any necessary
funds for the Company to be able to do so.
(b) On or prior to the Closing Date, and effective as of the
Closing Date, the Company shall cause all its employees to become the
employees of COG, or shall otherwise cause their employment relationship
with the Company to be severed.
23
Any termination of the employees described in Section 7.6(a) shall
only occur as provided in the Termination Agreements applicable to
such employees.
7.7 Agreement to Defend. In the event any claim, action, suit, investigation or
other proceeding by any governmental body or other person or other legal or
administrative proceeding is commenced that questions the validity or legality
of the transactions contemplated hereby or seeks damages in connection
therewith, the parties hereby agree to cooperate and use their commercially
reasonable efforts to defend against and respond thereto.
7.8 Certain Consents by Sellers. Each Seller hereby consents to the sale to
Buyer of the Shares owned by each other Seller on the terms and conditions set
forth in this Agreement for all purposes, including, but not limited to,
pursuant to Section 2 of that certain Voting and Stockholders Agreement, dated
as of April 19, 2000 (the "Voting Agreement"). The Sellers and the Company shall
take such action as is necessary to terminate the Voting Agreement in connection
with the Closing.
7.9 Excluded Items. Buyer acknowledges and agrees that the Excluded Items shall
be transferred by the Company to COG prior to the Closing Date, and that the
Excluded Items are not included in the property, assets or liabilities of the
Company to be acquired by Buyer in the transactions contemplated hereby or
otherwise.
7.10 Other Actions. Except as contemplated by this Agreement, neither the
Company, the Sellers nor Buyer shall, nor permit any of its Affiliates to, take
or agree or commit to take any action that is reasonably likely to result in any
of its respective representations or warranties hereunder being untrue in any
material respect or in any of the conditions to the transactions contemplated
hereby set forth in Article VIII not being satisfied. Each of the parties agrees
to use its reasonable best efforts to satisfy the conditions to Closing set
forth in this Agreement.
7.11 LIMITATION AND DISCLAIMER OF IMPLIED REPRESENTATIONS AND WARRANTIES
OF THE COMPANY. THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE COMPANY
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER
REPRESENTATIONS AND WARRANTIES, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE. AT OR
PRIOR TO CLOSING, BUYER SHALL HAVE CONDUCTED SUCH INSPECTIONS OF THE COMPANY AND
ITS ASSETS AS BUYER DEEMS NECESSARY AND SHALL HAVE SATISFIED ITSELF AS TO THE
CONDITION OF THE COMPANY AND ITS ASSETS. EXCEPT AS OTHERWISE PROVIDED IN THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, THE COMPANY MAKES NO
WARRANTY OR REPRESENTATION, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, AS TO THE
ACCURACY OR COMPLETENESS OF ANY DATA, REPORTS, RECORDS, PROJECTIONS, INFORMATION
OR MATERIALS NOW, HERETOFORE OR HEREAFTER FURNISHED OR MADE AVAILABLE TO BUYER
OR ITS REPRESENTATIVES BY THE COMPANY OR BY THE COMPANY'S AGENTS OR
REPRESENTATIVES; ANY AND ALL SUCH DATA, RECORDS, REPORTS, PROJECTIONS,
INFORMATION AND OTHER MATERIALS FURNISHED BY THE COMPANY OR BY THE COMPANY'S
AGENTS OR REPRESENTATIVES OR OTHERWISE MADE AVAILABLE TO BUYER OR BUYER'S
24
REPRESENTATIVES ARE PROVIDED TO OR FOR THE BENEFIT OF BUYER AS A CONVENIENCE,
AND SHALL NOT CREATE OR GIVE RISE TO ANY LIABILITY OF OR AGAINST THE COMPANY,
ANY SELLER OR THE AGENTS OR REPRESENTATIVES OF THE COMPANY OR ANY SELLER; AND
ANY RELIANCE ON OR USE OF THE SAME SHALL BE AT BUYER'S SOLE RISK.
