AGREEMENT
FOR ISSUANCE AND SALE OF COMMON STOCK
This Agreement, is entered into on March 30, 2005, by and between
Petrol Industries, Inc., a Nevada corporation (the "Company"), and SHWJ Oil
& Gas Co. Inc., a Texas corporation (the "Purchaser"):
RECITALS
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A. The Company desires to secure additional capital in order to enable
it to retire certain indebtedness in arrears that is owed to Xx. Xxxxx Xxxxxxx
in the current principal amount of Two Hundred Nineteen Thousand and Four
Hundred and One ($219,401.00) Dollars (the "Xxxxxxx Indebtedness") and develop
and expand its operations and business.
B. The Purchaser is prepared to furnish and supply this capital by
subscribing for and purchasing shares of common stock 0.10 par value, of the
Company.
C. The Company has one million two hundred forty thousand six hundred
twelve (1,240,612) authorized and unissued shares of its common stock that it
is willing to issue and sell to obtain funds.
D. In consideration of the current financial condition of the Company,
the Company is willing to sell and believes it to be in the best interest of
the shareholders and the long-term viability of the Company and the Purchaser
is willing to purchase the shares for .40/share for a total purchase price of
Four Hundred Ninety Six Thousand, Two Hundred Forty Four ($496,244) Dollars
delivered to the Company in exchange for such shares under the terms and
conditions herein stated.
E. Concurrently with the consummation of the transactions contemplated
hereunder, the Purchaser will purchase five hundred seventy five thousand
(575,000) shares (the "Xxxxxx Shares") of Petrol Industries, Inc. common stock
owned directly or indirectly by Xxxxxx X. Xxxxxx ("Xxxxxx") at the price of
$.40/share pursuant to a Stock Purchase Agreement between the Purchaser and
Xxxxxx X. Xxxxxx.
F. Concurrently with the consummation of the transactions contemplated
hereunder, an affiliate of the Purchaser, OMDA Oil & Gas Management, a _______
corporation ("OMDA") will purchase the outstanding note receivable held by
Xxxxxx X. Xxxxxx in the principal amount of One Million one hundred ten
thousand, one hundred thirty ($1,110,130.00) dollars, plus all accrued
interest (the "Xxxxxx Indebtedness"), at a cash purchase price equal to an
amount that is 20% of the principal plus all accrued interest and a 1%
overriding royalty interest on all xxxxx owned by Xxxxxxxxxx Production and
Four Star Production, all pursuant to a Note Purchase Agreement between OMDA
and Xxxxxx X. Xxxxxx, such note being an obligation of the Company.
SECTION 1
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ISSUANCE AND SALE OF COMMON STOCK
---------------------------------
1.1 SALE AND PURCHASE OF FIRST STOCK. At the First Closing (as defined
in Section 2), the Company shall issue and shall sell and deliver to the
Purchaser, and the Purchaser will buy and receive from the Seller, upon the
terms and conditions hereinafter set forth, six hundred seventy eight
thousand, six hundred twelve (678,612) shares of the Company's authorized but
unissued common stock 0.10 Par value. The Purchaser shall purchase such
shares from and pay to the Company the purchase price provided for in Section
1.3 hereof.
1.2 SALE AND PURCHASE OF SECOND STOCK. At the Second Closing (as
defined in Section 2), the Company shall issue and shall sell and deliver to
the Purchaser, and the Purchaser will buy and receive from the Seller, upon
the terms and conditions hereinafter set forth, five hundred sixty two
thousand (562,000) shares of the Company's authorized but unissued common
stock 0.10 Par value. The Purchaser shall purchase such shares from and pay
to the Company the purchase price provided for in Section 1.3 hereof.
1.3 PURCHASE PRICE OF STOCK. The purchase price for the six hundred
seventy eight thousand, six hundred twelve (678,612) shares of the Company's
authorized but unissued common stock 0.10 Par value (the "First Stock") shall
be Two Hundred Seventy One Thousand, Four Hundred and Forty Four ($271,444.00)
Dollars ("First Purchase Price"). Upon execution of this Agreement, Purchaser
shall make a non-refundable deposit (the "Deposit") to the Company in the
amount of Fifty Thousand dollars ($50,000.00). The Deposit shall be credited
to the First Purchase Price at the First Closing. The balance of the First
Purchase Price shall be payable at the First Closing in immediately available
funds.
