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EXHIBIT 10.3
BUY-SELL STOCK OPTION AGREEMENT
THIS BUY-SELL AND STOCK OPTION AGREEMENT is made July 8, 1996 by and
between Xxxxxxx X. Xxxxx ("Xx. Xxxxx"), and Energy Corporation of America
("ECA").
WHEREAS, Xx. Xxxxx owns, as of the date of this Agreement, 95,400 shares
of the common stock of ECA and;
WHEREAS, Xx. Xxxxx and ECA have engaged in lengthy and thorough
discussions and negotiations concerning a possible sale of a portion of the
shares to ECA, as well as negotiations concerning the fair market value of the
shares; and
WHEREAS, in consideration of the Purchase Price to be paid by ECA to Xx.
Xxxxx as set forth below, Xx. Xxxxx and ECA have agreed to do and hereby agree
as follows:
1. Present Transfer of 16,000 of the Shares. Xx. Xxxxx agrees to
transfer, sell and assign, and does hereby transfer, sell and assign to ECA
16,000 shares of the common stock of Energy Corporation of America, a West
Virginia corporation, (the "Initial Shares") on the terms hereinafter set
forth. Xx. Xxxxx shall endorse all stock certificates representing the Initial
Shares to ECA simultaneously upon execution of this Agreement.
2. Deposit into Escrow and Option to Purchase. After the transfer
of the Initial Shares to ECA pursuant to paragraph 1 above, Xx. Xxxxx will own
79,400 shares of ECA common stock. Xx. Xxxxx intends to retain 15,400 of those
shares and to grant to ECA an option to purchase the remaining 64,000 shares
(the "Option Shares").
Simultaneously upon execution of this Agreement, Xx. Xxxxx will endorse
the stock certificate(s) representing the Option Shares and deposit the
certificate(s) with an escrow agent mutually selected with ECA (the "Escrow
Agent"). The Escrow Agent shall hold the Option Shares
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in escrow during the Option Period (as defined below) and will deliver the
Option Shares to ECA if and when ECA exercises the option(s) granted to it
below. In the event all or any portion of the Option Shares remain in escrow
at the expiration of the Option Period, Escrow Agent shall return all such
remaining Option Shares to Xx. Xxxxx, his heirs or assigns. Accordingly, Xx.
Xxxxx hereby grants to ECA an exclusive option to purchase the Option Shares
during the six (6) year period following the execution of this Agreement (the
"Option Period") as follows:
a. ECA may purchase 16,000 of the Option Shares during each of the
next four (4) years for the Purchase Price of $75.00 per share,
payable in accordance with paragraph 5 below, by providing notice
to Xx. Xxxxx of its desire to purchase such shares. Such notice
must be provided on or before June 1 of each year.
b. In the event ECA fails to exercise, in any year, its option to
purchase the Option Shares as provided in subparagraph a above,
ECA shall have an additional period of two years after July 1,
2000, or until July 1, 2002 in which it may elect to purchase any
of the remaining Option Shares by providing reasonable notice to
Xx. Xxxxx and by paying the Purchase Price of $75.00 per share in
accordance with paragraph 5 below.
c. ECA shall have the absolute right, in its sole discretion, to
accelerate all options to purchase under this Agreement and to
purchase all, or any portion of the Option Shares at any time
during the Option Period.
3. Purchase Price. The Purchase Price for the Initial Shares
transferred simultaneously with the execution of this Agreement shall be
Seventy-Five Dollars ($75.00) per share (One Million
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Two Hundred Thousand Dollars ($1,200,000.00)), which Purchase Price shall be
paid by ECA to Xx. Xxxxx as set forth in paragraph 5 below. The Purchase Price
for the Option Shares shall be Seventy-Five Dollars ($75.00) per share, payable
as provided in paragraph 5.
4. Closing. Delivery of the fully endorsed stock certificates and
payment of the first installment of the Purchase Price for the Initial Shares
shall take place at 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000
simultaneously with the execution of this Agreement. In the event ECA elects
to exercise the option(s) to purchase all or any portion of the Option Shares
pursuant to paragraph 2, delivery of the fully endorsed stock certificates
relating to such shares likewise shall take place at 0000 X. Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000. All payments by ECA due pursuant to this
Agreement, other than the first installment of the Purchase Price for the
Initial Shares, shall be made by delivery of the payment in person to at such
place as may be directed by Xx. Xxxxx.
