EXHIBIT 10.29
STOCK EXCHANGE AGREEMENT
This Stock Exchange Agreement (the "Agreement") dated the 1st day of June,
1999, is by and between ST. XXXX XXXX & EXPLORATION COMPANY, a Delaware
corporation ("St. Xxxx"), and XXXXXX X. XXXXX and XXXXXX X. XXXXXX, all of whom
are together referred to herein as the "Stockholders" and who own all of the
capital stock of QUANTERRA ENERGY CORPORATION, a Montana corporation
("Quanterra").
WHEREAS, St. Xxxx desires to acquire all of the capital stock of Quanterra
from the Stockholders in exchange for shares of the common stock, par value of
$0.01 per share, of St. Xxxx ("St. Xxxx Stock") as hereinafter provided, and the
Stockholders desire to effect such exchange; and
WHEREAS, St. Xxxx and the Stockholders desire that the transactions
provided for herein shall qualify as a reorganization pursuant to Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound hereby, agree as follows:
ARTICLE 1
DEFINITIONS; HEADINGS
1.01 Defined Terms. As used in this Agreement, terms defined in the
preamble and recitals of this Agreement have the meanings set forth therein, and
the following terms have the meanings set forth below:
(1) "Affiliate" means Quanterra Alpha Limited Partnership as
subsequently defined.
(2) "Closing" has the meaning ascribed to such term in Section 2.03.
(3) "Code" means the Internal Revenue Code of 1986, as amended.
(4) "Consideration" means those shares of St. Xxxx Stock set forth
on Schedule 1.01(4) which have been calculated in accordance with the
methodology set forth in that certain letter dated March 2, 1999, from St.
Xxxx to Xxxxxx X. Xxxxx, as amended by oral understanding which provides
for the use of a five year NYMEX strip pricing run as opposed to the two
year NYMEX price strip stated in the letter. This letter provides that the
number of shares of St. Xxxx Stock that the Shareholders shall receive is
based on a proportionate net asset value comparison of St. Xxxx with
Quanterra. This comparison is expressed by using a formula wherein X (the
number of shares of St. Xxxx Stock that the Stockholders are to receive)
is the numerator of a fraction and the number of shares of St. Xxxx Stock
issued and outstanding is the denominator of the fraction, and such
fraction equals a fraction in which the numerator is the net asset value
of Quanterra and the denominator is the net asset value of St. Xxxx. Net
asset value has been determined in accordance with the above referenced
letter subject to the referenced amended hydrocarbon pricing.
(5) "Environmental Laws" mean all federal, state and local rules and
regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without
limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
(6) "GAAP" means generally accepted accounting principles
consistently applied.
(7) "Governmental Authority" means any federal, state, or local
court, arbitration tribunal or governmental department, board, commission,
bureau, agency, authority or instrumentality.
(8) "Hazardous Materials" mean (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable,
urea-formaldehyde foam insulation, and transformers or other equipment
that contain dielectric fluid containing polychlorinated biphenyls (PCBs);
(b) any chemicals, materials or substances which are now defined as or
included in the definition of
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"hazardous substances," "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," or words of similar import, under any
Environmental Law; (c) naturally occurring radioactive material (NORM);
and (d) any other chemical, material, substance or waste, exposure to
which is prohibited, limited or regulated by any Governmental Authority in
a jurisdiction in which Quanterra operates.
(9) "Knowledge" as used (i) with respect to St. Xxxx shall mean
those facts that are actually known or should reasonably have been or
become known in the ordinary course of business by the officers of St.
Xxxx, taking into account the scope and nature of such officers'
responsibilities, and (ii) with respect to the Stockholders shall mean
facts that are actually known or should reasonably have been or become
known to either of the Stockholders in the ordinary course of business,
taking into account the scope and nature of the Stockholders' involvement
in the operation of Quanterra or Quanterra Partnership.
(10) "Laws" mean all (i) federal, state, or local or foreign laws,
rules and regulations, (ii) orders, (iii) Permits, and (iv) agreements
with federal, state, local, or foreign regulatory authorities to which the
Stockholders, Quanterra, Quanterra Partnership, or St. Xxxx, as the case
may be, is a party or by which any of them or their property is bound.
(11) "Liens" mean all liens, liabilities, claims, security
interests, mortgages, pledges, agreements, obligations, restrictions, or
other encumbrances of any nature whatsoever, whether absolute, legal,
equitable, accrued, contingent or otherwise, including, without
limitation, any rights of first refusal.
(12) "1933 Act" means the Securities Act of 1933, as amended.
(13) "1934 Act" means the Securities Exchange Act of 1934, as
amended.
(14) "Quanterra Financial Statements" mean the unaudited financial
statements of Quanterra for each of its past two fiscal years, December
31, 1997, and December 31, 1998.
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(15) "Quanterra Stock" means all of the issued and outstanding
shares of all common stock of Quanterra.
(16) "NASDAQ" means National Association of Securities Dealers
Automated Quotations System.
(17) "Permits" mean all permits, licenses, franchises, orders,
certificates and approvals.
(18) "Quanterra Partnership" means Quanterra Alpha Limited
Partnership for which Quanterra Corporation, Xxxxx Petroleum Corporation
and Xxxxxx X. Xxxxxx are the partners.
(19) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
or disposing into the environment.
(20) "SEC" means the United States Securities and Exchange
Commission.
(21) "SEC Documents" mean all registration statements, proxy
statements, periodic reports and schedules filed by St. Xxxx with the SEC
under the Securities Laws.
(22) "Securities Laws" mean the 1933 Act, the 1934 Act, the
Investment Company of Act of 1940, as amended, the Trust Indenture Act of
1939, as amended, and the rules and regulations of the SEC promulgated
thereunder.
(23) "Taxes" mean any taxes or other governmental charges or
assessments of whatever kind or nature imposed by the United States, by
any other nation or by any state, county, municipality or governmental
subdivision, including without limitation, any income, franchise or any
other similar taxes based on or measured by income or otherwise, any sales
or use taxes, property, employment and employer withholdings,
unemployment, social security, occupational, customs, excise or other
taxes, together with any interest or penalties relating thereto.
(24) "Tax Reports" mean all returns or reports required to be filed
relating to the federal and state income tax filings of Quanterra and its
Affiliate.
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1.02 Other Definitional Provisions. Wherever the context so requires,
words used herein in the masculine gender shall be deemed to include the
feminine and neuter. A definition of any term shall be equally applicable to
both the singular and plural forms of the term defined.
1.03 Titles; Headings. All titles and headings appearing in this Agreement
are for identification only and are not to be used for interpretive purposes.
ARTICLE 2
EXCHANGE OF STOCK; CLOSING
2.01 Acquisition of Quanterra Stock. Subject to the terms and conditions
herein stated, the Stockholders agree to assign, transfer and deliver to St.
Xxxx at Closing, and St. Xxxx agrees to acquire from the Stockholders at
Closing, all of the issued and outstanding Quanterra Stock. The certificates
representing the Quanterra Stock shall be duly endorsed in blank by the
Stockholders. The Stockholders agree to cure any deficiencies with respect to
the endorsement of the certificates representing the Quanterra Stock.
2.02 Exchange of Shares. At Closing, the Stockholders shall surrender the
certificate or certificates representing all the issued and outstanding
Quanterra Stock in exchange for certificates of St. Xxxx Stock issued in the
name of the Stockholders in the amount of the Consideration. The Stockholders
shall receive their certificates for the St. Xxxx Stock issued as the
Consideration as set forth on Schedule 2.02 attached hereto.
