EXHIBIT 10.28
INTEREST PURCHASE AGREEMENT
BY AND BETWEEN
CONTINENTAL SOUTHERN RESOURCES, INC.
AND
▇▇▇▇ GAS, LLC
FEBRUARY 26, 2004
TABLE OF CONTENTS
1.1 The Purchase and Sale...........................................................................1
2.1 Closing Date....................................................................................2
2.2 Closing Deliveries..............................................................................2
3.1 Organization and Qualification..................................................................3
3.2 Authorization; Validity and Effect of Agreement.................................................3
3.3 No Conflict; Required Filings and Consents......................................................4
3.4 Investment Intent...............................................................................4
3.5 Brokers and Finders Fees........................................................................5
4.1 Organization and Qualification..................................................................5
4.2 Authorization; Validity and Effect of Agreement.................................................5
4.3 No Conflict; Required Filings and Consents......................................................5
4.4 Title to LP Interest............................................................................6
4.5 Brokers and Finders.............................................................................6
5.1 Access to Information...........................................................................6
5.2 Confidentiality; No Solicitation................................................................7
5.3 Best Efforts; Consents..........................................................................8
5.4 Further Assurances..............................................................................8
5.5 Public Announcements............................................................................8
5.6 Notification of Certain Matters.................................................................9
5.7 Prohibition on Trading in Securities............................................................9
6.1 Mutual Conditions to Obligations of the Company and ▇▇▇▇ Gas....................................9
6.2 Conditions to Obligations of ▇▇▇▇ Gas..........................................................11
6.3 Conditions to Obligations of the Company.......................................................11
7.1 Indemnification by the Parties.................................................................12
7.2 Indemnification Procedures for Third-Party Claims..............................................12
7.3 Indemnification Procedures for Non-Third Party Claims..........................................13
7.4 Limitations on Indemnification.................................................................14
7.5 Exclusive Remedy...............................................................................14
8.1 Entire Agreement...............................................................................14
8.2 Amendment and Modifications....................................................................15
8.3 Extensions and Waivers.........................................................................15
8.4 Successors and Assigns.........................................................................15
8.5 Survival of Representations, Warranties and Covenants..........................................15
8.6 Headings; Definitions..........................................................................15
8.7 Severability...................................................................................16
8.8 Specific Performance...........................................................................16
8.9 Expenses.......................................................................................16
8.10 Notices........................................................................................16
8.11 Governing Law..................................................................................17
8.12 Arbitration....................................................................................17
8.13 Counterparts...................................................................................17
8.14 Certain Definitions............................................................................17
i
Exhibits
1.1(b)(ii) Form of Note
2.2(a)(2) Form of Pledge Agreement
3.1 Certificate of Formation and Operating Agreement of ▇▇▇▇ Gas, LLC
ii
INTEREST PURCHASE AGREEMENT
THIS INTEREST PURCHASE AGREEMENT (the "Agreement"), is made and entered
into this 26th day of February, 2004, by and between CONTINENTAL SOUTHERN
RESOURCES, INC. a Nevada corporation (the "Company"), and ▇▇▇▇ GAS, LLC, a
Delaware limited liability company ("▇▇▇▇ Gas").
RECITALS
WHEREAS, the Board of Directors of the Company and the Managers and
Members of ▇▇▇▇ Gas have approved, and deem it advisable and in the best
interests of their respective companies and stockholders or interest holders, as
the case may be, to consummate the transactions contemplated hereby upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the Company wishes to sell to ▇▇▇▇ Gas, and ▇▇▇▇ Gas wishes to
purchase, a certain partnership interests owned by the Company in exchange for
cash consideration and a note payable (the transactions contemplated hereby
(other than those set forth in Section 6.1 hereof) collectively referred to
herein as, the "Transactions").
NOW, THEREFORE, in consideration of the foregoing premises and
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
THE PURCHASE AND SALE
1.1 THE PURCHASE AND SALE.
(a) The Purchase and Sale. Upon the terms and subject to the
conditions set forth in this Agreement, the Company shall sell, and ▇▇▇▇ Gas
shall purchase, the Company's ninety-nine percent (99%) limited partnership
interest (the "LP Interest") in ▇▇▇▇ Miss. Partners, L.P. ("▇▇▇▇ Miss"), and the
Company's one percent (1%) membership interest in ▇▇▇▇ Miss., LLC, the general
partner in ▇▇▇▇ Miss (the "Membership Interest"; together with the LP Interest,
the "Interests").
(b) Purchase Price. In consideration for the sale of the
Interests by the Company to ▇▇▇▇ Gas and for other covenants and agreements of
the Company contained herein, ▇▇▇▇ Gas shall transfer to the Company five
million dollars ($5,000,000) (the "Purchase Price") as follows:
(i) Five hundred thousand dollars ($500,000)
(the "Deposit") as of the date hereof, which amount will be applied against the
Purchase Price on the Closing Date (as defined below); and
(ii) The issuance of a note dated as of the
Closing Date substantially in the form attached hereto as Exhibit 1.1(b)(ii)
(the "Note") payable to the Company in the amount of four million, five hundred
thousand dollars ($4,500,000), issuable to the Company upon the Closing Date and
secured by the Pledge Agreement (as defined in Section 2.2(a)(ii)).
