AGREEMENT
BETWEEN
XXXXX MINERALS CORP. ("Purchaser");
and
COASTAL CARIBBEAN OILS & MINERALS, LTD. ("CCO") and
COASTAL PETROLEUM COMPANY ("CPC")
DATED OCTOBER 16, 1992
TABLE OF CONTENTS
1. PURCHASE AND SALE.....................................................1
A. Initial Purchase.............................................1
B. Use of Purchase Price........................................2
2. OPTION AGREEMENT......................................................2
A. Options......................................................2
B. Use of Option Purchase Price.................................4
C. Additional Conditions Precedent..............................4
3. EXCHANGE OF SHARES....................................................4
A. Exchange Privilege...........................................4
B. Manner of Exchange...........................................4
C. Delivery of Share Certificates, Fractional Shares............5
D. Compliance With Laws.........................................5
E. Reservation of Shares........................................5
F. Exchange for Royalty.........................................5
G. Disposition of Leasehold Interest............................6
4. ANTI-DILUTION.........................................................6
A. Stock Adjustments............................................6
B. Stock in Cancellation of Indebtedness........................6
C. CCO Stock Issuance...........................................7
D. CPC Stock Issuance...........................................7
5. REPRESENTATIONS AND WARRANTIES OF CCO AND CPC.........................7
A. Organization and Good Standing...............................7
B. Capitalization...............................................7
C. Subsidiaries.................................................8
D. Execution and Effect of Agreement............................8
E. Financial Statements.........................................9
F. No Undisclosed Liabilities...................................9
G. Taxes........................................................9
H. No Adverse Change............................................9
I. Securities Law Compliance...................................10
J. Business and Properties.....................................10
L. Permits: Compliance with Laws...............................10
M. Insurance...................................................10
N. Material Obligations........................................11
O. Labor Disputes..............................................11
P. ERISA.......................................................11
Q. Share Validity and Encumbrances.............................11
R. No Misrepresentation........................................11
S. Registration Rights.........................................11
T. Drilling Leases.............................................11
U. Royalty Interests...........................................12
V. Acknowledgement of Benefits.................................12
W. No Brokers or Finders.......................................12
6. INDEMNIFICATION AND SURVIVAL OF
REPRESENTATIONS, WARRANTIES AND COVENANTS............................12
A. Survival....................................................12
B. Indemnification.............................................12
7. REGISTRATION OF CCO STOCK............................................12
A. Registration Rights.........................................12
B. Agreement of Purchase.......................................13
C. Costs.......................................................13
8. ADDITIONAL COVENANTS OF CCO AND CPC..................................13
A. Settlement of Lawsuits......................................13
B. Dividends and Distributions.................................13
C. Transfer of Assets..........................................14
D. Material Investments........................................14
E. Articles and Bylaws.........................................14
F. Lines of Business...........................................14
G. Conduct of Business.........................................14
H. Financial Reports...........................................14
I. Access......................................................14
J. Representations and Warranties..............................14
K. Opt Out ofss.607.0901 and 607.0902..........................14
L. Revised Structure...........................................14
M. Intercompany Payments.......................................14
N. Right of First Refusal......................................15
O. Duration....................................................15
9. DEFAULTS AND REMEDIES................................................15
A. Defaults....................................................15
B. Remedies....................................................15
10. NOTICES..............................................................15
11. LAW GOVERNING AGREEMENT..............................................16
12. PARTIES BOUND........................................................16
13. ASSIGNMENT...........................................................16
14. PUBLIC ANNOUNCEMENTS.................................................16
15. EXPENSES.............................................................16
16. FURTHER ASSURANCES...................................................16
17. AMENDMENT AND MODIFICATION...........................................16
18. COUNTERPARTS.........................................................17
19. ENTIRE AGREEMENT.....................................................17
20. SEVERABILITY.........................................................17
EXHIBIT LIST
Page
Exhibit A - Opinion of Counsel 1,4
Exhibit B - Agreement with D'Alessandro 3
Exhibit C - Royalty Agreement 5
Exhibit D - Certified Articles and By-laws 7
Exhibit E - Drilling Leases 12
Exhibit F - Royalty Interests 12
Exhibit G - Confidentiality Agreement 15
Exhibit H - Public Announcement 17
A G R E E M E N T
THIS AGREEMENT made and entered into as of the ________ day of October,
1992, by and between:
XXXXX MINERALS CORP., a Florida corporation having its
principal office in Tampa, Florida, (hereinafter referred to
as the "Purchaser"); and
COASTAL CARIBBEAN OILS & MINERALS, LTD., a Bermuda corporation
having its principal office in Hamilton, Bermuda (hereinafter
referred to as "CCO") and
COASTAL PETROLEUM COMPANY, a Florida corporation having its
principal office in Tallahassee, Florida and majority owned
subsidiary of CCO (hereinafter referred to as "CPC").
In consideration of the sums set forth and the stated covenants and
options, the parties agree as follows:
1. PURCHASE AND SALE.
A. Initial Purchase.
(i) Subject to the terms and conditions set forth in this
Agreement and in reliance on the representations and warranties contained
herein, at the Closing (defined in Section 1.A.(iii)) CCO shall sell to the
Purchaser and the Purchaser shall purchase from CCO six (6) shares of CPC Common
Stock (defined in Section 5.B.(ii)) owned by CCO.
(ii) The purchase price (the "Purchase Price") for the six (6)
shares of CPC Common Stock shall be Two Hundred and Forty Thousand Dollars
($240,000.00) payable in cash or other immediately available funds at the
Closing.
