EXHIBIT A
EXECUTION COPY
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement"), dated May __, 2003,
is by and among XXXXXXXXX & XXXXX GUARANTY FINANCE, LLC, XXXXXX X. XXXXXXXX,
ALPS INVESTMENTS, LLC, XXXXXXXX ASSOCIATES, XXXXXX X. XXXXXXXX MONEY PURCHASE
PENSION PLAN, XXXXXX X. CASE III LIVING TRUST U/A DATED 7/17/00, ESTATE OF
XXXXXX X. CASE III, XXXXXX X. CASE LIVING TRUST, XXXXXXX X. XXXXXX,
XXXXXXXX X. XXXX, XXXXXXXX X. XXXXXXXX (collectively, the "H&Q Parties"), EL
CORONADO HOLDINGS, LLC, XXXXXXX X. XXXXXX, III, MUSCULAR DYSTROPHY
ASSOCIATION, XXXXX XXXXXX, XXXX XXXXXXXXX, XXX XXXXXXX, XXXXXX XXXXXX,
XXXXXXXXX XXXXXX, XXXXXXX XXXXX, XXXXXXX XXXXXXX, XXXX XXXX, XXXXX XXXXXXX,
XXXXXX X. XXXXXXXX and XXXXXX X. XXXXXXX (each a "Buyer", and collectively,
the "Buyers"), XXXXXXXX PETROLEUM CORPORATION (the "Company") and GUARANTY
FINANCE MANAGEMENT, LLC, solely in its capacity as the H&Q Representative
("Guaranty Finance").
RECITALS
WHEREAS, the H&Q Parties are the owners, in the aggregate, of
4,323,516 shares of common stock, par value $0.20 per share, of the Company (the
"Common Stock"), 116,200 shares of Series A Preferred Stock, par value $1.00 per
share, of the Company (the "Preferred Stock"), options to purchase 10,000 shares
of Common Stock (the "Director Options") and warrants to purchase 2,369,527
shares of Common Stock (the "Warrants"), and each H&Q Party is the owner of the
number of shares of Common Stock, Preferred Stock, Director Options and Warrants
set forth opposite its name on Exhibit A hereto;
WHEREAS, on October 15, 1999, certain of the H&Q Parties and certain
other persons filed a Schedule 13D with the Securities and Exchange Commission
with respect to the shares of Common Stock beneficially owned by such H&Q
Parties (as amended, the "Schedule 13D");
WHEREAS, on October 9, 2002, certain of the H&Q Parties and certain
other persons filed an amendment to the Schedule 13D disclosing their intention
to explore the possibility of selling all or part of the Common Stock
beneficially owned by them and their intention to discuss with certain other
stockholders of the Company the possibility of a coordinated single disposition
transaction;
WHEREAS, on January 23, 2003, the Schedule 13D was amended to
include all of the H&Q Parties and certain other persons and disclose, among
other things, that on January 16, 2003 the H&Q Parties entered into an agreement
whereby they agreed to form a group for the purpose of coordinating the
disposition of some or all of the Common Stock beneficially owned by them;
WHEREAS, the H&Q Parties desire to sell and the Buyers desire to
purchase certain shares of Common Stock and Warrants held by the H&Q Parties on
the terms set forth herein;
WHEREAS, the only securities that are subject to purchase and sale
under this Agreement are the shares of Common Stock and the Warrants to purchase
shares of Common Stock that are listed opposite the names of the H&Q Parties on
Exhibit B hereto (the "Covered Securities");
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and conditions set forth herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. H&Q Representative.
(a) Appointment of H&Q Representative. Each of the H&Q Parties
hereby appoints Guaranty Finance as its representative (the "H&Q
Representative") to be the representative of the H&Q Parties with respect to any
matter hereunder related to (i) holding and disbursing the Covered Securities,
(ii) preparing and delivering any Joint Written Direction and taking such action
in furtherance thereof and (iii) receiving any bank checks or other funds for
disbursement to the H&Q Parties. A majority in interest of the H&Q Parties may
replace the H&Q Representative upon written notice to the Buyers' Representative
(as defined below). For purposes of this Agreement, a "Joint Written Direction"
shall mean a written direction executed by the H&Q Representative and the
Buyers' Representative setting forth (i) the amount of funds to be delivered by
each Buyer to the Buyers' Representative for disbursement to the H&Q
Representative on behalf of the H&Q Parties, (ii) the Covered Securities to be
delivered to the Buyers' Representative for the benefit of the Buyers and (iii)
and any other matters related thereto (a "Joint Written Direction").
(b) Delivery of Covered Securities to H&Q Representative. Each of
the H&Q Parties hereby agrees that upon execution of the Agreement it will
deliver its Covered Securities (to the extent such Covered Securities are
certificated), with applicable stock powers duly and validly executed by the H&Q
Party), to the H&Q Representative. The H&Q Representative agrees to hold the
Covered Securities until the earlier of (i) the sale and disbursement of such
portion of the Covered Securities in accordance with the terms of this Agreement
and (ii) the expiration of the Third Call Exercise Period (or if there is a
Third Put Option Election Notice or Third Call Election Notice, then the closing
under the Third Put Option or the Third Call Option, as the case may be). Any
Covered Securities held by the H&Q Representative after such time will be
delivered to the H&Q Party that is the holder of record of such Covered
Securities.
(c) Rights of Covered Securityholders. During the period the Covered
Securities are held by the H&Q Representative, such shares of Common Stock and
Warrants shall be issued and outstanding shares and warrants of the Company for
all corporate purposes, and, except as otherwise provided in this Agreement, the
holders of such shares of Common Stock and Warrants shall have all the rights of
other shareholders of the Company's Common Stock and holders of the Company's
Warrants with respect to such securities, including the right to notice
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of, and to vote at, meetings, and the right to receive the dividends declared by
the Board of Directors of the Company with respect to such shares of Common
Stock held by the H&Q Representative. Cash dividends, income and proceeds on or
from the Covered Securities shall not be included in the Covered Securities held
by the H&Q Representative and, accordingly, shall be directly paid by the
Company to the holders of Common Stock or Warrants of record, rather than
through the H&Q Representative.
(d) Non-Liability; Indemnification. The H&Q Representative shall not
be liable for any act or omission while acting in good faith and in the exercise
of its own best judgment. The H&Q Representative shall have the right to consult
with counsel at the expense of the H&Q Parties whenever any question arises
concerning the Agreement and shall incur no liability for any delay reasonably
required to obtain such advice of counsel. The H&Q Representative shall not be
liable for the alteration, modification or elimination of any right permitted or
given under the instructions set forth in this Agreement, a Joint Written
Instruction and/or in any document deposited under the Agreement pursuant to any
Statute of Limitations or by reason of laches. The H&Q Representative shall have
no further responsibility or liability whatsoever to any or all of the H&Q
Parties and the Buyers following a partial or complete distribution of the
Covered Securities and any funds to be received for disbursement to the H&Q
Parties pursuant to this Agreement. The H&Q Representative shall not incur any
liability with respect to any act or omission in reliance upon any document,
including any written notice or instruction provided for in this Agreement. In
performing its obligations hereunder, the H&Q Representative shall be entitled
to presume, without inquiry, the due execution, validity and effectiveness of
all documents it receives, and also the truth and accuracy of any information
contained therein. The H&Q Representative shall not be responsible or liable for
any diminution of principal of the Covered Securities and any funds to be
received for disbursement to the H&Q Parties pursuant to this Agreement or any
interest penalty, whatsoever, for any reason. The H&Q Parties agree, jointly and
severally, to indemnify and hold harmless the H&Q Representative from any
liability, cost, or expense whatsoever, including, but not limited to,
attorney's fees incurred by reason of accepting the appointment under this
Agreement and acting in accordance with the terms hereof.
2. Buyers' Representative.
(a) Appointment of Buyer Representative. Each of the Buyers hereby
appoints the Company as its representative (the "Buyers' Representative") to be
the representative of the Buyers with respect to any matter hereunder related to
(i) holding and disbursing the funds from the Buyers to be disbursed to the H&Q
Representative on behalf of the H&Q Parties and (ii) preparing and delivering
any Joint Written Direction and taking any action in furtherance thereof. A
majority in interest of the Buyers may replace the Buyers' Representative upon
written notice to the H&Q Representative.
