STOCK PURCHASE AGREEMENT
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This Agreement is made and entered into as of the 23rd day of December,
1997, by and between HONDO OIL & GAS COMPANY (hereinafter referred to as
"Seller") and XXXXXXXX PETROLEUM COMPANY (hereinafter referred to as
"Purchaser").
WITNESSETH:
Purchaser has performed plugging, abandonment and/or closing of the
Tajiguas Facility and the Molino Field facilities in or offshore
California and may hereafter conduct certain related limited
environmental monitoring activity that has been proposed by Purchaser in
plans currently under review by California governmental bodies or
agencies (hereinafter the entirety of the foregoing is referred to as
"the Work");
Purchaser has incurred costs and expenses for the portion of the Work
that has been performed and has authorized prior hereto expenditure for
the portion of the Work that has been proposed by Purchaser in plans
currently under review by such governmental bodies or agencies
(hereinafter all such costs, expenses and authorized expenditure are
referred to as "the Cost");
Seller is obligated to bear a portion of the Cost, its share being one
million one hundred thousand five hundred nineteen point seventy-one
Dollars ($1,100,519.71); and
In satisfaction of such obligation and payment for Seller's share of the
Cost, Seller wishes to sell, and Purchaser wishes to buy, shares of
Seller's common stock and warrants to purchase additional shares of such
common stock on the terms and conditions set forth in this Agreement.
The parties, intending to be legally bound, hereby agree as follows:
1. Sale and Purchase of Units
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1.01 Agreement to Sell and Purchase. Subject to the terms,
provisions and conditions hereof, at Closing (as defined below) Seller
shall sell and deliver to Purchaser, and Purchaser shall buy and receive
from Seller, newly issued units of securities, the quantity thereof to
be determined pursuant to Section 1.03, with each unit consisting of six
(6) shares of Seller's common stock and a warrant to purchase one (1)
additional share of such common stock (hereinafter such units are
collectively referred to as "the Units").
1.02 Consideration. The sale and delivery of the Units at Closing
shall be in satisfaction and payment of, but only of, Seller's share of
the Cost. Delivery of the Units to Purchaser shall discharge Seller
from any further obligation to pay Purchaser for such share of the
Cost. Seller hereby waives any and all rights it has to audit the Work,
Cost and records of Purchaser related thereto.
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1.03 Determination of Quantity. The number of Units to be sold and
delivered by Seller hereunder shall be determined based upon the
formula:
N = 1.1 x C , where
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6 x A
N = the total number of Units to be sold, rounded as required below;
C = Seller's share of the Cost which shall be satisfied and paid by such
sale; and
A = the average closing price of Seller's common stock on the American
Stock Exchange for the ten (10) days such exchange is open for the
transaction of business immediately preceding the date the Registration
Statement (as defined below) is filed by Seller with the United States
Securities and Exchange Commission (hereinafter "the SEC").
If the sum derived from this formula is not an integer, the parties
agree to round such sum to the nearest whole number greater thereof and
such whole number will be deemed to be "N" for purposes of this
Agreement.
2. Closing
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2.01 Closing Date. The sale of the Units shall be closed at ten
(10) o'clock a.m., or such other time agreed by the parties, on the
first day the American Stock Exchange is open for the transaction of
business following the date each of the conditions stipulated in
Sections 3.01 and 3.02 has occurred or, at the parties' respective
elections, been specifically waived (hereinafter such day is referred to
as "the Closing Date" and such closing is referred to herein as
"Closing"). Closing shall take place in the Bellaire, Texas offices of
Purchaser.