(iii) The closing (the "Closing") shall take place at the
offices of Macfarlane Xxxxxxxx, 000 X. Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxxx,
Xxxxxxx 00000, or at such other place the parties may mutually agree upon at
11:00 a.m. on or before Friday, October 30, 1992, (the "Closing Date"). At the
Closing, CCO shall deliver to the Purchaser stock certificates evidencing the
six (6) shares of CPC Common Stock, duly endorsed in blank or accompanied by
stock powers duly endorsed in blank, and shall take, or cause CPC to take, all
other actions necessary to constitute the Purchaser the owner and holder of such
shares, free and clear of any lien or encumbrance or restriction, and shall
deliver such other documents and certificates reasonably requested by the
Purchaser, including, without limitation, a certificate signed by the President
of each of CCO and CPC certifying the truthfulness and correctness of the
representations and warranties contained in Section 5 hereof and the opinion of
counsel to CPC substantially in the form set forth as Exhibit A hereto and made
a part hereof. Following CCO and CPC's satisfaction of the conditions precedent
stated in the preceding sentence, the Purchaser shall deliver to CCO the
Purchase Price. In the event CCO and CPC fail to satisfy such conditions
precedent, then the Purchaser has the unconditional right to terminate this
Agreement with no liability of any kind whatsoever.
B. Use of Purchase Price. CCO shall use the Purchase Price
as follows:
(i) A minimum of One Hundred and Twenty Thousand Dollars
($120,000.00) shall be promptly advanced by CCO to CPC and shall be used by CPC
solely for the exploration and extraction of oil and other minerals on the
property subject to CPC's Drilling Leases (defined in Section 5.T) and expenses
related thereto.
(ii) The remaining portion of the Purchase Price may be used
for any proper business purposes of CCO.
For so long as the Purchaser owns any shares of CPC Common Stock (or CCO Common
Stock or the Royalty if CPC Common Stock is exchanged pursuant to Section 3
hereof), the Purchaser shall have the right to verify, through such procedures
as the Purchaser deems reasonably necessary, that the Purchase Price is used
solely as permitted by this Section 1.B. and Section 2.B.
2. OPTION AGREEMENT.
A. Options. Subject to the terms and conditions set forth in
this Agreement and in reliance on the representations and warranties contained
herein, CCO hereby grants to the Purchaser options to purchase additional CPC
Common Stock as follows:
(i) At the Closing, CCO shall grant to the Purchaser an
irrevocable first option to purchase up to an additional fifty-four (54) shares
of CPC Common Stock on the following basis:
(a) On or before May 1, 1993, up to six (6) shares for
$40,000.00 per share;
(b) On or before November 1, 1993, up to six (6) shares
for $40,000.00 per share;
(c) On or before May 1, 1994, up to six (6) shares for
$40,000.00 per share;
(d) On or before November 1, 1994, up to six (6) shares
for $40,000.00 per share;
(e) On or before May 1, 1995, up to six (6) shares for
$40,000.00 per share;
(f) On or before November 1, 1995, up to six (6) shares
for $40,000.00 per share
(g) On or before May 1, 1996, up to six (6) shares for
$40,000.00 per share;
(h) On or before November 1, 1996, up to six (6) shares
for $40,000.00 per share;
(i) On or before May 1, 1997, up to six (6) shares for
$40,000.00 per share;
(j) Purchaser, in its sole discretion, may unilaterally
extend each option described in Section 2.A.(i)(a ) through Section 2.A.(i)(i)
above:
(x) for a period of up to thirty (30) days by
giving prior written notice to CCO; and
(y) for a period of up to one (1) year by
purchasing three (3) shares for $40,000 per share on or before the date stated
in each such option.
(ii) At the Closing, CCO shall grant to the Purchaser an
irrevocable second option to purchase the twenty-one (21) shares of CPC Common
Stock which are subject to a first option to purchase which CCO previously
granted to Xxxx X. X'Xxxxxxxxxx, M.D., F.A.C.S., ("D'Alessandro") pursuant to
that certain Agreement dated December 3, 1991, between D'Alessandro and CCO
attached hereto as Exhibit B and made a part hereof, (the "D'Alessandro
Agreement"), on the following basis:
(a) CCO shall notify the Purchaser in writing within
ten (10) days after the first to occur of either:
(x) D'Alessandro's exercise of his options; or
(y) the lapse of D'Alessandro's options.
(b) In the event D'Alessandro's options lapse, then the
Purchaser may purchase at $40,000.00 per share the shares previously subject to
D'Alessandro's options within ninety (90) days of the Purchaser's receipt of
CCO's written notice to the Purchaser pursuant to Section 2.A.(ii)(a) above.
CCO shall not amend the D'Alessandro Agreement in any manner without the prior
written consent of the Purchaser. In the event the Purchaser purchases the
shares previously subject to D'Alessandro's options, then the Purchaser, at its
option, shall be entitled to convert such shares into a royalty interest or CCO
Common Stock according to the terms and conditions of the D'Alessandro Agreement
or this Agreement.
(iii) In the event the Purchaser exercises any or all of the
options granted pursuant to Section 2.A.(i) and 2.A.(ii), the closing of the
exercise of such options (the "Option Closings") shall be at the time and place
designated by Purchaser. At each such Option Closing, the Purchaser shall
deliver to CCO the purchase price (the "Option Purchase Price") for the shares
of CPC Common Stock to be purchased by the Purchaser. At each such Option
Closing, CCO shall deliver to the Purchaser stock certificates evidencing the
shares of CPC Common Stock to be purchased, duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, and shall take, or cause CPC
to take, all other actions necessary to constitute the Purchaser the owner and
holder of such shares, free and clear of any lien or encumbrance or restriction.