(b) Delivery of Cash Consideration to Buyers' Representative. Each
of the Buyers hereby agrees that prior to any closing under this Agreement it
will deliver to the Buyers' Representative such Buyer's portion of any funds to
be delivered in accordance with the terms hereof. The Buyers' Representative
agrees to deliver such funds by bank checks to the H&Q Representative on behalf
of the H&Q Parties in accordance with the terms hereof and any applicable Joint
Written Instruction.
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(c) Non-Liability; Indemnification. The Buyers' Representative shall
not be liable for any act or omission while acting in good faith and in the
exercise of its own best judgment. The Buyers' Representative shall have the
right to consult with counsel at the expense of the Buyers whenever any question
arises concerning the Agreement and shall incur no liability for any delay
reasonably required to obtain such advice of counsel. The Buyers' Representative
shall not be liable for the alteration, modification or elimination of any right
permitted or given under the instructions set forth in this Agreement, a Joint
Written Instruction and/or in any document deposited under the Agreement
pursuant to any Statute of Limitations or by reason of laches. The Buyers'
Representative shall have no further responsibility or liability whatsoever to
any or all of the H&Q Parties and the Buyers following a partial or complete
distribution of the Covered Securities and any funds to be received for
disbursement to the H&Q Representative pursuant to this Agreement. The Buyers'
Representative shall not incur any liability with respect to any act or omission
in reliance upon any document, including any written notice or instruction
provided for in this Agreement. In performing its obligations hereunder, the
Buyers' Representative shall be entitled to presume, without inquiry, the due
execution, validity and effectiveness of all documents it receives, and also the
truth and accuracy of any information contained therein. The Buyers'
Representative shall not be responsible or liable for any diminution of
principal of any funds to be received for disbursement to the H&Q Representative
on behalf of the H&Q Parties pursuant to this Agreement or any interest penalty,
whatsoever, for any reason. The Buyers agree, jointly and severally, to
indemnify and hold harmless the Buyers' Representative from any liability, cost,
or expense whatsoever, including, but not limited to, attorney's fees incurred
by reason of accepting the appointment under this Agreement and acting in
accordance with the terms hereof. The provisions in this Section 2(c) shall be
for the benefit of Buyers' Representative solely in its capacity as Buyers'
Representative and not for the Company's benefit in any other capacity under
this Agreement.
3. Initial Purchase.
(a) At Initial Purchase. No later than ten (10) business days after
the execution and delivery of this Agreement by all parties hereto, each H&Q
Party will sell to the Buyers, and the Buyers will purchase from each H&Q Party,
the number of Covered Securities set forth opposite such H&Q Party's name on
Exhibit B hereto under the heading "At Initial Purchase" (the "Initial
Purchase").
(b) Several Obligations. The obligation of the H&Q Parties to sell
Covered Securities pursuant to this Section 1 will be several and not joint, and
each H&Q Party will be obligated to sell no more than the number of Covered
Securities set forth opposite such H&Q Party's name on Exhibit B hereto under
the heading "At Initial Purchase." The obligation of the Buyers to purchase
Covered Securities pursuant to this Section 1 will be several and not joint, and
each Buyer will be obligated to purchase no more than the number of Covered
Securities set forth opposite such Buyer's name on Exhibit C hereto under the
heading "At Initial Purchase."
(c) Purchase Price at Initial Purchase. The purchase price per share
of Common Stock will be $3.00 per share in the Initial Purchase and the purchase
price per Warrant in the Initial Purchase will be $3.00 per share of Common
Stock under such Warrant minus the per share exercise price of the Warrant. Such
shares of Common Stock and Warrants will be
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delivered to the Buyers free and clear of all liens, charges, security
interests, options, claims, mortgages, pledges, proxies, voting trusts or
agreements, obligations, understandings or arrangements or other restrictions on
title or transfer of any nature whatsoever, except as contemplated by this
Agreement or by applicable securities laws (each an "Encumbrance").
(d) H&Q Parties' Deliveries. At the closing of the Initial Purchase
and each closing, if any, pursuant to the Put Options (as defined below) or Call
Options (as defined below), the H&Q Representative on behalf of each H&Q Party
shall deliver the following documents to the Buyers' Representative on behalf of
each purchasing Buyer (as applicable):
(i) certificates representing the Covered Securities (to the extent
such Covered Securities were certificated) being sold to the Buyer, each
certificate to be duly and validly endorsed in favor of the Buyer or
accompanied by one or more stock powers duly and validly executed by the
H&Q Party and otherwise sufficient to vest in the Buyer ownership of the
Covered Securities to be acquired by the Buyer at such closing, free and
clear of all Encumbrances;
(ii) a copy of resolutions of the board of directors or other
governing body of the H&Q Party authorizing the execution, delivery and
performance of this Agreement by the H&Q Party, and a certificate of the
secretary, or assistant secretary or other duly authorized officer of the
H&Q Party, dated the applicable closing date, that such resolutions were
duly adopted and are in full force and effect; provided, that no such
resolutions or certificates shall be required for any H&Q Party that is an
individual, a trust or an estate; and
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(iii) a certificate executed by each H&Q Party or by a duly
authorized representative of such H&Q Party to the effect that the
representations and warranties of such H&Q Party set forth in this
Agreement are true and correct in all respects as of the applicable
closing date.
(e) Buyers' Deliveries. At the closing of the Initial Purchase and
each closing, if any, pursuant to the Put Options or Call Options, the Buyers'
Representative on behalf of each Buyer shall deliver the following documents to
the H&Q Representative on behalf of each selling H&Q Party (as applicable):
(i) a copy of resolutions of the board of directors or other
governing body of the Buyer authorizing the execution, delivery and
performance of this Agreement by the Buyer, and a certificate of the
secretary, or assistant secretary or other duly authorized officer of the
Buyer, dated the applicable closing date, that such resolutions were duly
adopted and are in full force and effect; provided, that no such
resolutions or certificates shall be required for any Buyer that is an
individual, a trust or an estate; and
(ii) a certificate executed by each Buyer or by a duly authorized
representative of such Buyer to the effect that the representations and
warranties of such Buyer set forth in this Agreement are true and correct
in all respects as of the applicable closing date.
(f) Company Deliveries. At the closing of the Initial Purchase and
each closing, if any, pursuant to the Put Options or Call Options, the Company
shall deliver the following documents to the H&Q Representative on behalf of
each selling H&Q Party (as applicable):
(i) a copy of resolutions of the board of directors of the Company
authorizing the execution, delivery and performance of this Agreement by
the Company, and a certificate of the secretary, or assistant secretary or
other duly authorized officer of the Company, dated the applicable closing
date, that such resolutions were duly adopted and are in full force and
effect; and
(ii) a certificate executed by a duly authorized representative of
the Company to the effect that the representations and warranties of the
Company set forth in this Agreement are true and correct in all respects
as of the applicable closing date.
(g) Payment of Initial Purchase Price; Delivery of Covered
Securities; Transfer Agent. At the closing of the Initial Purchase (i) the H&Q
Representative and the Buyers' Representative shall prepare and execute a Joint
Written Instruction in respect of the Initial Purchase (ii) the Buyers shall pay
the purchase price in full to the Buyers' Representative for disbursement to the
H&Q Representative on behalf of the H&Q Parties, (iii) the Company shall obtain
bank checks payable to the applicable selling H&Q Party, (iv) the H&Q
Representative shall deliver to the Buyers' Representative the applicable
Covered Securities (with such duly and validly executed stock powers) and (v)
the Company shall, and shall instruct its transfer agent to, take such action as
is necessary to reflect the transfer of the Covered Securities, in each case as
set forth in the Joint Written Instruction. Such actions of the Company and its
transfer agent may include, without limitation, (i) instructions to cancel one
certificate representing Common Stock held by an H&Q Party and to issue new
certificates representing, in aggregate, the same number of shares of Common
Stock to one or more Buyers and such H&Q Party and to (ii) convert Warrants to
Common Stock as permitted pursuant to Section 15 of this Agreement.
4. First Put Option.
(a) First Put Option. The Buyers hereby grant to each H&Q Party the
right and option (the "First Put Option") at any time during the period
beginning on December 29, 2003 and ending at 8:00 P.M., New York City time, on
January 5, 2004 (the "First Put Exercise Period") to require the Buyers to
purchase and acquire from such H&Q Party up to the number of Covered Securities
set forth opposite such H&Q Party's name on Exhibit B hereto under the heading
"Upon Exercise of the First Put Option."