2.02 Seller's Deliveries at Closing. On the Closing Date, Seller
shall deliver to Purchaser:
(i) a stock certificate or certificates, registered in the
Purchaser's name, for and evidencing the number of shares of the common
stock sold to Purchaser;
(ii) a warrant, in the form of Exhibit A hereto (revised and
changed only as, and to the extent, agreed by the parties hereafter),
that grants Purchaser the right to buy, under the terms and conditions
stipulated therein, one (1) additional share of Seller's common stock
for each Unit sold hereunder;
(iii) a certificate, executed by an officer of Seller,
confirming to Purchaser that (a) the Registration Statement has been
declared effective by the SEC and remains in effect as of the Closing
Date, (b) the shares of Seller's common stock to be acquired by
Purchaser hereunder have been approved for listing, subject to
notification of issuance, on the American Stock Exchange on the Closing
Date, and (c) each of Seller's representations and warranties in this
Agreement was accurate in all material respects as of the date hereof
and is accurate in all material respects as of the Closing Date; and
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(iv) an opinion of X. X. XxXxxxxx, counsel for Seller, dated
the Closing Date and addressed to Purchaser, the substance of which is
as stated in Exhibit B hereto.
2.03 Purchaser's Deliveries at Closing. On the Closing Date,
Purchaser shall deliver to Seller a certificate, executed by an officer
of Purchaser, confirming that each of Purchaser's representations and
warranties in this Agreement was accurate in all material respects as of
the date hereof and is accurate in all material respects as of the
Closing Date.
3. Conditions to Closing
---------------------
3.01 Conditions Precedent to Purchaser's Obligation to Close.
Purchaser's obligations to buy and receive the Units, discharge Seller
from further obligation to pay its share of the Cost, and to take the
other actions required to be taken by Purchaser at the Closing are
subject to the occurrence (or, at its election, the waiver thereof), at
or prior to Closing, of each of the following:
(i) The Registration Statement being declared effective by the
SEC and remaining in effect as of the Closing Date;
(ii) Seller's common stock being listed and admitted for
trading on the American Stock Exchange on the Closing Date and on each
of the days included in the averaging period used in determining "A" in
the formula stipulated in Section 1.03 ;
(iii) The shares of Seller's common stock to be acquired by
Purchaser hereunder being approved for listing, subject to notification
of issuance, on the American Stock Exchange on the Closing Date;
(iv) All of Seller's representations and warranties in this
Agreement (considered collectively), and each of these representations
and warranties (considered individually), having been accurate in all
material respects as of the date hereof and being accurate in all
material respects as of the Closing Date as if made on the Closing Date;
(v) All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or
prior to Closing (considered collectively), and each of these covenants
and obligations (considered individually), having been duly performed
and complied with in all material respects;
(vi) There having not been any subdivision or combination of
Seller's common stock, any distribution on such common stock payable in
shares of such common stock or other securities, the issuance of rights
or warrants to purchase such common stock, sale or distribution of a
significant portion of Seller's assets, or a consolidation or merger of
Seller, with effect on or from the date hereof; and
(vii) Seller having delivered each document required to be
delivered by Seller pursuant to Section 2.02.
3.02 Conditions Precedent to Seller's Obligation to Close.
Seller's obligations to sell and deliver the Units, deliver the stock
certificate(s) and warrant referred to in Sections 2.02 (i) and (ii),
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and to take the other actions required to be taken by Seller at Closing
are subject to the occurrence (or, at its election, the waiver thereof),
at or prior to Closing, of each of the following:
(i) All of Purchaser's representations and warranties in this
Agreement (considered collectively), and each of these representations
and warranties (considered individually), having been accurate in all
material respects as of the date hereof and being accurate in all
material respects as of the Closing Date as if made on the Closing Date;
(ii) All of the covenants and obligations that Purchaser is
required to perform or to comply with pursuant to this Agreement at or
prior to Closing (considered collectively), and each of these covenants
and obligations (considered individually), having been performed and
complied with in all material respects; and
(iii) Purchaser having delivered each document required to be
delivered by Purchaser pursuant to Section 2.03.