2.03 Closing. The closing of the transaction provided for herein (the
"Closing") shall take place at the offices of Xxxxx Petroleum Corporation in
Billings, Montana, on June 1, 1999, at 10:00 a.m., local time.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
The Stockholders represent and warrant to St. Xxxx as follows:
3.01 Ownership of Shares. The Stockholders are the lawful sole owners,
beneficially and of record, of all of the issued and outstanding shares of
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Quanterra Stock and such stock is free and clear of all Liens. The ownership of
Quanterra Stock by the Stockholders is as set forth in Schedule 3.01 hereto.
3.02 Stockholders' Due Execution, Enforceability Against Stockholders.
This Agreement has been duly executed and delivered by the Stockholders and is a
valid and binding obligation of the Stockholders, enforceable in accordance with
its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application referring to or
affecting enforcement of creditors' rights and general principles of equity. The
execution, delivery and performance of this Agreement by the Stockholders will
not violate or conflict with any agreement, instrument, judgment or decree to
which the Stockholders, Quanterra or any Affiliate is a party or is subject.
3.03 Stockholders' Capacity. The Stockholders have full legal right,
power, authority and capacity to execute, deliver and perform their obligations
under this Agreement to consummate the transactions contemplated hereunder or
thereunder.
3.04 Organization Existence. Quanterra is a corporation duly organized and
validly existing under the laws of Montana with all requisite corporate power
and authority to own, operate and lease its properties and assets and to carry
on its business as now being conducted. Quanterra is duly qualified to do
business and is in good standing in each jurisdiction where the conduct of its
business or the ownership of its property requires such qualification. The
jurisdictions in which Quanterra is qualified to do business, and the names and
addresses of Quanterra's registered agents in such jurisdictions, are set forth
on Schedule 3.04 hereto. Schedule 3.04 hereto sets forth all names under which
Quanterra has conducted or purported to conduct business since the date of its
incorporation.
3.05 Capital Stock. Quanterra has an authorized capitalization consisting
solely of 50,000 shares of common stock no par value of which 2,000 shares are
issued and outstanding. Other than the Quanterra Stock, there is no class or
series of equity of Quanterra authorized, issued or outstanding. All such
outstanding shares of Quanterra Stock have been duly authorized and validly
issued and are fully paid and nonassessable. There are no outstanding options,
warrants, rights, calls, commitments, conversions rights, rights of exchange,
plans or other agreements of any character providing for the purchase, issuance
or sale of any shares of any equity security of Quanterra, including any
Quanterra Stock, other than as contemplated by this Agreement.
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3.06 Subsidiaries. Except as set forth in Schedule 3.06 hereto, Quanterra
does not have any subsidiaries or hold any equity or ownership interest of any
kind, whether beneficially or of record, in any corporation, partnership,
liability company, joint venture, or other enterprise or entity of any nature
whatsoever.
3.07 No Restrictions Against Performance. Neither the execution, delivery
nor performance of this Agreement, nor the consummation of the transactions
contemplated in this Agreement will, with or without the giving of notice or the
passage of time, or both, violate any provisions of, conflict with, result in a
breach of, constitute a default under, or result in the creation or imposition
of any Lien or adverse condition under:
(a) the Articles of Incorporation and By-Laws of Quanterra;
(b) any Law which is applicable to Quanterra or its Affiliate or any
of their properties or assets;
(c) any contract, indenture, instrument, agreement, mortgage, lease,
right, or other obligation or restriction to which Quanterra or its Affiliate is
a party or by which Quanterra or its Affiliate or any of their properties or
assets is or may be bound; or
(d) any order, judgment, writ, injunction, decree, license,
franchise, permit or other authorization of any Governmental Authority by which
either Quanterra or its Affiliate or any of their properties or assets is or may
be bound or by which the Stockholders may be bound.
3.08 Historical Financial Information. The Quanterra Financial Statements,
true and complete copies of which have been previously delivered to St. Xxxx
present fairly the financial position, assets and liabilities of Quanterra as of
the dates thereof and the revenues, expenses, results of operations and cash
flows of Quanterra for the periods covered thereby, on a tax basis with
adjustments made in accordance with GAAP so that the net asset value of
Quanterra can be determined and reasonably compared with the net asset value of
St. Xxxx. The Quanterra Financial Statements are in accordance with the books
and records of Quanterra and do not reflect any transactions which are not bona
fide transactions. The books and records of Quanterra have been maintained in
accordance with applicable laws, rules and regulations, and in the ordinary
course of business. To the best of Stockholders' Knowledge, the accounts and
notes receivable of Quanterra reflected in the Quanterra Financial Statements
are valid, existing and genuine and represent sales actually made or services
actually delivered by Quanterra in bona fide transactions in the ordinary
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course of business consistent with past practice and there is no material right
of setoff or counterclaim or threat thereof that would jeopardize the
collectability of such accounts and notes receivable at the aggregate recorded
amounts thereof. The Stockholders have no Knowledge of any material difference
that would arise if the Quanterra Financial Statements were prepared in
accordance with GAAP as opposed to being prepared on a tax basis with the
GAAP-type adjustments that have been made.
3.09 No Undisclosed Liabilities. To the best of Stockholders' Knowledge,
no basis exists on the date hereof for assertions against Quanterra of any
material claim or liability of any nature other than (i) those which have been
disclosed in the Quanterra Financial Statements, or (ii) have been incurred in
the ordinary course of the business of Quanterra since December 31, 1998 and
which do not constitute a breach of the representation and warranty set forth in
Section 3.10. For purposes of this Section 3.09, a claim or liability shall be
deemed to be "material" if it involves an amount in excess of $5,000,
individually or in the aggregate, as the context requires.
3.10 No Adverse Effects or Changes. Since December 31, 1998, Stockholders
are not aware of any event involving either Quanterra or its Affiliate that has
had a material adverse effect on their businesses or their assets. Except as
listed on Schedule 3.10, since December 31, 1998, neither Quanterra nor its
Affiliate has:
(a) made any change in its authorized capital, outstanding
securities or in the capital accounts of Quanterra Partnership;
(b) borrowed or agreed to borrow any funds, guaranteed the repayment
of any indebtedness or incurred any other contingent financial obligations,
except borrowings incurred in the ordinary course of its business in accordance
with its past practices;
(c) satisfied any obligation or liability (absolute or contingent),
other than obligations and liabilities incurred in the ordinary course of its
business in accordance with its past practices;
(d) declared or made, or agreed to declare or make, any payment of
dividends or distributions of any assets of any kind whatsoever in respect of
its capital stock, or purchased, redeemed or otherwise acquired, or agreed to
purchase, redeem or otherwise acquire, any of its outstanding capital stock;
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(e) except as set forth on Schedule 3.10(e), sold, transferred or
otherwise disposed of, or agreed to sell transfer or otherwise dispose of, any
material assets, properties or rights, except inventory and equipment in the
ordinary course of its business in accordance with its past practices, or
canceled or otherwise terminated, or agreed to cancel or otherwise terminate,
any debts or claims other than accounts receivable write-offs and writedowns in
the ordinary course of its business in accordance with its past practices;
(f) other than in the ordinary course of business in accordance with
its past practices, entered, or agreed to enter, into any agreement or
arrangements to sell any of its assets, properties or rights, including
inventories and equipment;
(g) made or permitted any amendment or termination of any material
contract, agreement, permit or license to which it is a party or by which it or
any of its properties are bound;
(h) except as set forth on Schedule 3.10(h), made, directly or
indirectly, any accrual or arrangement for or payment of any bonuses or special
compensation of any kind or any severance or termination pay to any present or
former officer, director or executive employee;
(i) incurred, or become subject to, any uninsured claim or liability
for any material damages for any negligence or other tort or breach of contract;
(j) made any capital expenditures (or commitments therefor) which in
the aggregate exceed $25,000;
(k) suffered any damages, destruction or casualty losses in excess
of $5,000 as to any single occurrence or $25,000 in the aggregate;
(l) entered into any other material transaction other than in the
ordinary course of its business in accordance with its past practices; or
(m) suffered any material adverse change in condition of or title to
any of its assets except depletion through normal production within authorized
allowables, ordinary changes in rates of production, and depreciation of
equipment through ordinary wear and tear.