ARTICLE II
THE CLOSING
2.1 CLOSING DATE.
The closing of the Transactions (the "Closing") shall take
place as of the date hereof (the "Closing Date") at the offices of the Company
or at such other place as may be mutually agreed upon in writing by the parties
hereto.
2.2 CLOSING DELIVERIES.
(a) At the Closing, ▇▇▇▇ Gas shall deliver or cause to be
delivered to the Company the following documents:
(i) The Note;
(ii) A pledge agreement substantially in the form
attached hereto as Exhibit 2.2(a)(ii) (the "Pledge Agreement");
(iii) An incumbency certificate signed by the
Manager of ▇▇▇▇ Gas dated at or about the Closing Date;
(iv) A certificate of good standing from the
Secretary of State of the State of Delaware, dated at or about the Closing Date,
to the effect that ▇▇▇▇ Gas is in good standing under the laws of said state;
(v) Certificate of Formation of ▇▇▇▇ Gas
certified by the Secretary of State of the State of Delaware at or about the
Closing Date and the Operating Agreement of ▇▇▇▇ Gas certified by the Manager of
▇▇▇▇ Gas at or about the Closing Date;
(vi) Manager and/or Member resolutions of ▇▇▇▇
Gas dated at or about the Closing Date authorizing the Transactions, certified
by the Manager of ▇▇▇▇ Gas;
(vii) Such other documents, instruments and
consents required to consummate the Transactions and to comply with the terms
hereof.
(b) At the Closing, the Company shall deliver or cause
to be delivered to ▇▇▇▇ Gas the following documents:
(i) All agreements evidencing the Interests;
2
(ii) An incumbency certificate signed by all of
the executive officers of the Company dated at or about the Closing Date;
(iii) A certificate of good standing from the
Secretary of State of the State of Nevada, dated at or about the Closing Date,
to the effect that the Company is in good standing under the laws of said state;
(iv) Board resolutions of the Company dated at or
about the Closing Date authorizing the Transactions, certified by the Secretary
of the Company; and
(v) Such other documents, instruments and
consents required to consummate the Transactions and to comply with the terms
hereof.
(c) Each of the parties to this Agreement shall have otherwise
executed whatever documents and agreements, provided whatever consents or
approvals and shall have taken all such other actions as are required under this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇ GAS
▇▇▇▇ Gas hereby makes the following representations and
warranties to the Company.
3.1 ORGANIZATION AND QUALIFICATION.
▇▇▇▇ Gas is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, with full power
and authority to own and operate its business as presently conducted, except
where the failure to be or have any of the foregoing would not have a Material
Adverse Effect. ▇▇▇▇ Gas is duly qualified as a foreign entity to do business
and is in good standing in each jurisdiction where the character of its
properties owned or held under lease or the nature of its activities makes such
qualification necessary, except for such failures to be so qualified or in good
standing as would not, individually or in the aggregate, have a Material Adverse
Effect. ▇▇▇▇ Gas has no subsidiaries. True, correct and complete copies of the
Certificate of Formation and Operating Agreement of ▇▇▇▇ Gas, as amended to
date, are attached hereto as Exhibit 3.1.
3.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT.
▇▇▇▇ Gas has the requisite power and authority to execute,
deliver and perform its obligations under this Agreement and to consummate the
Transactions. The execution and delivery of this Agreement by ▇▇▇▇ Gas and the
performance by ▇▇▇▇ Gas of its obligations hereunder and the consummation of the
Transactions have been duly authorized by its Manager, all other necessary
company action on the part of ▇▇▇▇ Gas has been taken, and no other company
proceedings on the part of ▇▇▇▇ Gas are necessary to authorize this Agreement
and the Transactions. This Agreement has been duly and validly executed and
delivered by ▇▇▇▇ Gas
3
and, assuming that it has been duly authorized, executed and delivered by the
other parties hereto, constitutes a legal, valid and binding obligation of ▇▇▇▇
Gas, enforceable against it in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing.
3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
Neither the execution and delivery of this Agreement by ▇▇▇▇
Gas nor the performance by ▇▇▇▇ Gas of its obligations hereunder, nor the
consummation of the Transactions, will: (i) conflict with ▇▇▇▇ Gas's Certificate
of Formation or Operating Agreement; (ii) violate any statute, law, ordinance,
rule or regulation applicable to ▇▇▇▇ Gas or any of the properties or assets of
▇▇▇▇ Gas; or (iii) violate, breach, be in conflict with or constitute a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the acceleration of the
performance of any obligation of ▇▇▇▇ Gas under, or result in the creation or
imposition of any Liens upon any properties, assets or business of ▇▇▇▇ Gas
under, any material contract or any order, judgment or decree to which ▇▇▇▇ Gas
is a party or by which ▇▇▇▇ Gas or any of its assets or properties is bound or
encumbered except, in the case of clauses (ii) and (iii), for such violations,
breaches, conflicts, defaults or other occurrences which, individually or in the
aggregate, would not have a Material Adverse Effect or would not prevent the
consummation of this Agreement or the Transactions.