4. Registration
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4.01 Seller's Undertaking to File Registration Statement. Seller,
as soon as practicable after execution hereof and in no event later than
January 7, 1998, shall prepare and file with the SEC a registration
statement on Form S-3 which provides for the resale of (i) the shares of
Seller's common stock that are to be delivered to Purchaser at Closing
and (ii) the shares of Seller's common stock that are to be delivered to
Purchaser upon its exercise of the warrants provided pursuant hereto
(such registration statement, together with all amendments and
supplements thereto, in each case including any prospectus and all
materials incorporated by reference therein, being referred to herein as
"the Registration Statement"). The Registration Statement so filed
shall be substantially in the form of the draft registration statement
attached as Exhibit C hereto. Seller shall obtain Purchaser's approval
on the final form of the Registration Statement prior to its filing, and
Purchaser's approval thereof shall not be unreasonably withheld. Seller
will use its reasonable best efforts to cause the Registration Statement
to be declared effective by the SEC as soon as practicable after the
filing thereof and any necessary or appropriate qualification or
compliance (including, without limitation, appropriate qualification
under applicable "Blue Sky" or other state securities laws and
appropriate compliance with any governmental requirements or
regulations).
4.02 Seller's Undertaking to Keep the Registration Statement
Effective. Seller shall use its reasonable best efforts to keep the
Registration Statement continuously effective for a period of two (2)
years from the Closing Date or, if earlier, until all shares delivered
at Closing and any shares received by Purchaser upon its exercise of the
warrants delivered hereunder are sold by Purchaser.
4.03 Amendments. Seller shall use its reasonable best efforts to
prepare and file with the SEC such amendments and supplements to the
Registration Statement as may be necessary to keep such Registration
Statement effective for the period contemplated in Section 4.02. Seller
shall notify Purchaser of all such amendments and supplements and shall
advise Purchaser forthwith when the same have become effective.
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4.04 Prospectuses. Seller shall furnish Purchaser with the number
of copies of a prospectus, including a preliminary prospectus in
conformity with the requirements of the Securities Act of 1933, as
amended (hereinafter "the Securities Act"), and such other documents as
Purchaser may reasonably request, in order to facilitate the public sale
or other disposition of the shares of Seller's common stock acquired
pursuant hereto. Seller shall immediately notify Purchaser of the
occurrence of any event as a result of which a prospectus in or provided
pursuant to the Registration Statement, as then in effect, includes an
untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing.
Upon receipt of such a notice Purchaser shall immediately discontinue
sales or other dispositions of shares of Seller's common stock pursuant
to the Registration Statement. Seller shall forthwith amend such
prospectus immediately after giving such notice so that it is true and
correct in all material respects, and Purchaser may resume such sales or
other disposition thereafter.
4.05 Listing. Seller, concurrently with its preparation and filing
of the Registration Statement, shall cause the shares of its common
stock that are the subject thereof to be approved for listing, subject
to notification of issuance, on the American Stock Exchange. Seller
shall use its reasonable best efforts to have its common stock listed
and admitted for trading on the American Stock Exchange throughout the
period contemplated in Section 4.02.
4.06 State Securities Law Compliance. Seller shall use its
reasonable best efforts to register or qualify the shares sold hereunder
under the securities laws of such states as Purchaser may reasonably
request in light of the costs of such registration or qualification for
Seller (provided, however, that Seller shall not be required to consent
to the general service of process for all purposes in any jurisdiction
where it is not then qualified to do business or to qualify to do
business) and to do any and all other acts or things that may be
reasonably necessary or advisable to enable Purchaser to consummate
public sale or other disposition of such shares in such states.
4.07 Compliance with Laws. Effective from the date hereof and
throughout the period contemplated in Section 4.02, Seller shall use its
reasonable best efforts to comply with and to make all filings,
registrations and disclosures required of it pursuant to the Securities
Act and the Securities and Exchange Act of 1934, as amended.