(b) Several Obligations. To the extent the H&Q Parties elect to sell
Covered Securities pursuant to this Section 4, such selling obligations of the
H&Q Parties will be several and not joint, and no H&Q Party will be obligated to
sell more than the number of Covered Securities set forth opposite such H&Q
Party's name on Exhibit B hereto under the heading "Upon Exercise of the First
Put Option." To the extent the Buyers are obligated to purchase Covered
Securities pursuant to this Section 4, such purchasing obligations of the Buyers
will be several and not joint, and no Buyer will be obligated to purchase more
than the number of Covered Securities set forth opposite such Buyer's name on
Exhibit C hereto under the heading "Upon Exercise of the First Put Option."
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(c) Notice; Put Price. The First Put Option may be exercised only by
giving written notice to the Buyers stating the number of Covered Securities to
be sold by each H&Q Party pursuant to the First Put Option (the "First Put
Election Notice"). If the H&Q Parties elect to exercise the First Put Option
with respect to less than all of the Covered Securities that are subject to the
First Put Option, each Buyer will purchase its pro rata share of the reduced
number of Covered Securities with respect to which the First Put Option is
exercised. The purchase price per share of Common Stock will equal the greater
of (i) $2.05 and (ii) the lesser of 90% of (A) the Volume Weighted Average Price
(as defined below) for the twenty trading days immediately preceding December
29, 2003 and (B) $4.50 (the "First Put Common Stock Price"). "Volume Weighted
Average Price" means during the relevant period, the quotient of (x) the
aggregate sale price for all shares of Common Stock traded on the New York Stock
Exchange, divided by (y) the aggregate number of shares of Common Stock traded
on the New York Stock Exchange. The purchase price for each Warrant will equal
the First Put Common Stock Price per share of Common Stock under the Warrant
minus the per share exercise price of the Warrant.
(d) Lapse of First Put Option. At the end of the First Put Exercise
Period, any Covered Securities that are set forth opposite an H&Q Party's name
on Exhibit B under the heading "Upon Exercise of the First Put Option" and that
are not included in the First Put Election Notice shall no longer be subject to
the First Put Option.
(e) Closing Deliveries. If the First Put Option is exercised,
delivery to the Buyers' Representative of the certificates representing the
number of Covered Securities as to which the First Put Option is exercised (to
the extent such Covered Securities were certificated), accompanied by a stock
power duly executed in blank, payment by the Buyers' Representative of the
purchase price in full to the H&Q Representative for the benefit of the
applicable H&Q Party by bank check and delivery of the documents set forth in
Section 3 shall take place at the offices of the Company, on the date that is
five (5) business days following the delivery date of the First Put Election
Notice. The Buyers' Representative and the H&Q Representative shall prepare and
execute a Joint Written Instruction in connection with such closing.
5. Second Put Option.
(a) Second Put Option. The Buyers hereby grant to each H&Q Party the
right and option (the "Second Put Option") at any time during the period
beginning on March 29, 2004 and ending at 8:00 P.M., New York City time, on
April 2, 2004 (the "Second Put Exercise Period") to require the Buyers to
purchase and acquire from such H&Q Party up to the number of Covered Securities
set forth opposite such H&Q Party's name on Exhibit B hereto under the heading
"Upon Exercise of the Second Put Option."
(b) Several Obligations. To the extent the H&Q Parties elect to sell
Covered Securities pursuant to this Section 5, such selling obligations of the
H&Q Parties will be several and not joint, and no H&Q Party will be obligated to
sell more than the number of Covered Securities set forth opposite such H&Q
Party's name on Exhibit B hereto under the heading "Upon Exercise of the Second
Put Option." To the extent the Buyers are obligated to purchase Covered
Securities pursuant to this Section 5, such purchasing obligations of the Buyers
will be several and not joint, and no Buyer will be obligated to purchase more
than the number of
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Covered Securities set forth opposite such Buyer's name on Exhibit C hereto
under the heading "Upon Exercise of the Second Put Option."
(c) Notice; Put Price. The Second Put Option may be exercised only
by giving written notice to the Buyers stating the number of Covered Securities
to be sold by each H&Q Party pursuant to the Second Put Option (the "Second Put
Election Notice"). If the H&Q Parties elect to exercise the Second Put Option
with respect to less than all of the Common Shares and Warrants that are subject
to the Second Put Option, each Buyer will purchase its pro rata share of the
reduced number of Covered Securities with respect to which the Second Put Option
is exercised. The purchase price per share of Common Stock will equal the
greater of (i) $2.05 and (ii) the lesser of 90% of (A) the Volume Weighted
Average Price for the twenty trading days immediately preceding March 29, 2003
and (B) $4.50 (the "Second Put Common Stock Price"). The purchase price per
Warrant will equal the Second Put Common Stock Price per share of Common Stock
under the Warrant minus the per share exercise price of the Warrant.
(d) Lapse of Second Put Option. At the end of the Second Put
Exercise Period, any Covered Securities that are set forth opposite an H&Q
Party's name on Exhibit B under the heading "Upon Exercise of the Second Put
Option" and that are not included in the Second Put Election Notice shall no
longer be subject to the Second Put Option.
(e) Closing Deliveries. If the Second Put Option is exercised,
delivery to the Buyers' Representative of the certificates representing the
number of Covered Securities as to which the Second Put Option is exercised (to
the extent such Covered Securities were certificated), accompanied by a stock
power duly executed in blank, payment by the Buyers' Representative of the
purchase price in full to the H&Q Representative for the benefit of the
applicable H&Q Party by bank check and delivery of the documents set forth in
Section 3 shall take place at the offices of the Company, on the date that is
five (5) business days following the delivery date of the Second Put Election
Notice. The Buyers' Representative and the H&Q Representative shall prepare and
execute a Joint Written Instruction in connection with such closing.
6. Third Put Option.
(a) Third Put Option. The Buyers hereby grant to each H&Q Party the
right and option (the "Third Put Option", and together with the First Put Option
and the Second Put Option, the "Put Options") at any time during the period
beginning on June 28, 2004 and ending at 8:00 P.M., New York City time, on July
2, 2004 (the "Third Put Exercise Period") to require the Buyers to purchase and
acquire from such H&Q Party up to the number of Covered Securities set forth
opposite such H&Q Party's name on Exhibit B hereto under the heading "Upon
Exercise of the Third Put Option."
(b) Several Obligations. To the extent the H&Q Parties elect to sell
Covered Securities pursuant to this Section 6, such selling obligations of the
H&Q Parties will be several and not joint, and no H&Q Party will be obligated to
sell more than the number of Covered Securities set forth opposite such H&Q
Party's name on Exhibit B hereto under the heading "Upon Exercise of the Third
Put Option." To the extent the Buyers are obligated to purchase Covered
Securities pursuant to this Section 6, such purchasing obligations of the Buyers
will be
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several and not joint, and no Buyer will be obligated to purchase more than the
number of set forth opposite such Buyer's name on Exhibit C hereto under the
heading "Upon Exercise of the Third Put Option."
(c) Notice; Put Price. The Third Put Option may be exercised only by
giving written notice to the Buyers stating the number of Covered Securities to
be sold by each H&Q Party pursuant to the Third Put Option (the "Third Put
Election Notice"). If the H&Q Parties elect to exercise the Third Put Option
with respect to less than all of the Common Shares and Warrants that are subject
to the Third Put Option, each Buyer will purchase its pro rata share of the
reduced number of Covered Securities with respect to which the Third Put Option
is exercised. The purchase price per share of Common Stock will equal the
greater of (i) $2.05 and (ii) the lesser of 90% of (A) the Volume Weighted
Average Price for the twenty trading days immediately preceding June 28, 2004
and (B) $4.50 (the "Third Put Common Stock Price"). The purchase price per
Warrant will equal the Third Put Common Stock Price per share of Common Stock
under the Warrant minus the per share exercise price of the Warrant.
(d) Lapse of Third Put Option. At the end of the Third Put Exercise
Period, any Covered Securities that are set forth opposite an H&Q Party's name
on Exhibit B under the heading "Upon Exercise of the Third Put Option" and that
are not included in the Third Put Election Notice shall no longer be subject to
the Third Put Option.