7.12 Assumption of Employee Benefit Plans. Effective as of the Closing
Date, the Company shall cause COG to become the successor sponsor to the Company
of the Employee Benefit Plans and COG shall assume and be solely responsible and
liable for all liabilities, obligations, duties, payments and benefits which
exist or subsequently arise under the Employee Benefit Plans or under applicable
law with respect to such plans. Neither Buyer nor the Company shall have any
obligations of any kind whatsoever under the Employee Benefit Plans with respect
to the employees and former employees of the Company from and after the Closing
Date, and the Company shall cease to be a participating employer in the Employee
Benefit Plans as of the Closing Date. The parties agree and acknowledge that
Buyer will have certain responsibilities to make payments with respect to such
stock option plans and Employment Agreements as described in this Agreement.
7.13 Preparation of Payroll and Bonus Checks and Overhead Reimbursement.
The Company shall prepare all final payroll and bonus checks and tax reports
(including tax withholdings) to reflect payments for all compensation earned by
the employees of the Company up to the Closing Date and all other amounts to be
paid as required under this Agreement or otherwise to the employees or former
employees of the Company, and such checks shall be delivered by the Company. COG
shall reimburse the Company for one-third of the Company's overhead expense
incurred from the Effective Date through the Closing Date and such amount shall
be included in the Final Statement.
7.14 Change of Company Name. Each of Buyer and the Company undertakes
and agrees that promptly after the Closing, it will take all actions necessary
to change the name of the Company to delete the use of the name "Camden" and/or
any derivative thereof, and Buyer shall transfer the rights to such names to COG
by December 31, 2005.
7.15 Relationship Among Sellers Each Seller hereby appoints COG as the
sole representative (the "Sellers' Representative") of such Seller to act as the
agent and on behalf of such Seller for all purposes under this Agreement,
including for the purposes of: (i) determining any adjustments to the Base
Purchase Price in accordance with Section 3.4; (ii) determining whether the
conditions to closing in Article VIII have been satisfied and supervising the
Closing, including waiving any such condition if Sellers' Representative, in its
sole discretion, determines that such waiver is appropriate; (iii) taking any
action that may be necessary or desirable, as determined by Sellers'
Representative in its sole discretion, in connection with the termination of
this Agreement in accordance with Article X; (iv) taking any and all actions
that may be necessary or desirable, as determined by Sellers' Representative in
its sole discretion, in connection with the amendment of this Agreement or
waivers of any term of this Agreement in accordance with Sections 13.1 and 13.2;
(v) accepting notices on behalf of such Seller in accordance with Section 13.3;
(vi) taking any and all actions that may be necessary or desirable, as
determined by Sellers' Representative in its sole discretion, in connection with
the payment of
25
the costs and expenses incurred with respect to the Company or such Seller in
connection with the transactions contemplated by this Agreement; (vii) granting
any consent or approval on behalf of such Seller under this Agreement; and
(viii) taking any and all other actions and doing any and all other things
provided in or contemplated by this Agreement to be performed by Sellers'
Representative on behalf of any Seller. As the representative of Sellers,
Sellers' Representative shall act as the agent for all such persons, shall have
authority to bind each such person in accordance with this Agreement, and Buyer
may rely on such appointment and authority until the receipt of notice from
Sellers owning at least a majority of the Shares of the appointment of a
successor upon 30 days' prior written notice to Buyer. Neither Seller's
Representative nor any Seller shall have any liability to Buyer for any default
under this Agreement by any other Seller. Each Seller shall, however, be
responsible to each other Seller for any default under this Agreement.
7.16 Assumption of Office Lease. The Company has caused COG to become
the successor tenant to the Company of the Office Lease Agreement and COG has
assumed and is solely responsible and liable for all liabilities, obligations,
duties, payments and benefits which exist or arise after the date of such
assignment under the Office Lease or under applicable law with respect to such
Office Lease Agreement, and the consent of the landlord to such assignment has
been obtained by the Company and COG.