5. Payment. ECA will pay the Purchase Price of Seventy-Five Dollars
($75.00) per share for the 16,000 Initial Shares (One Million Two Hundred
Thousand Dollars ($1,200,000.00)) in four equal quarterly installments of Three
Hundred Thousand Dollars ($300,000.00) with the first installment to be paid
simultaneously upon execution of this Agreement, the second installment to be
paid on October 1, 1996, the third installment to be paid on January 1, 1997,
and the fourth installment to be paid on March 1, 1997. In the event ECA
elects to exercise the option(s) to purchase all or any portion of the Option
Shares pursuant to paragraph 2, ECA will pay the Purchase Price for such shares
in four equal quarterly installments, due July 1, October 1, January 1 and
March 1 following the exercise of such option(s). ECA shall have the right, at
its sole discretion, to pay any or all of the quarterly installments prior to
the time the same are due.
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6. Representations and Warranties. Xx. Xxxxx represents and
warrants as follows:
a. He is the sole owner of and has the right to sell the Initial
Shares and the Option Shares.
b. The Initial Shares and the Option Shares are free of all liens
and encumbrances.
c. ECA shall receive good and marketable title to the Initial Shares
free of all encumbrances.
d. In the event ECA elects to exercise the option(s) to purchase all
or any of the Option Shares pursuant to paragraph 2, ECA shall
receive good and marketable title to the Option Shares free of
all encumbrances.
7. Dividends. All dividends, voting rights, and other incidents of
ownership of the 16,000 Initial Shares transferred simultaneously upon
execution of this Agreement shall immediately vest in ECA. All dividends
declared upon the Option Shares, together with all voting rights and all other
incidents of ownership, shall be retained by Xx. Xxxxx unless and until ECA
shall exercise its option(s) to purchase all or any of the Option Shares
pursuant to paragraph 2 of this Agreement. Upon exercise of each of the
options and the transfer of the Option Shares, all dividends, voting rights,
and other incidents of ownership associated wit the shares transferred shall
vest in ECA.
8. The 15,400 shares retained by Xx. Xxxxx pursuant to paragraph 2
above (the "Retained Shares") shall remain subject to the prior agreement dated
June 30, 1993 between ECA and Xx. Xxxxx (the "Prior Agreement"). The terms of
the Prior Agreement shall remain in full force and effect only with respect to
the Retained Shares. In addition, the terms of the Prior Agreement are hereby
modified and amended as follows:
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(a) In the event Xx. Xxxxx should die during the term of this Buy-
Sell and Stock Option Agreement, thereby invoking the provisions
of the Prior Agreement, all payments due under the Prior
Agreement shall be automatically postponed until one (1) year
after the final payments have been made under this Buy-Sell and
Stock Option Agreement.
(b) The postponement of payments due under the Prior Agreement shall
not effect a postponement of the valuation of the stock under the
Prior Agreement. The valuation shall be made at the time
specified and according to the formula specified in the Prior
Agreement.
9. Binding Effect; Assignment. This Agreement shall be binding upon
the parties, their heirs, legal representatives, successors and assigns. ECA
may assign its rights under this Agreement without the consent of Xx. Xxxxx
provided, however, that no such assignment shall relieve ECA of its obligation
to pay the Purchase Price as herein provided.
10. Entire Agreement. Except as provided in paragraph 8 above with
respect to the Prior Agreement, this agreement supersedes all prior agreements,
written and oral, between the parties relating to the subject matter of this
Agreement. Further, except for the Escrow Agreement to be executed
simultaneously herewith pursuant to paragraph 2 above, there are no other
understandings or agreements between them concerning the subject matter of this
Agreement. To the extent of any inconsistency between this Buy-Sell and Stock
Option Agreement and the Prior Agreement, the terms of this Buy-Sell and Stock
Option Agreement shall govern.
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11. Counterparts. This Agreement may be executed 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.
IN WITNESS WHEREOF, the parties have signed this Agreement.
/s/ XXXXXXX X. XXXXX
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XXXXXXX X. XXXXX
ENERGY CORPORATION OF AMERICA
By /s/ XXXX XXXX
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Its CEO
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