(e) Closing Deliveries. If the Third Put Option is exercised,
delivery to the Buyers' Representative of the certificates representing the
number of Covered Securities as to which the Third Put Option is exercised (to
the extent such Covered Securities were certificated), accompanied by a stock
power duly executed in blank, payment by the Buyers' Representative of the
purchase price in full to the H&Q Representative for the benefit of the
applicable H&Q Party by bank check and delivery of the documents set forth in
Section 3 shall take place at the offices of the Company, on the date that is
five (5) business days following the delivery date of the Third Put Election
Notice. The Buyers' Representative and the H&Q Representative shall prepare and
execute a Joint Written Instruction in connection with such closing.
7. First Call Option.
(a) First Call Option. The H&Q Parties hereby grant to the Buyers
the right and option (the "First Call Option") at any time during the period
beginning on January 6, 2004 and ending at 8:00 P.M., New York City time, on
January 12, 2004 (the "First Call Exercise Period") to require the H&Q Parties
to sell to the Buyers up to the number of Covered Securities set forth opposite
each Buyer's name on Exhibit C hereto under the heading "Upon Exercise of the
First Call Option."
(b) Several Obligations. To the extent the H&Q Parties are obligated
to sell Covered Securities pursuant to this Section 7, such selling obligations
of the H&Q Parties will be several and not joint, and no H&Q Party will be
obligated to sell more than the number of Covered Securities set forth opposite
such H&Q Party's name on Exhibit B hereto under the heading "Upon Exercise of
the First Call Option." To the extent the Buyers elect to purchase Covered
Securities pursuant to this Section 7, such purchasing obligations of the Buyers
will be several and not joint, and no Buyer will be obligated to purchase more
than the number of
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Covered Securities set forth opposite such Buyer's name on Exhibit C hereto
under the heading "Upon Exercise of the First Call Option."
(c) Notice; Call Price. The First Call Option may be exercised only
by giving written notice to the H&Q Parties stating the aggregate number of
Covered Securities to be purchased by each Buyer pursuant to the First Call
Option (the "First Call Election Notice"). If the Buyers elect to exercise the
First Call Option with respect to less than all of the Common Shares and
Warrants that are subject to the First Call Option, (i) each Buyer will have the
right to purchase such Covered Securities on a pro rata basis based on such
Buyer's percentage of the Covered Securities purchased in the Initial Purchase
and (ii) each H&Q Party will sell such reduced number of Covered Securities on a
pro rata basis based on such H&Q Party's percentage of the Covered Securities
subject to this Agreement. The purchase price per share of Common Stock will
equal the greater of (i) $2.05 and (ii) the lesser of 90% of (A) the Volume
Weighted Average Price for the twenty trading days immediately preceding
December 29, 2003 and (B) $4.50 (the "First Call Common Stock Price"). The
purchase price per Warrant will equal the First Call Common Stock Price per
share of Common Stock under the Warrant minus the per share exercise price of
the Warrant.
(d) Lapse of First Call Option. At the end of the First Call
Exercise Period, any Covered Securities that are set forth opposite a Buyer's
name on Exhibit C under the heading "Upon Exercise of the First Call Option" and
that are not included in the First Call Election Notice shall no longer be
subject to the First Call Option.
(e) Closing Deliveries. If the First Call Option is exercised,
delivery to the Buyers' Representative of the certificates representing the
number of Covered Securities as to which the First Call Option is exercised (to
the extent such Covered Securities were certificated), accompanied by a stock
power duly executed in blank, payment by the Buyers' Representative of the
purchase price in full to the H&Q Representative for the benefit of the
applicable H&Q Party by bank check and delivery of the documents set forth in
Section 3 shall take place at the offices of the Company, on the date that is
five (5) business days following the delivery date of the First Call Election
Notice. The Buyers' Representative and the H&Q Representative shall prepare and
execute a Joint Written Instruction in connection with such closing.
8. Second Call Option.
(a) Second Call Option. The H&Q Parties hereby grant to each Buyer
the right and option (the "Second Call Option") at any time during the period
beginning on April 5, 2004 and ending at 8:00 P.M., New York City time, on April
9, 2004 (the "Second Call Exercise Period") to require the H&Q Parties to sell
to the Buyers up to the number of Covered Securities set forth opposite each
Buyer's name on Exhibit C hereto under the heading "Upon Exercise of the Second
Call Option."
(b) Several Obligations. To the extent the H&Q Parties are obligated
to sell Covered Securities pursuant to this Section 8, such selling obligations
of the H&Q Parties will be several and not joint, and no H&Q Party will be
obligated to sell more than the number of Covered Securities set forth opposite
such H&Q Party's name on Exhibit B hereto under the heading "Upon Exercise of
the Second Call Option." To the extent the Buyers elect to purchase
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Covered Securities pursuant to this Section 8, such purchasing obligations of
the Buyers will be several and not joint, and no Buyer will be obligated to
purchase more than the number of Covered Securities set forth opposite such
Buyer's name on Exhibit C hereto under the heading "Upon Exercise of the Second
Call Option."
(c) Notice; Call Price. The Second Call Option may be exercised only
by giving written notice to the H&Q Parties stating the aggregate number of
Covered Securities to be purchased by each Buyer pursuant to the Second Call
Option (the "Second Call Election Notice"). If the Buyers elect to exercise the
Second Call Option with respect to less than all of the Covered Securities that
are subject to the Second Call Option, (i) each Buyer will have the right to
purchase such Covered Securities on a pro rata basis based on such Buyer's
percentage of the Covered Securities purchased in the Initial Purchase and (ii)
each H&Q Party will sell such reduced number of Covered Securities on a pro rata
basis based on such H&Q Party's percentage of the Covered Securities subject to
this Agreement. The purchase price per share of Common Stock will equal the
greater of (i) $2.05 and (ii) the lesser of 90% of (A) the Volume Weighted
Average Price for the twenty trading days immediately preceding March 29, 2004
and (B) $4.50 (the "Second Call Common Stock Price"). The purchase price per
Warrant will equal the Second Call Common Stock Price per share of Common Stock
under the Warrant minus the per share exercise price of the Warrant.
(d) Lapse of Second Call Option. At the end of the Second Call
Exercise Period, any Covered Securities that are set forth opposite a Buyer's
name on Exhibit C under the heading "Upon Exercise of the Second Call Option"
and that are not included in the Second Call Election Notice shall no longer be
subject to the Second Call Option.
(e) Closing Deliveries. If the Second Call Option is exercised,
delivery to the Buyers' Representative of the certificates representing the
number of Covered Securities as to which the Second Call Option is exercised (to
the extent such Covered Securities were certificated), accompanied by a stock
power duly executed in blank, payment by the Buyers' Representative of the
purchase price in full to the H&Q Representative for the benefit of the
applicable H&Q Party by bank check and delivery of the documents set forth in
Section 3 shall take place at the offices of the Company, on the date that is
five (5) business days following the delivery date of the Second Call Election
Notice. The Buyers' Representative and the H&Q Representative shall prepare and
execute a Joint Written Instruction in connection with such closing.
9. Third Call Option.
(a) Third Call Option. The H&Q Parties hereby grant to each Buyer
the right and option (the "Third Call Option", and together with the First Call
Option and the Second Call Option, the "Call Options") at any time during the
period beginning on July 6, 2004 and ending at 8:00 P.M., New York City time, on
July 12, 2004 (the "Third Call Exercise Period") to require the H&Q Parties to
sell to the Buyers up to the number of Covered Securities set forth opposite
each Buyer's name on Exhibit C hereto under the heading "Upon Exercise of the
Third Call Option."
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(b) Several Obligations. To the extent the H&Q Parties are obligated
to sell Covered Securities pursuant to this Section 9, such selling obligations
of the H&Q Parties will be several and not joint, and no H&Q Party will be
obligated to sell more than the number of Covered Securities set forth opposite
such H&Q Party's name on Exhibit B hereto under the heading "Upon Exercise of
the Second Call Option." To the extent the Buyers elect to purchase Covered
Securities pursuant to this Section 9, such purchasing obligations of the Buyers
will be several and not joint, and no Buyer will be obligated to purchase more
than the number of Covered Securities set forth opposite such Buyer's name on
Exhibit C hereto under the heading "Upon Exercise of the Second Call Option."