The purchase price for the five hundred sixty two thousand (562,000)
shares of the Company's authorized but unissued common stock 0.10 Par value
(the "Second Stock") shall be Two Hundred Twenty Five Thousand, Eight Hundred
($225,800.00) Dollars ("Second Purchase Price") which shall be payable the
Second Closing in immediately available funds.
SECTION 2
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CLOSING
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2.1 FIRST CLOSING DATE. The closing of the issuance and sale of the
First Stock (the "First Closing") shall occur at 10 a.m., local time on
April 28, 2005, or at any other later time and date the Company and the
Purchaser agree upon.
2.2 DELIVERY AT FIRST CLOSING. At the First Closing, the Company will
deliver to the Purchaser the certificates evidencing the First Stock.
Purchaser shall deliver to the Company in immediately available funds an
amount equal to the First Purchase Price for the payment of the First Stock.
2.3 SECOND CLOSING DATE. The closing of the issuance and sale of the
Second Stock (the "Second Closing") shall occur at 10 a.m., local time on the
third business day after the Company has obtained the shareholder approvals as
required in this Agreement and in no event later than May 25, 2005, or at any
other later time and date the Company and the Purchaser agree upon.
2.4 DELIVERY AT SECOND CLOSING. At the Second Closing, the Company will
deliver to the Purchaser the certificates evidencing the Second Stock.
Purchaser shall deliver to the Company in immediately available funds an
amount equal to the Second Purchase Price for the payment of the Second Stock.
2.5 DELIVERY OF COMPANY AT BOTH CLOSINGS. At the First and Second
Closing, the Company will deliver the following to the Purchaser:
(a) The certificate of the Company required by Sections 5.1 and 5.3
of this Agreement; and
(b) Certified copies of the resolutions adopted by the Board and
shareholders of the Company authorizing the transactions
contemplated by this Agreement.
2.6 DELIVERY OF PURCHASER AT BOTH CLOSINGS. At the First and Second
Closing, the Purchaser will deliver the following to the Company:
(a) The certificate of Purchaser required by Sections 5.2 and 5.4
of this Agreement; and
(b) Certified copies of the resolutions adopted by the Board and
shareholders of the Purchaser authorizing the transactions
contemplated by this Agreement.
SECTION 3
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REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER
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The Company represents, warrants and covenants to the Purchaser as
follows:
3.1 AUTHORIZATION. The Company has all requisite legal power to sell
the First Stock and the Second Stock and to carry out and perform all of its
obligations under this Agreement. This Agreement, when executed and
delivered, shall constitute the valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization or similar laws relating to
or affecting the enforcement of creditor's rights generally; and (ii) as
limited by equitable principles generally.
3.2 STOCK. At both the First Closing and the Second Closing, the
aggregate number of shares of common stock of the Company that the Company
shall be authorized to issue shall include the one million two hundred forty
thousand six hundred twelve (1,240,612) shares issuable under and pursuant to
this Agreement. At the First Closing all the First Stock shall be authorized
and unissued. At the Second Closing all the Second Stock shall be authorized
and unissued. When issued and delivered as provided for in this Agreement,
all the First Stock and Second Stock shall have been validly issued, fully
paid and non-assessable.
3.3 ORGANIZAGTION AND GOOD STANDING. The Company is duly organized and
validly existing under the laws of the State of Nevada and has all necessary
power and authority to operate, own and lease its properties and assets, to
carry on the business as now conducted.
SECTION 4
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REPRESENTATIONS, WARRANTIES, AND COVENANTS
OF THE PURCHASER
------------------------------------------
The Purchaser represents, warrants and covenants to the Seller as of
the Closing as follows:
4.1 AUTHORIZATION. The Purchaser has all requisite legal power and has
taken all requisite action to execute and deliver this Agreement, to purchase
the First Stock and the Second Stock (collectively sometimes referred to as
the "Shares") and to carry out and perform all of its obligations under this
Agreement. This Agreement, when executed and delivered shall constitute the
valid and legally binding obligation of the Purchaser, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally; and (ii) as limited by equitable
principles generally. The execution and delivery of this Agreement does not,
and the performance of this Agreement and the compliance with the provisions
hereof and the purchase and receipt of the Shares by the Purchaser will not
conflict with, or result in a breach or violation of the terms, conditions, or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien pursuant to the terms of, any statute, law, rule or
regulation or any state or federal order, judgment or decree of any material
indenture, mortgage, lease or other existing agreement or instrument to which
the Purchaser, or any of its properties, is subject.
