Exhibit 10.3
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of April 28, 2006 by
and between Blue Dolphin Energy Company, a Delaware corporation (the "COMPANY"),
and the investors listed on the signature pages hereto (each, an "INVESTOR" and
collectively the "INVESTORS").
WHEREAS, the Investors wish to purchase, and the Company wishes to sell,
upon the terms and conditions stated in this Agreement, a maximum of 400,000
shares of the common stock, par value $.01 per share, of the Company (the
"COMMON STOCK"). The shares of Common Stock to be purchased by the Investors
pursuant to this Agreement are referred to herein as the "SECURITIES"; and
WHEREAS, the Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and Rule 506 of Regulation D ("REGULATION D") as promulgated by the
United States Securities and Exchange Commission (the "COMMISSION") under the
Securities Act.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Investors agree
as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"ADVICE" has the meaning set forth in Section 6.5.
"AFFILIATE" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, "controls" or is
"controlled" by or is under common control with, such Person, as such terms are
used in and construed under Rule 144 under the Securities Act.
"AGREEMENT" has the meaning set forth in the Preamble.
"BUSINESS DAY" means any day other than Saturday, Sunday or other day on
which commercial banks in the City of Houston are authorized or required by law
to remain closed.
"CLOSING" means the closing of the purchase and sale of the Securities
pursuant to Section 2.1.
"CLOSING DATE" means the date and time of the Closing and shall be 3:00
p.m., Houston time, on April 28, 2006, or such other date and time as is
mutually agreed to by the Company and the Investors.
"COMMISSION" has the meaning set forth in the Recitals.
"COMMON STOCK" has the meaning set forth in the Recitals.
"COMPANY" has the meaning set forth in the Preamble.
"DISCLOSURE MATERIALS" has the meaning set forth in Section 3.1(g).
"EFFECTIVE DATE" means the date that the Registration Statement is first
declared effective by the Commission.
"EFFECTIVENESS PERIOD" has the meaning set forth in Section 6.1(b).
"ELIGIBLE MARKET" means any of the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 6.4(c).
"INDEMNIFYING PARTY" has the meaning set forth in Section 6.4(c).
"INVESTOR" has the meaning set forth in the Preamble.
"LIEN" means any lien, charge, claim, security interest, encumbrance, right
of first refusal or other restriction.
"LOSSES" means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including, without limitation, costs of preparation and
reasonable attorneys' fees.
"MATERIAL ADVERSE EFFECT" has the meaning set forth in Section 3.1(b).
"PERSON" means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, or joint stock company.
"PROCEEDING" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened in writing.
"PROSPECTUS" means the prospectus included in the Registration Statement at
the time of effectiveness (including, without limitation, a prospectus that
includes any information previously omitted from a prospectus filed as part of
an effective registration statement in reliance upon Rule 430A promulgated under
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to such prospectus including post effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.
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"PURCHASE PRICE" means $4.90, or 80% of the volume weighted average price
for twenty (20) Trading Days preceding the Closing Date.
"REGULATION D" has the meaning set forth in the Recitals.
"REGISTRABLE SECURITIES" means any Securities issued pursuant to this
Agreement, together with any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to the foregoing.
"REGISTRATION STATEMENT" means each registration statement required to be
filed under Article VI, as amended at the time and on the date it became
effective, including the information (if any) contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b) or deemed to be
part thereof at the time of effectiveness pursuant to Rule 430A, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement.
"RULE 144," "RULE 415," "RULE 424" and "RULE 430A" means Rule 144, Rule
415, Rule 424 and Rule 430A, respectively, promulgated by the Commission
pursuant to the Securities Act, as such Rules may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SEC REPORTS" has the meaning set forth in Section 3.1(g).
"SECURITIES" has the meaning set forth in the Recitals.
"SECURITIES ACT" has the meaning set forth in the Recitals.
"SUBSIDIARY" means any Person in which the Company, directly or indirectly,
owns voting securities having the power to elect a majority of the directors (or
similar members of such corporation's or other entity's governing body), or
otherwise direct the management and polices of such corporation or other entity.
"TRADING DAY" means (a) any day on which the Common Stock is listed or
quoted and traded on its primary Trading Market, (b) if the Common Stock is not
then listed or quoted and traded on any Eligible Market, then a day on which
trading occurs on the Nasdaq SmallCap Market (or any successor thereto), or (c)
if trading ceases to occur on the Nasdaq SmallCap Market (or any successor
thereto), any Business Day.