3.11 Third-Party and Governmental Consents. Except as set forth in
Schedule 3.11 hereto, no approval, consent, waiver, order or authorization of,
or registration, qualification, declaration, or filing with, or notice to, any
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Governmental Authority or other third party is required on the part of the
Stockholders, Quanterra or its Affiliate in connection with the execution and
delivery of this Agreement by the Stockholders or the consummation of the
transactions contemplated hereby. All of the consents and approvals set forth on
Schedule 3.11 have been obtained.
3.12 Real and Personal Property
(a) Oil and Gas Leases and Xxxxx. Schedule 3.12(a) sets forth a
true, correct and complete list of all oil and gas leases and xxxxx in which
either Quanterra or its Affiliate is a party, whether as lessor, lessee, or the
owner of any non-cost bearing interest. The interests of either Quanterra or its
Affiliate in all leases listed on such Schedule are valid and subsisting and in
full force and effect, and all rentals and other payments now due have been
paid. Quanterra and its Affiliate enjoy and are in peaceful and undisturbed
possession as to their respective ownership share under each lease so listed in
which it is a lessee. Neither Quanterra nor its Affiliate have received any
notice of, and to the Knowledge of the Stockholders, there does not exist, any
event of default or event, occurrence or act which, with the giving of notice or
the lapse of time or both, would become a default under any such lease, and
neither Quanterra nor its Affiliate have violated any of the terms or conditions
under any such lease in any material respect. The real property under the leases
referred to in Schedule 3.12(a) is free from material physical defects. Such
real property and the fixtures, equipment, and other property attached, situated
or appurtenant thereto are in good operating condition and repair, in compliance
with all applicable Laws and are adequate and suitable for the purposes for
which they are presently being used, except for such matters which in the
aggregate would not have a material adverse effect on the business of Quanterra
or its Affiliate.
(b) Personal Property. Except as otherwise identified on Schedule
3.12(b) hereto, Quanterra has good, valid, marketable, legal and beneficial
title to all of its personal property, free and clear of all Liens. There are no
outstanding options, warrants, commitments, agreements or any other rights of
any character entitling any person or entity, other than St. Xxxx, to acquire
any interest in all or any part of the personal property of Quanterra.
3.13 Accounts and Notes Receivable. Schedule 3.13 sets forth a list as of
December 31, 1998, of all accounts and notes receivable of Quanterra and its
Affiliate together with:
(a) an aging schedule setting forth all such accounts receivable
(other than intercompany receivables)
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(b) the identity of any asset in which Quanterra or its Affiliate
holds a security interest to secure payment of the underlying indebtedness;
(c) a description of the nature and amount of any lien on or
security interest in such accounts and notes receivable; and
(d) an identification of the accounts receivable on this Schedule
3.13 which have been collected in their entirety since December 31, 1998.
Except as specifically identified on Schedule 3.13, the Stockholders believe to
the best of their Knowledge that the accounts and notes receivable itemized are
collectible in the ordinary course of Quanterra's and its Affiliate's
businesses.
3.14 Accounts Payables and Promissory Notes. Schedule 3.14 sets forth a
list of:
(a) all accounts payable of Quanterra and its Affiliate as of
December 31, 1998, together with an appropriate aging schedule;
(b) all long-term and short-term promissory notes, installment
contracts, loan agreements and credit agreements to which Quanterra or its
Affiliate is a party or to which any of their properties are subject;
(c) all indentures, mortgages, security agreements, pledges, and any
other agreements, pledges, and any other agreements of Quanterra and its
Affiliate relating thereto or with respect to collateral securing the same; and
(d) an identification of the accounts payable on Schedule 3.14 that
have been fully or partially paid since December 31, 1998.
3.15 Insurance and Bonds.
(a) Schedule 3.15 sets forth a list of all insurance policies and
bonds held by Quanterra including those covering its properties, buildings,
equipment, fixtures, employees, and operations. Such list specifies with respect
to each such policy:
(i) the insurer and agent;
(ii) the amount of coverage;
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(iii) the dates of premiums or payments due thereunder; and
(b) the expiration date, as applicable.
Each such policy identified is currently in full force and effect. All insurance
premiums due according to the applicable payment schedules reflected in such
policies have been timely paid. Except as set forth on Schedule 3.15, there are
no facts or circumstances known to the Stockholders or under which any claims
for uninsured losses or damages are likely to be asserted against Quanterra in
an amount in excess of $10,000 nor are there any such claims pending against
Quanterra;
(c) the insurance policies currently maintained by Quanterra provide
coverage believed by the Stockholders to be adequate for its properties, assets,
products and operations;
(d) Quanterra has not requested cancellation of any material policy
of insurance at any time during the previous two years;
(e) Quanterra has not sought and been denied any insurance coverage
during the two-year period prior to the Closing Date. All bonds issued to secure
performance of or payment by Quanterra under any material contract in progress
or yet to be completed, including those contracts identified in Schedule 3.15,
are in force and effect and are identified on Schedule 3.15. Neither Quanterra
nor the Stockholders have made any representations or undertaken any other act
which would give rise to a viable claim that any such existing bond is invalid
or unenforceable; there are no facts or circumstances under which the validity
or enforceability by Quanterra of any such existing bond could be successfully
challenged; and
(f) the transactions contemplated by this Agreement will have no
adverse effect on any such existing bond.
3.16 Bank Accounts. Schedule 3.16 sets forth a list of (i) the name of
each bank or other financial institution in which Quanterra or its Affiliate
have an account or safe deposit box; (ii) the names of all person authorized to
draw thereon or to have access thereto; and (iii) the names of all persons other
than the officers of Quanterra and its Affiliate who are authorized to incur
liabilities on behalf of Quanterra or its Affiliate for borrowed funds.
3.17 Compliance with Laws. To the best of Stockholders' Knowledge,
Quanterra and its Affiliate have complied with and are not in default under any
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Laws the violation of which could have a material adverse effect on their
business, properties or assets.