4.08 Registration Expenses. Seller agrees to pay all registration
expenses in connection with the registrations and other activities
contemplated in this Section 4. "Registration expenses", for this
purpose, means any and all expenses incident to performance of or
compliance with the provisions of this Section 4 by Seller, including,
without limitation: (i) all SEC and National Association of Securities
Dealers, Inc. ("NASD") registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or
"Blue Sky" laws and compliance with the rules of the NASD, (iii) all
filing, listing or other fees for the American Stock Exchange related to
listing of Seller's common stock, (iv) all expenses in preparing,
printing and distributing the Registration Statement and other documents
related to the performance of and compliance with this Agreement by
Seller, and (v) all fees and disbursements of counsel and independent
certified public accountants for Seller related to the same or
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preparation and execution of this Agreement. Purchaser shall pay any
brokerage fees, transfer taxes (if any) and the fees and expenses of its
legal counsel in connection with the registration and sale by it of
shares of Seller's common stock.
5. Purchaser's Resale of Shares
----------------------------
5.01 Limitations on Resale. Any resale by Purchaser of the shares
of Seller's common stock pursuant to the Registration Statement shall be
subject to the following:
(i) The volume of such shares sold by Purchaser on any day
shall not exceed the greater of (a) fifty percent (50%) of the average
daily trading volume of all shares of Seller's common stock during the
ten (10) day period immediately preceding such sale, and (b) three
thousand (3,000).
(ii) Notwithstanding (i) above, Purchaser on any day may sell
to any one transferee pursuant to the Registration Statement no less
than twenty percent (20%) of the shares then held by it, provided such
transferee agrees to cause subsequent resales to comply with the daily
volume limitation included in (i) above.
5.02 Stop Orders. Seller shall notify Purchaser forthwith upon
the issuance by the SEC, any other governmental agency, or a court of a
stop order, other order, or injunction which suspends the effectiveness
of the Registration Statement or the registration or qualification for
resale of the shares acquired hereunder. Upon receipt of such notice
Purchaser shall cease any sale or other disposition of such shares
affected thereby until Seller notifies it that such suspension has been
withdrawn. Seller shall use its reasonable best efforts to obtain
withdrawal of such suspension and to have the effectiveness of the
Registration Statement or registration or qualification restored at the
earliest possible time.
5.03 Black-Out Period. Without limiting Section 5.02, if Seller
notifies Purchaser that any sale pursuant to the Registration Statement
in its then current form would reasonably be expected to violate the
federal securities law, such notice to be in the form of a certification
by an officer of Seller, Purchaser shall cease making any such sale for
the period, stipulated by Seller, in which such sale would be expected
to so violate such law, such period not to exceed fifteen (15) days.
Seller may not issue any more than one (1) such notice during any one
hundred eighty (180) day period.
6. Representations and Warranties
------------------------------
6.01 Seller's Representations and Warranties. Seller represents
and warrants as follows:
(i) Seller is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware, with total
authorized capital stock consisting of thirty million (30,000,000)
shares of common stock having a par value of one Dollar ($1.00) per
share, of which thirteen million seven hundred ninety-one thousand one
hundred ninety-four (13,791,194) shares have been subscribed, are fully
paid, nonassessable, duly and regularly issued and outstanding, and ten
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million (10,000,000) shares of preferred stock having a par value of one
Dollar ($1.00) per share, of which no shares have been issued or
subscribed;
(ii) Seller has all requisite corporate power and authority to
carry on its business as now conducted, to enter into this Agreement and
to perform its obligations under this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will not result in any breach of any of the terms or
conditions of any agreement, nor violate any law by which Seller is
bound, nor constitute a violation of the Certificate of Incorporation or
By-Laws of Seller;
(iii) The execution, delivery and performance of this
Agreement by Seller and the transactions contemplated hereby have been
duly and validly authorized by all requisite corporate action on the
part of Seller;
(iv) All shares of its common stock issued to Purchaser
pursuant hereto shall be fully paid and nonassessable;
(v) No registration or filing with, or consent or approval of
or other action by, any federal, state or other governmental agency or
instrumentality is or will be necessary for the valid execution,
delivery and performance by Seller of this Agreement or the issuance,
sale and delivery of its shares to Purchaser contemplated herein, other
than filings pursuant to federal and state securities laws (all of which
filings shall be duly made by or on behalf of Seller) in connection with
the issuance or sale of such shares;
(vi) Seller will give Purchaser and Purchaser's counsel,
accountants, engineers and other representatives access, during normal
business hours throughout the period from the date hereof to the Closing
Date, to all of Seller's properties, books, contracts, commitments and
records, and Seller will furnish Purchaser during such period with all
such information concerning Seller's affairs as Purchaser reasonably may
request; and
(vii) That at no time was Purchaser, in connection with the
transactions contemplated herein, presented with or solicited by or
through any public promotional meeting, advertisement or any other form
of general or public advertising or solicitation.
