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EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
NORTH COAST ENERGY, INC.,
AS SELLER
AND
NUON INTERNATIONAL bv,
AS PURCHASER
AUGUST 1, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.............................................................1
1.1 Defined Terms..................................................1
1.2 Other Definitional Provisions..................................4
ARTICLE II
ISSUANCE AND PURCHASE OF SHARES AND WARRANTS............................5
2.1 Issuance and Purchase of Common Stock..........................5
2.2 Closing........................................................6
ARTICLE III
AGREEMENTS REGARDING BOARD REPRESENTATION...............................6
3.1 Board Members..................................................6
3.2 Establishment of Executive Committee...........................7
3.3 Voting Agreement...............................................8
ARTICLE IV.......................................................................8
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER................................8
5.1 Corporate Status...............................................8
5.2 Corporate Power and Authority..................................9
5.3 Enforceability.................................................9
5.4 No Violation...................................................9
5.5 Consents/Approvals.............................................9
5.6 Capitalization................................................10
5.7 Valid Issuance of Shares......................................10
5.8 SEC Reports and NASDAQ Compliance.............................10
5.9 Seller Data...................................................10
5.10 Financial Statements..........................................11
5.11 Litigation....................................................11
5.12 Compliance with Law...........................................11
5.13 Environmental Protection......................................11
5.14 Judgments, Orders and Consent Decrees.........................13
5.15 Material Changes..............................................13
5.16 Compliance With Securities Laws...............................13
5.17 Sales Outside of the United States............................13
5.18 No Directed Selling Efforts...................................13
5.19 No Commissions................................................14
5.20 Full Disclosure...............................................14
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER............................14
6.1 Power and Authority. ........................................14
6.2 No Violation..................................................14
6.3 Consents/Approvals............................................15
6.4 Enforceability................................................15
6.5 Offshore Transaction..........................................15
6.6 Investment Purpose............................................15
6.7 No Put Option or Short Position...............................16
6.8 Reliance on Representations of the Purchaser..................16
6.9 No Commissions................................................16
ARTICLE VII
COVENANTS..............................................................16
7.1 Filings.......................................................16
7.2 Public Announcements..........................................16
7.3 Further Assurances............................................17
7.4 Cooperation...................................................17
7.5 Notification of Certain Matters...............................17
7.6 Necessary Actions.............................................17
7.7 Due Diligence and Confidentiality.............................17
7.8 Other Offers..................................................18
7.9 Use of Proceeds...............................................18
ARTICLE VIII
REGISTRATION RIGHTS....................................................20
8.1 Required Registration.........................................20
8.2 Registration Procedures.......................................20
8.3 Registration Expenses.........................................22
8.4 Further Information...........................................22
ARTICLE IX
INDEMNIFICATION........................................................22
9.1 Indemnification Generally.....................................22
9.2 Indemnification Relating to Registration Rights...............22
9.3 Indemnification Procedures....................................24
ARTICLE X
CONDITIONS TO CLOSING..................................................25
10.1 Conditions to Obligation of Each Party to Effect the Closing..25
10.2 Additional Conditions to the Obligations of Purchaser.........26
10.3 Additional Conditions to the Obligations of Seller............27
11.1 Events of Termination.........................................28
11.2 Effect of Termination.........................................29
11.3 Purchaser Fee.................................................30
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11.4 Reimbursement to Seller.......................................30
ARTICLE XII
MISCELLANEOUS..........................................................30
12.1 Notices.......................................................30
12.2 Loss or Mutilation............................................32
12.3 Survival......................................................32
12.4 Remedies......................................................32
12.5 Entire Agreement..............................................32
12.6 Expenses; Taxes...............................................33
12.7 Amendment.....................................................33
12.8 Waiver........................................................33
12.9 Binding Effect; Assignment....................................33
12.10 Counterparts..................................................33
12.11 Headings......................................................33
12.12 Governing Law Interpretation..................................33
12.13 Severability..................................................35
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STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement") made and entered into
as of August 1, 1997 by and between NUON INTERNATIONAL bv, a limited liability
company organized under the laws of the Netherlands ("Purchaser"), and NORTH
COAST ENERGY, INC., a Delaware corporation ("Seller"), is to evidence the
following agreements and understandings:
W I T N E S S E T H:
WHEREAS, Seller is an independent natural gas and oil company engaged
in exploration, development and production activities primarily in the
Appalachian Basin region of Ohio and Pennsylvania (the "Business");
WHEREAS, subject to the terms and conditions of this Agreement,
Purchaser has agreed to purchase and Seller has agreed to sell up to 17,226,387
shares of Seller's common stock, subject to the terms and conditions hereinafter
set forth; and
WHEREAS, the foregoing sales are made pursuant to Regulation S
promulgated by the United States Securities and Exchange Commission.