"TRADING MARKET" means the Nasdaq SmallCap Market or any other Eligible
Market, or any national securities exchange, market or trading or quotation
facility on which the Common Stock is then listed or quoted.
"TRANSFER AGENT" means Securities Transfer Corporation or any successor
transfer agent for the Company.
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ARTICLE II
PURCHASE AND SALE
2.1 Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing the Company shall issue and sell to the Investors, and
the Investors shall purchase from the Company, the Securities. The date and time
of the Closing and shall be 9:00 a.m., Houston, Texas time, on the Closing Date.
The Closing shall take place at a location mutually agreeable to the parties or
by electronic mail and/or facsimile.
2.2 Closing Deliveries.
(a) At the Closing, each Investor shall deliver or cause to be
delivered to the Company the aggregate Purchase Price for the Securities
listed next to such Investor's name on their respective signature page. The
Purchase Price shall be paid in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing to
the Investor by the Company for such purpose.
(b) As soon as practicable after the Closing, the Company shall
deliver or cause to be delivered to each Investor one or more stock
certificates, containing only the legend expressly provided in Section 4.1
hereof, evidencing the Securities purchased by such Investor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to the Investors as follows (which representations and
warranties shall be deemed to apply, where appropriate, to each Subsidiary):
(a) Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company
and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, could not reasonably be expected,
individually or in the aggregate, to have a material adverse effect on (i)
the results of operations, assets, business or financial condition of the
Company and the Subsidiaries, taken as a whole on a consolidated basis, or
(ii) the Company's ability to consummate the transactions contemplated by
this Agreement on a timely basis (either of (i) or (ii), a "MATERIAL
ADVERSE EFFECT").
(b) Authorization; Enforcement. The Company has the requisite
corporate authority to enter into and to consummate the transactions
contemplated by this
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Agreement and otherwise to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of the Company and no further consent or action is
required by the Company, its board of directors or its stockholders. This
Agreement has been (or upon delivery will be) duly executed by the Company
and is, or when delivered in accordance with the terms hereof, will
constitute, the valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms, except as may
be limited by applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditors rights generally, or by general principles of equity.
(c) No Conflicts. The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not, and will not, (i)
conflict with or violate any provision of the Company's Amended and
Restated Certificate of Incorporation or its bylaws, (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation (with or without notice, lapse of
time or both) of, any agreement, credit facility, debt or other instrument
to which the Company or any Subsidiary is a party or by which any property
or asset of the Company or any Subsidiary is bound, or affected, except to
the extent that such conflict, default, termination, amendment,
acceleration or cancellation right could not reasonably be expected to have
a Material Adverse Effect, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and regulations and
the rules and regulations of any self-regulatory organization to which the
Company or its securities are subject), or by which any property or asset
of the Company or a Subsidiary is bound or affected, except to the extent
that such violation could not reasonably be expected to have a Material
Adverse Effect.
(d) Subsidiaries. The Company has no Subsidiaries or any other equity
interests in any other Person other than those listed on Schedule 3.1(d)
hereto. Except as disclosed on Schedule 3.1(d) hereto, the Company owns,
directly or indirectly, all of the capital stock or comparable equity
interests of each Subsidiary free and clear of any Lien and all the issued
and outstanding shares of capital stock or comparable equity interests of
each Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights.
(e) Issuance of the Securities. The Securities have been duly
authorized and, when issued and paid for in accordance with this Agreement,
will be duly and validly issued, fully paid and nonassessable, free and
clear of all Liens and shall not be subject to preemptive or similar rights
of stockholders.
(f) Capitalization. The aggregate number of shares and type of all
authorized, issued and outstanding classes of capital stock, options and
other securities of the Company (whether or not presently convertible into
or exercisable or exchangeable for shares of capital stock of the Company)
as of the date of this Agreement is set forth on
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Schedule 3.1(f) hereto. All outstanding shares of capital stock are duly
authorized, validly issued, fully paid and nonassessable and have been
issued in compliance with all applicable securities laws. Except as
disclosed on Schedule 3.1(f) hereto, the Company has not issued any other
options, warrants, script rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or entered into any
agreement giving any Person any right to subscribe for or acquire, any
shares of Common Stock, or securities or rights convertible or exchangeable
into shares of Common Stock. Except as set forth on Schedule 3.1(f) hereto,
and except for customary adjustments as a result of stock dividends, stock
splits, combinations of shares, reorganizations, recapitalizations,
reclassifications or other similar events, there are no anti-dilution or
price adjustment provisions contained in any security issued by the Company
(or in any agreement providing rights to security holders) and the issuance
and sale of the Securities will not obligate the Company to issue shares of
Common Stock or other securities to any Person (other than the Investor)
and will not result in a right of any holder of securities to adjust the
exercise, conversion, exchange or reset price under such securities.