4.2 ORGANIZATION AND GOOD STANDING. The Purchaser is duly organized and
validly existing under the laws of the State of Texas and has all necessary
power and authority to operate, own and lease its properties and assets, to
carry on the business as now conducted.
4.3 NO CONFLICT. The execution, delivery and performance of this
Agreement by the Purchaser and the execution, delivery and performance of any
related agreement or contemplated transactions by Purchaser will not
(a) violate the provisions of, or constitute a breach or default (whether upon
lapse of time and/or the occurrence of any act or event, or otherwise), or
give rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a material benefit under, its charter documents or
any contract to which it is a party, except those that would not have a
material adverse effect on the business, operations or financial condition of
the Purchaser, or (b) violate any laws, rules, regulations or orders to which
Purchaser is subject.
4.4 APPROVALS. The execution and delivery of this Agreement by
Purchaser or any other agreements, instruments or documents entered into by
Purchaser pursuant to this Agreement or in connection with the valid and
lawful sale and delivery of the Shares, and the performance by Purchaser of
this Agreement and any related agreement or contemplated transactions by
Purchaser, will not require filing or registration with, the issuance of any
permit by, or the approval or consent of any other third party or governmental
entity under the terms of any applicable law, rules, regulation, order or
contract.
4.5 NO BROKERS OR FINDERS. No agent, broker, finder or investment or
commercial banker, or other person or firms engaged by or acting on behalf of
Purchaser in connection with the negotiation, execution or performance of this
Agreement or the transactions contemplated by this Agreement, is or will be
entitled to any broker's or finder's or similar fees or other commissions as a
result of this Agreement or such transactions. The Purchaser agrees to pay
any such brokerage commissions, finder's fees or similar compensation and to
indemnify and hold the Company harmless against any damages incurred as a
result of any such claim and if not so paid and any claim or loss is asserted
against Company, it may be offset by Company pursuant to any payment that may
be due and owing to Purchaser from Company.
4.6 INVESTMENT REPRESENTATIONS:
(a) This Agreement is made with the Purchaser in reliance upon the
Purchaser's representation to the Seller, which by its acceptance
hereof the Purchaser hereby confirms, that the Shares to be received
by Purchaser will be acquired for investment for its own account,
not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and that it has no present
intention of selling, granting participation in, or otherwise
distributing the same. By executing this Agreement, the Purchaser
further represents that it does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer, or grant
participation to such person, or to any third person, with respect
to any of the Shares.
(b) The Purchaser understands that the Shares are not registered under
the Securities Act of 1933 (the "Securities Act") on the grounds
that the sale provided for in this Agreement is exempt from
registration under the Securities Act and that the Seller's and the
Company's reliance on such exemption is predicated on Purchaser's
representations set forth herein.
(c) The Purchaser represents that it is able to fend for itself in the
transactions contemplated by this Agreement, has such knowledge and
experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment and has the
ability to bear the economic risks of its investment. Purchaser
further represents that it has had access during the course of the
transaction and prior to its purchase of the Shares to all books and
records of the Company and that it has had, during the course of the
transaction and prior to its purchase of the Shares, the opportunity
to conduct adequate investigation, to review documents and financial
statements, and business plans, and to ask questions of, and receive
answers from, the officers and the Company concerning the financial
condition, business and affairs of the Company.
(d) The Purchaser is fully aware of (i) the highly speculative nature of
an investment in the Shares; (ii) the financial hazards involved;
(iii) the lack of liquidity of the Shares and the restrictions on
transferability of some or all of the Shares (e.g., that Purchaser
may not be able to sell or dispose of the Shares or use them as
collateral for loans); (iv) the qualifications and backgrounds of
the members of the Company's management; and (v) the tax conse-
quences of investment in the Shares.
(e) At no time was Purchaser presented with or solicited by any publicly
issued or circulated newspaper, mail, radio, television or other
form of general advertising or solicitation in connection with the
offer, sales and purchase of Shares.
(f) The Purchaser understands that the Shares may not be sold, trans-
ferred or otherwise disposed of except in compliance with the
Articles of Incorporation and bylaws of the Company and with prior
registration under the Securities Act or an exemption therefrom.
In the absence of an effective registration statement covering the
Shares or an available exemption from registration under the
Securities Act, the Shares may have to be held indefinitely.