3.4 INVESTMENT INTENT.
The Interests being acquired in connection with the
Transactions is being acquired for ▇▇▇▇ Gas's own account for investment
purposes only and not with a view to, or with any present intention of,
distributing or reselling any of such Interests. ▇▇▇▇ Gas acknowledges and
agrees that the Interests has not been registered under the Securities Act or
under any state securities laws, and that the Interests may not be, directly or
indirectly, sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act and
applicable state securities laws, except pursuant to an available exemption from
such registration. ▇▇▇▇ Gas also acknowledges and agrees that neither the SEC
nor any securities commission or other Governmental Authority has (a) approved
the transfer of the Interests or passed upon or endorsed the merits of the
transfer of the Interest, this Agreement or the Transactions; or (b) confirmed
the accuracy of, determined the adequacy of, or reviewed this Agreement. ▇▇▇▇
Gas has such knowledge, sophistication and experience in financial, tax and
business matters in general, and investments in securities in particular, that
it is capable of evaluating the merits and risks of this investment in the
Interests, and ▇▇▇▇ Gas has made such investigations in connection herewith as
it deemed necessary or desirable so as to make an informed investment decision
without relying upon the Company for legal or tax advice related to this
investment. ▇▇▇▇ Gas and each of its Members are "accredited investors" within
the meaning of Rule 501 promulgated under the Securities Act.
4
3.5 BROKERS AND FINDERS FEES.
Neither ▇▇▇▇ Gas nor any of its officers, directors, employees
or managers has employed any broker or finder or incurred any liability for any
investment banking fees, brokerage fees, commissions or finders fees in
connection with the Transactions for which ▇▇▇▇ Gas has or could have any
liability.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby makes the following representations and warranties
to ▇▇▇▇ Gas:
4.1 ORGANIZATION AND QUALIFICATION.
The Company is duly organized, validly existing and in good
standing under the laws of its jurisdiction of its organization, with the
corporate power and authority to own and operate its business as presently
conducted, except where the failure to be or have any of the foregoing would not
have a Material Adverse Effect. The Company is duly qualified as a foreign
corporation or other entity to do business and is in good standing in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except for such
failures to be so qualified or in good standing as would not have a Material
Adverse Effect.
4.2 AUTHORIZATION; VALIDITY AND EFFECT OF AGREEMENT.
The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the Transactions. The execution and delivery of this Agreement by the
Company and the performance by the Company of its obligations hereunder and the
consummation of the Transactions have been duly authorized by its Board of
Directors and all other necessary corporate action on the part of the Company
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement and the Transactions. This Agreement has been duly and
validly executed and delivered by the Company and, assuming that it has been
duly authorized, executed and delivered by the other parties hereto, constitutes
a legal, valid and binding obligation of the Company, in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
Neither the execution and delivery of the Agreement by the
Company nor the performance by the Company of its obligations hereunder, nor the
consummation of the Transactions, will: (i) conflict with the Company's Articles
of Incorporation or Bylaws; (ii) violate any statute, law, ordinance, rule or
regulation, applicable to the Company or any of the
5
properties or assets of the Company; or (iii) violate, breach, be in conflict
with or constitute a default (or an event that, with notice or lapse of time or
both, would constitute a default) under, or permit the termination of any
provision of, or result in the termination of, the acceleration of the maturity
of, or the acceleration of the performance of any obligation of the Company, or
result in the creation or imposition of any Lien upon any properties, assets or
business of the Company under, any material contract or any order, judgment or
decree to which the Company is a party or by which it or any of its assets or
properties is bound or encumbered except, in the case of clauses (ii) and (iii),
for such violations, breaches, conflicts, defaults or other occurrences which,
individually or in the aggregate, would not have a material adverse effect on
its obligation to perform its covenants under this Agreement.
4.4 TITLE TO LP INTEREST.
The Company has good and marketable title to the LP Interest
and is the sole record and beneficial owner of the LP Interest, free and clear
of any Liens. With the exception of this Agreement, there are no outstanding
options, warrants, agreements, conversion rights, preemptive rights or other
rights to purchase or otherwise acquire the LP Interest, nor are there any
obligations of any Person to purchase, redeem or otherwise acquire the LP
Interest. There are no voting trusts or other agreements or understandings to
which the Company is a party with respect to the voting of the LP Interest, nor
is there any indebtedness of the Company issued and outstanding that has general
voting rights with respect to the LP Interest.
4.5 BROKERS AND FINDERS.
Neither the Company nor any of its officers, directors,
employees or managers has employed any broker or finder or incurred any
liability for any investment banking fees, brokerage fees, commissions or
finders' fees in connection with the Transactions for which the Company has or
could have any liability.
ARTICLE V
CERTAIN COVENANTS
5.1 ACCESS TO INFORMATION.
At all times prior to the Closing or the earlier termination
of this Agreement in accordance with the provisions of Article VIII, and in each
case subject to Section 5.2 below, each party hereto shall provide to the other
party (and the other party's authorized representatives) reasonable access
during normal business hours and upon reasonable prior notice to the premises,
properties, books, records, assets, liabilities, operations, contracts,
personnel, financial information and other data and information of or relating
to such party (including without limitation all written proprietary and trade
secret information and documents, and other written information and documents
relating to intellectual property rights and matters), and will cooperate with
the other party in conducting its due diligence investigation of such party,
provided that the party granted such access shall not interfere unreasonably
with the operation of the business conducted by the party granting access, and
provided that no such access need be
6
granted to privileged information or any agreements or documents subject to
confidentiality agreements.
