XXXXXXXX PETROLEUM CORPORATION
EXHIBIT 99.2
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement"), dated May 9, 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, THE XXXXXX AND XXXXXX XXXXXXX TRUST OF 1982, 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;
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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 of, and to
vote at, meetings, and the right to receive the dividends declared by
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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
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price of the Warrant. Such shares of Common Stock and Warrants will be
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
(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.
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(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
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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 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
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will be 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
9
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
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 Covered Securities pursuant to
10
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."
11
(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
Securities that are subject to the Second Call Option shall be reduced
12
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 consents, or seek to advise or
13
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 or
14
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.
15
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 has
16
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 Encumbrances. The H&Q Party owns no
other securities of the Company except as disclosed on Exhibit A
17
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
18
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 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: /s/__________________________________________________
Name: XXXXX XXXXXX
Title: MEMBER OF MANAGEMENT COMMITTEE
/s/______________________________________________________
XXXXXX X. XXXXXXXX
ALPS INVESTMENTS, LLC
By: /s/__________________________________________________
Name: XXXX X. XXXX
Title: PRESIDENT & CEO
XXXXXXXX ASSOCIATES
By: /s/__________________________________________________
Name: XXXXXX X. XXXXXXXX
Title: GENERAL PARTNER
XXXXXX X. XXXXXXXX MONEY PURCHASE PENSION PLAN
By: /s/__________________________________________________
Name: XXXXXX X. XXXXXXXX
Title: PLAN BENEFICIARY
23
XXXXXX X. CASE III LIVING TRUST U/A DATED 7/17/00
By: /s/__________________________________________________
Name: XXXX X. XXXX
Title: TRUSTEE
ESTATE OF XXXXXX X. CASE III
By: /s/__________________________________________________
Name: XXXX X. XXXX
Title: TRUSTEE
XXXXXX X. CASE LIVING TRUST
By: /s/__________________________________________________
Name: XXXX X. XXXX
Title: TRUSTEE
/s/______________________________________________________
XXXXXXX X. XXXXXX
/s/______________________________________________________
XXXXXXXX X. XXXX
/s/______________________________________________________
XXXXXXXX X. XXXXXXXX
By: XXXXXX X. XXXXXXXX
ATTORNEY IN FACT
24
EL CORONADO HOLDINGS, LLC
By: /s/__________________________________________________
Name: XXXXXX X. XXXXXX
Title: MANAGING MEMBER
/s/______________________________________________________
XXXXXXX X. XXXXXX, III
MUSCULAR DYSTROPHY ASSOCIATION
By: /s/__________________________________________________
Name: XXXXX XXXXXX
Title: CHAIRMAN OF INVESTMENT COMMITTEE
/s/______________________________________________________
XXXXX XXXXXX
/s/______________________________________________________
XXXX XXXXXXXXX
/s/______________________________________________________
XXX XXXXXXX
/s/______________________________________________________
XXXXXX XXXXXX
/s/______________________________________________________
XXXXXXXXX XXXXXX
By: XXXXXXX X. XXXXXX III WITH
POWER OF ATTORNEY
25
/s/______________________________________________________
XXXXXXX XXXXX
/s/______________________________________________________
DR. XXXXXXX XXXXXXX
/s/______________________________________________________
XXXX XXXX
THE XXXXXX AND XXXXXX XXXXXXX TRUST OF 1982
By: /s/__________________________________________________
Name: XXXXXX X. XXXXXXX
Title:
/s/______________________________________________________
XXXXXX X. XXXXXXXX
/s/______________________________________________________
XXXXXX X. XXXXXXX
XXXXXXXX PETROLEUM CORPORATION
By:/s/___________________________________________________
Name: XXXXXX X. XXXXXXX
Title: PRESIDENT & COO
26
GUARANTY FINANCE MANAGEMENT, LLC, solely in its capacity
as H&Q Representative
By: /s/__________________________________________________
Name: XXXXXX X. XXXXXXXX
Title: CHIEF EXECUTIVE OFFICER
A-2
27
Exhibit A
Company Securities Owned by Each H&Q Party
Warrants
Common Director Series A
Group Member Stock $0.9375 $1.00 $1.50 Options Preferred
Xxxxxxxx X. Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000 210,892 99,600 9,960
Xxxxxxxxx & Xxxxx Guaranty Finance, LLC
3rd Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx 1,587,276 799,980 280,000 79,998 94,500
Xxxxxx X. Xxxxxxxx
000 Xxxxx Xxxxxx, Xxxx 00
Xxx Xxxxxxxxx, XX 00000 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 197,454 59,250 5,925 8,600
Xxxxxxxx Associates
000 Xxxxx Xxxxxx, Xxxx 00
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx 2,442
Xxxxxxx X. Xxxxxx &
Xxxxxxxx X. Xxxx
000 00xx Xxxxxx Xxxx
Xxxxxxxx, XX 00000 649,496 200,010 20,001
A-1
28
Company Securities Owned by Each H&Q Party
(cont'd)
Warrants
Common Director Series A
Group Member Stock $0.9375 $1.00 $1.50 Options Preferred
Alps Investments, LLC
c/o Xxxxxx X. Xxxxx
Ka Po'e Hana, LLC
0000 X Xxxxxx XX
Xxxxxxxxxx, XX 00000 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 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 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 27,000
Total for H&Q Parties 4,323,516 1,899,570 280,000 189,957 10,000 116,200
A-2
29
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 Put Call Put Call Put Call
H&Q Party Purchase Option Option Option Option Option 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
B-1
30
Exhibit C
Covered Securities to Be Purchased by Each Buyer
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 Put Call Put Call Put Call
Buyer Purchase Option Option Option Option Option Option
El Coronado Holdings, LLC
0000 X. Xxxxxx Xxxxx Xxxx
Xxxxxx, XX 00000-0000 1,137,600 420,000 420,000 420,000 420,000 420,000 420,000
Xxxxxxx X. Xxxxxx, III
Bay Street at the Waterfront
Xxx Xxxxxx, XX 00000 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 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 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 71,100 26,250 26,250 26,250 26,250 26,250 26,250
31
Exhibit C(cont'd)
Covered Securities to Be Purchased by Each Buyer
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 Put Call Put Call Put Call
Buyer Purchase Option Option Option Option Option Option
Xxx Xxxxxxx
RKO Pictures
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000 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 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 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 47,400 17,500 17,500 17,500 17,500 17,500 17,500
Dr. Xxxxxxx Xxxxxxx
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, XX 00000 23,700 8,750 8,750 8,750 8,750 8,750 8,750
Xxxx Xxxx
X.X. Xxx 000
Xxxxx Xxxx, XX 00000 23,700 8,750 8,750 8,750 8,750 8,750 8,750
The Xxxxxx and Xxxxxx Xxxxxxx Trust
of 1982
0000 Xxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000 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 23,700 8,750 8,750 8,750 8,750 8,750 8,750
32
Exhibit C(cont'd)
Covered Securities to Be Purchased by Each Buyer
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 Put Call Put Call Put Call
Buyer Purchase Option Option Option Option Option Option
Xxxxxx X. Xxxxxxx
Xxxxxxxx Petroleum
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000 14,220 5,250 5,250 5,250 5,250 5,250 5,250
Total Buyers 2,700,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
33