SECTION 5
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CONDITIONS TO CLOSE
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5.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE THE
FIRST CLOSING. The obligations of Purchaser to affect the First Closing shall
be subject to the following conditions except to the extent waived in writing
by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF COMPANY. The
representations and warranties of Company herein contained shall be
true in all material respects at the First Closing Date with the
same effect as though made at such time, except for representations
or warranties made as of a specific date, which shall be true and
correct in all material respects as of the specified date; Company
shall, in all material respects, have performed all obligations and
complied with all covenants and conditions required by this
Agreement to be performed or complied with by it at or prior to the
First Closing Date, and Company shall have delivered to Purchaser
all documents and certificates required to be delivered hereunder.
Company shall have delivered to Purchaser a certificate of Company
in form and substance reasonably satisfactory to Purchaser, dated
the First Closing Date and signed by its President and such other of
Company's Directors or officers as may be reasonably required by
Purchaser.
(b) NO ORDERS: LEGAL PROCEEDINGS. No law or order shall have been
enacted, entered, issued, promulgated or enforced by any govern-
mental entity that prohibits or restricts or would (if successful)
prohibit or restrict the transactions contemplated by this
Agreement. No governmental entity shall have notified any party to
this Agreement that consummation of the transactions contemplated by
this Agreement would constitute a violation of any law of any
jurisdiction and/or that it intends to commence proceedings to
restrain or prohibit such transactions or force divestiture or
rescission, unless such governmental entity shall have withdrawn
such notice and abandoned any such proceedings prior to the time
that otherwise would have been the First Closing Date, unless
counsel known to have expertise as to such matters on behalf of the
party against whom such action or proceeding was or would be
instituted renders to the parties a favorable opinion that such
action or proceeding is or would be without merit.
(c) APPROVALS. Company shall have obtained and provided to Purchaser
all approvals, consents and releases required by Purchaser, and any
and all consents by the Board and/or Shareholders of Company,
consenting to the transactions contemplated by this Agreement, each
in form and substance satisfactory to Purchaser in its sole
discretion. All other permits and approvals required by applicable
law to be obtained from any governmental entity shall have been
received or obtained on or prior to the First Closing Date.
(d) PROXY STATEMENT. Purchaser shall have been given the opportunity to
participate in the preparation of and approve the proxy statement
used in the solicitation of shareholders for the purpose of
approving or ratifying the transactions contemplated hereunder.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE THE
FIRST CLOSING. The obligations of Company to effect the First Closing shall
be subject to the following conditions, except to the extent waived in
writing by Company:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF PURCHASER. The
representations and warranties of Purchaser herein contained shall
be true in all material respects at the First Closing Date with the
same effect as though made at such time, except for representations
or warranties made as of a specified date, which shall be true and
correct in all material respects as of the specified date.
Purchaser shall, in all material respects, have performed all
obligations and complied with all covenants and conditions required
by this Agreement to be performed or complied with by it at or prior
to the First Closing Date and Purchaser shall have delivered to
Company all documents and certificates required to be delivered
hereunder. Purchaser shall have delivered to Company a certificate
of Purchaser in form and substance reasonably satisfactory to
Company, dated the First Closing Date and signed by one of its
President and such other of Purchaser's Directors or officers as may
be reasonably required by Company.
(b) NO ORDERS: LEGAL PROCEEDINGS. No law or order shall have been
enacted, entered, issued, promulgated or enforced by any govern-
mental entity that prohibits or restricts or would (if successful)
prohibit or restrict the transactions contemplated by this
Agreement. No governmental entity shall have notified any party
to this Agreement that consummation of the transactions contemplated
by this Agreement would constitute a violation of any law of any
jurisdiction and/or that it intends to commence proceedings to
restrain or prohibit such transactions or force divestiture or
rescission, unless such governmental entity shall have withdrawn
such notice and abandoned any such proceedings prior to the time
that otherwise would have been the First Closing Date, unless
counsel known to have expertise as to such matters on behalf of the
party against whom such action or proceeding was or would be
instituted renders to the parties a favorable opinion that such
action or proceeding is or would be without merit.
(c) DELIVERY OF CASH FIRST CLOSING PAYMENT. Purchaser shall have
delivered to Company in the manner specified in Section 2.2 of the
Agreement an amount equal to the First Purchase Price, less the
Deposit.