5.2 CONFIDENTIALITY; NO SOLICITATION.
(a) Confidentiality. Each party shall hold, and shall cause
its respective Affiliates and representatives to hold, all Confidential
Information made available to it in connection with the transactions
contemplated under this Agreement in strict confidence, shall not use such
information except for the sole purpose of evaluating the Transactions and shall
not disseminate or disclose any of such information other than to its directors,
officers, managers, employees, shareholders, interest holders, Affiliates,
agents and representatives, as applicable, who need to know such information for
the sole purpose of evaluating the Transactions and with respect to
representatives, advisors and Affiliates of the Persons involved in the
transactions described in Section 6.1, including potential investors in the
contemplated private offering of the Company's common stock, par value $.001 per
share ("Common Stock") (each of whom shall be informed in writing by the
disclosing party of the confidential nature of such information and directed by
such party in writing to treat such information confidentially). If this
Agreement is terminated pursuant to the provisions of Article VIII, each party
shall immediately return to the other party all such information, all copies
thereof and all information prepared by the receiving party based upon the same.
The above limitations on use, dissemination and disclosure shall not apply to
Confidential Information that (i) is learned by the disclosing party from a
third party entitled to disclose it; (ii) becomes known publicly other than
through the disclosing party or any third party who received the same from the
disclosing party, provided that the disclosing party had no Knowledge that the
disclosing party was subject to an obligation of confidentiality; (iii) is
required by law or court order to be disclosed by the parties; or (iv) is
disclosed with the express prior written consent thereto of the other party. The
parties shall undertake all necessary steps to ensure that the secrecy and
confidentiality of such information will be maintained in accordance with the
provisions of this subsection (a). Notwithstanding anything contained herein to
the contrary, in the event a party is required by court order or subpoena to
disclose information which is otherwise deemed to be confidential or subject to
the confidentiality obligations hereunder, prior to such disclosure, the
disclosing party shall: (i) promptly notify the non-disclosing party and, if
having received a court order or subpoena, deliver a copy of the same to the
non-disclosing party; (ii) cooperate with the non-disclosing party, at the
expense of the non-disclosing party, in obtaining a protective or similar order
with respect to such information; and (iii) provide only that amount of
information as the disclosing party is advised by its counsel is necessary to
strictly comply with such court order or subpoena.
(b) No Solicitation. Except as otherwise contemplated in this
Agreement, the Company shall not, directly or indirectly, solicit any inquiries
or proposals for, or enter into or continue or resume any discussions with
respect to or enter into any negotiations or agreements relating to the sale or
exchange of the Interests. The Company shall promptly notify the Company if any
such proposal or offer, or any inquiry or contact with any Person or entity with
respect thereto, is made.
7
5.3 BEST EFFORTS; CONSENTS.
Subject to the terms and conditions herein provided, each of
the Company and ▇▇▇▇ Gas agrees to use all reasonable best efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective as promptly as
practicable the transactions contemplated under this Agreement and to cooperate
with the others in connection with the foregoing, including using its reasonable
efforts to (i) obtain all waivers, consents and approvals from other parties to
loan agreements, leases, mortgages and other contracts necessary for the
consummation of such transactions, (ii) make all filings with, and obtain all
consents, approvals and authorizations that are required to be obtained from,
Governmental Authorities, (iii) lift or rescind any injunction, restraining
order, decree or other order adversely affecting the ability of the parties
hereto to consummate such transactions, (iv) effect all necessary registrations
and filings and submissions of information requested by Governmental
Authorities, and (v) fulfill all conditions to this Agreement. Each of the
Company and ▇▇▇▇ Gas shall use all reasonable efforts to prevent the entry,
enactment or promulgation of any threatened or pending preliminary or permanent
injunction or other order, decree or ruling or statute, rule, regulation or
executive order that would adversely affect the ability of the parties hereto to
consummate such transactions.
5.4 FURTHER ASSURANCES.
Subject to Section 5.3, each of the parties hereto agrees to
use its reasonable best efforts before and after the Closing Date to take or
cause to be taken all action, to do or cause to be done, and to assist and
cooperate with the other party hereto in doing, all things necessary, proper or
advisable under applicable laws to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated under this
Agreement, including, but not limited to (i) the satisfaction of the conditions
precedent to the obligations of any of the parties hereto; (ii) to the extent
consistent with the obligations of the parties set forth in Section 5.3, the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the performance of the obligations
hereunder; and (iii) the execution and delivery of such instruments, and the
taking of such other actions, as the other party hereto may reasonably require
in order to carry out the intent of this Agreement.
5.5 PUBLIC ANNOUNCEMENTS.
The Company and ▇▇▇▇ Gas shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to this Agreement or the transactions contemplated hereunder, and shall not
issue any other press release or make any other public statement without prior
consent of the other parties, except as may be required by law or, with respect
to the Company, by obligations pursuant to rule or regulation of the Exchange
Act, the Securities Act, any rule or regulation promulgated thereunder or any
rule or regulation of the National Association of Securities Dealers.
8
5.6 NOTIFICATION OF CERTAIN MATTERS.
Each party hereto shall promptly notify the other party in
writing of any events, facts or occurrences that would result in any breach of
any representation or warranty or breach of any covenant by such party contained
in this Agreement.