3.18 Litigation. There is no judicial or administrative claim, action,
suit or proceeding pending or, to the Knowledge of the Stockholders, threatened
against or relating to the Stockholders, Quanterra, its Affiliate or the
officers or directors of Quanterra or its Affiliate in their capacities as
officers or directors, the business, properties or assets of Quanterra or its
Affiliate or the transactions contemplated by this Agreement, including, but not
limited to, actions or proceedings alleging any violation of any Environmental
Law, before any federal, state, or local court, arbitration tribunal or
Governmental Authority, which would, individually or in the aggregate,
materially adversely affect the Stockholders, the business, properties or assets
of Quanterra or its Affiliate, or the transactions contemplated by this
Agreement and, to the Knowledge of the Stockholders, there does not exist any
valid basis for any such claim, action, suit or proceeding. There are no claims,
actions, suits, proceedings or investigations pending or, to the Knowledge of
the Stockholders, threatened by or against the Stockholders, Quanterra or its
Affiliate with respect to this Agreement, or in connection with the transactions
contemplated hereby and the Stockholders have no reason to believe there exists
a valid basis for any such claim, action, suit, proceeding or investigation.
3.19 Permits. Schedule 3.19 hereto sets forth a true, correct and complete
list of all Permits of any federal, state or local regulatory or Governmental
Authority relating to the business properties or assets of Quanterra and its
Affiliate. The Permits constitute all permits, licenses, franchises, orders,
certificates and approvals which are required for the lawful operation of the
business, properties and assets of Quanterra and its Affiliate. Further,
Quanterra or its Affiliate are in compliance in all material respects with all
such Permits and own or have owned or had valid Permits to use all properties,
tangible or intangible, necessary for the conduct of its business and the
operation of its properties and assets in the manner in which they are now
conducted and operated.
3.20 Taxes.
(a) All Tax Reports required to be filed by Quanterra and its
Affiliate that are required to be filed on or prior to the Closing have been
duly filed and are true, complete and accurate in all material respects. All
Taxes owed with respect to the periods covered by such Tax Reports have been
duly paid. Quanterra and its Affiliate have complied with all applicable laws,
rules and regulations relating to the withholding and payment of Taxes and has
timely
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withheld and paid to the proper governmental authorities all amounts required to
have been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor or stockholder.
(b) There are no agreements, waivers or other arrangements providing
for extension of time with respect to the assessment or collection of any Tax on
Quanterra or its Affiliate. There are not any actions, suits, proceedings,
investigations or claims now pending against Quanterra or its Affiliate in
respect of unpaid Taxes, and there are no matters under discussion with any
federal, state, county or local Governmental Authority relating to any amount of
unpaid Taxes. Except as otherwise set forth on Schedule 3.20, the Tax Reports of
Quanterra and its Affiliate have not been audited and are not in the process of
being audited by the applicable taxing authorities, and there is no Tax
deficiency outstanding, proposed or assessed against Quanterra or its Affiliate,
and Quanterra and its Affiliate are not a party to any Tax allocation or Tax
sharing agreement.
(c) Since its formation, Quanterra has elected and the Stockholders
have consented for Quanterra to be treated as an S Corporation (within the
meaning of Code Section 1361(a)) for federal income tax purposes. For all
periods since commencing operations, Quanterra has qualified to be treated as an
S Corporation for federal income tax purposes. Quanterra has also elected, and
its Stockholders have consented, to be treated as an S Corporation for state
income tax purposes for all years since its formation. Quanterra has filed all
reports consistent with and necessary to maintain its S Corporation status for
federal and state income tax purposes. Neither Quanterra nor Stockholders have
revoked the S Corporation stature of Quanterra and neither Quanterra nor its
Stockholders have done anything to cause a termination of such federal or state
tax purposes.
3.21 Employee Benefit Plans and Employment Agreements. Quanterra for
itself and its Affiliate has not entered into any employee benefit plan within
the meaning of Section 3(3) of ERISA or any written or oral employment or
consulting agreement, severance pay plan or agreement, employee relations policy
(or practice, agreement, or arrangement), agreements with respect to leased or
temporary employees, vacation plan or arrangement, sick pay plan, stock purchase
plan, stock option plan, fringe benefit plan, incentive plan, bonus plan,
cafeteria or flexible spending accounting plan or any deferred compensation
agreement with any present or former employee of Quanterra or its Affiliate.
Further, there are currently no employees of either Quanterra or its Affiliate.
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3.22 Material Contracts. Quanterra had made available all contracts and
arrangements, written, electronic, oral, or otherwise to which Quanterra or its
Affiliate is a party or by which they are bound, or to which any of their assets
or properties is subject.
3.23 Labor Matters. Quanterra has conducted, and currently is conducting
its and its Affiliate business in full compliance with all Laws relating to
employment and employment practices, terms and conditions of employment, wages
and hours, and nondiscrimination in employment.
3.24 Environmental Matters. Except as set forth in Schedule 3.24:
(a) Quanterra and its Affiliate are currently in compliance in all
material respects with all applicable Environmental Laws, have cured any past
violations or alleged violations of Environmental Laws to the satisfaction of
Governmental Authorities, are not currently in receipt of any notice of
violation, are not currently in receipt of any notice of any potential liability
for cleanup of Hazardous Materials and are not now subject to any investigation
or information request by a Governmental Authority concerning Hazardous
Materials or any Environmental Laws. To the Knowledge of the Stockholders,
Quanterra and its Affiliate hold and are in compliance with all governmental
permits, licenses, and authorizations necessary to operate those aspects of
their businesses that relate to siting, wetlands, coastal zone management, air
emission, discharges to surface or ground water, discharges to any sewer or
septic system, noise emissions, solid waste disposal or the generation, use,
transportation or other management of Hazardous Materials. Neither Quanterra nor
its Affiliate has ever generated, manufactured, refined, recycled, discharged,
emitted, released, buried, processed, produced, reclaimed, stored, treated,
transported, or disposed of any Hazardous Materials except in compliance with
all applicable Laws, including applicable Permit requirements;
(b) No assets of Quanterra or its Affiliate are subject to any Lien
in favor of any person as a result of any Hazardous Material or response
thereto;
(c) To the Knowledge of the Stockholders, all facilities where any
person has treated, stored, disposed of, reclaimed, or recycled any Hazardous
Material on behalf of Quanterra or its Affiliate are in compliance with
Environmental Laws.
3.25 Minute Books and Charter Documents. All corporate records and books
(including stock transfer ledgers) of Quanterra have been made available to St.
Xxxx for its review.
15
3.26 Broker's Fees. No agent, broker or other person is or may be entitled
to a commission or finder's fee in connection with the transactions contemplated
by this Agreement, or is or may be entitled to make any claim against Quanterra
or against St. Xxxx as a result of any actions by the Stockholders or Quanterra.
The Stockholders shall indemnify St. Xxxx against any claim for any such
commission or finder's fee made by any agent, broker or other person as a result
of any actions by the Stockholders or Quanterra.
3.27 Investment Representation. Each of the Stockholders acknowledges that
the issuance to him by St. Xxxx of the shares of St. Xxxx Stock constituting the
Consideration pursuant to this Agreement has not been registered under the 1933
Act or any state securities law, and that such St. Xxxx Stock may not be sold or
transferred other than pursuant to an effective registration statement under the
1933 Act or pursuant to an available exemption from such registration, and
further acknowledges that the certificates representing the St. Xxxx Stock will
bear a restrictive legend to the foregoing effect. Each Stockholder is acquiring
the St. Xxxx Stock for investment purposes only, for his own account (and not
for the account(s) of others) and not with a view to the distribution thereof.