(d) APPROVALS. Purchaser shall have obtained and provided to Company
all approvals, consents and releases required by Company, any and
all consents by the shareholders of Purchaser, transactions contem-
plated by this Agreement, each in form and substance satisfactory to
Company in its sole discretion. All other permits and approvals
required by applicable law to be obtained from any governmental
entity shall have been received or obtained on or prior to the First
Closing Date.
(e) ADDITIONAL STOCK PURCHASE. Purchaser shall have purchased the
Xxxxxx Shares pursuant to the terms and conditions of the Stock
Purchase Agreement between the Purchaser and Xxxxxx.
(f) PROVISION FOR PAYMENT OF THE XXXXXXX INDEBTEDNESS. Satisfactory
provision shall have been made for payment of the Xxxxxxx
Indebtedness concurrently with the First Closing.
(g) SHAREHOLDER APPROVAL. Company shall have initiated steps necessary
to call a special shareholders meeting in order to obtain share-
holder approval for the following:
1. The change in the management of the Board of Directors of the
Company, such shareholder approval being subject to the
consummation of the Second Closing.
2. Providing for the addition of a stock conversion feature to the
Xxxxxx Debt.
5.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO CLOSE THE
SECOND CLOSING. The obligations of Purchaser to effect the Second Closing
shall be subject to the following conditions except to the extent waived in
writing by Purchaser:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF COMPANY. The
representations and warranties of Company herein contained shall be
true in all material respects at the Second Closing Date with the
same effect as though made at such time, except for representations
or warranties made as of a specific date, which shall be true and
correct in all material respects as of the specified date; Company
shall, in all material respects, have performed all obligations and
complied with all covenants and conditions required by this
Agreement to be performed or complied with by it at or prior to the
Second Closing Date, and Company shall have delivered to Purchaser
all documents and certificates required to be delivered hereunder.
Company shall have delivered to Purchaser a certificate of Company
in form and substance reasonably satisfactory to Purchaser, dated
the Second Closing Date and signed by its President and such other
of Company's Directors or officers as may be reasonably required by
Purchaser.
(b) NO RDERS: LEGAL PROCEEDINGS. No law or order shall have been
enacted, entered, issued, promulgated or enforced by any govern-
mental entity that prohibits or restricts or would (if successful)
prohibit or restrict the transactions contemplated by this
Agreement. No governmental entity shall have notified any party to
this Agreement that consummation of the transactions contemplated by
this Agreement would constitute a violation of any law of any juris-
diction and/or that it intends to commence proceedings to restrain
or prohibit such transactions or force divestiture or rescission,
unless such governmental entity shall have withdrawn such notice and
abandoned any such proceedings prior to the time that otherwise
would have been the Second Closing Date, unless counsel known to
have expertise as to such matters on behalf of the party against
whom such action or proceeding was or would be instituted renders to
the parties a favorable opinion that such action or proceeding is or
would be without merit.
(c) APPROVALS. Company shall have obtained and provided to Purchaser
all approvals, consents and releases required by Purchaser, and any
and all consents by the Board and/or Shareholders of Company,
consenting to the transactions contemplated by this Agreement, each
in form and substance satisfactory to Purchaser in its sole
discretion. All other permits and approvals required by applicable
law to be obtained from any governmental entity shall have been
received or obtained on or prior to the Second Closing Date.
(d) RESIGNATION OF DIRECTORS. Each of the members of the Board of
Directors of the Company and the Officers of the Company shall have
tendered their resignations effective as of the Second Closing.
5.4 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO CLOSE THE
SECOND CLOSING. The obligations of Company to effect the Second Closing shall
be subject to the following conditions, except to the extent waived in writing
by Company:
(a) REPRESENTATIONS AND WARRANTIES AND COVENANTS OF PURCHASER. The
representations and warranties of Purchaser herein contained shall
be true in all material respects at the Second Closing Date with the
same effect as though made at such time, except for representations
or warranties made as of a specified date, which shall be true and
correct in all material respects as of the specified date.
Purchaser shall, in all material respects, have performed all obli-
gations and complied with all covenants and conditions required by
this Agreement to be performed or complied with by it at or prior to
the Second Closing Date and Purchaser shall have delivered to
Company all documents and certificates required to be delivered
hereunder. Purchaser shall have delivered to Company a certificate
of Purchaser in form and substance reasonably satisfactory to
Company, dated the Second Closing Date and signed by one of its
President and such other of Purchaser's Directors or officers as may
be reasonably required by Company.