(iv) At the Closing, CCO shall place a legend satisfactory to
the Purchaser on the stock certificates evidencing fifty-four (54) CPC shares
subject to the Purchaser's irrevocable first option and twenty-one (21) CPC
shares subject to the Purchaser's irrevocable second option.
B. Use of Option Purchase Price. CCO shall use the Option
Purchase Price as follows:
(i) A minimum of fifty percent (50%) of the Option Purchase
Price shall be promptly advanced by CCO to CPC and shall be used by CPC solely
for the exploration and extraction of oil and other minerals on the property
subject to CPC's Drilling Leases and expenses related thereto.
(ii) The remaining portion of the Option Purchase Price may be
used for any proper business purposes of CCO.
C. Additional Conditions Precedent.
(i) As a condition precedent to each purchase and sale
described in Sections 1 and 2 hereof and as a condition precedent to each
exchange described in Section 3 hereof, CCO and CPC shall reaffirm in writing
each of the representations and warranties set forth in Section 5 hereof.
(ii) As a condition precedent to each purchase and sale
described in Sections 1 and 2 hereof, and as a condition precedent to each
exchange contemplated by Section 3 hereof, CCO shall cause to be delivered to
the Purchaser an opinion of counsel to CPC substantially in the form set forth
as Exhibit A hereto and such other documents and certificates reasonably
requested by the Purchaser.
3. EXCHANGE OF SHARES.
A. Exchange Privilege. At the election of Purchaser, any share of CPC
Common Stock owned by the Purchaser may be exchanged into fully paid and
non-assessable shares of common stock of CCO ("CCO Common Stock"), on the basis
of 100,000 shares of CCO Common Stock for each share of CPC Common Stock.
B. Manner of Exchange. Any share of CPC Common Stock may be exchanged
by the Purchaser by surrender of such share (the "Exchanged Share") with a
written notice requesting an exchange pursuant to the terms hereto, duly
executed by the Purchaser to CCO at its principal office. The exchange shall be
deemed to have been effected at the close of business on the date on which the
Exchanged Share(s) shall have been surrendered to CCO, and at such time the
appropriate number of shares of CCO Common Stock shall be issued by CCO to the
Purchaser and CCO shall take all action necessary to constitute the Purchaser
the owner and holder of such shares, free and clear of any lien or encumbrance
or restriction.
C. Delivery of Share Certificates Fractional Shares. As promptly as
practicable after the surrender of the Exchanged Share(s), and in any event
within 15 days thereafter, CCO at its expense (including the payment by it of
any applicable issue taxes) will cause to be issued in the name of and delivered
to the Purchaser, or delivered to such other person as the Purchaser (upon
payment by the Purchaser of any applicable transfer taxes) may direct, a
certificate or certificates representing the number of shares of CCO Common
Stock to which the Purchaser shall be entitled upon such exchange. No fractional
share of CCO Common Stock or scrip representing such fractional share shall be
issued upon exchange hereunder. If any fractional share otherwise would be
deliverable upon exchange, such fraction shall be rounded up if one-half or more
or otherwise rounded down, to the nearest whole number.
D. Compliance with Laws. Upon any such exchange, Purchaser shall
provide CCO with such customary investment representations reasonably requested
by CCO to assure that such exchange complies with applicable federal and state
securities laws.
E. Reservation of Shares. CCO shall reserve for issuance pursuant to
such exchange rights 8,100,000 shares of CCO Common Stock and shall increase or
decrease such number of CCO shares so reserved to reflect adjustments, if any,
in the total number of such shares issuable upon Purchaser's exercise of the
right to exchange shares.
F. Exchange for Royalty. The Purchaser may, at the Purchaser's option,
exchange all or any of the shares of CPC Common Stock acquired by the Purchaser
pursuant to this Agreement for an overriding royalty, in the form attached
hereto as Exhibit C and made a party hereof, (the "Royalty"), and as more fully
described below. The Royalty shall entitle the Purchaser to receive from CPC an
amount equal to the number of shares of CPC Common Stock exchanged by the
Purchaser for the Royalty divided by the total number of shares of CPC Common
Stock outstanding (the "Royalty Percentage") at the time of such exchange
multiplied by (a) the gross amounts received by CPC or its successors in
interest from the sale of oil, gas or other minerals produced from the so called
"working interest" areas of CPC's Drilling Leases 224-A, 224-B and 248, all as
modified and amended to the date hereof, divided by 8; and (b) the amounts
received by CPC or its successor in interest as an overriding royalty pursuant
to Section 4, Paragraph 2 of that certain Memorandum of Settlement dated January
6, 1976 by and between the Board of Trustees of the Internal Improvement Trust
Fund of the State of Florida and CPC. Notwithstanding anything herein to the
contrary, in the event the Purchaser exchanges all sixty (60) shares of CPC
Common Stock for the Royalty, which is the total number of shares the Purchaser
may acquire through the Purchaser's initial purchase pursuant to Section 1 and
the exercise of the options pursuant to Section 2.A.(i), such Royalty shall
entitle the Purchaser to a minimum of (a) 2.57% of the gross amounts resulting
from the sale of oil, gas or other minerals produced from the "working interest"
areas of CPC's Drilling Leases 224-A, 224-B and 248, all as modified and amended
to the date hereof; and (b) 20.55% of the amounts resulting from the overriding
royalty pursuant to Section 4, Paragraph 2 of that certain Memorandum of
Settlement dated January 6, 1976 by and between the Board of Trustees of the
Internal Improvement Trust Fund of the State of Florida and CPC. Royalty
payments shall be made quarterly no later than the 15th day of January, April,
July and October of each year for the quarter ended on the last day of the
immediately preceding month. CPC shall not grant, bargain, sell, convey, assign,
transfer, set over or deliver its interest in the Royalty or any part thereof to
any party except as provided herein. Until the Royalty is acquired by the
Purchaser, CPC shall make no payment pursuant to the Royalty. Upon the
acquisition of the Royalty by the Purchaser, CPC shall make payments pursuant to
the Royalty in accordance with the terms of the Royalty.