(g) SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding
the date hereof (the foregoing materials, together with any materials filed
by the Company under the Exchange Act, whether or not required, being
collectively referred to herein as the "SEC REPORTS" and, together with
this Agreement and the Schedules to this Agreement, the "DISCLOSURE
MATERIALS") on a timely basis. As of the respective dates on which they
were filed and/or amended, the SEC Reports complied in all material
respects with the requirements of the Securities Act and the Exchange Act
and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
audited consolidated balance sheets and audited consolidated statements of
income and cash flows of the Company as of December 31, 2005, 2004 and 2003
and for the three years ended December 31, 2005 (as restated and including
in each case any related notes and schedules thereto) included in the SEC
Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have
been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto, and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, year-end audit adjustments.
(h) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, and except as specifically
disclosed in the SEC Reports or on Schedule 3.1(h) hereto, (i) there has
been no event, occurrence or development that, individually or in the
aggregate, has had or that could result in a Material Adverse Effect
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and (ii) the Company has not incurred any material liabilities other than
(A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to
be reflected in the Company's financial statements pursuant to GAAP or
required to be disclosed in filings made with the Commission.
(i) Absence of Litigation. Except as disclosed in the SEC Reports,
there is no action, suit, claim, or proceeding, or, to the Company's
knowledge, inquiry or investigation, before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or
any of its Subsidiaries that would be reasonably expected to, individually
or in the aggregate, have a Material Adverse Effect.
(j) Compliance. Neither the Company nor any Subsidiary, except in each
case as could not, individually or in the aggregate, reasonably be expected
to have or result in a Material Adverse Effect, (i) is in default under or
in violation of (and no event has occurred that has not been waived that,
with notice or lapse of time or both, would result in a default by the
Company or any Subsidiary under), nor has the Company or any Subsidiary
received written notice of a claim that it is in default under or that it
is in violation of, any indenture, loan or credit agreement or any other
agreement or instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has been
waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute,
rule or regulation of any governmental authority.
(k) Private Placement. Neither the Company, nor any of its Affiliates,
nor any Person acting on the Company's behalf, has, directly or indirectly,
at any time within the past six months, made any offer or sale of any
security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the exemption
from registration under Regulation D under the Securities Act in connection
with the offer and sale by the Company of the Securities as contemplated
hereby or (ii) cause the offering of the Securities pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes
of any applicable law, regulation or stockholder approval provisions,
including, without limitation, under the rules and regulations of any
Trading Market.
(l) Disclosure. The Company confirms that neither it nor any officers,
directors or Affiliates, has provided the Investors or their agents or
counsel with any information that constitutes or might constitute material,
nonpublic information with respect to the Company (other than the existence
and terms of the issuance of Securities, as contemplated by this
Agreement).
3.2 Representations and Warranties of the Investors. Each Investor hereby
represents and warrants to the Company as follows:
(a) Organization; Authority. If the Investor is an entity, the
Investor is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its
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organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder. The purchase by such Investor of the
Securities hereunder has been duly authorized by all necessary action on
the part of the Investor. In addition, this Agreement has been duly
executed and delivered by each Investor and constitutes the valid and
legally binding obligation of the Investor, enforceable against it in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization or other laws of general application
relating to or affecting the enforcement of creditors rights generally, or
by general principles of equity.
(b) No Public Sale or Distribution; Investment Intent. The Investor is
acquiring the Securities for investment, for its own account, and not with
a view towards, or for resale in connection with, the public sale or
distribution thereof, except pursuant to sales registered under the
Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws, and the
Investor does not have a present intention or arrangement to effect any
sale or distribution of the Securities to or through any Person, including,
without limitation, entering into any arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership
of the Securities, whether any such transaction is to be settled by
delivery of Common Stock or other securities, in cash or otherwise.
(c) Investor Status. At the time the Investor was offered the
Securities, it was, and at the date hereof it is, an "accredited investor"
as defined in Rule 501(a) under the Securities Act.