6.02 Purchaser's Representations and Warranties. Purchaser
represents and warrants as follows:
(i) Purchaser is a corporation duly organized, existing and in
good standing under the laws of the State of Delaware with full
corporate power and authority to execute and deliver this Agreement and
to perform its obligations hereunder;
(ii) The execution, delivery and performance of this Agreement
by Purchaser and the transactions contemplated hereby have been duly and
validly authorized by all requisite corporate action on the part of
Purchaser;
(iii) Purchaser has substantial knowledge, skill and
experience in making investment decisions of the type contemplated
herein, it is capable of evaluating the risk of its investment in the
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Units being acquired hereby and is able to bear the economic risk of
such investment;
(iv) The Units are being acquired by Purchaser for its own
account and for investment and not with a view to any distribution
thereof in violation of applicable securities laws;
(v) That at no time was it, in connection with the
transactions contemplated herein, presented with or solicited by or
through any public promotional meeting, advertisement or any other form
of general or public advertising or solicitation; and
(vi) Purchaser has had an opportunity to discuss Seller's
business, management and financial affairs with Seller's management.
6.03 Private Placement. The parties acknowledge that the Units
have not been registered under the Securities Act but are intended to be
issued pursuant hereto in a private placement exempt from the Securities
Act registration requirements. Resale by Purchaser of all shares of
Seller's common stock acquired hereunder shall be pursuant to the
Registration Statement or as otherwise permitted under the Securities
Act.
7. Termination
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7.01 Termination Events. This Agreement may be terminated, by
notice given in accordance with Section 9.01 and prior to Closing, by:
(i) either Purchaser or Seller if a material breach of any
provision of this Agreement has been committed by the other party and
such breach has not been waived or cured;
(ii) Purchaser if any of the conditions in Section 3.01 has
not been satisfied as of the Closing Date or if satisfaction of any of
those conditions is or becomes impossible (other than through the
failure of Purchaser to comply with its obligations under this
Agreement) and Purchaser has not waived such condition on or before the
Closing Date;
(iii) Seller if any of the conditions in Section 3.02 has not
been satisfied as of the Closing Date or if satisfaction of any of those
conditions is or becomes impossible (other than through the failure of
Seller to comply with its obligations under this Agreement) and Seller
has not waived such condition on or before the Closing Date;
(iv) Purchaser if the Registration Statement is not declared
effective by the SEC by February 27, 1998; or
(v) mutual consent of Purchaser and Seller.
7.02 Effect of Termination. Each party's right of termination
under Section 7.01 is in addition to any other rights it may have under
this Agreement or otherwise, and the exercise of a right of termination
will not be an election of remedies. If this Agreement is terminated
pursuant to Section 7.01, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Sections
9.09 and 9.10 will survive; provided, however, that if this Agreement is
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terminated by a party because of a breach of the Agreement by the other
party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of
the other party's failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies
will survive such termination unimpaired.
8. Indemnification
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8.01 Indemnification by Purchaser. Purchaser shall defend,
indemnify and hold harmless Seller, its directors, its officers and
persons controlling Seller within the meaning of the Securities Act from
and against any and all liabilities, claims, damages, loss, costs and
expenses, including reasonable legal fees and penalties, arising out of
(i) the inaccuracy or nonfulfillment of any representation or warranty,
or the breach of any covenant, expressly made by Purchaser in this
Agreement, or (ii) any untrue statement (or alleged untrue statement) of
a material fact contained in the Registration Statement, or any omission
(or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, but only to
the extent such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in the Registration Statement in
reliance upon and in conformity with written information furnished by
Purchaser and stated to be specifically for use therein or the
preparation thereof.