Each Stockholder confirms that (i) he is familiar with the business of St. Xxxx
and has had the opportunity to ask questions of appropriate executive officers
of St. Xxxx (and that he has received responses thereto to his satisfaction) and
to obtain such information about the business and financial condition of St.
Xxxx as he has reasonably requested, and (ii) he has such knowledge and
experience in financial and business matters that he is capable of evaluating
and accepting the merits and risks of an investment in St. Xxxx Stock.
3.28 Questionable Payments. Neither Quanterra nor its Affiliate nor any
executive employee, agent, or representative of Quanterra or its Affiliate
(including the Stockholders) has made, directly or indirectly, any (a) bribes,
kickbacks or illegal payments, (b) payments that were falsely recorded on the
books and records of Quanterra or its Affiliate, or (c) payments to governmental
officials for improper purposes.
3.29 Tax Reports. Schedule 3.29 contains true and correct copies of the
Tax Reports filed by either Quanterra or its Affiliate for the past two tax
years including tax year 1998.
3.30 Joint Operating Agreements. Neither Quanterra nor its Affiliate has
entered into any joint operating agreement regarding any of the leases or xxxxx
affected by this Agreement that contains terms or conditions which impose duties
or obligations on Quanterra or its Affiliate beyond those customarily contained
or
16
created by joint operating agreements executed in the ordinary course of
conducting an oil and gas business.
3.31 Affiliate. The Stockholders represent and warrant to St. Xxxx with
respect to Quanterra Partnership the matters set forth in Section 3.08 and
Section 3.09 to the same extent as those representations and warranties by the
Stockholders apply to Quanterra. Quanterra Partnership is a limited partnership
organized and in good standing under the laws of the State of Montana for which
Quanterra is the sole general partner and as such holds a one percent
partnership interest in Quanterra Partnership.
3.32 No Misstatements or Omissions. No representation or warranty made in
this Agreement or on any Schedule hereto by the Stockholders is false or
misleading as to any material fact or omits to state a material fact required to
make any of such information not misleading in any material respect. In
addition, all other information made available by Quanterra to St. Xxxx, whether
in oral, written, or any other form, is true and correct to the Knowledge of the
Stockholders, and such information is not false or misleading as to any material
fact. To the Knowledge of the Stockholders, the foregoing representations,
warranties, schedules and information constitute full disclosure of all material
facts with respect to the business, assets and liabilities of Quanterra and its
Affiliate.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF ST. XXXX
St. Xxxx represents and warrants to the Stockholders as follows:
4.01 Organization; Good Standing. St. Xxxx is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware with all requisite corporate power and authority and legal right to
own, operate and lease its properties and assets and to carry on its business as
now being conducted and to enter into this Agreement and perform its obligations
hereunder, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the conduct of its business or
the ownership of its property requires such qualification.
4.02 Authority. St. Xxxx has the corporate power and authority to execute,
deliver, and perform its obligations under this Agreement to which it is a party
and to consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and
17
performance of this Agreement. St. Xxxx has the power and authority to deliver
the Consideration, and all necessary corporate action to authorize the delivery
of the Consideration has been taken.
4.03 Due Execution and Enforceability. This Agreement is a valid and
binding obligation of St. Xxxx, enforceable in accordance with its terms, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application referring to or affecting enforcement of
creditors' rights and general principles of equity.
4.04 No Restrictions Against Performance. Neither the execution, delivery,
authorization or performance of this Agreement, nor the consummation of the
transactions contemplated hereby will, with or without the giving of notice or
the passage of time, or both, violate any provisions of, conflict with, result
in a breach of, constitute a default under, or result in the creation or
imposition of any Lien or adverse condition under (i) the Certificate of
Incorporation or By-Laws of St. Xxxx; (ii) any federal, state or local law,
which is applicable to St. Xxxx; (iii) any contract, indenture, instrument,
agreement, mortgage, lease, right or other obligation or restriction to which
St. Xxxx is a party or by which it is bound; or (iv) any order, judgment, writ,
injunction, decree, license, franchise, permit or other authorization of any
Governmental Authority by which St. Xxxx is bound.
4.05 Capital Stock of St. Xxxx. The authorized capital stock of St. Xxxx
consists of 50,000,000 shares of common stock of which 10,827,067 are issued and
outstanding. All of the issued and outstanding shares of St. Xxxx Stock are, and
all of the shares of St. Xxxx Stock, when issued in accordance with the terms of
this Agreement are or will be, duly and validly authorized and issued and
outstanding, fully paid and nonassessable. None of the outstanding shares of St.
Xxxx Stock to be issued pursuant to this Agreement will be issued in violation
of any preemptive rights of the current or past holders of St. Xxxx Stock.
Except as disclosed on Schedule 4.05 hereto, as of the date of this Agreement,
there are no other equity securities of St. Xxxx outstanding and no outstanding
options, warrants, rights, calls, commitments, conversion rights, rights of
exchange, plans or other agreements of any character provided for the purchase,
issuance or sale of any shares of the capital stock of St. Xxxx, other than as
contemplated by this Agreement.
4.06 SEC Filings; Financial Statements of St. Xxxx. St. Xxxx has timely
filed and made available to the Stockholders all SEC Documents required to be
filed by St. Xxxx during calendar year 1998 and since December 31, 1998 . The
SEC Documents (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Laws and other applicable Laws, and
18
(ii) did not, at the time they were filed (or, if amended, or superseded by a
filing prior to the date of this Agreement, then on the date of such filing),
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in the SEC Documents or necessary in order to make the
statements in the SEC Documents in light of the circumstances under which they
were made, not misleading. Each of the St. Xxxx financial statements (including,
in each case, any related notes) contained in the SEC Documents complied as to
form in all material respects with the applicable published rules and
regulations of the SEC with respect thereto, was prepared in accordance with
GAAP (except to the extent required by changes in GAAP, as may be indicated in
the notes to such financial statements or, in the case of unaudited interim
statements, as permitted by Form 10-Q under the 1934 Act, as amended), and
fairly presented in all material respects the consolidated financial positions
of St. Xxxx and its subsidiaries as at the respective dates and the consolidated
results of operations and cash flows of the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount or effect.
4.07 Materially Adverse Change of Condition. St. Xxxx has no Knowledge of
any material adverse change in the condition of or title to its assets which
have occurred subsequent to December 31, 1998, except depletion through normal
production within authorized allowables, ordinary changes and rates of
production, and depreciation of equipment through ordinary wear and tear.
4.08 Third-Party and Governmental Consents. Except as set forth on
Schedule 4.08 hereto, and those customarily obtained after Closing, no approval,
consent, waiver, order or authorization of, or registration, qualification,
declaration or filings with, or notice to, any Governmental Authority or other
third party is required on the part of St. Xxxx in connection with the execution
of this Agreement, or the consummation of the transactions contemplated hereby.
All of the consents and approvals set forth on Schedule 4.08 have been obtained.
4.09 Litigation. There are no claims, actions, suits, proceedings or
investigations pending or, to the Knowledge of St. Xxxx, threatened, by or
against St. Xxxx with respect to this Agreement, or in connection with the
transactions contemplated hereby and St. Xxxx has no reason to believe there
exists a valid basis for any such claim, action, suit, proceeding, or
investigation.