(c) Notice; Call Price. The Third Call Option may be exercised only
by giving written notice to the H&Q Parties stating the aggregate number of
Covered Securities to be purchased by each Buyer pursuant to the Third Call
Option (the "Third Call Election Notice"). If the Buyers elect to exercise the
Third Call Option with respect to less than all of the Covered Securities that
are subject to the Third Call Option, (i) each Buyer will have the right to
purchase such Covered Securities on a pro rata basis based on such Buyer'
percentage of the Covered Securities purchased in the Initial Purchase and (ii)
each H&Q Party will sell such reduced number of Covered Securities on a pro rata
basis based on such H&Q Party's percentage of the Covered Securities subject to
this Agreement. The purchase price per share of Common Stock will equal the
greater of (i) $2.05 and (ii) the lesser of 90% of (A) the Volume Weighted
Average Price for the twenty trading days immediately preceding June 28, 2004
and (B) $4.50 (the "Third Call Common Stock Price"). The purchase price per
Warrant will equal the Third Call Common Stock Price per share of Common Stock
under the Warrant minus the per share exercise price of the Warrant.
(d) Lapse of Third Call Option. At the end of the Third Call
Exercise Period, any Covered Securities that are set forth opposite a Buyer's
name on Exhibit C under the heading "Upon Exercise of the Third Call Option" and
that are not included in the Third Call Election Notice shall no longer subject
be to the Third Call Option.
(e) Closing Deliveries. If the Third Call Option is exercised,
delivery to the Buyers' Representative of the certificates representing the
number of Covered Securities as to which the Third Call Option is exercised (to
the extent such Covered Securities were certificated), accompanied by a stock
power duly executed in blank, payment by the Buyers' Representative of the
purchase price in full to the H&Q Representative for the benefit of the
applicable H&Q Party by bank check and delivery of the documents set forth in
Section 3 shall take place at the offices of the Company, on the date that is
five (5) business days following the delivery date of the Third Call Election
Notice. The Buyers' Representative and the H&Q Representative shall prepare and
execute a Joint Written Instruction in connection with such closing.
10. Reduction of Covered Securities Subject to Call Options;
Combination of Covered Securities.
(a) Notwithstanding anything to the contrary in this Agreement, (i)
the number of Covered Securities that are subject to the First Call Option shall
be reduced by the number of Covered Securities that are sold pursuant to the
First Put Option, (ii) the number of Covered
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Securities that are subject to the Second Call Option shall be reduced by the
Covered Securities that are sold pursuant to the Second Put Option and (iii) the
number of Covered Securities that are subject to the Third Call Option shall be
reduced by the number of Covered Securities that are sold pursuant to the Third
Put Option.
(b) Without limiting the effect of Section 15, each H&Q Party shall
have the sole discretion to determine the combination of shares of Common Stock
and Warrants that will comprise the amount of Covered Securities to be sold in
accordance with the terms of this Agreement. In accordance with the terms of
Section 15, to the extent that shares of Common Stock are delivered to the
Buyers as a result of the exercise of Warrants by an H&Q Party, each such H&Q
Party shall, in its sole discretion, determine which Warrants will be exercised
and the number of Warrants to be exercised.
11. Securities Act Registration. The parties acknowledge that the
Company's registration statement on Form S-3 (Registration No. 333-70840)
(including any post-effective amendments thereto, the "Registration Statement"),
and a related prospectus (including any prospectus supplement filed pursuant to
Rule 424(b) under the Securities Act, the "Prospectus") relating to the Covered
Securities that are shares of Common Stock, has been filed with the Securities
and Exchange Commission and has been declared effective under the Securities Act
of 1933 (the "Securities Act"). The parties agree that the sale and purchase of
Covered Securities pursuant to this Agreement, whether at the Initial Purchase
or upon exercise of any Put Options or any Call Options, shall be effected under
and pursuant to the Registration Statement, as the same may be amended or
supplemented from time to time. In accordance therewith, at the Initial Purchase
and each exercise of a Put Option or Call Option, the H&Q Parties shall deliver
to each Buyer a copy of the Prospectus; provided, that any such delivery
requirement may be satisfied by complying with The New York Stock Exchange's
standards for listed companies with respect to prospectus delivery. If, at the
Initial Purchase and each exercise of a Put Option or Call Option, the H&Q
Parties are unable to deliver a copy of the Prospectus to the Buyers which meets
the requirements of applicable securities laws, the Initial Purchase or exercise
of a Put Option or Call Option, as applicable, shall nevertheless be consummated
and the Buyers will receive securities that have not been registered under the
Securities Act.
12. Standstill. Each H&Q Party agrees that except as contemplated by
this Agreement, without the prior written consent of the Company, it shall not,
during the period from the date hereof until expiration of the Third Call
Exercise Period (the "Standstill Period"), directly or indirectly:
(a) acquire or agree, offer, seek or propose to acquire, or cause to
be acquired, ownership (including, but not limited to, beneficial ownership as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") of any of the assets or businesses of the Company or any
securities of the Company (including, without limitation, any debt, equity or
convertible securities) or any rights or options to acquire any such ownership
from any Person;
(b) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the Securities and
Exchange Commission) to vote or
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consents, or seek to advise or influence in any manner whatsoever any Person
with respect to the voting of any securities of any of the Company;
(c) form, join, or in any way participate in a "group" (within the
meaning of Section 13d(3) of the Exchange Act) with respect to any voting
securities of the Company, except that each H&Q Party shall be permitted to
participate in the group, that filed the Schedule 13D for the purpose of
complying with the terms of this Agreement;
(d) arrange, or in any way participate in, any financing for the
purchase of any voting securities or securities convertible or exchangeable into
exercisable for any voting securities or assets of the Company;
(e) otherwise act, whether alone or in concert with others, to seek
to propose to the Company, or any of its officers, directors, employees or
stockholders, any merger, business combination, restructuring, recapitalization
or similar transaction involving the Company or otherwise act, whether alone or
in concert with others, to seek to control, change or influence the management,
shareholders, Board of Directors, or policies of the Company, or nominate any
Person as a director of the Company;
(f) solicit, negotiate with, or provide any information to, any
Person with respect to a merger, business combination, exchange offer or
liquidation involving the Company or any other acquisition of the Company, any
acquisition of securities of or all or any portion of the assets of the Company
or any other similar transaction;
(g) make any proposal to be considered and/or voted upon at any
meeting the stockholders of the Company, or discuss or communicate with respect
to any matter related to the business and affairs of the Company with the
stockholders (other than any H&Q Party) of the Company;
(h) announce an intention to, or enter into any discussion,
negotiations, arrangements or understandings with any third party with respect
to, any of the foregoing matters;
(i) disclose any intention, plan or arrangement inconsistent with
any of the foregoing provisions; or
(j) advise, assist, encourage or participate with any other Person
in connection with action inconsistent with any of the foregoing provisions.
"Person" shall mean any natural person, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, government or any agency or political subdivision thereof, or
any other legal entity or organization.
13. Restriction on Transfer.
(a) Except pursuant to the Initial Purchase, the Put Options and the
Call Options, from the date hereof until the expiration of the Third Call
Exercise Period, each H&Q Party agrees that it shall not, directly or
indirectly, sell, assign, transfer, grant an option with respect to
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or otherwise dispose of any interest in (or enter into an agreement or
understanding with respect to the foregoing), whether or not subject to passage
of time or contingencies, any Covered Securities that are set forth opposite its
name on Exhibit A and that have not been sold to the Buyers, except for shares
of Preferred Stock.
(b) Each Buyer agrees that it shall not, and shall not induce or
encourage any Person to, directly or indirectly, sell, assign, transfer, grant
an option with respect to or otherwise dispose of any interest in (or enter into
an agreement or understanding with respect to the foregoing) any securities of
the Company or securities convertible into or exercisable or exchangeable for
such securities, whether or not subject to passage of time or contingencies,
during any period in which the Volume Weighted Average Price is being determined
for the purposes of Sections 4, 5, 6, 7, 8 or 9.
(c) Each H&Q Party agrees that it shall not, and shall not induce or
encourage any Person to, directly or indirectly, buy, sell, assign, transfer,
grant an option with respect to or otherwise dispose of any interest in (or
enter into an agreement or understanding with respect to the foregoing) any
securities of the Company or securities convertible into or exercisable or
exchangeable for such securities, whether or not subject to passage of time or
contingencies, during any period in which the Volume Weighted Average Price is
being determined for the purposes of Sections 4, 5, 6, 7, 8 or 9.
14. Waiver of Board Representation. The H&Q Parties do hereby waive
any and all rights the H&Q Parties have to be represented on the Company's Board
of Directors or to have the Company nominate any designee of the H&Q Parties for
election to the Company's Board of Directors.