8.02 Indemnification by Seller. Seller shall defend, indemnify and
hold harmless Purchaser, its directors, its officers and persons
controlling Purchaser within the meaning of the Securities Act from and
against any and all liabilities, claims, damages, loss, costs and
expenses, including reasonable legal fees and penalties, arising out of
(i) the inaccuracy or nonfulfillment of any representation or warranty,
or the breach of any covenant, expressly made by Seller in this
Agreement, (ii) any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or any other
document filed or submitted by Seller pursuant hereto, or any omission
(or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, or (iii) any
violation by Seller of the Securities Act in connection herewith,
provided that Seller will not be liable to any such person under (ii)
above in any case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement
or omission (or alleged untrue statement or omission) made in reliance
upon and in conformity with written information furnished by Purchaser
and stated to be specifically for use therein or the preparation
thereof.
8.03 Liability for the Cost. Upon Closing, Purchaser shall hold
Seller harmless for any further claim against Seller for the Cost. This
Agreement and performance hereunder are not intended to and shall not
relieve or release Seller from any other obligation, claim or liability
that has accrued or may result arising from or related to the operation,
plugging, abandonment and closure of the Tajiguas Facility and the
Molino Field facilities.
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9. General Provisions
------------------
9.01 Notices. Any and all notices or other communications required
or permitted to be given under any of the provisions of this Agreement
shall be in writing and shall be deemed to have been duly given when
personally delivered or mailed by first class registered mail, return
receipt requested, addressed to the other party at the address set forth
below or sent by telecopier (with written confirmation of receipt) to
the telefax number of such other party set forth below (or at such other
address or telefax number as any party may specify by notice to the
other given as aforesaid.)
If to Seller: Hondo Oil & Gas Company
00000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: X. X. XxXxxxxx
Telefax: (000) 000-0000
If to Purchaser: Xxxxxxxx Petroleum Company
P. O. Xxx 0000
Xxxxxxx, XX 00000-0000
Attn: X. X. XxXxx
Telefax: (000) 000-0000
9.02 Integration; Amendment. This writing constitutes the entire
agreement of the parties with respect to the subject matter hereof and
may not be modified or amended except by a written agreement
specifically referring to this Agreement signed by the parties hereto.
9.03 Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature.
9.04 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of each party hereto, its heirs, personal
representatives, successors and assigns.
9.05 Captions. The section headings contained herein are for the
purpose of convenience only and are not intended to define or limit the
contents of such sections.
9.06 Counterparts. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed one original.
9.07 Governing Law. This Agreement and all amendments thereof
shall be governed by and construed in accordance with the law of the
State of Oklahoma applicable to contracts made and to be performed
therein, without reference to its conflict of laws provisions.
9.08 Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the
other provisions of this Agreement will remain in full force and effect.
Any provision of this Agreement held invalid or unenforceable only in
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part or degree will remain in full force and effect to the extent not
held invalid or unenforceable.
9.09 Expenses. Purchaser and Seller shall each be responsible for
its own fees and expenses, including fees and expenses of legal counsel,
incurred in connection with the transactions contemplated herein.
9.10 Confidentiality. Any public announcement or similar publicity
with respect to this Agreement or the transactions contemplated hereby
will be issued, if at all, at such time and in such manner as the
parties may agree. Unless consented to by Purchaser, Seller shall keep
this Agreement strictly confidential.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the date first above written.
PURCHASER:
XXXXXXXX PETROLEUM COMPANY
By: /s/X.X. Xxxxx
--------------------------------
Title: V.P. North American Prod.
--------------------------------
SELLER:
HONDO OIL & GAS COMPANY
By: /s/ Xxxx X. Xxxx
--------------------------------
Title: President
--------------------------------
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