4.10 Broker's Fees. No agent, broker or other person is or may be entitled
to a commission or finder's fee in connection with the transactions
19
contemplated by this Agreement, or is or may be entitled to make any claim
against the Stockholders or Quanterra or against St. Xxxx or any of its
subsidiaries or affiliates as a result of any actions by St. Xxxx. St. Xxxx
shall indemnify the Stockholders against any claim for any such commission or
finder's fee made by any agent, broker or other person as a result of any
actions by St. Xxxx.
4.11 No Misstatements or Omissions. No representation or warranty made in
this Agreement by St. Xxxx is false or misleading as to any material fact or
omits to state a material fact required to make any of such information not
misleading in any material respect. In addition, all other information made
available by St. Xxxx to the Stockholders, whether in oral, written or any other
form, is true and correct to the Knowledge of St. Xxxx, and such information is
not false or misleading as to any material fact. To the knowledge of St. Xxxx,
the foregoing representations, warranties and information, together with the SEC
Documents, constitute full disclosure of all material facts with respect to the
business, assets and liabilities of St. Xxxx.
ARTICLE 5
DELIVERIES
5.01 Deliveries by the Stockholders. At the Closing, in addition to any
other documents required to be delivered under the terms of this Agreement, the
Stockholders shall deliver the following:
(a) A certificate of the Stockholders dated the Closing, certifying
that any consents and approvals referred to in Section 3.11, which are
obtainable prior to the Closing, have been obtained, together with copies of
such consents and approvals.
(b) Copies of the Articles of Incorporation of Quanterra certified
as of a recent date by the Secretary of State of Montana.
(c) Copies of the By-Laws of Quanterra including all amendments
thereto, certified by the Secretary or an Assistant Secretary of Quanterra.
(d) A Certificate dated not earlier than seven calendar days prior
to Closing of the Secretary of State of Montana as to the valid existence of
Quanterra.
(e) Certificates of authority dated during 1999 of the Secretary of
State of each of the states in which Quanterra is qualified to do business, as
to
20
the due qualification or license of Quanterra as a foreign corporation in such
state.
(f) The opinion of Xxxxxxx, Haughey, Hanson, Toole & Xxxxxxxx, PLLP,
counsel to Quanterra and the Stockholders, substantially in the form of Exhibit
5.01(f) hereto.
(g) Evidence in form and substance satisfactory to St. Xxxx of the
resignation of all of the directors of Quanterra.
(h) The Stockholders shall deliver to St. Xxxx Uniform Commercial
Code financing statement searches for the State of Montana and any other state
in which Quanterra or the Affiliate do business, dated within 15 calendar days
prior to the date of the Closing, showing that there are no security interests,
judgments, taxes, other liens or encumbrances outstanding against Quanterra or
its Affiliate or their assets, or against the Stockholders.
5.02 Deliveries by St. Xxxx. At the Closing, in addition to any other
documents required to be delivered under the terms of this Agreement, St. Xxxx
shall have delivered or will deliver the following:
(a) A certificate of the President or a Vice President of St. Xxxx,
dated the Closing Date, certifying that any consents and approvals referred to
in Section 4.08 have been obtained, together with copies of such consents and
approvals.
(b) A copy of the Certificate of Incorporation of St. Xxxx,
certified as of a recent date by the Secretary of State of Delaware.
(c) A copy of the By-Laws of St. Xxxx, including all amendments
thereto, certified by the Secretary or an Assistant Secretary of St. Xxxx.
(d) A Certificate, dated as of a recent date of the Secretary of
State of the State of Delaware as to the valid existence and good standing of
St. Xxxx.
(e) Resolutions adopted by the Board of Directors of St. Xxxx
authorizing this Agreement and the transactions contemplated hereby, certified
by the Secretary or an Assistant Secretary of St. Xxxx.
(f) The opinion of the law firm Xxxxxxx Xxxxx Xxxxxxx & Xxxxxxxxx,
LLP, counsel to St. Xxxx, substantially in the form of Exhibit 5.02(f) hereto.
21
ARTICLE 6
INDEMNIFICATION
6.01 Survival of Representations, Warranties and Covenants. Without
affecting the validity or applicability of the indemnification provisions set
forth in Sections 6.02 and 6.03 of this Agreement, the representations,
warranties, and covenants of the Stockholders and St. Xxxx contained in this
Agreement shall survive the Closing and remain in full force and effect until
one year after the Closing except that such representations and warranties shall
remain in full force and effect until two years after the Closing with respect
to any breach thereof resulting in or otherwise involving a claim by a third
party against St. Xxxx, Quanterra or its Affiliate (a "Third Party Claim").
6.02 Indemnification by and on Behalf of the Stockholders. Subject to the
provisions of Section 6.05, the Stockholders jointly and severally agree to
defend, indemnify and hold St. Xxxx harmless from and against any and all
losses, liabilities, damages, costs or expenses (including reasonable attorneys'
fees, penalties, and interest) payable to or for the benefit of, or asserted by,
any party, resulting from, arising out of, or incurred as a result of:
(a) the breach of any representation and/or warranty made by the
Stockholders herein; or (b) any claim, whether made before or after the date of
this Agreement, or any litigation, proceeding or governmental investigation,
whether commenced before or after the date of this Agreement, arising out of the
businesses of Quanterra or its Affiliate prior to the Closing, or otherwise
arising out of any act or occurrence prior to, or any condition or facts
existing as of, Closing, regardless of whether or not referred to on a Schedule
to this Agreement or otherwise disclosed or known to St. Xxxx as of Closing. No
claim by St. Xxxx for indemnification by the Stockholders shall be made after
one year has elapsed following the Closing except that a claim for
indemnification may be made by St. Xxxx with respect to a Third Party Claim
until two years has elapsed following the Closing.
The indemnification obligation of the Stockholders set forth above shall
be limited to those amounts attributable solely to Quanterra with respect to
interests or activities of it, including those realized with respect to an
interest of Quanterra in any property partially owned by it or realized with
respect to any partnership interest of Quanterra (including its interest in
Quanterra Partnership), and shall not apply with respect to an ownership
interest or partnership interest (even if in Quanterra Partnership) of others.
22
6.03 Indemnification by St. Xxxx. Subject to the provisions of Section
6.05, St. Xxxx agrees to defend, indemnify and hold the Stockholders harmless
from and against any and all losses, liabilities, damages, costs, or expenses
(including reasonable attorneys' fees, penalties and interest) payable to or for
the benefit of, or asserted by, any party, resulting from, arising out of, or
incurred as a result of the breach of any representation and warranty made by
St. Xxxx herein or in accordance herewith. No claim by the Stockholders for
indemnification by St. Xxxx shall be made after one year has elapsed following
the Closing except that a claim for indemnification may be made by the
Stockholders with respect to a Third Party Claim until two years has elapsed
following the Closing.
6.04 Notice of Claims. The Stockholders and St. Xxxx shall give prompt
written notice to each other of any claim by any party which might give rise to
a claim by the Stockholders or St. Xxxx against the other based upon the
indemnity provisions contained herein, stating the nature and basis of the claim
and the actual or estimated amount thereof; provided, however, that failure to
give such notice will not affect the obligation of the indemnifying party to
provide indemnification in accordance with the provisions of this Article 6
unless, and only to the extent that, such indemnifying party is actually
prejudiced thereby. In the event that any action, suit or proceeding is brought
by a third party against the Stockholders or St. Xxxx with respect to which the
other party may have liability under the indemnification provisions contained
herein, the indemnifying party shall have the right, at its sole cost and
expense, to defend such action in the name or on behalf of the indemnified party
and, in connection with any such action, suit or proceeding, the parties hereto
agree to render to each other such assistance as may reasonably be required in
order to ensure the proper and adequate defense of any such action, suit or
proceeding; provided further, however, that an indemnified party shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate because of actual or
potential differing interests between such indemnified party and any other party
represented by such counsel. Neither party hereto shall make any settlement of
any claim which might give rise to liability of the other party under the
indemnification provisions contained herein without the written consent of such
other party, which consent such other party covenants shall not be unreasonably
withheld.