(d) Experience of the Investor. The Investor has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in
the Securities, and has so evaluated the merits and risks of such
investment. The Investor is able to bear the economic risk of an investment
in the Securities and, at the present time, is able to afford a complete
loss of such investment.
(e) Access to Information. The Investor acknowledges that it has
reviewed the Disclosure Materials and has been afforded: (i) the
opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Securities and the merits and risks
of investing in the Securities; (ii) access to information (other than
material non-public information) about the Company and the Subsidiaries and
their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with respect to the Securities. Neither such inquiries nor any other
investigation conducted by or on behalf of the Investor or its
representatives or counsel shall modify, amend or affect the Investor's
right to rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company's representations and warranties contained in
this Agreement.
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(f) No Governmental Review. The Investor understands that no United
States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the
Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of
the offering of the Securities.
(g) No Conflicts. The execution, delivery and performance by the
Investor of this Agreement and the consummation by the Investor of the
transactions contemplated hereby will not (i) conflict with or violate the
organizational documents of the Investor (if the Investor is an entity),
(ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time, or both) of, any agreement, credit facility,
debt, indenture or other instrument to which the Investor is a party or by
which any of its property is bound, or (iii) result in a violation of any
law, rule, regulation, order, judgment, decree or other restriction of any
court or governmental authority to which the Investor is subject (including
federal and state securities laws) or by which any of its property or
assets is bound or affected, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults or violations that are not material and
do not otherwise affect the ability of the Investor to consummate the
transactions contemplated hereby.
(h) No Legal, Tax or Investment Advice. The Investor understands that
nothing in this Agreement or any other materials presented by or on behalf
of the Company to the Investor in connection with the purchase of the
Securities constitutes legal, tax or investment advice. The Investor has
consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.
(i) Disclosure. The Investor confirms that, to the Investor's
knowledge, none of the Company and its officers, directors and Affiliates
has provided the Investor or its agents or counsel with any information
that constitutes or might constitute material, nonpublic information with
respect to the Company, other than the existence and terms of the issuance
of Securities, as contemplated by this Agreement.
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Legend Requirements. Each Investor agrees to the imprinting, so long as
is required by this Section 4.1, of the following legend on any certificate
evidencing Securities:
"THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR
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PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE
WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS."
Certificates evidencing Securities shall not be required to contain such
legend (i) after a Transfer pursuant to a Registration Statement that is
effective under the Securities Act covering the resale of such Securities,
(ii) following any sale of such Securities pursuant to Rule 144, (iii) if
such Securities are eligible for sale under Rule 144(k) or (iv) if such
legend is not required under applicable requirements of the Securities Act
(including controlling judicial interpretations and pronouncements issued
by the Staff of the Commission). Following the Effective Date or at such
earlier time as a legend is no longer required for the Securities, the
Company will no later than five Business Days following the delivery by an
Investor to the Company or the Transfer Agent of a legended certificate
representing such Securities and an opinion of counsel to the extent
required, deliver or cause to be delivered to such Investor a certificate
representing such Securities that is free from such legend.
4.2 Furnishing of Information. As long as any Investor owns Securities, the
Company covenants to use its commercially reasonable efforts to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. The Company further covenants that it will use its
commercially reasonable efforts to take such further action as any holder of
Securities may reasonably request to satisfy the provisions of this Section 4.2.
4.3 Securities Laws Disclosure; Publicity. Following the Closing, the
Company shall issue a press release disclosing all material terms of the
transactions contemplated hereby and shall, thereafter, timely file a Current
Report on Form 8-K with the Commission describing the terms of the transactions
contemplated by this Agreement in the form required by the Exchange Act and
shall file this Agreement as an exhibit to its annual report on Form 10-Q for
the quarter year ended June 30, 2006. The Company and the Investors shall
consult with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency or Trading Market with respect to the transactions
contemplated hereby, and neither party shall issue any such press release or
otherwise make any such public statement, filing or other communication without
the prior consent of the other, except if such disclosure is required by law, in
which case the disclosing party shall promptly provide the other party with
prior notice of such public statement, filing or other communication.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Investor, or include the name of any Investor in any press release
without the prior written consent of such Investor.
4.4 Use of Proceeds. The Company intends to use the net proceeds from the
sale of the Securities for working capital needs and general corporate purposes.