G. Disposition of Leasehold Interest. The parties hereto acknowledge
that some or all of CPC's Florida oil, gas and mineral leasehold rights may have
been or may be voluntarily or involuntarily transferred, diminished, or
extinguished. Such transfer, diminution or extinguishment may have occurred or
may occur (i) as a result of partial, temporary or total condemnation of such
interests by governmental agencies, (ii) as a result of theft, conversion or
other unauthorized taking by one or more persons, or (iii) as a result of a
voluntary transfer or transfers by CPC. In the event that CPC receives
consideration from any source whatsoever upon or as a result of any such
transfer, diminution or extinguishment of its leasehold interests, and if
Purchaser has acquired a Royalty pursuant hereto, CPC shall promptly pay
Purchaser an amount equal to the Royalty Percentage owned by the Purchaser
multiplied by the total consideration so received by CPC. Upon such payment by
CPC to the Purchaser, the royalty rights with respect to that portion of the
leasehold rights transferred, diminished or extinguished shall terminate and be
of no further force or effect.
4. ANTI-DILUTION.
A. Stock Adjustments. In the event that after the date hereof, CPC or
CCO shall have effected one or more stock splits, stock dividends, mergers,
reorganizations, consolidations, combinations or exchanges of shares,
recapitalization or similar capital adjustments, CCO shall adjust equitably the
number, kind and option price of the remaining shares of CPC Common Stock that
the Purchaser may purchase hereunder in order to avoid dilution or enlargement
of the Purchaser's rights granted under Sections 1 and 2 hereof; and CCO shall
similarly adjust equitably the exchange ratio in order to avoid dilution or
enlargement of the Purchaser's rights granted under Section 3 hereof.
B. Stock in Cancellation of Indebtedness. In the event that after the
date hereof, CPC shall issue to CCO shares of CPC Common Stock in exchange for
or otherwise in consideration of the cancellation or satisfaction of CPC's
outstanding indebtedness to CCO, then CCO shall forthwith transfer to the
Purchaser, without further consideration, shares of CPC Common Stock so that the
Purchaser's percentage ownership of CPC shares outstanding after such issuance
at least equals the Purchaser's percentage ownership of such shares immediately
prior to such issuance.
C. CCO Stock Issuance. In the event that after the date hereof, CCO
shall issue shares of its common stock at a per share price less than forty
cents ($.40) or shall issue other securities convertible into shares of its
common stock where the total per share price of such common stock (based on the
purchase price of such other securities and the conversion price, if any) is
less than forty cents ($.40), then the value of each CCO share issuable to the
Purchaser pursuant to Section 3 hereof shall be reduced from forty cents ($.40)
to the lowest per share price at which CCO shall have issued shares during such
period, thereby changing the exchange ratio for the number of CCO shares
deliverable for each share of CPC Common Stock exchanged. The foregoing
notwithstanding, no such reduction in the value of each CCO share shall occur as
a result of or with respect to any issuance of shares by CCO pursuant to an
offering in which all of its then present shareholders are entitled to
participate on a pro rata basis.
D. CPC Stock Issuance. In the event that after the date hereof, CPC
shall issue shares of its common stock, CPC shall provide the Purchaser with
sixty (60) days prior written notice of the proposed stock issuance and a first
option to acquire a proportional amount of such shares necessary to maintain the
Purchaser's then current ownership percentage.
5. REPRESENTATIONS AND WARRANTIES OF CCO AND CPC. The
representations and warranties of CCO and CPC set out below are made by each
company on its own behalf and not on behalf of the other. For purposes of this
Agreement, the term "Companies" refers to CCO and CPC. The Companies represent
and warrant to the Purchaser as follows:
A. Organization and Good Standing. The Companies are corporations duly
organized, validly existing and in good standing under the laws of either
Bermuda or Florida as applicable, and have full corporate power and authority
(i) to enter into and perform their obligations under this Agreement, (ii) to
sell or issue CCO Common Stock or CPC Common Stock as the case may be, (iii) to
pay the Royalty and (iv) to own or lease their properties and to conduct their
businesses as they are now being conducted. Each of CCO and CPC is duly licensed
or qualified and in good standing as a foreign corporation in all jurisdictions
in which the conduct of its business or the ownership or lease of property by it
require such qualification. True and complete copies of the CCO's and CPC's
Certificates of Incorporation and By-Laws (together with all amendments thereto)
are annexed hereto as Exhibit D.
B. Capitalization.
(i) As of the date hereof, the authorized capital stock of CCO consists
of 100,000,000 shares of Common Stock, par value $0.12 per share, of which (A)
33,363,632 shares are presently issued and outstanding, (B) 375,000 shares are
reserved for issuance pursuant to stock options granted to certain directors and
employees of the Companies, (C) no shares are held by CCO as treasury stock, (D)
6,000,000 shares shall be reserved for issuance to Purchaser in the event
Purchaser exercises the options contained in Section 2 and the exchange rights
contained in Section 3, and (E) 2,100,000 shares are reserved for issuance
pursuant to the D'Alessandro Agreement. All of the issued and outstanding shares
of CCO Common Stock are validly issued, fully paid and nonassessable and are
free of preemptive rights. Except for this Agreement and except as set forth in
CCO's Annual Report on Form 10-K for the year ended December 31, 1991 and CCO's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1992 (the "Form
10-Q"), there is no existing option, warrant, call, commitment or other
agreement to which CCO is a party, and there are no convertible securities of
CCO outstanding, pursuant to which CCO may become obligated to issue any
additional shares of CCO Common Stock or other securities convertible into or
evidencing the right to purchase shares of CCO Common Stock or other equity
securities of CCO. Except as set forth in the D'Alessandro Agreement, neither
the sale of CPC Common Stock nor the exchange rights granted herein to acquire
shares of CCO Common Stock will give rise to any antidilution adjustments under
the terms of any outstanding options, warrants or convertible securities of CCO
or any agreements to which CCO is a party, or any preemptive rights.