5.7 PROHIBITION ON TRADING IN SECURITIES.
▇▇▇▇ Gas acknowledges that information concerning the matters
that are the subject matter of this Agreement may constitute material non-public
information under United States federal securities laws, and that United States
federal securities laws prohibit any Person who has received material non-public
information relating to the Company from purchasing or selling securities of the
Company, or from communicating such information to any Person under
circumstances in which it is reasonably foreseeable that such Person is likely
to purchase or sell securities of the Company. Accordingly, until such time as
any such non-public information has been adequately disseminated to the public,
▇▇▇▇ Gas shall not purchase or sell any securities of the Company, or
communicate such information to any other Person.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE TRANSACTION
6.1 MUTUAL CONDITIONS TO OBLIGATIONS OF THE COMPANY AND ▇▇▇▇ GAS.
The obligations of the Company and ▇▇▇▇ Gas to consummate the
Transactions shall be subject to the fulfillment, or written waiver by each of
the Company and ▇▇▇▇ Gas, at or prior to the Closing, of each of the following
conditions:
(a) Trident Growth Fund, L.P. ("Trident") shall receive (i) an
aggregate of approximately 375,000 shares of common stock, $.001 per share
("Common Stock"), of the Company in full satisfaction and release of all
amounts, liabilities and obligations due and owing by Parent to Trident under
that certain First Amended Loan Agreement between the Company and Trident, the
First Amended Security Agreement between the Company and Trident and the 6%
Secured Convertible Promissory Note in the principal amount of $600,000, all
dated July 29, 2003 (collectively, the "Trident 2003 Loan Documents"), and (ii)
$1,500,000 cash, payable in good funds, in full satisfaction and release of all
amounts, liabilities and obligations due and owing by the Company to Trident
under that certain Loan Agreement between the Company and Trident, the Security
Agreement between the Company and Trident and the 12% Secured Convertible
Promissory Note in the principal amount of $1,500,000, all dated April 5, 2002
(the "Trident 2002 Loan Documents," and together with the Trident 2003 Loan
Documents, the "Trident Loan Documents"). In connection with the foregoing,
Trident shall deliver and surrender to the Company (i) the original promissory
notes issued by the Company in connection with the Trident Loan Documents, (ii)
a release of the Company from any and all obligations under the Trident Loan
Documents, and (iii) any other documentation necessary to facilitate the
termination and release of all Liens on any asset of the Company;
9
(b) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") shall convert the full
$1,550,000 principal amount due under the 12% convertible promissory notes
issued by the Company to Marcus, dated October 18 and 30, 2002, and all accrued
interest due thereunder, into shares of Common Stock. In connection with the
foregoing, Marcus shall deliver and surrender to the Company (i) the original
promissory notes issued by the Company in connection with the underlying loan
documents, (ii) a release of the Company from any and all obligations under the
underlying loan documents, and (iii) any other documentation necessary to
facilitate the termination and release of all Liens on any asset of the Company;
(c) The holders of all of the Company's outstanding shares of
Series C Convertible Preferred Stock (the "Series C Preferred Stock") shall
enter into an agreement with the Company, pursuant to which, on or prior to
Closing, they will convert their shares of Series C Preferred Stock, and waive
certain registration rights and other rights of such holders under such
agreements;
(d) The Company, CSOR Acquisition Corp. and NSNV, Inc. ("North
Sea") shall enter into an Agreement and Plan of Merger (the "Merger Agreement"),
pursuant to which, on or prior to Closing, North Sea shall merge with and into
CSOR Acquisition Corp., with the separate corporate existence of North Sea
ceasing and CSOR Acquisition Corp. continuing as the surviving corporation (the
"Merger");
(e) The Company shall purchase from RAM Trading Limited all of
the shares of Series B Convertible Preferred Stock currently owned by Lancer
Offshore, Inc. and approximately 14,100,000 shares of Common Stock currently
owned by Lancer Offshore, Inc. and Lancer Partners, L.P.;
(f) The Company shall complete a private offering of Common
Stock for a minimum of $45,000,000 of gross proceeds (the "Equity Offering");
(g) The Company shall purchase from the holders of all of the
Company's outstanding shares of Series A Convertible Preferred Stock and Series
B Preferred Stock not owned by Lancer Offshore, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or their
respective Affiliates (the "Non-Lancer/Laurer Series B Preferred Stock"), all of
the shares of Series A Preferred Stock and Non-Lancer/Laurer Series B Preferred
Stock in exchange for certain non-core assets of the Company, and in connection
therewith provide a general release of the Company and its Affiliates from any
and all pre-Closing claims
(h) The Company shall have entered into employment agreements
with each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇;
(i) No domestic or foreign governmental or regulatory agency,
authority, bureau, commission, department, official or similar body or
instrumentality thereof, or any governmental court, arbitral tribunal located or
having jurisdiction in the United States shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, decree,
judgment, injunction or other order, whether temporary, preliminary or permanent
which is then in effect and has the effect of making the Closing illegal or
otherwise prohibiting consummation
10
of the Closing; provided, that the parties use reasonable commercial efforts to
challenge any decree, judgment or injunction or other order that is not final
and non-applicable, but in no event will any party be required to expend in
excess of $25,000 with respect to such challenge; and
(j) There shall not be pending, instituted or threatened by
any Person or Governmental Authority any suit, action, investigation or
proceeding seeking to (i) alter, prevent, materially delay, restrain or prohibit
the consummation of the Merger, the Equity Offering or the other transactions
contemplated by this Agreement, (ii) obtain from the Company any damages that
would have, or could reasonably be expected to have, a Material Adverse Effect
on the Company, or (iii) seeking to prohibit or limit the ownership or operation
by the Company of its businesses or assets in a manner that would have, or could
reasonably be expected to have, a Material Adverse Effect on the Company.