6.05 Limitation of Liability. Notwithstanding the provisions of this
Article 6, neither the Stockholders collectively nor St. Xxxx shall have any
liability to the other with respect to any matter which liability does not
exceed $5,000 as to any single liability or $10,000 as to liabilities in the
aggregate irrespective of their
23
single size except that such limitations shall not apply to any Third Party
Claim. In the event of any liability of the Stockholders for indemnification,
St. Xxxx xxx elect to cause such liability to be satisfied in part or in whole
by reducing pro rata the St. Xxxx Stock issued to the Stockholders by the number
of shares (rounded to the nearest whole number) equal to the amount of the
Stockholders' liability based on the published closing price for a share of St.
Xxxx Stock on the day such liability is quantified, and the certificates of St.
Xxxx Stock issued to the Stockholders shall bear a legend to that effect.
ARTICLE 7
SHARE RESTRICTIONS
7.01 Restricted Shares. The Stockholders hereby agree that during the
period beginning on the Closing and, subject to Section 7.05, ending on the date
which is three years after the date hereof, the Stockholders will not sell,
assign, transfer, pledge, hypothecate, encumber or otherwise dispose of
("Transfer") any shares of St. Xxxx Stock received as part of the Consideration
(the "Restricted Shares"), other than in accordance with the terms of this
Article 7 or as otherwise agreed by St. Xxxx in writing in its sole discretion,
and any such purported Transfer shall be void, except that the Stockholders may
make a Permitted Transfer (as hereinafter defined), if and only if the
transferee in such Permitted Transfer ("Permitted Transferee") executes and
delivers a written agreement to the effect that the Restricted Shares
transferred to such Permitted Transferee shall be bound by the terms of this
Article 7 as if such Permitted Transferee were an original party hereto.
7.02 Permitted Transfer. For purposes of this Article 7, a "Permitted
Transfer" of Restricted Shares by any Stockholder is (i) any bona fide gift of
such Restricted Shares by the Stockholder, including a charitable gift, (ii) any
transfer of such Restricted Shares by the Stockholder to a trustee for the
benefit of the Stockholder or the Stockholder's ancestors, descendants or
spouse, or (iii) any transfer of such Restricted Shares by a Stockholder to the
Stockholder's executors, administrators or legal representatives, heirs or
devisees pursuant to the laws of descent and distribution.
7.03 Restrictive Legends; Stop Orders. The certificate or certificates
representing Restricted Shares issued to the Stockholders or any Permitted
Transferee shall bear an appropriate legend referring to the restrictions on
Transfer contained in this Article 7 (together with the legends referred to in
Section 3.23 and Section 7.05 hereof) shall be endorsed with substantially the
24
following legend in addition to any other legend which may appear on such
certificate or certificates:
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTECATION, ENCUMBRANCE OR OTHER
DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS AND CONDITIONS OF A STOCK EXCHANGE AGREEMENT DATED JUNE 1,
0000, XXXXXXX XX. XXXX XXXX & EXPLORATION COMPANY AND XXXXXX X. XXXXX AND
XXXXXX X. XXXXXX. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF THIS CERTIFICATE TO THE SECRETARY OF
ST. XXXX XXXX & EXPLORATION COMPANY.
To assure compliance with the terms of this Agreement, St. Xxxx shall also be
permitted to deliver appropriate "stop transfer" instructions covering
certificates representing Restricted Shares to any transfer agent or registrar
of the shares of St. Xxxx Stock.
7.04 Termination of Restrictions. Any provision of this Agreement to the
contrary notwithstanding, the restrictions on Transfer contained in this Article
7 shall expire three years after the date hereof. The restrictions contained
herein shall expire with respect to the Restricted Shares held by the
Stockholders in proportion to his respective ownership of shares of St. Xxxx
Stock on the date hereof.
7.05 Removal of Legends. Whenever the restrictions imposed by this Article
7 shall terminate by reason of the passage of time and the Restricted Shares are
transferable pursuant to Rule 144(k) under the Securities Act or other available
exemption from the registration requirements of the Securities Act, each holder
of Restricted Shares shall be entitled to receive from St. Xxxx, without cost or
expense, a new certificate representing such Restricted Shares not bearing the
legends set forth in Section 7.03 and Section 3.23 upon receipt of an opinion of
counsel reasonably satisfactory to St. Xxxx that such restrictions have
terminated in accordance with their terms and that such Restricted Shares are
transferable without registration under the Securities Act pursuant to Rule
144(k) under the Securities Act or other available exemption from the
registration requirements of the Securities Act.
25
7.06 Voting Rights. The holder or holders of Restricted Shares shall
retain the full right to vote or to execute and deliver a proxy to vote
Restricted Shares on any matter submitted to holders of St. Xxxx Stock.
ARTICLE 8
GENERAL PROVISIONS
8.01 Expenses. Except as otherwise expressly provided herein, each party
to this Agreement shall pay its or his own expenses (including, without
limitation, the fees and expenses of its or his agents, representatives,
counsel, and accountants) incurred in connection with the negotiation, drafting,
execution, delivery and performance of this Agreement and the transactions
contemplated hereby.
8.02 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Stockholders and St. Xxxx and their respective
heirs, personal representatives, successors, representatives and assigns.
8.03 Waiver. No provision of this Agreement shall be deemed waived by
course of conduct, including the act of closing, unless such waiver is made in
writing signed by all then existing or surviving parties hereto, stating that it
is intended specifically to modify this Agreement, nor shall any course of
conduct operate or be construed as a waiver of any subsequent breach of this
Agreement, whether of a similar or dissimilar nature.
8.04 Entire Agreement. This Agreement (together with the Schedules and
Exhibits hereto) supersedes any other agreement, whether written or oral, that
may have been made or entered into by St. Xxxx or by the Stockholders (or by any
director, officer, employee, agent, or other representative of such parties)
relating to the matters contemplated hereby. This Agreement (together with the
Schedules and Exhibits hereto) constitutes the entire agreement between the
parties and there are no agreements or commitments except as expressly set forth
herein.
8.05 Further Assurances. Each of the parties hereto agrees to execute all
further documents and instruments and to take or to cause to be taken all
reasonable actions which are necessary or appropriate to complete the
transactions contemplated by this Agreement.
8.06 Notices. All notices, demands, requests, and other communications
hereunder shall be in writing and shall be deemed to have been duly given and
26
shall be effective upon receipt if delivered by hand, or sent by certified or
registered United States mail, postage prepaid and return receipt requested, or
by prepaid overnight express service or facsimile transmission (with receipt
confirmed). Notices shall be sent to the parties to the following addresses (or
at such other addresses for a party as shall be specified by like notice;
provided that such notice shall be effective only upon receipt thereof):
If to the Stockholders:
Xxxxxx X. Xxxxx
000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Xxxxxx X. Xxxxxx
000 X. 00xx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxxx Xxxxxx Xxxxx & Xxxxxxxx
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to St. Xxxx:
St. Xxxx Xxxx & Exploration Company
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx Xxxxxxxx Xxxxx
8.07 Amendments, Supplements, Etc. This Agreement may be amended or
modified only by a written instrument executed by all parties hereto which
states specifically that it is intended to amend or modify this Agreement.