(ii) As of the date hereof, the authorized capital stock of CPC
consists of 5,000 shares of common stock, no par value, ("CPC Common Stock"), of
which (A) 292 shares are presently issued and outstanding, (B) no shares are
reserved for issuance for specific purposes and (C) no shares are held by CPC as
treasury stock. All of the issued and outstanding shares of CPC Common Stock are
validly issued, fully paid and non-assessable and are free of preemptive rights.
There are no convertible securities of CPC outstanding pursuant to which CPC may
become obligated to issue any additional shares of CPC Common Stock or other
securities convertible into or evidencing the right to purchase shares of CPC
Common Stock or other equity securities of CPC.
(iii) The total number of CPC shares outstanding shall not exceed 292
shares; provided, however, that if CPC or CCO, upon the receipt by CPC of the
governmental permit(s) for the extraction of oil and other minerals on the
property subject to CPC's leasehold interests, requires additional equity
financing to accomplish such extraction and related activities, then CPC may
issue additional capital stock to raise the necessary capital provided that CPC
gives Purchaser the opportunity to protect its equity ownership percentage from
dilution in CPC by participating in such stock offering on the same basis as any
other persons who participate in such stock offering.
C. Subsidiaries. The Companies do not have any subsidiaries.
D. Execution and Effect of Agreement.
(i) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby (A) are within the
corporate powers of the Companies, (B) have been duly authorized by all
necessary corporate action on the part of the Companies, and (C) do not and will
not (1) violate any of the provisions of the respective Certificates of
Incorporation or By-Laws of CCO and CPC or any law, regulation, order or
judgment, (2) conflict with or result in a breach of, or give rise to a right of
termination of, or accelerate the performance required by, any term of any
agreement to which CCO or CPC is a party, or constitute a default thereunder, or
(3) result in the creation of any lien, claim or encumbrance upon any of the
assets of either CCO or CPC.
(ii) This Agreement has been validly executed and constitutes the
legal, valid and binding obligation of the Companies, enforceable against the
Companies in accordance with its terms.
(iii) The Royalty, when paid and delivered in accordance with the terms
hereof and thereof, will constitute the legal, valid and binding obligation of
CPC, enforceable against CPC in accordance with its terms.
E. Financial Statements. CCO has delivered to the Purchaser true and
complete copies of (i) CCO's Annual Report on Form 10-K for the years ended
December 31, 1990 and December 31, 1991 (the "Form 10-K") containing an audited
consolidated balance sheet of CCO as at December 31, 1990 and December 31, 1991
and related audited consolidated statements of operations and cash flows of CCO
for the year then ended, (ii) the Form 10-Q containing an unaudited consolidated
balance sheet of CCO as at June 30, 1992 and related unaudited consolidated
statements of operations and cash flows for the interim period then ended, and
(iii) unaudited consolidating balance sheets as at December 31, 1990, December
31, 1991 and June 30, 1992 and related unaudited consolidating statements of
operations and cash flows for the foregoing period. The foregoing financial
statements (i) are complete, correct and in accordance with the books and
records of CCO as of the date and for the period indicated, (ii) have been
prepared in accordance with generally accepted accounting principles and in
conformity with the practices consistently applied by CCO in the immediately
preceding fiscal periods, and (iii) present fairly the financial position,
results of operations and changes in financial position of CCO as at the
respective dates thereof and for the respective periods covered thereby. For the
purposes hereof, the audited balance sheet of the Company as at December 31,
1991 is referred to herein as the "Balance Sheet," and December 31, 1991 is
referred to herein as the "Balance Sheet Date."
F. No Undisclosed Liabilities. At the Balance Sheet Date, CCO had no
material indebtedness or liability (whether accrued, absolute, contingent or
otherwise, and whether due or to become due), which is not reflected in the
Balance Sheet or the notes thereto or disclosed herein or in a schedule hereto.
Since the Balance Sheet Date, CCO has not incurred any obligation, indebtedness
or liability (whether accrued, absolute, contingent or otherwise, and whether
due or to become due), which is not reflected in the Balance Sheet or the notes
thereto or disclosed herein or in a schedule hereto or in the Company's report
on Form 10-Q for the period ended June 30, 1992.
G. Taxes. Since the Balance Sheet Date, the Companies have complied
with all tax laws in all jurisdictions in which they are or have been subject to
taxation of any nature whatsoever and have timely filed all federal, state and
local tax returns which are required to be filed by them and have paid all taxes
and interest and penalties, if any, to the extent such taxes have become due and
payable.
H. No Adverse Change. Since the Balance Sheet Date, there has been no
change in the business, prospects, properties, assets or financial condition of
CCO from that shown in the Balance Sheet, other than (i) changes shown in the
unaudited balance sheet included in the Form 10-Q, and (ii) changes occurring
subsequent to the date of such unaudited balance sheet in the ordinary course of
business or otherwise specifically disclosed in a schedule hereto, which
changes, in the aggregate, have not materially adversely affected the business,
prospects, properties, assets or financial condition of the Companies.