6.2 CONDITIONS TO OBLIGATIONS OF ▇▇▇▇ GAS.
The obligations of ▇▇▇▇ Gas to consummate the Transactions
shall be subject to the fulfillment, or written waiver by ▇▇▇▇ Gas, at or prior
to the Closing, of each of the following conditions:
(a) The representations and warranties of the Company set out
in this Agreement shall be true and correct in all material respects at and as
of the time of the Closing as though such representations and warranties were
made at and as of such time;
(b) The Company shall have performed and complied in all
material respects with all covenants, conditions, obligations and agreements
required by this Agreement to be performed or complied with by the Company on or
prior to the Closing Date;
(c) There shall be delivered to ▇▇▇▇ Gas an officer's
certificate of the Company to the effect that the conditions set forth in
Section 6.2(a) and (b) have been satisfied; and
(d) The Company shall have made all the deliveries required of
the Company under Section 2.2(a).
6.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligations of the Company to consummate the Transactions
shall be subject to the fulfillment, or written waiver by the Company, at or
prior to the Closing of each of the following conditions:
(a) The representations and warranties of ▇▇▇▇ Gas set out in
this Agreement shall be true and correct in all material respects at and as of
the time of the Closing as though such representations and warranties were made
at and as of such time;
(b) ▇▇▇▇ Gas shall have performed and complied in all material
respects with all covenants, conditions, obligations and agreements required by
this Agreement to be performed or complied with by ▇▇▇▇ Gas on or prior to the
Closing Date;
11
(c) There shall be delivered to the Company a certificate of
the Manager of ▇▇▇▇ Gas to the effect that the conditions set forth in Section
6.2(a) and (b) hereof have been satisfied;
(d) ▇▇▇▇ Gas shall have made all the deliveries required of
▇▇▇▇ Gas under Section 2.2(b); and
(e) The Company shall have completed a due diligence review of
the business, operations, financial condition and prospects of ▇▇▇▇ Gas and
shall have been satisfied with the results of its due diligence review in its
sole and absolute discretion.
ARTICLE VII
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE PARTIES.
From and after the Closing Date, the Company or ▇▇▇▇ Gas, as
the case may be (the "Indemnitor"), shall indemnify and hold harmless ▇▇▇▇ Gas
or the Company, as the case may be (the "Indemnitee"), and its respective
officers and directors (the Indemnitee and each such officer and director an
"Indemnified Party"), from and against any and all demands, claims, actions or
causes of action, judgments, assessments, losses, liabilities, damages or
penalties and reasonable attorneys' fees and related disbursements
(collectively, "Claims") suffered by such Indemnified Party resulting from or
arising out of (i) any inaccuracy in or breach of any of the representations or
warranties made by the Indemnitor herein, in any certificate, or in any other
document delivered herewith or otherwise required hereby at the time they were
made, and, except for representations and warranties that speak as of a specific
date or time (which need only be true and correct as of such date or time), on
and as of the Closing Date, (ii) any breach or nonfulfillment of any covenants
or agreements made by the Indemnitor, and (iii) any misrepresentation made by
the Indemnitor, in each case as made herein or in the Exhibits annexed hereto or
in any closing certificate, schedule or any ancillary certificates or other
documents or instruments furnished by the Indemnitor pursuant hereto or in
connection with the Transactions.
7.2 INDEMNIFICATION PROCEDURES FOR THIRD-PARTY CLAIMS.
(a) Upon obtaining Knowledge of any Claim by a third party
which has given rise to, or is expected to give rise to, a claim for
indemnification hereunder, the Indemnitee shall give written notice ("Notice of
Claim") of such claim or demand to the Indemnitor, specifying in reasonable
detail such information as the Indemnified Party may have with respect to such
indemnification claim (including copies of any summons, complaint or other
pleading which may have been served on it and any written claim, demand,
invoice, billing or other document evidencing or asserting the same). Subject to
the limitations set forth in Section 7.2(b) hereof, no failure or delay by the
Indemnitee in the performance of the foregoing shall reduce or otherwise affect
the obligation of the Indemnitor to indemnify and hold the Indemnified Party
harmless, except to the extent that such failure or delay shall have actually
adversely affected
12
Indemnitor's ability to defend against, settle or satisfy any Claims for which
the Indemnified Party entitled to indemnification hereunder.