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ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Investors. The
obligation of the Investors to acquire Securities at the Closing is subject to
the satisfaction or waiver by the Investors, at or before the Closing, of each
of the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing as though made on
and as of such date; and
(b) Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by it at or prior to the Closing.
5.2 Conditions Precedent to the Obligations of the Company. The obligation
of the Company to sell the Securities at the Closing is subject to the
satisfaction or waiver by the Company, at or before the Closing, of each of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of the Investors contained herein shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made
on and as of such date; and
(b) Performance. The Investors shall have performed, satisfied and
complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or
complied with by the Investors at or prior to the Closing.
ARTICLE VI
REGISTRATION RIGHTS
6.1 Shelf Registration.
(a) The Company shall prepare and file with the Commission a "Shelf"
Registration Statement covering the resale of all Registrable Securities
for an offering to be made on a continuous basis pursuant to Rule 415, as
promptly as reasonably practicable after the Closing, but in no event later
than May 15, 2006. The Registration Statement shall be on Form S-3, except
if the Company is not then eligible to register for resale the Registrable
Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance with the Securities Act and the Exchange Act
and as consented to by the Investors.
(b) The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective by the Commission as
promptly as possible after the filing thereof and shall use its reasonable
best efforts to keep the Registration Statement continuously effective (the
period for which the Company is required to use its reasonable best efforts
to keep such Registration Statement effective, the "EFFECTIVENESS PERIOD")
under the Securities Act until the earlier of (i) the date that all
Registrable
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Securities covered by such Registration Statement have been sold or (ii)
the date that all Registrable Securities may be sold publicly under Rule
144(k). To the extent that the Registration Statement is not declared
effective by the Commission by the close of business on August 7, 2006, the
Company shall immediately issue to the Investor 1% of the Securities, or
4,000 shares of Common Stock, as consideration for the delay in the
declaration of the effectiveness of the Registration Statement. The Company
shall continue to issue 4,000 shares of Common Stock to the Investor on the
seventh day of each subsequent month (or the first Business Day following
the seventh day of the month if such day is a Saturday, Sunday or federal
holiday) until such time as the Registration Statement is declared
effective.
(c) The Company shall notify the Investors in writing promptly (and in
any event within three Business Days) after receiving notification from the
Commission that the Registration Statement has been declared effective.
(d) Notwithstanding anything in this Agreement to the contrary, at any
time when the Registration Statement is effective, the Company may, by
written notice to the Investors, suspend sales thereunder and/or require
that the Investors immediately cease the sale of shares of Common Stock
pursuant thereto if (x) the Company is engaged in a merger, acquisition or
sale and the board of directors of the Company determines in good faith, by
appropriate resolutions, that, as a result of such activity, (A) it would
be detrimental to the Company (other than as relating solely to the price
of the Common Stock) to maintain a Registration Statement at such time and
(B) it is in the best interests of the Company to suspend such Registration
Statement or (y) another event has occurred or is reasonably likely to
occur that would require additional disclosure by the Company and that the
Company has a bona fide business purpose for keeping confidential, and the
nondisclosure of which would reasonably be expected to cause the
Registration Statement to fail to comply with applicable disclosure
requirements at such time. Upon receipt of such notice, the Investors shall
immediately discontinue any sales of Registrable Securities pursuant to
such registration until the Investors have received copies of a
supplemented or amended Prospectus or until the Investors are advised in
writing by the Company that the then-current Prospectus may be used and has
received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus. In no
event, however, shall this right be exercised to suspend sales beyond the
period during which (in the good faith determination of the Company's board
of directors) the failure to require such suspension would be detrimental
to the Company. The Company's rights under this Section 6.1(d) may be
exercised for a period of no more than 30 days at a time and not more than
three times in any twelve-month period. Immediately after the end of any
suspension period under this Section 6.1(d), the Company shall take all
necessary actions (including filing any required supplemental prospectus)
to restore the effectiveness of the applicable Registration Statement and
the ability of the Investors to publicly resell their Registrable
Securities pursuant to such effective Registration Statement.
6.2 Information from Investors. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Article VI with
respect to the Registrable Securities that each of the Investors shall furnish
to the Company such information regarding
12
itself, the Registrable Securities held by it and the intended method of
disposition of such securities, including but not limited to, the Investor's
name, the amount of Registrable Securities held by such Investor and the amount
of other debt and equity securities of the Company held by such Investor. Each
Investor agrees to provide such other information as the Company may reasonably
request in writing.