I. Securities Law Compliance. The sale or issuance as the case may be
of CPC or CCO Common Stock and the payment of the Royalty pursuant to the terms
hereof are exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act"), and any state securities or Blue Sky
law. The Form 10-K, the Form 10-Q and all registration statements, reports and
documents (including exhibits) filed since January 1, 1989 by CCO with the
Securities and Exchange Commission (hereinafter the "Commission") when so filed
(i) complied in all material respects with the applicable requirements of the
Securities Act, the Securities and Exchange Act of 1934, as amended (hereinafter
the "Exchange Act") and the rules and regulations promulgated by the Commission
under the Securities Act and the Exchange Act (the "Rules and Regulations"),
(ii) contained all statements required to be stated therein by the Securities
Act, the Exchange Act and the Rules and Regulations, (iii) did not contain any
untrue statement of a material fact and (iv) did not 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.
CCO has filed all reports that it is obligated to file with the Commission
through the date thereof pursuant to the Securities Act and the Exchange Act
(including current reports on Form 8-K under the Exchange Act).
J. Business and Properties. The description of CCO, its business and
properties contained in the Form 10-K is true, complete and correct.
K. Litigation. Except as set forth in the Form 10-K and the Form 10-Q
(i) there are no actions, suits, proceedings, claims or investigations pending
or, to the knowledge of the Companies, threatened against the Companies, and its
officers and directors in their capacity as such, or commenced by the Companies
and presently pending, (ii) to the best of the Companies, knowledge, there is no
basis for the commencement of any action, suit, proceeding, claim or
investigation against them and (iii) there is no outstanding order, injunction
or decree of any court or governmental agency against or affecting the
Companies, except an order of the United States District Court for the District
of Columbia dated November 2, 1981, enjoining CCO from violations of certain
federal securities laws.
L. Permits; Compliance with Laws. CPC and CCO have all necessary
permits, licenses and governmental authorizations required for, and have
complied in all material respects with all laws (including, without limitation,
the federal and state environmental laws), regulations and court and
governmental orders applicable thereto, affecting the ownership or occupancy of
their properties and assets and the carrying on of their businesses.
M. Insurance. The Companies insurance coverage is adequate and
appropriate in light of the foreseeable business risks to which they are subject
and the resources of the Companies.
N. Material Obligations. Except as filed with the Commission as an
exhibit to the Form 10-K or the Form 10-Q, neither CCO nor CPC is a party to nor
is any of their property subject to or bound by any material indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease, contract or
other instrument or document (each a "Material Contract"). The Companies have
performed in all respect all of the material obligations required to be
performed by each of them to date and are not in default in any material respect
under any Material Contract and each of the Companies do not know of any
condition or state of facts which is likely to cause or create a default or
defaults on its part to any Material Contract; provided, however, that the
Trustees of the Internal Improvement Fund of the State of Florida have claimed
that CPC has breached provisions of certain oil and gas exploration leases and
that such leases have been terminated. To the best of the Companies' knowledge,
no other party to any such Material Contract is in default in any material
respect thereunder. Except as disclosed herein or in a schedule hereto, neither
of the Companies nor any of their officers is a party to any non-competition or
similar agreement that in any way limits or restricts the Companies in the
conduct of their business.
O. Labor Disputes. There are no strikes or other labor disputes against
the Companies pending or, to the knowledge of the Companies, threatened.
P. ERISA. The Companies have no "employee benefit plan," as defined by
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
other than so called SEP-XXX accounts maintained for two officers of CPC.
Q. Share Validity and Encumbrances. The shares of Common Stock of CCO
and CPC to be sold or issued to the Purchaser will be validly issued and
outstanding, fully paid and nonassessable, and no personal liability will attach
to the ownership thereof. CCO is and will be, at the time of sale, the sole and
exclusive owner of all shares of CPC Common Stock sold to the Purchaser, and
such shares shall be free and clear of all pledges, liens, claims and
encumbrances.
R. No Misrepresentation. No representation or warranty of the Companies
contained in this Agreement or in any schedule hereto or in any certificate or
other instrument furnished, or to be furnished, by the Companies to the
Purchaser pursuant to the terms hereof, contains, or will contain, any untrue
statement of a material fact, or omits, or will omit, to state a material fact
necessary to make the statements contained herein or therein not misleading.
S. Registration Rights. Prior to the date hereof, except as set forth
in the D'Alessandro Agreement, CCO has not granted to any party any rights to
demand or require the registration of any securities of CCO under the Securities
Act, or to have securities of CCO included in a registration statement filed or
proposed to be filed by CCO under the Securities Act.
T. Drilling Leases. Drilling Leases 224-A, 224-B and 248, attached
hereto as Exhibit E and made a part hereof, (the "Drilling Leases") are in full
force and effect except to the extent that those leases may be altered,
modified, revoked, forfeited or otherwise rendered invalid by the State of
Florida pursuant to any actions made the subject of litigation currently pending
between CPC and other parties.
U. Royalty Interests. The Royalty Interests CPC owns in 2,450,000 acres
in and offshore the State of Florida, attached hereto as Exhibit F and made a
part hereof, (the "Royalty Interests"), are in full force and effect.
V. Acknowledgement of Benefits. CCO and CPC acknowledge the substantial
benefits they will derive as a result of Purchaser's purchase of the CPC share
which benefits include not only the proceeds resulting from Purchaser's
purchase, which are necessary to fund the continued exploration relating to CPC
leasehold interests and other corporate purposes, but also that Purchaser's
involvement will enhance CCO and CPC's ability to carry out the corporate
activities relating to the leasehold interests.
W. No Brokers or Finders. Neither CCO nor CPC nor any of their
respective officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finder's fees, and
no broker or finder has acted directly or indirectly for CCO or CPC, in
connection with this Agreement or the transactions contemplated hereby.