(b) NO ORDERS: LEGAL PROCEEDINGS. No law or order shall have been
enacted, entered, issued, promulgated or enforced by any govern-
mental entity that prohibits or restricts or would (if successful)
prohibit or restrict the transactions contemplated by this
Agreement. No governmental entity shall have notified any party to
this Agreement that consummation of the transactions contemplated by
this Agreement would constitute a violation of any law of any juris-
diction and/or that it intends to commence proceedings to restrain
or prohibit such transactions or force divestiture or rescission,
unless such governmental entity shall have withdrawn such notice and
abandoned any such proceedings prior to the time that otherwise
would have been the Second Closing Date, unless counsel known to
have expertise as to such matters on behalf of the party against
whom such action or proceeding was or would be instituted renders to
the parties a favorable opinion that such action or proceeding is or
would be without merit.
(c) DELIVERY OF CASH SECOND CLOSING PAYMENT. Purchaser shall have
delivered to Company in the manner specified in Section 2.4 of the
Agreement an amount equal to the Second Purchase Price.
(d) APPROVALS. Purchaser shall have obtained and provided to Company
all approvals, consents and releases required by Company, any and
all consents by the shareholders of Purchaser, transactions contem-
plated by this Agreement, each in form and substance satisfactory to
Company in its sole discretion. All other permits and approvals
required by applicable law to be obtained from any governmental
entity shall have been received or obtained on or prior to the
Second Closing Date.
(e) PAYMENT TO XXXXX AND MILAN. Satisfactory provision shall have been
made for payment to Xxxxx and Milan of the Bonus Amounts con-
currently with the Second Closing.
(f) PROVISION FOR PURCHASE OF THE XXXXXX INDEBTEDNESS. Satisfactory
provision shall have been made for purchase of the Xxxxxx
Indebtedness by OMDA concurrently with the Second Closing.
(g) PAYMENT TO XXXXXX. Satisfactory provision shall have been made for
payment to Xxxxxx of a 1% overriding royalty interest in all the
xxxxx owned by the Company in recognition of his service to the
Company.
(h) SHAREHOLDER APPROVAL. Company shall have obtained shareholder
approval for the following:
1. The change in the management of the Board of Directors of the
Company, such shareholder approval being subject to the
consummation of the Second Closing.
2. Providing for the addition of a stock conversion feature to the
Xxxxxx Debt.
SECTION 6
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USE OF PROCEEDS
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The Company agrees that it shall use the proceeds obtained pursuant to
the sale of the Shares for the following purposes:
(a) $219,401.22, or the then current amount outstanding shall be used to
pay the outstanding debt owed by the Company to Xxxxx Xxxxxxx as
evidenced by the promissory note held by Xx. Xxxxxxx and as set
forth on the books of the Company
(b) $75,000.00 shall be used to pay Xxxxxx Xxxxx in consideration of the
services he has rendered to the Company (the "Xxxxx Payment"); and
(c) $60,000.00 shall be used to pay Xxxxx X. Milan in consideration of
the services she has rendered to the Company (the "Milan Payment"
the Milan Payment and the Xxxxx Payment are collectively referred to
as the "Bonus Amounts").
(d) $141,843.58 - or the remaining balance shall be used for working
capital of the Company.
SECTION 7
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TERMINATION OF OBLIGATIONS;
SURVIVAL OF COVENANT
---------------------------
7.1 TERMINATION OF AGREEMENT. Anything herein to the contrary notwith-
standing, if all of the conditions to the First Closing have not been
satisfied (other than through the failure of any party seeking to terminate
this Agreement to fully comply with its obligations under this Agreement),
waived or otherwise extended, this Agreement and the transactions contemplated
by this Agreement may be terminated by either Purchaser or Company at the
close of business on the date (the "Termination Date") which is the later
of (i) April 10, 2005, or (ii) such later date as shall be mutually agreed to
in writing by Purchaser and Company. This Agreement may otherwise be
terminated at any time before the First Closing as follows and in no other
manner:
(a) MUTUAL CONSENT. By mutual consent in writing of Purchaser and
Company.
(b) CONDITIONS TO PURCHASER'S PERFORMANCE NOT MET. By Purchaser by
written notice to Company if any event occurs (other than through
the failure of Purchaser to fully comply with its obligations under
this Agreement), that would render impossible the satisfaction, on
or before the day then reasonably estimated by Purchaser and Company
to be the Termination Date, of one or more conditions to the
obligations of Purchaser to consummate the transactions contemplated
by this Agreement.