6.3 Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Not less than three Business Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), furnish to the Investors
copies of all such documents proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference) will be
subject to the review of the Investors.
(b) (i) Subject to Section 6.1(d), prepare and file with the
Commission such amendments, including post-effective amendments, to each
Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep the Registration Statement continuously effective,
as to the applicable Registrable Securities for the Effectiveness Period
and prepare and file with the Commission during the Effectiveness Period
any additional Registration Statements, only to the extent necessary to
register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement, and as so supplemented or amended to
be filed pursuant to Rule 424; (iii) respond as promptly as reasonably
possible to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and as promptly as
reasonably possible provide the Investors with true and complete copies of
all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of
the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by
the Investor thereof set forth in the Registration Statement as so amended
or in such Prospectus as so supplemented.
(c) Notify the Investors as promptly as reasonably practicable, and no
later than three Business Days thereafter, of any of the following events:
(i) the Commission notifies the Company whether there will be a "review" of
any Registration Statement; (ii) the Commission comments in writing on any
Registration Statement (in which case the Company shall deliver to the
Investors a copy of such comments and of all written responses thereto);
(iii) the Registration Statement or any post-effective amendment is
declared effective; (iv) the Commission or any other federal or state
governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional information
related thereto; (v) the Commission issues any stop order suspending the
effectiveness of any Registration Statement or initiates any Proceedings
for that purpose; (vi) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities
for sale in any
13
jurisdiction, or the initiation or threat of any Proceeding for such
purpose; or (vii) the financial statements included in any Registration
Statement become ineligible for inclusion therein or any statement made in
any Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference is untrue in any material
respect or any revision to a Registration Statement, Prospectus or other
document is required so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Use its reasonable best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness
of any Registration Statement or (ii) any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, as soon as possible.
(e) Upon request, provide the Investors, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, and all exhibits to the
extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the filing of such documents with
the Commission.
(f) Consent to the use of any Prospectus and each amendment or
supplement thereto by the Investors in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any
amendment or supplement thereto to the extent permitted by federal and
state securities laws and regulations.
(g) Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the
Investor in connection with the registration or qualification (or exemption
from such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as the Investor requests in writing, to keep each
such registration or qualification (or exemption therefrom) effective for
so long as required, but not to exceed the duration of the Effectiveness
Period, and to do any and all other acts or things reasonably necessary or
advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as
a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject.
(h) If requested by the Investors, as promptly as reasonably
practicable incorporate in the Registration Statement such appropriate
information as the Investors may reasonably request to have included
therein by filing a Form 8-K, or filing a supplement to the Prospectus, to
reflect any change in the information regarding the holder of the
Registrable Securities or the Investor's plan of distribution, provided,
that all filings made in connection with such requests shall be made at the
requesting Investor's expense.
14
(i) Cooperate with the Investors to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be
delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by this Agreement and
under law, of all restrictive legends, and to enable such Registrable
Securities to be in such denominations and registered in such names as the
Investors may reasonably request.
(j) Upon the occurrence of any event described in Section 6.2(c)(vii),
as promptly as reasonably possible, prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration
Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(k) Cooperate with any reasonable due diligence investigation
undertaken by the Investors in connection with the sale of Registrable
Securities, including, without limitation, by making available documents
and information.
(l) Comply with all rules and regulations of the Commission applicable
to the registration of the Securities.
6.4 Registration Expenses. The Company shall pay all fees and expenses
incident to the performance of or compliance with Article VI of this Agreement
by the Company, including without limitation (a) all registration and filing
fees and expenses, including without limitation those related to filings with
the Commission, any Trading Market and in connection with applicable state
securities or Blue Sky laws, other than those fees and expenses which are
specific to an individual Investor, (b) printing expenses (including without
limitation expenses of printing certificates for Registrable Securities), (c)
messenger, telephone and delivery expenses, (d) fees and disbursements of
counsel for the Company, (e) fees and expenses of all other Persons retained by
the Company in connection with the consummation of the transactions contemplated
by this Agreement and (f) all listing fees to be paid by the Company to the
Trading Market.