15. Procedure for Exercising Warrants. Notwithstanding anything
contained in a Warrant or the applicable Warrant Agreement, from and after the
date hereof, the Company and each H&Q Party agree that if any H&Q Party wishes
to exercise a Warrant, such H&Q Party must exercise the warrant by (i) tendering
to the Company shares of Common Stock otherwise beneficially owned by the H&Q
Party having a price, based on the closing price of the Common Stock as reported
by the New York Stock Exchange on the trading day immediately preceding the date
of exercise, equal to the exercise price of the Warrant or (ii) making a
cashless conversion of the Warrants as contemplated during any "Registration
Lapse Period" provided for in Section 7.3 of the "Warrant to Purchase Shares of
Common Stock" agreements between the H&Q Parties and the Company; provided that
for this purpose the "Registration Lapse Period" as used in Section 7.3 of the
"Warrant to Purchase Shares of Common Stock" agreements shall be the period
beginning from April 30, 2003 and ending at the end of the trading day
immediately prior to the exercise of the right to make a cashless conversion. If
a Prospectus is not delivered to the Buyers as contemplated by Section 11 and
the sale and purchase of Covered Securities hereunder is not effected pursuant
to the Registration Statement, to the extent that the H&Q Parties desire or are
required to transfer and sell to the Buyers Warrants or shares of common stock
underlying warrants (whether at the Initial Purchase or upon exercise of the Put
Options or the Call Options) the H&Q Parties shall, prior to the applicable
closing, exercise the Warrants as required by this Section 15 so that each Buyer
will receive registered shares of Common Stock pursuant to the Registration
Statement.
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16. Releases.
(a) H&Q Parties' Release. Each of the H&Q Parties, on behalf of
itself and its respective heirs, successors and assigns, and their respective
directors, officers, trustees, managers, members, shareholders, partners,
representatives, agents and employees, does hereby release and forever discharge
the Company and its subsidiaries and affiliated corporations, partnerships,
limited liability companies and other legal entities, and their respective
directors, officers, trustees, managers, members, shareholders, partners,
assigns, attorneys, insurers, representatives, successors, agents and employees,
from any and all claims, causes of action, damages, actions, proceedings, suits,
debts, judgments, sums of money, accounts, controversies, agreements, promises,
injuries, xxxxx, remedies, liens, liabilities and demands whatsoever, whether
under federal, state or local law, statute or ordinance, law or in equity, known
or unknown, matured or unmatured, absolute or contingent, which any H&Q Party
ever had, now has or may have against the Company occurring in whole or in part
through and including the date of this Agreement (other than amounts due
pursuant to this Agreement and/or claims and liabilities arising out of this
Agreement, whether by breach or otherwise).
(b) Company Release. The Company, on behalf of itself and its
respective successors and assigns, subsidiaries and affiliated corporations,
partnerships, limited liability companies and other legal entities, and their
respective directors, officers, shareholders, representatives, agents and
employees, does hereby release and forever discharge the H&Q Parties and their
respective heirs, successors and assigns, and their respective directors,
officers, trustees, managers, members, shareholders, partners, representatives,
agents and employees, from any and all claims, causes of action, damages,
actions, proceedings, suits, debts, judgments, sums of money, accounts,
controversies, agreements, promises, injuries, xxxxx, remedies, liens,
liabilities and demands whatsoever, whether under federal, state or local law,
statute or ordinance, law or in equity, known or unknown, matured or unmatured,
absolute or contingent, which the Company ever had, now has or may have against
the H&Q Parties occurring in whole or in part through and including the date of
this Agreement (other than claims and liabilities arising out of this Agreement,
whether by breach or otherwise).
(c) Buyer Release. Each Buyer, on behalf of itself and its
respective heirs, successors and assigns, and their respective directors,
officers, trustees, managers, members, shareholders, partners, representatives,
agents and employees, does hereby release and forever discharge the H&Q Parties
and their respective heirs, successors and assigns, and their respective
directors, officers, trustees, managers, members, shareholders, partners,
representatives, agents and employees, from any and all claims, causes of
action, damages, actions, proceedings, suits, debts, judgments, sums of money,
accounts, controversies, agreements, promises, injuries, xxxxx, remedies, liens,
liabilities and demands whatsoever, whether under federal, state or local law,
statute or ordinance, law or in equity, known or unknown, matured or unmatured,
absolute or contingent, which any Buyer ever had, now has or may have against
the H&Q Parties occurring in whole or in part through and including the date of
this Agreement (other than claims and liabilities arising out of this Agreement,
whether by breach or otherwise).
(d) Advice of Counsel; Reliance on Representations and Warranties.
Each party to this Agreement has had the benefit of, or has had the opportunity
to, and has been advised to, obtain professional advice of attorneys of its own
choosing. Each party to this Agreement that
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has chosen to obtain professional advice of attorneys of its own choosing is
fully satisfied with that advice, and has relied solely and completely upon its
judgment together with that professional advice with respect to this Agreement
and the terms contained herein. With the benefit of such professional advice,
such party to this Agreement has fully informed itself of the contents, terms,
conditions, and effects of this Agreement, having read and understood this
document and having had its contents fully disclosed and explained to it by
attorneys of its own choosing, and understands the same. Each party to this
Agreement that has declined the opportunity to obtain professional advice of
attorneys of its own choosing acknowledges that it has been advised to obtain
professional advice of attorneys of its own choosing, but has declined to do so.
No promise or representation of any kind by a party being released herein or by
anyone acting on their behalf has been expressed or implied to the party by whom
they are released, except as expressly stated in this Agreement.
17. Representations and Warranties of the H&Q Parties. Each H&Q
Party represents and warrants to the Company and the Buyers as follows:
(a) Legal Power; Organization; Qualification. The H&Q Party is
either an individual or a legal entity of the type set opposite such party's
name on Exhibit A hereto. If not an individual, the H&Q party has been duly
organized, and is validly existing and in good standing, under the laws of its
jurisdiction of formation, has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby,
and has taken all necessary corporate or other action to authorize the
execution, delivery and performance of this Agreement.
(b) Authorization of Agreement. This Agreement has been duly
executed and delivered by the H&Q Party and, assuming due and valid
authorization, execution and delivery by the other parties hereto, this
Agreement constitutes a legal, valid and binding obligation of the H&Q Party,
enforceable against such H&Q Party in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws of general application affecting
enforcement of creditors' rights generally and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable relief
may be subject to equitable defenses and would be subject to the determination
of the court before which any proceeding therefor may be brought.
(c) No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation by the H&Q Party of any of the transactions
contemplated by this Agreement will result in a violation of, or a default
under, or conflict with, or require any consent, approval or notice under, any
governing or constitutional document, contract, trust, commitment, agreement,
obligation, understanding, arrangement or restriction of any kind to which such
H&Q Party is a party or by which such H&Q Party is bound or to which the Covered
Securities beneficially owned by the H&Q Party are subject. Consummation by the
H&Q Party of the transactions contemplated by this Agreement will not violate,
or require any consent, approval or notice under, any provision of any judgment,
order, decree, statute, law, rule or regulation applicable to the H&Q Party or
the securities of the Company held by such H&Q Party.
(d) Ownership of Covered Securities. The H&Q Party is the beneficial
owner of the securities set forth opposite its name on Exhibit A hereto, in each
case free and clear of any
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Encumbrances. The H&Q Party owns no other securities of the Company except as
disclosed on Exhibit A hereto. At the closing of the Initial Purchase and the
exercise of any Put Option or any Call Option, if any, the H&Q Party will
transfer and deliver to the applicable Buyer good and marketable title to all
the Covered Securities to be acquired by such Buyer, free and clear of any
Encumbrances.
(e) Investigation by the H&Q Parties. Each H&Q Party has conducted
its own investigation, to the extent that such H&Q Party has determined
necessary or desirable, in connection with its sale of Covered Securities and
has determined to enter into and complete such transaction based solely on such
investigation and the specific representations and warranties of the Buyers and
the Company set forth in this Agreement.
18. Representations and Warranties of the Buyers. Each Buyer
represents and warrants to the H&Q Parties and the Company as follows:
(a) Legal Power; Organization; Qualification. The Buyer is either an
individual or a legal entity of the type set opposite such party's name on
Exhibit C hereto. If not an individual, the Buyer has been duly organized, and
is validly existing and in good standing, under the laws of its jurisdiction of
formation, has all requisite power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, and has taken
all necessary corporate or other action to authorize the execution, delivery and
performance of this Agreement.