7.17 Amendment of Schedules. The Company and the Sellers will, promptly
upon becoming aware of any fact, matter, circumstance or event, which fact,
matter, circumstance or event arose after the date hereof but prior to the
Closing (a "Post-Signing Event"), requiring supplementation or amendment of the
Schedules provided by the Company and the Sellers in the Schedules of the
Company and Sellers, supplement or amend such Schedules to this Agreement to
reflect any Post-Signing Event, which, if existing, occurring or known on the
date of this Agreement, would have been required to be set forth or described in
such Schedules which were or have been rendered inaccurate thereby. All
supplements and amendments to the Schedules provided by the Company and Sellers
are provided for the information of the Buyer only and no such supplement or
amendment to the Schedules shall (i) amend or supplement the representations and
warranties (and corresponding Schedules) made as of the date hereof or (ii) have
any effect for the purpose of determining (A) satisfaction of the conditions set
forth in Article VIII of the Agreement or (B) compliance by the Company or
Sellers with their respective covenants and agreements set forth herein;
provided, however, that if the Closing occurs the Schedules as so supplemented
or amended as of the Closing with respect to such Post-Closing Event shall be
deemed to be the Schedules for purposes of determining whether or not any breach
of the representations and warranties of any of the Company or Sellers has
occurred.
7.18 Audit. On or before May 20, 2005, the Company shall complete an
audit of the consolidated balance sheet of the Company as of December 31, 2004,
together with the related statements of operations for the period ended on such
date (the "2004 Financial Statements"). The fees and expenses of the audit in
connection with the 2004 Financial Statements shall be borne 50% by the Company
and 50% by the Buyer. The 2004 Financial Statements shall present fairly the
financial position of the Company as of the date indicated, and the results of
its operations for the period prepared in conformity with GAAP, consistently
applied.
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ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Buyer's Conditions. Unless otherwise waived in writing prior to the
Closing, the obligation of Buyer to complete the Closing is subject to
fulfillment prior to or at the Closing of each of the following conditions:
(a) No Legal Proceeding. At the Closing, no Legal Proceeding
shall be pending or threatened seeking to enjoin or prevent, nor shall
an Injunction, Order or Official Action have been issued prohibiting
consummation of the transactions contemplated hereby.
(b) Bank Accounts. Sellers shall have caused the Company to
change the names of the respective officers, employees, agents or other
similar representatives of the Company, as designated by Buyer at or
prior to the Closing, who thereafter shall be authorized to transact
business with respect to the accounts, safe deposit boxes, lock boxes or
other relationships with the banks, trust companies, securities brokers
and other financial institutions set forth in Schedule 4.22.
(c) Fulfillment of Obligations. Sellers and Company shall have
duly performed or complied with all of the obligations and covenants to
be performed or to which compliance is by each of them is required under
the terms of this Agreement at or prior to the Closing Date.
(d) Employee and Employee Benefit Plan Matters. The actions
described in Sections 7.6 and 7.12 shall have occurred.
(e) Accuracy of Representations and Warranties. The
representations and warranties of the Company and the Sellers set forth
herein shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made on and as of
the Closing Date.
(f) No Material Changes. No events shall have occurred which
result in a Material Adverse Effect to the Company.
(g) Closing Deliveries. Sellers or the Company, as applicable,
shall have delivered at or before Closing all of the items listed in
Section 9.1.
(h) Office Lease Agreement. The actions described in Section
7.16 shall have occurred.
(i) Financing. Buyer shall have completed, or shall complete
contemporaneously with Closing, debt and/or equity financing with
minimum net proceeds to Buyer of $83,000,000.
27
8.2 Sellers' Conditions. Unless otherwise waived in writing prior to
Closing, the obligation of Sellers to complete the Closing is subject to
fulfillment prior to or at Closing of each of the following conditions.
(a) Legal Proceeding. At the Closing, no Legal Proceeding shall
be pending or threatened seeking to enjoin or prevent, nor shall an
Injunction, Order or Official Action have been issued prohibiting
consummation of the transactions contemplated hereby.
(b) Accuracy of Representations and Warranties. The
representations and warranties of Buyer set forth herein shall be true
and correct in all material respects as of the date of this Agreement
and as of the closing Date as though made on and as of the Closing Date.