6.5 Indemnification.
(a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each
Investor, their officers, directors, partners, members, agents and
employees, each Person who controls an Investor (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, partners, members, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from
and against any and all Losses arising out of or based on (i) any breach of
any representation or warranty made by the Company in this Agreement or any
other certificate, instrument or document delivered in connection with this
Agreement, (ii) any breach of any
15
covenant, agreement or obligation of the Company contained in this
Agreement or any other certificate, instrument or document delivered in
connection with this Agreement or (iii) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or related preliminary prospectus or in any amendment or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
not misleading only to the extent that such untrue or alleged untrue
statement of a material fact occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for
use in connection with such Registration Statement, except (x) to the
extent, but only to the extent, that any such untrue statement, alleged
untrue statement, omission or alleged omission was contained in or based
upon information furnished in writing to the Company by or on behalf of the
Investor for use therein, or to the extent that such information relates to
the Investor or the Investor's proposed method of distribution of
Registrable Securities, or (y) in the case of an occurrence of an event of
the type specified in Section 6.2(c)(v)-(vii), such Loss results from the
use by the Investor of an outdated or defective Prospectus after the
Company has notified the Investor in writing that the Prospectus is
outdated or defective and prior to the receipt by the Investor of the
Advice contemplated in Section 6.5. The indemnification obligations of the
Company pursuant to Sections 6.4(a)(i) and 6.4(a)(ii) shall terminate upon
the first anniversary of the Closing Date. In addition, the Company shall
not be liable to reimburse the Investor pursuant to Sections 6.4(a)(i) or
6.4(a)(ii) unless the aggregate amount of Losses incurred by the Investor
with respect to all such breaches of representations, warranties,
covenants, agreements or obligations by the Company exceeds $25,000 and,
provided that, the Company's maximum aggregate indemnification obligations
pursuant to Sections 6.4(a)(i) or 6.4(a)(ii) will be limited to the amount
of the purchase price paid by the Investor for the Securities pursuant to
Section 2.2(b).
(b) Indemnification by Investors. Each Investor shall indemnify and
hold harmless the Company, its directors, officers, agents and employees,
each Person who controls the Company (within the meaning of Section 15 of
the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses arising out
of or based on (i) any breach of any representation or warranty made by
such Investor in this Agreement or any other certificate, instrument or
document delivered in connection with this Agreement, (ii) any breach of
any covenant, agreement or obligation of the Investor contained in this
Agreement or any other certificate, instrument or document delivered in
connection with this Agreement or (iii) any untrue or alleged untrue
statement of a material fact contained in the Registration Statement, any
Prospectus or related preliminary prospectus or in any amendment or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein
not misleading. In no event shall the liability of the Investor hereunder
be greater in amount than the dollar amount of the proceeds received by the
Investor upon the sale of the Registrable Securities giving rise to such
indemnification obligation. The indemnification obligations of the
Investors pursuant to Sections 6.4(b)(i) and 6.4(b)(ii) shall terminate
upon the first anniversary of the Closing Date. In addition, the Investors
shall not be liable to reimburse the Company pursuant to Sections 6.4(b)(i)
or 6.4(b)(ii) unless the aggregate amount of Losses incurred by the
16
Company with respect to all such breaches of representations, warranties,
covenants, agreements or obligations by the Investor exceeds $25,000 and,
provided that, the Investor's maximum aggregate indemnification obligations
pursuant to Sections 6.4(b)(i) or 6.4(b)(ii) will be limited to the amount
of the purchase price paid by the Investor for the Securities pursuant to
Section 2.2(b).
(c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the "INDEMNIFYING PARTY") in writing,
and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such
notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent
that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed
in writing to pay such fees and expenses; or (ii) the Indemnifying Party
shall have failed promptly to assume the defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any
such Proceeding; or (iii) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and
the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party
in writing that it elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to
assume the defense thereof and such counsel shall be at the expense of the
Indemnifying Party). It is understood, however, that the Indemnifying Party
shall not, in connection with any one such Proceeding be liable for the
fees and expenses of more than one separate firm of attorneys at any time
for all Indemnified Parties, which firm shall be appointed by a majority of
the Indemnified Parties; provided, however, that in the case a single firm
of attorneys would be inappropriate due to actual or potential differing
interests or conflicts between such Indemnified Parties and any other party
represented by such counsel in such Proceeding or otherwise, then the
Indemnifying Party shall be liable for the fees and expenses of one
additional firm of attorneys with respect to such Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party,
unless such settlement includes an unconditional release of such
17
Indemnified Party from all liability for claims that are the subject matter
of such Proceeding.