(b) Authorization of Agreement. This Agreement has been duly
executed and delivered by the Buyer and, assuming due and valid authorization,
execution and delivery by each of the other parties hereto, this Agreement
constitutes a legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting enforcement
of creditors' rights generally and (ii) the availability of the remedy of
specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the determination of the
court before which any proceeding therefor may be brought.
(c) No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation by the Buyer of any of the transactions
contemplated hereby will result in a violation of, or a default under, or
conflict with, or require any consent, approval or notice under, any contract,
trust, commitment, agreement, obligation, understanding, arrangement or
restriction of any kind to which the Buyer is a party or by which the Buyer is
bound. Consummation by the Buyer of the transactions contemplated by this
Agreement will not violate, or require any consent, approval or notice under,
any provision of any judgment, order, decree, statute, law, rule or regulation
applicable to the Buyer.
(d) Securities Laws. The Buyer understands that if the Prospectus is
not delivered to the Buyer and the sale and purchase of Covered Securities
hereunder is not effected pursuant to the Registration Statement (an
"Unregistered Sale"), the purchase and sale of Covered Securities pursuant to
this Agreement will not be registered under the Securities Act, or any
securities act of any state or other jurisdiction, in reliance on registration
exemptions under such
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statutes. In such event, the Covered Securities will be acquired solely for the
Buyer's own account, for investment, and not with a view to any distribution or
other disposition of such Covered Securities or any part thereof, or interest
therein, except in accordance with the Securities Act. In such event, the Buyer
will not sell or otherwise transfer the Covered Securities except in accordance
with the Securities Act and all other applicable securities laws, and prior to
any transfer (other than pursuant to an effective registration statement under
the Securities Act or otherwise in compliance with applicable law) the Buyer
will furnish to the Company a written opinion of counsel in form and substance
reasonably satisfactory to the Company to the effect that registration under the
Securities Act is not required or that all requisite action has been taken under
all applicable securities laws in connection with the proposed transfer. In the
event of an Unregistered Sale, the Buyer acknowledges its understanding that the
Covered Securities will bear an appropriate legend with respect to the foregoing
matters until the Company's counsel reasonably determines that the legend is no
longer advisable. The Buyer also acknowledges that, in such event, appropriate
stop transfer orders will be noted on the Company's records with respect to the
Covered Securities. Buyer is an "accredited investor" as that term is defined in
Regulation D under the Securities Act. Buyer has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of purchasing the Covered Securities, is able to bear the
economic risk of such investment, including a complete loss thereof, and
understands that there are substantial risks involved in acquiring the Covered
Securities.
(e) Investigation by the Buyers. Each Buyer has conducted its own
investigation, to the extent that such Buyer has determined necessary or
desirable, in connection with its purchase of Covered Securities and has
determined to enter into and complete such transaction based solely on such
investigation and the specific representations and warranties of the H&Q Parties
and the Company set forth in this Agreement.
19. Representations and Warranties of the Company. The Company
represents and warrants to the H&Q Parties and the Buyers as follows:
(a) Legal Power; Organization; Qualification. The Company is a
corporation duly incorporated, validly existing and in good standing, under the
laws of Delaware, has all requisite power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, and has
taken all necessary corporate or other action to authorize the execution,
delivery and performance of this Agreement.
(b) Authorization of Agreement. This Agreement has been duly
executed and delivered by the Company and, assuming due and valid authorization,
execution and delivery by each of the other parties hereto, this Agreement
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws of general application affecting enforcement
of creditors' rights generally and (ii) the availability of the remedy of
specific performance or injunctive or other forms of equitable relief may be
subject to equitable defenses and would be subject to the determination of the
court before which any proceeding therefor may be brought.
-19-
(c) No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation by the Company of any of the transactions
contemplated hereby will result in a violation of, or a default under, or
conflict with, or require any consent, approval or notice under, any contract,
trust, commitment, agreement, obligation, understanding, arrangement or
restriction of any kind to which the Company is a party or by which the Company
is bound. Consummation by the Company of the transactions contemplated by this
Agreement will not violate, or require any consent, approval or notice under,
any provision of any judgment, order, decree, statute, law, rule or regulation
applicable to the Company.
20. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof, and
supersedes any and all prior agreements or understandings among the parties
arising out of or relating to the subject matter hereof. This Agreement may only
be changed by written agreement executed by the parties.
21. Governing Law. This Agreement and all disputes hereunder shall
be governed by the laws of the State of New York, without giving effect to the
conflicts of law principles thereof.
22. Equitable Relief. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
23. Expenses. Each party shall pay its own costs incident to the
negotiation, preparation, performance, and execution of this Agreement, and all
fees and expenses of its or his counsel, accountants, and other consultants,
advisors and representatives for all activities of such persons undertaken in
connection with the negotiation, preparation, performance and execution of this
Agreement, provided that the fees and expenses of the Company's counsel in
drafting and revising this Agreement shall be paid by the H&Q Parties, provided
further, that all expenses, fees and disbursements of counsel for the Company
and the H&Q Parties incurred in connection with preparing, printing and
furnishing any amendment to the Registration Statement or the Prospectus in
connection with this Agreement shall be paid by the Company.
24. Further Assurances. Each Party agrees to execute and deliver to
the other parties such other documents and instruments, provide such materials
and information and take such other actions as any other party may reasonably
request to effectively consummate the transactions contemplated by this
Agreement.
25. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be one and the same instrument. Copies of executed counterparts
transmitted by telescope or other electronic transmission service shall be
considered original executed counterparts, provided receipt of such counterparts
is confirmed.
26. Time Is of the Essence. The parties hereto agree and acknowledge
that time is of the essence in the performance of this Agreement.
-20-
27. Assignments. No party hereto may assign any of its respective
rights or delegate any of its respective obligations under this Agreement
without the prior written consent of the other parties hereto.
28. Consent to Jurisdiction of Service of Process; Venue. Each party
hereto hereby irrevocably and unconditionally (i) consents to the submission to
the exclusive jurisdiction of the courts of the State of New York and of the
United States of America located in the County of New York in the State of New
York (or any appeals court thereof), for any action, claim, complaint,
investigation, petition, suit or other proceeding, whether civil or criminal, in
law or equity, or by or before any governmental authority ("Actions") arising
out of or arising out of relating to this Agreement or the breach, termination
or validity thereof and the transactions contemplated by this Agreement, (ii)
agrees not to commence any Action relating thereto except in such courts and in
accordance with the provisions of this Agreement, (iii) agrees that service of
any process, summons, notice, or document by U.S. registered mail or as
otherwise provided in this Agreement shall be effective service of process for
any Action brought in any such court, (iv) waives any objection to the laying of
venue of any Action arising out of this Agreement or the transactions
contemplated by this Agreement in the courts of the State of New York and of the
Untied States of America located in the County of New York in the State of New
York (or any appeals courts thereof) and (v) agrees not to plead or claim in any
such court that any such Action brought in any such court has been brought in an
inconvenient forum.
29. Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to any other
party shall be in writing and shall be deemed to have been duly given when
delivered in person or by courier or by facsimile transmission (confirmed to the
sender by mail), or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties as follows:
If to the Company or Buyers' Representative:
Xxxxxxxx Petroleum Corporation
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx.