(b) If the claim or demand set forth in the Notice of Claim
given by the Indemnitee pursuant to Section 7.2(a) hereof is a claim or demand
asserted by a third party, the Indemnitor shall have fifteen (15) days after the
date on which Notice of Claim is given to notify the Indemnitee in writing of
its election to defend such third party claim or demand on behalf of the
Indemnified Party. If the Indemnitor elects to defend such third party claim or
demand, the Indemnitee shall make available to the Indemnitor and its agents and
representatives all records and other materials that are reasonably required in
the defense of such third party claim or demand and shall otherwise cooperate
with, and assist the Indemnitor in the defense of, such third party claim or
demand, and so long as the Indemnitor is defending such third party claim in
good faith, the Indemnified Party shall not pay, settle or compromise such third
party claim or demand. If the Indemnitor elects to defend such third party claim
or demand, the Indemnified Party shall have the right to participate in the
defense of such third party claim or demand, at such Indemnified Party's own
expense. In the event, however, that such Indemnified Party reasonably
determines that representation by counsel to the Indemnitor of both the
Indemnitor and such Indemnified Party could reasonably be expected to present
counsel with a conflict of interest, then the Indemnified Party may employ
separate counsel to represent or defend it in any such action or proceeding and
the Indemnitor will pay the fees and expenses of such counsel. If the Indemnitor
does not elect to defend such third party claim or demand or does not defend
such third party claim or demand in good faith, the Indemnified Party shall have
the right, in addition to any other right or remedy it may have hereunder, at
the Indemnitor's expense, to defend such third party claim or demand; provided,
however, that (i) such Indemnified Party shall not have any obligation to
participate in the defense of, or defend, any such third party claim or demand;
(ii) such Indemnified Party's defense of or its participation in the defense of
any such third party claim or demand shall not in any way diminish or lessen the
obligations of the Indemnitor under the agreements of indemnification set forth
in this Article VII; and (iii) such Indemnified Party may not settle any claim
without the consent of the Indemnitor, which consent shall not be unreasonably
withheld or delayed.
(c) The Indemnitor and the Indemnitee and the other
Indemnified Party, if any, shall cooperate fully in all aspects of any
investigation, defense, pre-trial activities, trial, compromise, settlement or
discharge of any claim in respect of which indemnity is sought pursuant to this
Article VII, including, but not limited to, by providing the other party with
reasonable access to employees and officers (including as witnesses) and other
information.
(d) Except for third party claims being defended in good
faith, the Indemnitor shall satisfy its obligations under this Article VII in
respect of a valid claim for indemnification hereunder which is not contested by
the Indemnitor in good faith in cash within thirty (30) days after the date on
which Notice of Claim is given.
7.3 INDEMNIFICATION PROCEDURES FOR NON-THIRD PARTY CLAIMS.
In the event any Indemnified Party should have an
indemnification claim against the Indemnitor under this Agreement that does not
involve a claim by a third party, the
13
Indemnified Party shall promptly deliver notice of such claim to the Indemnitor
in writing and in reasonable detail. The failure by any Indemnified Party to so
notify the Indemnitor shall not relieve the Indemnitor from any liability that
it may have to such Indemnified Party, except to the extent that the Indemnitor
has been actually prejudiced by such failure. If the Indemnitor does not notify
the Indemnified Party within fifteen (15) Business Days following its receipt of
such notice that the Indemnitor disputes such claim, such claim specified by the
Indemnitor in such notice shall be conclusively deemed a liability of the
Indemnitor under this Article VII and the Indemnitor shall pay the amount of
such liability to the Indemnified Party on demand, or in the case of any notice
in which the amount of the claim is estimated, on such later date when the
amount of such claim is finally determined. If the Indemnitor disputes its
liability with respect to such claim in a timely manner, the Indemnitor and the
Indemnified Party shall proceed in good faith to negotiate a resolution of such
dispute and, if not resolved through negotiations, such dispute shall be
submitted to arbitration pursuant to Section 8.12.
7.4 LIMITATIONS ON INDEMNIFICATION.
No claim for indemnification under this Article VII shall be
asserted by, and no liability for such indemnify shall be enforced against,
the Indemnitor to the extent the Indemnified Party has theretofore received
indemnification or otherwise been compensated for such Claim. In the event
that an Indemnified Party shall later collect any such amounts recovered under
insurance policies with respect to any Claim for which it has previously
received payments under this Article VII from the Indemnitor, such Indemnified
Party shall promptly repay to the Indemnitor such amount recovered.
7.5 EXCLUSIVE REMEDY.
The indemnification provisions of this Article VII (i) shall
be the exclusive remedy following the Closing with respect to breaches thereof,
(ii) shall apply without regard to, and shall not be subject to, any limitation
by reason of set-off, limitation or otherwise and (iii) are intended to be
comprehensive and not to be limited by any requirements of law concerning
prominence of language or waiver of any legal right under any law (including,
without limitation, rights under any workers compensation statute or similar
statute conferring immunity from suit). The obligations of the parties set forth
in this Article VII shall be conditioned upon the Closing having occurred.
ARTICLE VIII
MISCELLANEOUS
8.1 ENTIRE AGREEMENT.
This Agreement and the Schedules and Exhibits hereto contain
the entire agreement between the parties and supercede all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof.
14
8.2 AMENDMENT AND MODIFICATIONS.
This Agreement may not be amended, modified or supplemented
except by an instrument or instruments in writing signed by the party against
whom enforcement of any such amendment, modification or supplement is sought.
8.3 EXTENSIONS AND WAIVERS.
At any time prior to the Closing, the parties hereto entitled
to the benefits of a term or provision may (a) extend the time for the
performance of any of the obligations or other acts of the parties hereto, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document, certificate or writing delivered pursuant hereto, or (c) waive
compliance with any obligation, covenant, agreement or condition contained
herein. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument or instruments in writing
signed by the party against whom enforcement of any such extension or waiver is
sought. No failure or delay on the part of any party hereto in the exercise of
any right hereunder shall impair such right or be construed to be a waiver of,
or acquiescence in, any breach of any representation, warranty, covenant or
agreement.