(d) Contribution. If a claim for indemnification under Section 6.4(a)
or 6.4(b) is unavailable to an Indemnified Party or is otherwise
insufficient to hold harmless an Indemnified Party (by reason of public
policy or otherwise), then each Indemnifying Party, in lieu of indemnifying
the Indemnified Party, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material
fact, has been taken or made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the
limitations set forth in Section 6.4(c), any reasonable attorneys' or other
reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such
fees or expenses if the indemnification provided for in this Section was
available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 6.4(d),
the Investor shall not be required to contribute, in the aggregate, any
amount in excess of the amount by which the proceeds actually received by
the Investor from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that the Investor has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty
of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this Section
are in addition to any liability that an Indemnifying Party may have to an
Indemnified Party.
6.6 Dispositions. Each Investor agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Investor further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(v)-(vii), the Investor will discontinue disposition of such Registrable
Securities under the Registration Statement until the Investor's receipt of the
copies of the supplemented Prospectus and/or amended Registration Statement
contemplated by Section 6.2(k), or until it is advised in writing (the "ADVICE")
by the Company that the use of the applicable Prospectus may be
18
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
ARTICLE VII
MISCELLANEOUS
7.1 Fees and Expenses. Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement.
7.2 Entire Agreement. This Agreement, together with the Schedules hereto,
contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties acknowledge have been
merged into such documents, exhibits and schedules. At or after the Closing, and
without further consideration, the Company will execute and deliver to the
Investors such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under this Agreement.
7.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified on the Investor's signature page prior to 6:30 p.m. (Houston time) on
a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified on the Investor's signature page on a day that is not a Trading Day or
later than 6:30 p.m. (Houston time) on any Trading Day, (c) the Trading Day
following the date of deposit with a nationally recognized overnight courier
service and (d) the date of actual receipt by the party to whom such notice is
required to be given. The addresses and facsimile numbers for such notices and
communications are those set forth on the signature pages hereof, or such other
address or facsimile number as may be designated in writing hereafter, in the
same manner, by any such Person.
7.4 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and the Investors or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to rights under Article VI may be given by
holders of least a majority of the Registrable Securities to which such waiver
or consent relates.
19
7.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.
7.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors. Each Investor may assign its
rights under this Agreement to any Person to whom the Investor assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that
apply to the "Investors."
7.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Indemnified Party is an intended third
party beneficiary of Section 6.4 and (in each case) may enforce the provisions
of such Sections directly against the parties with obligations thereunder.
7.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
7.9 Survival. The representations, warranties, agreements and covenants
contained herein shall survive the Closing, provided that the representations
and warranties contained herein shall terminate on the first anniversary of the
Closing Date.
7.10 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that the parties need not sign
the same counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original thereof.
7.11 Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
7.12 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) this
Agreement, whenever an Investor exercises a right, election, demand or option
owed to the Investor by the Company under this Agreement and the Company does
not timely perform its related obligations within the periods therein provided,
then, prior to the performance by the Company of the Company's related
obligation, the Investor may rescind or withdraw, in its sole discretion from
time to time
20
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights.
7.13 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and the execution by the holder
thereof of a customary lost certificate affidavit of that fact and an agreement
to indemnify and hold harmless the Company for any losses in connection
therewith. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities.
7.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Investors and the Company will be entitled to seek specific performance under
this Agreement. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for temporary restraining order) the defense that a remedy at law would
be adequate.
7.15 Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in this Agreement or any other certificate, instrument or document
delivered in connection with this Agreement to a number of shares or a price per
share shall be amended to appropriately account for such event.
[SIGNATURE PAGES FOLLOW]
21
SIGNATURE PAGE
Attached to and made a part of the
STOCK PURCHASE AGREEMENT
dated as of April 28, 2006
IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement
to be duly executed as of the date written above.
THE COMPANY:
BLUE DOLPHIN ENERGY COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
Address for Notice:
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
22
SIGNATURE PAGE
Attached to and made a part of the
STOCK PURCHASE AGREEMENT
dated as of April 28, 2006
IN WITNESS WHEREOF, the parties have caused this Stock Purchase Agreement
to be duly executed as of the date written above.
INVESTOR:
By: /s/ Xxxx Xxxx
------------------------------------
Name: Xxxx Xxxx
Title: Principal and Portfolio Manager
Number of Shares Purchased:
400,000
Address for Notice:
000 Xxxxxxxx. 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
23