President and Chief Operating Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to a Buyer:
To the address set forth under such party's name on
Exhibit C hereto
-21-
If to the H&Q Representative:
Guaranty Finance Management, LLC
3rd Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to an H&Q Party:
To the address set forth under such party's name on Exhibit A
hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGES FOLLOW]
-22-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
XXXXXXXXX & XXXXX GUARANTY FINANCE,
LLC
By:
------------------------------------
Name:
Title:
------------------------------------
XXXXXX X. XXXXXXXX
ALPS INVESTMENTS, LLC
By:
------------------------------------
Name:
Title:
XXXXXXXX ASSOCIATES
By:
------------------------------------
Name:
Title:
XXXXXX X. XXXXXXXX MONEY PURCHASE
PENSION PLAN
By:
------------------------------------
Name:
Title:
XXXXXX X. CASE III LIVING TRUST U/A
DATED 7/17/00
By:
------------------------------------
Name:
Title:
ESTATE OF XXXXXX X. CASE III
By:
------------------------------------
Name:
Title:
XXXXXX X. CASE LIVING TRUST
By:
------------------------------------
Name:
Title:
------------------------------------
XXXXXXX X. XXXXXX
------------------------------------
XXXXXXXX X. XXXX
------------------------------------
XXXXXXXX X. XXXXXXXX
EL CORONADO HOLDINGS, LLC
By:
------------------------------------
Name:
Title:
------------------------------------
XXXXXXX X. XXXXXX, III
MUSCULAR DYSTROPHY ASSOCIATION
By:
------------------------------------
Name:
Title:
------------------------------------
XXXXX XXXXXX
------------------------------------
XXXX XXXXXXXXX
------------------------------------
XXX XXXXXXX
------------------------------------
XXXXXX XXXXXX
------------------------------------
XXXXXXXXX XXXXXX
------------------------------------
XXXXXXX XXXXX
------------------------------------
DR. XXXXXXX XXXXXXX
------------------------------------
XXXX XXXX
------------------------------------
XXXXX XXXXXXX
------------------------------------
XXXXXX X. XXXXXXXX
------------------------------------
XXXXXX X. XXXXXXX
XXXXXXXX PETROLEUM CORPORATION
By:
------------------------------------
Name:
Title:
GUARANTY FINANCE MANAGEMENT, LLC,
solely in its capacity as H&Q
Representative
By:____________________________________
Xxxxxx X. Xxxxxxxx
Chief Executive Officer
Exhibit A
Company Securities Owned by Each H&Q Party
------------------------------------------
Common WARRANTS Director Series A
GROUP MEMBER Stock $0.9375 $1.00 $1.50 OPTIONS PREFERRED
---------------------------------------- ----- ------- ----- ----- ------- ---------
XXXXXXXX X. XXXXXXXX
000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 210,892 99,600 9,960
XXXXXXXXX & XXXXX GUARANTY FINANCE, LLC
3rd Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 1,587,276 799,980 280,000 79,998 94,500
XXXXXX X. XXXXXXXX
000 Xxxxx Xxxxxx, Xxxx 00
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 207,644 60,750 6,075 10,000 13,100
XXXXXX X. XXXXXXXX
MONEY PURCHASE PENSION PLAN (XXXXX)
000 Xxxxx Xxxxxx, Xxxx 00
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 197,454 59,250 5,925 8,600
XXXXXXXX ASSOCIATES
000 Xxxxx Xxxxxx, Xxxx 00
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 2,442
XXXXXXX X. XXXXXX &
XXXXXXXX X. XXXX
000 00xx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 649,496 200,010 20,001
ALPS INVESTMENTS, LLC
c/o Xxxxxx X. Xxxxx
Ka Po'e Hana, LLC
0000 X Xxxxxx XX
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 1,016,341 480,000 48,000
XXXXXX X. CASE III LIVING TRUST
c/o Xxxxxx X. Xxxxx
Ka Po'e Hana, LLC
0000 X Xxxxxx XX
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 340,297 159,990 15,999
XXXXXX X. CASE LIVING TRUST
c/o Xxxxxx X. Xxxxx
Ka Po'e Hana, LLC
0000 X Xxxxxx XX
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 84,674 39,990 3,999
ESTATE OF XXXXXX X. CASE III
c/o Xxxxxx X. Xxxxx
Ka Po'e Hana, LLC
0000 X Xxxxxx XX
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 27,000
TOTAL FOR H&Q PARTIES 4,323,516 1,899,570 280,000 189,957 10,000 116,200
------------------------------------------------------------------------------------------------------------------------------------
Exhibit B
Covered Securities to be Sold by Each H&Q Party
-----------------------------------------------
SHARES OF COMMON STOCK
(INCLUDING SHARES DERIVED BY CASHLESS EXERCISE AT WARRANTS)
-----------------------------------------------------------
UPON EXERCISE UPON EXERCISE UPON EXERCISE
OF THE FIRST: OF THE SECOND: OF THE THIRD:
------------------------ ------------------------ ------------------------
AT INITIAL
H&Q PARTY PURCHASE PUT OPTION CALL OPTION PUT OPTION CALL OPTION PUT OPTION CALL OPTION
--------- -------- ---------- ----------- ---------- ----------- ---------- -----------
XXXXXXXX X. XXXXXXXX 0 25,000 25,000 25,000 25,000 25,000 25,000
XXXXXXXXX & XXXXX
GUARANTY FINANCE, LLC 1,400,000 321,309 321,309 321,309 321,309 321,309 321,309
XXXXXX X. XXXXXXXX 64,717 61,989 61,989 61,989 61,989 61,987 61,987
XXXXXX X. XXXXXXXX 0 80,383 80,383 80,383 80,383 80,384 80,384
MONEY PURCHASE
PENSION PLAN (XXXXX)
XXXXXXXX ASSOCIATES 2,442 0 0 0 0 0 0
XXXXXXX X. XXXXXX &
XXXXXXXX X. XXXX 216,500 193,501 193,501 193,501 193,501 193,501 193,501
ALPS INVESTMENTS, LLC 1,016,341 118,000 118,000 118,000 118,000 118,000 118,000
XXXXXX X. CASE III
LIVING TRUST 0 152,763 152,763 152,763 152,763 152,763 152,763
XXXXXX X. CASE
LIVING TRUST 0 38,055 38,055 38,055 38,055 38,056 38,056
ESTATE OF
XXXXXX X. CASE III 0 9,000 9,000 9,000 9,000 9,000 9,000
TOTAL H&Q PARTIES 2,700,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
-------------------------------------------------------------------------------------------------------------------------------
EXHIBIT C
Covered Securities to Be Purchased by Each Buyer
------------------------------------------------
SHARES OF COMMON STOCK AND/OR
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
------------------------------------------------------------------------------
UPON EXERCISE UPON EXERCISE UPON EXERCISE
OF THE FIRST: OF THE SECOND: OF THE THIRD:
------------------------ ------------------------ ------------------------
AT INITIAL
BUYER PURCHASE PUT OPTION CALL OPTION PUT OPTION CALL OPTION PUT OPTION CALL OPTION
---------------------------------- ---------- ---------- ----------- ---------- ----------- ---------- -----------
EL CORONADO HOLDINGS, LLC
0000 X. Xxxxxx Xxxxx Xxxx
Xxxxxx, XX 00000-0000
Tel: (000)000-0000
Fax: (000)000-0000 0,137,600 420,000 420,000 420,000 420,000 420,000 420,000
XXXXXXX X. XXXXXX, III
Bay Street at the Waterfront
Xxx Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 837,180 312,250 312,350 312,250 312,250 312,250 312,250
MUSCULAR DYSTROPHY ASSOCIATION
c/o Xxxxx Xxxxxx
Victory SBSF Capital Management
0 Xxxxx Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 237,000 87,500 87,500 87,500 87,500 87,500 87,500
XXXXX XXXXXX, ET AL.
Victory SBSF Capital Management
0 Xxxxx Xxxxxxxx
Xxxxx Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 94,800 35,000 35,000 35,000 35,000 35,000 35,000
XXXX XXXXXXXXX
Xxxxxxxxx Nawrockli
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 71,100 26,250 26,250 26,250 26,250 26,250 26,250
XXX XXXXXXX
RKO Pictures
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 71,100 26,250 26,250 26,250 26,250 26,250 26,250
XXXXXX XXXXXX
Bay Street at the Waterfront
Xxx Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 47,400 17,500 17,500 17,500 17,500 17,500 17,500
XXXXXXXXX XXXXXX
Bay Street at the Waterfront
Xxx Xxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 47,400 17,500 17,500 17,500 17,500 17,500 17,500
XXXXXXX XXXXX
0000 Xxxxxxx Xxxxxx, Xxxxx X
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 47,400 17,500 17,500 17,500 17,500 17,500 17,500
DR. XXXXXXX XXXXXXX
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 23,700 8,750 8,750 8,750 8,750 8,750 8,750
XXXX XXXX
X.X. Xxx 000
Xxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 23,700 8,750 8,750 8,750 8,750 8,750 8,750
XXXXX XXXXXXX 23,700 8,750 8,750 8,750 8,750 8,750 8,750
XXXXXX X. XXXXXXXX
Xxxxxxxx Petroleum
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 23,700 8,750 8,750 8,750 8,750 8,750 8,750
XXXXXX X. XXXXXXX
Xxxxxxxx Petroleum
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000 14,220 5,250 5,250 5,250 5,250 5,250 5,250
TOTAL H&Q PARTIES 2,700,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
------------------------------------------------------------------------------------------------------------------------------------