(c) Closing Deliveries. Buyer shall have delivered at or before
Closing all of the items listed in Section 9.2.
ARTICLE IX
DELIVERIES AT CLOSING
9.1 Deliveries by Seller to Buyer. At the Closing, Sellers or the
Company as is appropriate shall deliver, or shall cause to be delivered, to
Buyer the following:
(a) the certificates evidencing the Shares, and such instruments
or documents evidencing the sale, assignment, transfer and conveyance by
the Sellers to Buyer of the Shares in accordance with the terms hereof;
(b) a certificate of the Company, dated as of the Closing Date,
setting forth resolutions of the board of directors of the Company
authorizing the consummation of the transactions contemplated hereby,
and certifying that such resolutions were duly adopted and have not been
rescinded or amended as of the Closing Date;
(c) a certificate of the Company attesting as to the incumbency
and signature of each officer of the Company, as applicable, who shall
execute this Agreement and any other agreement in connection therewith
on behalf of the Company, and certifying as being complete and correct
the copies attached to such certificate of the articles of incorporation
and bylaws of the Company, each as in effect on such date;
(d) a certificate of existence of the Company from the Secretary
of State of the State of Delaware and a certificate of the good standing
of the Company from State of Delaware, and a certificate of
qualification of the Company as a foreign entity authorized to do
business in each state in which they are so qualified, in each case
dated as of a date not earlier than 10 days prior to the Closing Date;
28
(e) a certificate of the Company that the representations and
warranties of the Company are true and correct as of the Closing Date,
and that the Company has performed or complied with all covenants and
agreements required by this Agreement;
(f) a certificate of each of the Sellers that the
representations and warranties of the Sellers are true and correct as of
the Closing Date, and that the Sellers have performed or complied with
all covenants and agreements required by this Agreement;
(g) the originals of all minute books, stock transfer records,
electronic data and corporate and all other records of the Company,
including but not limited to, all land, geological, engineering and
geophysical work files relating to the Company's Oil and Gas Properties;
(h) the resignation of each of the present directors and
officers of the Company;
(i) all consents or waivers referenced on Schedule 4.5;
(j) copies of any and all releases, termination statements and
other documents and instruments, dated on or within five days prior to
the Closing Date, as are necessary to remove and release the Liens
specified on Schedule 4.16 other than Permitted Liens;
(k) the Termination Agreements; and
(l) the Option Cancellation Agreements.
9.2 Deliveries by Buyer to Seller. At the Closing, in addition to making
the payments described in Sections 3.2, 3.3, 3.6 and 3.7, Buyer shall deliver to
each Seller the following:
(a) a certificate of a duly authorized representative of Buyer,
dated the Closing Date, authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
and certifying that such authorizations are in full force and effect and
have not been rescinded or amended as of the Closing Date; and
(b) a certificate of a duly authorized representative of Buyer
attesting as to the incumbency and signature of each person who shall
execute this Agreement or any other material document related to this
transaction.
ARTICLE X
TERMINATION
10.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
29
(a) by mutual written consent of the Company, Sellers'
Representative and Buyer;
(b) by any of the Company, Sellers' Representative or Buyer if
any Governmental Entity shall have issued any Injunction or taken any
other action permanently restraining, enjoining or otherwise prohibiting
the consummation of the transactions contemplated hereby and such
Injunction or other action shall have become final and nonappealable;
(c) by any of the Company, the Sellers' Representative or Buyer
if the Closing shall not have occurred on or before June 10, 2005 or
such later date as mutually agreed; or
(d) by Buyer, the Company or Sellers if the total Title Defect
Amount of all of such uncured and unwaived Title Defects exceed
$5,000,000.