(c) CONDITIONS TO COMPANY'S PERFORMANCE NOT MET. By Company by written
notice to Purchaser if any event occurs (other than through the
failure of Company to fully comply with its obligations under this
Agreement), that would render impossible the satisfaction, on or
before the day then reasonably estimated by Purchaser and Company to
be the Termination Date, of one or more conditions to the obligation
of Company to consummate the transactions contemplated by this
Agreement.
(d) MATERIAL BREACH. By Purchaser or Company if there has been a
material misrepresentation or material breach on the part of the
other party in its representations, warranties and covenants set
forth herein, which, if curable, has not been cured within ten (10)
business days after receipt of written notice from Purchaser or
Company of its intention to terminate if such misrepresentation or
breach continues.
7.2 EFFECT OF TERMINATION. If this Agreement shall be terminated
pursuant to this Section 7, all further obligations of the parties under this
Agreement shall terminate without further liability of any party to the other;
provided however, that the obligations of the parties contained in Section
10.17 shall survive any such termination. Except as provided in this Section
7.2, a termination under Section 7.1 shall not relieve any party of any
liability for a breach of, or for any misrepresentation under, this Agreement
or be deemed to constitute a waiver of any available remedy (including
specific performance if available) for any such breach or misrepresentation.
7.3 SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES. The
covenants, representations and warranties contained in or made pursuant to
this Agreement shall survive for a period of two (2) years from the First
Closing Date or the applicable statute of limitations period, whichever is
longer, unless otherwise specified.
SECTION 8
---------
INDEMNIFICATION
---------------
8.1 COMPANY INDEMNITY: The Company hereby agrees to indemnify, defend
and hold harmless the Purchaser, and its directors, officers, employees, and
agents, (whether past, present or future) (each a "Company Indemnified
Party") from any and all claims, liabilities, losses, damages and expenses
(settlement payments, litigation costs, reasonable attorney's fees and
disbursements, regardless of whether incurred in connection with a third party
claim) asserted against or incurred by a Company Indemnified Party, which are
caused by or are related to or arise out of the Company's breach of any
representation, warranty, covenant or agreement of the Company contained in
this Agreement..
8.2 PURCHASER INDEMNITY: The Purchaser hereby agrees to indemnify,
defend and hold harmless the Company, and its directors, officers, employees,
and agents, (whether past, present or future) (each a "Purchaser Indemnified
Party") from and against any and all claims, liabilities, losses, damages and
expenses (including without limitation, settlement payments, litigation costs,
reasonable attorney's fees and disbursements, regardless of whether incurred
in connection with a third party claim) asserted against or incurred by any
Purchaser Indemnified Party, which are caused by or are related to or arise
out of the Purchaser's breach of any representation, warranty, covenant or
agreement of the Purchaser contained in this Agreement.
SECTION 9
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RESTRICTIONS ON TRANSFERABILITY OF
SHARES; COMPLIANCE WITH SECURITIES ACT
--------------------------------------
9.1 RESTRICTIVE LEGEND: Any certificate(s) representing the Shares
shall bear substantially the following legend (in addition to any legends
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR QUALIFIED
OR REGISTERED UNDER THE SECURITIES LAWS OF ANY STATE. ANY TRANSFER OF THE
INTEREST SHALL BE SUBJECT TO THE ARTICLES OF INCORPORATION AND BYLAWS OF THE
COMPANY, AS AMENDED. THE INTEREST MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE INTERESTS UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SECTION 10
----------
MISCELLANEOUS
-------------
10.1 WAIVERS AND AMENDMENTS: The terms of this Agreement may be waived
or amended with the written consent of the Company and the Purchaser.
10.2 NO BROKER'S FEE: The parties represent and warrant to each other
that neither has retained the services of a broker and no brokerage or
similar fee will be due in connection with this transaction. Each party
agrees to indemnify the other for any damages or loss as a result of a breach
of the foregoing representation and warranty.
10.3 SURVIVAL: The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by the
Company or the Purchaser and both the First Closing and the Second Closing.
The provisions of Section 8 are not intended to limit and shall not limit any
other remedies which either party hereto may have for the breach by the other
of any such representation, warranty, covenant, or agreement.
10.4 SUCCESSORS AND ASSIGNS: This Agreement may not be assigned by the
Purchaser without the written consent of the Company.