6. INDEMNIFICATION AND SURVIVAL
OF REPRESENTATIONS WARRANTIES AND COVENANTS.
A. Survival. All representations, warranties, covenants, indemnities
and agreements included or provided in this Agreement shall survive the Closing
Date and shall thereafter remain in full force and effect for so long as the
Purchaser owns either CPC Common Stock, CCO Common Stock or the Royalty.
B. Indemnification. From and after the Closing Date, CCO and CPC shall
jointly and severally indemnify and hold the Purchaser harmless from any and all
damages, losses, costs, liabilities or expenses, including reasonable attorneys'
fees incurred by the Purchaser by reason of the incorrectness or breach of any
of the representations, warranties or covenants made by CCO or CPC in this
Agreement. From and after the Closing Date, the Purchaser shall indemnify and
hold the Companies harmless from any and all damages, losses, costs, liabilities
or expenses, including reasonable attorneys' fees incurred by the Companies by
reason of the incorrectness or breach of any of the representations made by the
Purchaser to the Companies pursuant to Section 3.D of this Agreement.
7. REGISTRATION OF CCO STOCK.
A. Registration Rights. If at any time CCO shall plan or be required to
file with the Securities and Exchange Commission a registration statement under
the Securities Act for the sale by it or by any of its investors of shares of
its Common Stock, CCO, at CCO's expense, will permit the Purchaser upon receipt
(within 25 calendar days after written notice from CCO) of a written request
from Purchaser setting forth the number of shares to be included in such
registration statement, to have such shares included in such registration
statements or to be made the subject of a separate registration statement
sufficient to permit the registration of such shares pursuant to the
requirements of Rule 415 promulgated under the Securities Act of 1933 relating
to sales by selling security holders; provided, however, that (i) CCO need not
so register fewer than 1,000 shares in any such registration statement, (ii) CCO
shall not be obligated to include such shares unless Purchaser reasonably
cooperates in supplying information reasonably requested by CCO for use in the
preparation and filing of such statement, and (iii) CCO shall not be obligated
to include such shares if CCO shall agree in writing within 15 days after
receipt from Purchaser of written notice that Purchaser seeks to have such
shares registered to purchase from Purchaser at a price agreed upon by Purchaser
and CCO within said 15 days the shares which Purchaser would have included, and
(iv) CCO shall not be required to have shares of Purchaser included in or
registered with more than two registration statements under this Section 7. Any
shares to be sold by the Purchaser pursuant to a registration statement under
this Section 7 shall be subject to all the applicable terms, conditions and
restrictions, to which such registration statement and the public offering
covered thereby are subject.
B. Agreement of Purchaser. From the time it receives notice under the
foregoing Paragraph A of a proposed offering until 90 days (or such longer
period as the underwriter managing the offering may reasonably specify) after
completion thereof; Purchaser shall refrain from any registration, offer or sale
of any of its shares of CCO and CPC stock not included in the proposed offering,
unless in the opinion of the underwriter managing the offering such
registration, offer or sale would not materially adversely affect the offering.
C. Costs. Subject to the limitations contained in this Section 7, the
entire cost and expense of any registration or qualifications pursuant to this
Agreement shall be borne by CCO. The costs and expenses to be so borne by CCO
shall include, without limitation, the fees and expenses of its counsel and of
its accountants and all other costs and expenses of CCO incident to the
preparation, printing and filing under the 1933 Act of the registration
statement and all amendments (including post-effective amendments) and
supplements thereto and the cost of furnishing copies of each preliminary
prospectus, each final prospectus and each amendment or supplement thereto to
underwriters, dealers and the costs and expenses incurred by CCO in connection
with the qualification of the shares under the Blue Sky laws of various
jurisdictions.
8. ADDITIONAL COVENANTS OF CCO AND CPC. The Companies jointly
and severally covenant and agree with the Purchaser as follows:
A. Settlement of Lawsuits. Neither CPC nor CCO shall settle or agree to
settle any lawsuit to which either CPC or CCO is a party, including, without
limitation, the CPC lawsuits pending in the Circuit Court for Xxxx County,
Florida with the Trustees of the Internal Improvement Trust Fund of the State of
Florida, without the prior written consent of Purchaser, which consent shall not
be unreasonably withheld.
B. Dividends and Distributions. At such time as the business of CPC
permits and to the extent permitted by law after reserving an amount reasonably
necessary, consistent with good business practices, CPC shall pay dividends and
make other distributions to all the CPC shareholders on a pro rata basis on a
regular basis, but in no event less regularly than annually.
C. Transfer of Assets. Except as contemplated by this Agreement, CPC
shall not sell, transfer, assign or pledge any of the material assets of CPC,
including without limitation, the Drilling Leases or interests of any kind
therein.
D. Material Investments. CPC shall not make any material investment
of any kind whatsoever outside the ordinary course of business.
E. Articles and Bylaws. Except as required by law or regulation, CPC
shall not amend its articles of incorporation or by-laws.
F. Lines of Business. CPC shall not enter into any new line of
business.
G. Conduct of Business. The Companies shall conduct their respective
businesses in, and only in, the usual, regular and ordinary course of business
consistent with past practice, and the officers and directors shall at all times
use prudent business judgment equivalent to the standard observed by a prudent
trustee dealing with property of another.
H. Financial Reports. CCO and CPC shall submit to the Purchaser such
financial and other reports and information as is requested by the Purchaser,
including, without limitation, quarterly comparative consolidated and
consolidating financial statements of CCO within forty-five (45) days of the end
of each calendar quarter and annual comparative consolidated and consolidating
financial statements of CCO within ninety (90) days of the end of each fiscal
year. The Purchaser shall execute a Confidentiality Agreement, in the form
attached hereto as Exhibit G, prior to receiving such financial reports.