10.2 Effect of Termination. In the event of termination of this
Agreement by any party hereto as provided in Section 10.1, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of any party hereto except (i) under the Confidentiality Agreement, (ii) with
respect to this Section 10.2, the second and third sentences of Section 7.4, and
Section 13.9, and (iii) to the extent that such termination results from the
willful breach by a party hereto of any of its representations and warranties or
of any of its covenants or agreements contained in this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 Seller Indemnification. Subject to the limitations set forth in
Section 11.4 hereof, each Seller, severally (and only in proportion to their
respective Pro Rata Share) and not jointly, hereby agrees to indemnify and hold
Buyer and each of their Affiliates, and the officers, directors, employees and
agents thereof, harmless from and against any and all claims, judgments, causes
of action, liabilities, obligations, guarantees, damages, losses, deficiencies,
costs, penalties, interest and expenses, including without limitation, cost of
investigation and defense, and reasonable attorneys' fees and expenses, net of
any collected insurance proceeds (collectively, "Losses"), arising out of, based
upon, attributable to or resulting from (a) any breach of a representation or
warranty on the part of the Company and such Seller contained in or pursuant to
this Agreement, and (b) the Xxxxx Litigation.
11.2 Buyer Indemnification. Buyer hereby agrees to indemnify and hold
Sellers harmless from and against any and all Losses arising out of, based upon,
attributable to or resulting from any breach of any representation, warranty,
agreement or covenant on the part of Buyer contained in or made pursuant to this
Agreement or any of the transactions contemplated herein.
11.3 Indemnification Procedures.
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(a) If any third party asserts any claim against a party to this
Agreement which, if successful, would entitle the party to
indemnification under this Article XI (the "Indemnified Party"), it
shall give notice of such claim to the party from whom it intends to
seek indemnification (the "Indemnifying Party") and the Indemnifying
Party shall have the right to assume the defense and, subject to Section
11.3(b), settlement of such claim at its expense by representatives of
its own choosing acceptable to the Indemnified Party (which acceptance
shall not be unreasonably withheld). The failure of the Indemnified
Party to notify the Indemnifying Party of such claim shall not relieve
the Indemnifying Party of any liability that the Indemnifying Party may
have with respect to such claim, except to the extent that the defense
is materially prejudiced by such failure. The Indemnified Party shall
have the right to participate in the defense of such claim at its
expense (which expense shall not be deemed to be a Loss), in which case
the Indemnifying Party shall cooperate in providing information to and
consulting with the Indemnified Party about the claim. If the
Indemnifying Party fails or does not assume the defense of any such
claim within 15 days after written notice of such claim has been given
by the Indemnified Party to the Indemnifying Party, the Indemnified
Party may defend against or, subject to Section 11.3(b), settle such
claim with counsel of its own choosing at the expense (to the extent
reasonable under the circumstances) of the Indemnifying Party.
(b) If the Indemnifying Party does not assume the defense of a
claim involving the asserted liability of the Indemnified Party under
this Article XI, no settlement of such claim shall be made by the
Indemnified Party without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld or delayed. If
the Indemnifying Party assumes the defense of such a claim, (i) no
settlement thereof may be effected by the Indemnifying Party without the
Indemnified Party's consent unless (A) there is no finding or admission
of any violation of Law or any violation of the rights of any Person and
no effect on any other claim that may be made against the Indemnified
Party, (B) the sole relief provided is monetary damages that have been
paid in full by the Indemnifying Party, and (C) the settlement includes,
as an unconditional term thereof, the giving by the claimant or the
plaintiff to the Indemnified Party of a release in form and substance
reasonably satisfactory to the Indemnified Party, from all liability in
respect of such claim, and (ii) the Indemnified Party shall have no
liability with respect to any compromise or settlement thereof effected
without its consent. Notwithstanding anything in this Agreement to the
contrary, the Xxxxx Litigation shall not be settled or compromised on
any terms and conditions without the prior written consent of Seller's
Representative.