10.5 ENTIRE AGREEMENT: This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
thereof. Each of the Purchaser and the Company is a sophisticated person or
entity that was advised by knowledgeable counsel and, to the extent it deemed
necessary, other advisors in connection with this Agreement. Accordingly,
each of the Purchaser and the Company hereby acknowledge that there are no
representations or warranties by or on behalf of any party hereto or any of
its respective affiliates or representation other than those expressly set
forth in this Agreement.
10.6 NOTICES: All notices and other communications required or
permitted under this Agreement shall be in writing and may be sent by personal
delivery, by telecopy, overnight delivery service or U.S. mail, in which event
it may be mailed by first-class, certified or registered, postage prepaid.
All such notices and communications must be addressed to the Company or the
Purchaser, as the case may be, at their respective addresses and telecopy
numbers set forth on the signature page at the end of this Agreement, or at
such other address or telecopy number as the Company or the Purchaser shall
designate in writing to the other party. Notice shall be deemed to be
effective upon the earlier of actual receipt thereof and (i) in the case of
notice or communication that arrives at the applicable address or was
successfully sent to the applicable telecopy number, at the time (local time)
of the date received; (ii) in the case of notices and communications sent by
overnight delivery service, at noon (local time) on the first business day
following the day such notice or communication was sent; and (iii) in the
case of notices and communications sent by U.S. mail, at noon (local time)
five days after such notice or communication shall have been deposited in the
U.S. mail.
10.7 SEVERABILITY OF THIS AGREEMENT: If any provision of this Agreement
shall be judicially determined to be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
10.8 TITLES AND SUBTITLES: The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
10.9 COUNTERPARTS: This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
10.10 FURTHER ASSURANCE: Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things
and shall execute and deliver all such other agreements, certificates,
instruments and documents as the other party hereto may reasonably request,
as requested by the Manager or otherwise, in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transaction contemplated hereby.
10.11 EXPENSES: Each of the Company and the Purchaser shall bear its
own expenses insured on its behalf with respect to this Agreement and the
transactions contemplated hereby, including fees of legal counsel.
10.12 EXCLUSIVE RIGHT; NON-CIRCUMVENT: The parties agree to deal with
each other exclusively in connection with the transactions contemplated in
this Agreement. Neither party will attempt to circumvent the rights or
privileges of the other in connection with this Agreement.
10.13 DISCLOSURE: Any public announcement or similar publicity with
respect to this Agreement or the contemplated transactions will be issued,
at such time and in such manner as Company determines. Unless consented to
by Company in advance or required by any legal requirements, prior to the
First Closing or the Second Closing, Purchaser shall, and shall cause its
affiliates to keep this Agreement strictly confidential and may not make any
disclosure of this Agreement to any Person. Company and Purchaser will
consult with each other concerning the means by which the transactions
contemplated by this Agreement shall be publicly disclosed, but disclosure of
transactions shall ultimately be in the sole discretion of the Company.
10.14 CONFIDENTIALITY: All information disclosed by any party (or its
representatives) whether before or after the date hereof, in connection with
the transactions contemplated by, or the discussions and negotiations
preceding, this Agreement to any other party (or its representatives) shall be
kept in confidence by such other party and its representatives and shall not
be disclosed to or used by any person. If this Agreement is terminated, each
party shall use all reasonable efforts to return upon written request from the
other party all documents received by it or its representatives from such other
party and not retain any copies. The obligations set forth in the immediately
preceding sentence shall not apply to (i) information that is already publicly
known and in the public domain prior to its disclosure to Buyer,
(ii) information which is received by Buyer from a third party not a party to
this letter of intent and not under any obligation of confidentiality with
respect to such information; (iii) information which is or becomes known to
the public other than through a breach of the obligations set forth in this
paragraph 10.14; or (iv) information which is required to be disclosed by
Buyer pursuant to legal order or process.
[SIGNATURE PAGES FOLLOW]
WITNESSES: PETROL INDUSTRIES, INC.:
S/Xxxxx X. Xxxxxx S/Xxxxxx X. Xxxxxx
------------------------------ -----------------------------------
Printed Name: Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxx, President
S/Xxxxxxxx Xxxxxxxx
------------------------------
Printed Name: Xxxxxxxx Xxxxxxxx
WITNESSES: SHWJ OIL & GAS CO., INC.:
S/Xxxxxx Xxxxx S/Xxx Xxxxx
------------------------------ -----------------------------------
Printed Name: Xxxxxx Xxxxx
S/Xxxxx Xxxxx
------------------------------
Printed Name: Xxxxx Xxxxx