8.4 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, provided,
however, that no party hereto may assign its rights or delegate its obligations
under this Agreement without the express prior written consent of the other
party hereto. Except as provided in Article VII, nothing in this Agreement is
intended to confer upon any person not a party hereto (and their successors and
assigns) any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
8.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations and warranties contained herein shall
survive the Closing and shall thereupon terminate twelve (12) months from the
Closing, except that the representations contained in Sections 3.1, 3.2, 3.4,
4.1, 4.2 and 4.4 shall survive indefinitely. All covenants, conditions,
obligations and agreements contained herein which by their terms contemplate
actions following the Closing shall survive the Closing and remain in full force
and effect in accordance with their terms. All other covenants, conditions,
obligations and agreements contained herein shall not survive the Closing and
shall thereupon terminate.
8.6 HEADINGS; DEFINITIONS.
The Section and Article headings contained in this Agreement
are inserted for convenience of reference only and will not affect the meaning
or interpretation of this Agreement. All references to Sections or Articles
contained herein mean Sections or Articles of this Agreement unless otherwise
stated. All capitalized terms defined herein are equally applicable to both the
singular and plural forms of such terms.
15
8.7 SEVERABILITY.
If any provision of this Agreement or the application thereof
to any Person or circumstance is held to be invalid or unenforceable to any
extent, the remainder of this Agreement shall remain in full force and effect
and shall be reformed to render the Agreement valid and enforceable while
reflecting to the greatest extent permissible the intent of the parties.
8.8 SPECIFIC PERFORMANCE.
The parties hereto agree that in the event that any party
fails to consummate the Transactions in accordance with the terms of this
Agreement, irreparable damage would occur, no adequate remedy at law would exist
and damages would be difficult to determine, and that the parties shall be
entitled to specific performance in such event, without the necessity of proving
the inadequacy of money damages as a remedy, in addition to any other remedy at
law or in equity.
8.9 EXPENSES.
Whether or not the Transactions are consummated, and except as
otherwise expressly set forth herein, all legal and other costs and expenses
incurred in connection with the Transactions shall be paid by the party
incurring such expenses and shall be paid at the Closing.
8.10 NOTICES.
All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy,
telefax or other electronic transmission service to the appropriate address or
number as set forth below.
If to the Company: with a copy to:
----------------- --------------
Continental Southern Resources, Inc. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, 17th Floor ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to ▇▇▇▇ Gas:
--------------
▇▇▇▇ Gas, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Manager
16
8.11 GOVERNING LAW.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada, without regard to the laws that
might otherwise govern under applicable principles of conflicts of laws thereof,
except to the extent that Delaware law shall apply to the internal corporate
governance of ▇▇▇▇ Gas.
8.12 ARBITRATION.
If a dispute arises as to the interpretation of this
Agreement, it shall be decided in an arbitration proceeding conforming to the
Rules of the American Arbitration Association applicable to commercial
arbitration then in effect at the time of the dispute. The arbitration shall
take place in Philadelphia, Pennsylvania. The decision of the Arbitrators shall
be conclusively binding upon the parties and final, and such decision shall be
enforceable as a judgment in any court of competent jurisdiction. The parties
shall share equally the costs of the arbitration.
8.13 COUNTERPARTS.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
8.14 CERTAIN DEFINITIONS.
As used herein:
(a) "Affiliate" shall have the meanings ascribed to such term
in Rule 12b-2 of the Exchange Act;
(b) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which federally chartered financial institutions are not open
for business in the City of Philadelphia, Pennsylvania;
(c) "Confidential Information" shall mean the existence and
contents of this Agreement and the Schedules and Exhibits hereto, and all
proprietary technical, economic, environmental, operational, financial and/or
business information or material of one party which, prior to or following the
Closing Date, has been disclosed by the Company, on the one hand, or ▇▇▇▇ Gas,
on the other hand, in written, oral (including by recording), electronic, or
visual form to, or otherwise has come into the possession of, the other.
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended;
(e) "Governmental Authority" shall mean any nation or
government, any state, municipality or other political subdivision thereof and
any entity, body, agency, commission or court, whether domestic, foreign or
multinational, exercising executive, legislative, judicial,
17
regulatory or administrative functions of or pertaining to government and any
executive official thereof;
(f) "Knowledge" shall mean (i) with respect to an individual,
knowledge of a particular fact or other matter, if such individual is aware of
such fact or other matter, and (ii) with respect to a Person that is not an
individual, knowledge of a particular fact or other matter if any individual who
is serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at any
time had, knowledge of such fact or other matter;
(g) "Liens" shall mean liens, pledges, charges, claims,
security interests, purchase agreements, options, title defects, restrictions on
transfer or other encumbrances, or any agreements (other than this Agreement) to
do any of the foregoing, of any nature whatsoever, whether consensual, statutory
or otherwise;
(h) "Material Adverse Effect" shall mean, with respect to any
Person, any adverse effect on the business, assets, liabilities, condition
(financial or otherwise) or results of operation of such Person and its
subsidiaries, if any, which is material to such Person and its subsidiaries, if
any, taken as a whole;
(i) "Person" shall mean any individual, corporation,
partnership, association, trust or other entity or organization, including a
governmental or political subdivision or any agency or institution thereof;
(j) "SEC" shall mean the Securities and Exchange Commission;
and
(k) "Securities Act" shall mean the Securities Act of 1933, as
amended.
[Remainder of page intentionally left blank]
18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CONTINENTAL SOUTHERN RESOURCES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Co-Chief Executive Officer
▇▇▇▇ GAS, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
Title: FEQ Investments, Managing Member
19