11.4 Limits on Indemnification. Notwithstanding anything to the contrary
contained in this Agreement:
(a) Sellers shall not have any obligation to provide indemnification for
Losses with respect to any specific occurrence, event or circumstance
giving rise to a right to be indemnified pursuant to Section 11.1 unless
the amount of the claim giving rise to the right to be indemnified with
respect to such specific occurrence, event or circumstance
31
exceeds $50,000 (the "Basket Amount"). The maximum aggregate amount for
which Sellers may be liable under this Article XI shall be limited to
$8,800,000. The limitations set forth in this Section 11.4(a) shall not
apply to the Sellers' obligation to provide indemnification for Losses
relating to the Xxxxx Litigation.
(b) Buyer shall not have any obligation to provide
indemnification for Losses pursuant to Section 11.2 arising out of or
related to breaches of representations and warranties unless the
aggregate amount of all such Losses pursuant to such Section exceeds the
Basket Amount in which case Buyer shall be only liable to Sellers for
the amount of such Losses that exceed the Basket Amount.
(c) Except for the representations and warranties of (i) Sellers
contained in Sections 5.2, 5.4, 5.6 and 5.7, and (ii) Buyer contained in
Sections 6.2 and 6.9, which representations and warranties shall survive
the Closing indefinitely, the respective representations of the Company,
Sellers and Buyer contained in this Agreement shall survive the Closing
for a period of six (6) months from the Closing Date and thereafter none
of the Company, any Seller, Buyer, or any officer, director, employee,
Affiliate or Related Party of the Company, any Seller or Buyer shall
have any liability whatsoever (whether pursuant to this Agreement or
otherwise) with respect to such representation or warranty. The six (6)
month limitation set forth in the preceding sentence shall not apply to
the Sellers' obligation to provide indemnification for Losses relating
to the Xxxxx Litigation, which shall survive until the Xxxxx Litigation
has been completed without any additional rights of appeal by the
parties thereto.
(d) Any payments made to Sellers, the Company or the Buyer
pursuant to this Article XI shall constitute an adjustment of the
Purchase Price for Tax purposes and shall be treated as such by the
Buyer and Sellers on their Tax Returns.
(e) An Indemnifying Party shall not be liable under this Article
XI for Losses resulting from any event relating to a breach of a
representation or warranty if the Indemnifying Party can establish that
the Indemnified Party had actual knowledge on or before the Closing Date
of such event.
(f) Subject to the provisions of this Article XI and except as
set forth in Section 3.8, an Indemnified Party's sole and exclusive
remedy for Losses arising out of or resulting from breaches of
representations and warranties set forth herein or pursuant hereto or
for the Xxxxx Litigation shall be indemnification under this Article XI.
ARTICLE XII
TAXES
12.1 Tax Returns and Payments. Buyer shall control the preparation of
all Tax Returns of the Company from and after the Closing Date, provided,
however, that Sellers shall have the right to review and comment on any Tax
Return covering a period (or portion thereof) ending on
32
or before April 1, 2005 ("Pre-Closing Returns") and Buyer shall consider all
such comments in good faith. Buyer shall prepare such Pre-Closing Returns in a
manner consistent with past practice. Buyer shall not amend any Pre-Closing
Returns without the written consent of the Sellers, which consent shall not be
unreasonably withheld. The parties agree that the value of the Excluded Items is
$200,000, and each party agrees to report the value of such Excluded Items as
$200,000 on any Tax Return.
12.2 Cooperation. Each party shall provide the other party with such
cooperation and information as it reasonably may request with respect to the
Company in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to a refund of Taxes or
participating in or conducting any audit or other proceeding in respect of
Taxes. Each party shall bear its own expenses in complying with the foregoing
provisions.
12.3 Sales and Use Taxes; Property Taxes. Sellers shall be responsible
for the payment of any sales or use, transfer or other Taxes due as a result of
the transactions contemplated in this Agreement. The parties will cooperate in
obtaining any exemptions from any sales or use or other transfer Taxes that may
be due as a result of the transactions contemplated in this Agreement.
ARTICLE XIII
GENERAL
13.1 Amendments. This Agreement may only be amended by an instrument in
writing executed by Buyer and Sellers.