27
8.08 Severability. In the event that any provision contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision hereof and this Agreement shall be construed as if such
invalid, illegal or unenforceable provisions had never been contained herein
and, in lieu of each such illegal, invalid or unenforceable provision, there
shall be added automatically as a part of this Agreement a provision as similar
in terms to such illegal, invalid or unenforceable provision as may be possible
but still be legal, valid and enforceable.
8.09 Governing Law. This Agreement and its interpretation shall be
governed by the laws of the State of Colorado.
8.10. Counterpart Execution. This Agreement may be executed in
counterparts and each counterpart shall constitute a binding agreement as if the
parties had executed a single document. The parties agree that such counterpart
execution may be evidenced by a facsimile transmission of the execution page for
each such party, and such facsimile execution shall constitute a binding
execution by such party. At or after Closing, the parties agree that a
sufficient number of original counterpart executions will be obtained and
affixed to this Agreement so that each party will have an originally executed
Agreement.
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
ST. XXXX XXXX & EXPLORATION COMPANY
By: /s/ Xxxx X. Xxxxxxxxxxx
--------------------------------
Xxxx X. Xxxxxxxxxxx
President
28
LIST OF SCHEDULES
Schedule 1.01(4) - Consideration - Shares of St. Xxxx Stock used as
Consideration
Schedule 2.02 - Exchange of Shares - Certificates for St. Xxxx Stock used as
Consideration
Schedule 3.01 - Ownership of Shares - Ownership of Quanterra Stock by
Stockholders
Schedule 3.04 - Organization Existence - Jurisdictions where Quanterra is
qualified to do business; names and addresses of registered agents in such
jurisdictions; and names under which Quanterra has conducted or purported to
conduct business since date of incorporation
Schedule 3.06 - Subsidiaries - List of Quanterra subsidiaries, ownership in any
corporation, partnership, liability company, joint venture, or other enterprise
or entity
Schedule 3.10 - No Adverse Effects or Changes - Quanterra or Affiliate
Schedule 3.10(e) - List, if any, of any disposition of any material
assets, properties or rights, or canceled or terminated, or agreed to
cancel or terminate any debts or claims other accounts receivable
write-offs and writedowns in the ordinary course of business (since
December 31, 1998)
Schedule 3.10(h) - List, if any, of any accrual or arrangement for or
payment of any bonus or special compensation or severance or termination
pay to any present or former officer, director, or executive employee
(since December 31, 1998)
Schedule 3.11 - Third Party and Governmental Consents - List, if any, of the
Third Party and Governmental Consents required on the part of Stockholders,
Quanterra, or its Affiliates
Schedule 3.12 - Real and Personal Property
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Schedule 3.12(a) - Oil and Gas Leases and Xxxxx List of oil and gas leases
in which Quanterra or its Affiliate is a party
Schedule 3.12(b) - Personal Property - List, if any, of any outstanding
options, warrants, commitments, agreements or any other right against any
of the personal property (other than St. Xxxx)
Schedule 3.13 - Accounts and Notes Receivable - List of Quanterra's and its
Affiliate's accounts and notes receivables as of December 31, 1998
Aging report setting forth all accounts receivables (other than
intercompany receivables)
Identify any asset holding a security interest to secure payment of the
underlying indebtedness
Description of the nature and amount of any lien on or security interest
in such accounts and notes receivable
Identify accounts receivable on Schedule 3.13 which have been collected in
their entirety since December 31, 1998.
Schedule 3.14 - Accounts Payables and Promissory Notes Quanterra and its
Affiliate. List of:
Accounts payable as of December 31, 1998 with appropriate aging report
Long-term and short-term promissory notes, installment contracts, loan
agreements, and credit agreements
Indentures, mortgages, security agreements, pledges, etc.
Identify accounts payable on Schedule 3.13 which have been fully or
partially paid since December 31, 1998.
30
Schedule 3.15 - Bonds and Insurance
List of all insurance policies and bonds. List should include (i) insurer
and agent; (ii) amount of coverage; (iii) premium dates; and (iv)
expiration dates, if any.
List, if any, of any facts or circumstances under which claims for
uninsured losses or damages are likely to be asserted against Quanterra in
excess of $10,000 or pending claims against Quanterra
Schedule 3.16 - Bank Accounts - List of (i) names of banks or financial
institutions where Quanterra or its Affiliate has banks accounts and safety
deposit boxes (ii) names of persons authorized to draw on account or access the
safety deposit box; and (iii) names of persons other than officers who are
authorized to incur liabilities for borrowed funds
Schedule 3.19 - Permits - List of all federal, state or local regulatory or
governmental authority permits
Schedule 3.20 - Taxes - List, if any, of audited Tax reports
Schedule 3.24 - Environmental Matters
Schedule 3.29 - Tax Reports - Copies of tax reports filed by Quanterra or its
Affilate for the past two years including 1998
Schedule 4.05 - Capital Stock of St. Xxxx - List, if any, of outstanding equity
securities, options, warrants, rights, call, commitments, conversion rights,
rights of exchange, plans or other agreements of any character provided for the
purchase, issuance or sale of any shares of capital stock of St. Xxxx (other
than contemplated in this Agreement)
Schedule 4.08 - Third Party and Governmental Consents - List, if any, of the
Third Party and Governmental Consents required on the part of St. Xxxx
Exhibit 5.01(f) - Form opinion letter from Quanterra counsel
Exhibit 5.02(g) - Form opinion letter from St. Xxxx counsel
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DELIVERIES BY ST. XXXX
1. A certificate from the President or a Vice President dated the date of
Closing, certifying that any third party or governmental consents and
approvals have been obtained, together with copies of such consents and
approvals.
2. A copy of STML&EC Certificate of Incorporation (recent date) from
Secretary of State of Delaware.
3. A copy of the By-Laws of St. Xxxx, including all amendments thereto
certified by the Secretary or an Assistant Secretary of St. Xxxx.
4. A Certificate of Good Standing for STML&E (recent date) from Secretary of
State of Delaware
5. STML&EC Resolutions adopted by the Board of Directors of authorizing
transaction
6. Opinion letter from Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
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CONDITIONS BY QUANTERRA ENERGY CORPORATION
1. A Stockholders certificate (dated as of Closing) regarding consents and
approvals, together with copies of such consents and approvals
2. Certified Articles of Incorporation (recent date) from Secretary of State
of Montana.
3. By-Laws including all amendments thereto certified by the Secretary or an
Assistant Secretary
4. Certificate from the Montana Secretary of State (dated within seven
calendar days prior to Closing) as to the valid existence of Quanterra.
5. Certificates of Authority dated during 1999 from the Secretary of State of
each of the states in which Quanterra is qualified to do business
6. Opinion letter from Xxxxxxx, Haughey, Hanson, Toole & Xxxxxxxx, PLLP
7. Evidence of resignation of all of the directors of Quanterra.
8. Uniform Commercial Code financing statement searches for the State of
Montana and any other state in which Quanterra or the Affiliate do
business (dated within 15 calendar days prior to the date of the Closing)
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