I. Access. CPC shall permit the Purchaser and its agents access to all
of its properties, books, contracts, commitments and records upon request by the
Purchaser. The Purchaser shall execute a Confidentiality Agreement, in the form
attached hereto as Exhibit G, prior to receiving such access.
J. Representations and Warranties. CCO and CPC shall use their best
efforts to cause the representations and warranties contained in this Agreement
to be true and correct at all times.
K. Opt Out of ss.607.0901 and 607.0902. Upon the request of the
Purchaser, CCO and CPC shall take such corporate action as is necessary so that
Florida Statutes Sections 607.0901 and 607.0902 shall not apply to either CCO or
CPC or to the Purchaser or the shares of CPC Common Stock acquired by the
Purchaser pursuant to this Agreement.
L. Revised Structure. Notwithstanding anything to the contrary
contained in this Agreement, the Purchaser shall have the right to revise the
structure of the purchase described in Sections 1 and 2 and the exchanges
described in Section 3 provided that such revised structure shall not have a
materially adverse financial effect on CCO or CPC.
M. Intercompany Payments. CPC shall not make any payments of any kind
to CCO beyond such payments as are reasonably necessary in the ordinary course
of business.
N. Right of First Refusal. CCO hereby grants the Purchaser a right of
first refusal on any and all shares of CPC Common Stock owned by CCO or
hereafter acquired. Subject to the right of first refusal, CCO shall not sell
the shares of CPC Common Stock owned by CCO unless the Purchaser is entitled to
sell the shares of CPC Common Stock owned by the Purchaser on the same terms and
conditions as CCO.
O. Duration. The foregoing terms and covenants contained in this
Section 8 remain in effect so long as the Purchaser has exercised its most
current option pursuant to Section 2.A(i).
9. DEFAULTS AND REMEDIES.
A. Defaults. Any unexcused refusal or failure by CCO or CPC to perform
any of the covenants contained in this Agreement shall be a default.
B. Remedies. Upon any default by either CCO or CPC, the Purchaser
shall be entitled to pursue all of its legal and equitable remedies including,
without limitation, the right to recover damages and the right to rescind the
purchase of shares of CPC Common Stock for which CCO and CPC shall promptly
return to the Purchaser the Purchase Price.
10. NOTICES.
All notices, requests, demands and other communications which are
required or may be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid:
(a) If to Purchaser, to:
Xxxxx Minerals Corp.
000 X. Xxxxxxx Xxxxxx - Xxxxx 0000
P.O. Box 1690
Xxxxx, Xxxxxxx 00000
ATTN: Xxx X. Xxxxxx, President
With copy to: Macfarlane Xxxxxxxx
000 X. Xxxxxxx Xxxxxx - Xxxxx 0000
P.O. Box 1531
Xxxxx, Xxxxxxx 00000
ATTN: Xxxxxx X. Xxxxxxx, Esq.
(b) If to CCO or CPC, to:
Coastal Petroleum Company
X.X. Xxx 00000
Xxxxxxxxxxx, Xxxxxxx 00000
ATTN: Xxxxxxx X. Xxxx, President
With copy to: Coastal Caribbean Oils & Minerals, Ltd.
c/x Xxxxxxxx & X'Xxxxxxx Associates
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
or to such other person or address as any party shall have specified by notice
in writing to the other.
11. LAW GOVERNING AGREEMENT.
This Agreement will be governed by the laws of the State of Florida
(without giving effect to rule of law relating to conflict of laws), and the
parties shall accept the jurisdiction of the state and federal courts in the
State of Florida.
12. PARTIES BOUND.
This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto, their successors and permitted assigns.
13. ASSIGNMENT. Except as permitted in this Section 13, this
Agreement shall not be assigned by any party hereto without the prior written
consent of the other party hereto. Notwithstanding anything in this Agreement to
the contrary, the Purchaser, in its sole discretion, may assign this Agreement
to a direct or indirect subsidiary of the Purchaser or direct or indirect parent
of the Purchaser.
14. PUBLIC ANNOUNCEMENTS. The parties agree that no statement or
public disclosure concerning this Agreement or the transactions contemplated by
this Agreement shall be made or released, except with the prior written consent
of the Purchaser, and except for the statement contained in Exhibit H attached
hereto and as required by law.
15. EXPENSES. Each of the parties hereto shall pay its own fees
and expenses incurred in connection with the transactions contemplated by this
Agreement.
16. FURTHER ASSURANCES. From time to time, at the request of any
party (whether at or after Closing), the other parties shall execute and deliver
such further instruments and shall take such other actions as the requesting
party may reasonably request in order to more effectively convey out the intent
of this Agreement.
17. AMENDMENT AND MODIFICATION. The parties may amend, modify or
supplement this Agreement only in the form of a written agreement signed by all
of the parties.
18. COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
19. ENTIRE AGREEMENT. This Agreement and other documents
specifically referred to herein which from a part hereof contain the entire
understanding of the parties in respect of the subject matter of this Agreement.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to the subject matter hereof.
20. SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by operation of law or otherwise, such circumstances
shall not have the effect of rendering any of the other provisions of this
Agreement invalid or unenforceable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement the day and year first above written.
XXXXX MINERALS CORP.
By: /s/___________________________
Name: Xxx X. Xxxxxx
Title: Chairman of the Board and President
COASTAL CARIBBEAN OILS
& MINERALS, LTD.
By: /s/___________________________
Name: Xxxxxxx X. Xxxx
Title: Director, Vice President
COASTAL PETROLEUM COMPANY
By: /s/___________________________
Name: Xxxxxxx X. Xxxx
Title: President