13.2 Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but such waiver shall
be effective only if it is in a writing signed by the party entitled to enforce
such term and against which such waiver is to be asserted. Unless otherwise
expressly provided in this Agreement, no delay or omission on the part of any
party in exercising any right or privilege under this Agreement shall operate as
a waiver thereof, nor shall any waiver on the part of any party of any right or
privilege under this Agreement operate as a waiver of any other right or
privilege under this Agreement nor shall any single or partial exercise of any
right or privilege preclude any other or further exercise thereof or the
exercise of any other right or privilege under this Agreement.
13.3 Notices. Any notice or other communications required or permitted
hereunder shall be in writing and shall be sufficiently given (and shall be
deemed to have been duly given upon receipt) if sent by overnight mail,
registered mail or certified mail, postage prepaid, or by hand, to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) If to Buyer, to:
33
Maverick Oil and Gas, Inc.
0000 Xxxx Xxx Xxxx Xxxx., #000
Xx. Xxxxxxxxxx, XX 00000
Attn: V. Xxx Xxxxxx
With copy to
SCM Capital Advisors, Inc.
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
and
Glast, Xxxxxxxx & Xxxxxx, PC
00000 Xxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
(b) If to the Sellers, to the Seller's Representative, to:
Camden Oil & Gas, Inc.
0000 XXX Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
With a copy to:
Xxxxxxxx & Xxxxxx LLP
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Esq.
13.4 Successor and Assigns, Parties in Interest. This Agreement shall be
binding upon and shall inure solely to the benefit of the parties hereto and
their respective successors, legal representatives and permitted assigns.
Neither this Agreement nor any rights or obligations hereunder may be assigned
without the written consent of the other parties. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person, other than
the parties hereto and their respective successors, legal representatives and
permitted assigns, any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, and no Person shall be deemed a third
party beneficiary under or by reason of this Agreement.
13.5 Severability. If any provision of this Agreement or the application
of any such provision to any Person or circumstance, shall be declared
judicially to be invalid, unenforceable or void, such decision shall not have
the effect of invalidating or voiding the remainder of this
34
Agreement, it being the intent and agreement of the parties that this Agreement
shall be deemed amended by modify such provision to the extent necessary to
render it valid, legal and enforceable while preserving its intent or, if such
modification is not possible, by substituting therefor another provision that is
valid, legal and enforceable and that achieves the same objective.
13.6 Entire Agreement. This Agreement (including the Confidentiality
Agreement, the Exhibits and Schedules hereto, and the documents and instruments
executed and delivered in connection herewith) constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements and understandings, whether written or
oral, among the parties or any of them with respect to the subject matter
hereof, and there are no representations, understandings or agreements relating
to the subject matter hereof that are not fully expressed in this Agreement and
the documents and instruments executed and delivered in connection herewith. All
Exhibits and Schedules attached to this Agreement are expressly made a part of,
and incorporated by reference into, this Agreement.
13.7 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without giving effect to any
choice-of-law rules that may require the application of the laws of another
jurisdiction.
13.8 Remedies. Each of the parties hereto acknowledges and agrees that
(i) the provisions of this Agreement are reasonable and necessary to protect the
proper and legitimate interests of the other parties hereto, and (ii) the other
parties hereto would be irreparably damaged in the event any of the provisions
of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties hereto shall
be entitled to preliminary and permanent injunctive relief to prevent breaches
of the provisions of this Agreement by other parties hereto without the
necessity of proving actual damages upon posting of a suitable bond, and to
enforce specifically the terms and provisions hereof and thereof, which rights
shall be cumulative and in addition to any other remedy to which the parties
hereto may be entitled hereunder or at law or equity.
13.9 Expenses. Except for (i) the aggregate fees of each of XX Xxxxxx
and Xxxxxxxxxx Xxxx & Co. in connection with their services as financial advisor
to the Company in connection with the transactions contemplated by this
Agreement (50% of each of which shall be borne by each of Company and Buyer) and
(ii) the fees and expenses of audit in connection with the 2004 Financial
Statements (50% of which shall be borne by each of the Company and the Buyer),
the Company, the Sellers and Buyer shall each bear their own expenses
(including, without limitation, fees and disbursements of counsel, accountants
and other experts) incurred by it in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement, each of the
other documents and instruments executed in connection with or contemplated by
this Agreement and the consummation of the transactions contemplated hereby and
thereby; provided, however, that nothing in this Section 13.9 shall be deemed to
prevent certain expenses incurred by the Company for legal counsel to the
Company and the fees and expenses of financial advisors to the Company in
connection with their services to the Company from adjusting the Base Purchase
Price as contemplated in Section 3.4.
35
13.10 Release of Information; Confidentiality. The parties shall
cooperate with each other in releasing information concerning this Agreement and
the transactions contemplated hereby. No press releases or other public
announcements concerning the transactions contemplated by this Agreement shall
be made by any party without prior consultation with and written consent of each
other party, except for any legally required communication by any party and then
only with prior consultation and at least 12 hours notice together with copies
of all drafts of the proposed text, prior to the time the communication is made
public.
13.11 Schedules. Nothing in the Schedules is intended to broaden the
scope of any representation or warranty contained in the Agreement or to create
any covenant unless clearly specified to the contrary herein. Any disclosure on
one Schedule shall be deemed to be disclosed on all Schedules and under the
Agreement. Inclusion of any item in the Schedules (a) shall be deemed to be
disclosure of such item on all Schedules and under the Agreement, (b) does not
represent a determination that such item is material nor shall it be deemed to
establish a standard of materiality, (c) does not represent a determination that
such item did not arise in the ordinary course of business, (d) does not
represent a determination that the transactions contemplated by the Agreement
require the consent of third parties and (e) shall not constitute, or be deemed
to be, an admission to any third party concerning such item. The Schedules
include descriptions of instruments or brief summaries of certain aspects of the
Company and its business and operations. The descriptions and brief summaries
are not necessarily complete and are provided in the Schedules to identify
documents or other materials previously delivered or made available.
13.12 Certain Construction Rules. The article and section headings and
the table of contents contained in this Agreement are for convenience of
reference only and shall in no way define, limit, extend or describe the scope
or intent of any provisions of this Agreement. Whenever the context may require,
any pronoun used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns, pronouns and verbs
shall include the plural and vice versa. In addition, as used in this Agreement,
unless otherwise provided to the contrary, (a) all references to days, months or
years shall be deemed references to calendar days, months or years and (b) any
reference to a "Section," "Article," or "Schedule" shall be deemed to refer to a
section or article of this Agreement or an Exhibit or Schedule attached to this
Agreement. The words "hereof", "herein", and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specifically
provided for herein, the term "or" shall not be deemed to be exclusive.
13.13 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one instrument binding on all the parties,
notwithstanding that all the parties are not signatories to the original or the
same counterpart.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
SIGNATURE PAGE TO STOCK PURCHASE AGREEMENT - CAMDEN RESOURCES, INC. IN
WITNESS WHEREOF, this Agreement has been duly executed as of the date first
above written.
BUYER:
MAVERICK OIL AND GAS, INC.,
a Nevada corporation
By:
----------------------------
Name:
------------------------
Title:
------------------------
COMPANY:
CAMDEN RESOURCES, INC., a Delaware
corporation
By:
----------------------------
Name:
------------------------
Title:
------------------------
SELLERS:
-------------------------------------------
XXXXXX X. XXXXXX, an individual
-------------------------------------------
XXXXX X. XXXXX, an individual
-------------------------------------------
XXXXXX X. XXXXXX, an individual
-------------------------------------------
XXXXXX X. XXXXXX, an individual
-------------------------------------------
XXXXXX X. XXXXXXX, an individual
-------------------------------------------
XXXXXX X. XXXXXXX, an individual
YORKTOWN ENERGY PARTNERS IV,
L.P., a Delaware limited partnership
By: Yorktown IV Company LLC, its general
partner
By:
----------------------------
Name:
------------------------
Title:
------------------------
CAMDEN OIL & GAS, INC., a Delaware
corporation
By:
----------------------------
Name:
------------------------
Title:
------------------------