AGREEMENTS:
In consideration of the mutual representations, warranties, covenants
and agreements contained herein and other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein the following terms shall have the
following meanings:
"Agreement" means this Stock Purchase Agreement.
"Business Day" means any day that is not a Saturday or Sunday or a day
on which banks are required or permitted to be closed in the State of Ohio.
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"Closing" has the meaning set forth in Section 2.2 of this Agreement.
"Closing Date" has the meaning set forth in Section 2.2 of this
Agreement.
"Common Stock" means the common stock, $0.01 par value per share, of
Seller, as constituted on the date hereof, and any capital stock into which such
Common Stock may thereafter be changed, and shall also include (i) capital stock
of Seller of any other class (regardless of how denominated) issued to the
holders of shares of Common Stock upon any reclassification thereof which is
also not preferred as to dividends or assets over any other class of stock of
Seller and which is not subject to redemption and (ii) shares of common stock of
any successor or acquiring corporation received by or distributed to the holders
of Common Stock of Seller.
"Contract" means any agreement, indenture, lease, sublease, license,
sublicense promissory note, evidence of indebtedness, insurance policy, annuity,
mortgage, restriction commitment, obligation or other contract, agreement or
instrument (whether written or oral).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations promulgated
thereunder, all as the same shall be in effect from time to time.
"GAAP" means generally accepted accounting principles in effect in the
United States of America from time to time.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, and any entity or official exercising
executive, legislative, judicial, regulatory or administrative functions of, or
pertaining to, government.
"Lien" means any mortgage, pledge, security interest, assessment,
encumbrance, lien, lease, sublease, adverse claim, levy, or charge of any kind,
or any conditional Contract, title retention Contract or other contract to give
or refrain from giving any of the foregoing.
"Material Adverse Change" or "Material Adverse Effect" means, with
respect to any Person, any change or effect that is or is reasonably likely to
be materially adverse to the financial condition, business, prospects or results
of operations of such Person.
"NASD" means the National Association of Securities Dealers, Inc., or
any successor thereto.
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"Person(s)" means any individual, sole proprietorship, partnership,
joint venture, trust, limited liability company, incorporated organization,
association, corporation, institution public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
"Register", "registered" and "registration" refer to a registration of
the offering and sale of Common Stock effected by preparing and filing a
registration statement in compliance with the Securities Act and the declaration
or ordering of the effectiveness of such registration statement
"Registrable Securities" means, at any particular time, all of
Purchaser's shares of Common Stock then owned, provided, however, as to any
particular Registrable Securities, such Registrable Securities will cease to be
Registrable Securities when they have been sold pursuant to an effective
registration statement or in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.
"Registration Expenses" has the meaning set forth in Section 8.3 of
this Agreement.
"Registration Statement" has the meaning set forth in Section 8.2.
"Requirement of Law" means as to any Person, the articles of
incorporation, bylaws or other organizational or governing documents of such
Person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning set forth in Section 5.8 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations promulgated thereunder,
all as the same shall be in effect at the applicable time.
"Series A Preferred Stock" means the Series A 6% Convertible
Non-Cumulative Preferred Stock, $0.01 par value per Share, of Seller, as
constituted on the date hereof, and any Common Stock into which such Series A
Preferred Stock may thereafter be changed.
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"Series B Preferred Stock" means the Series B Cumulative Convertible
Preferred Stock, $0.01 per value per Share, of Seller, as constituted on the
date hereof, and any Common Stock into which such Series B Preferred Stock may
thereafter be changed.
"Shelf Registration Statement" has the meaning set forth in Section 8.1
of this Agreement.
"Subsidiary" means each of those Persons of which another person,
directly or indirectly owns beneficially securities having more than 50% of the
voting power in the election of directors (or persons fulfilling similar
functions or duties) of the owned Person (without giving effect to any
contingent voting rights).
"Terminating Purchaser Breach" has the meaning set forth in Section
11.1(c).
"Terminating Seller Breach" has the meaning set forth in Section
11.1(d).
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) All references to "dollars" or "$" refer to currency of the United
States of America.
(b) Terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with this
Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP.
(d) As used herein, the neuter gender shall also denote the masculine
and feminine, and the masculine gender shall also denote the neuter and
feminine, where the context so permits.
(e) The words "hereof," "herein" and "hereunder," and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
(including any exhibits or schedules hereto) and not to any particular provision
of this Agreement.
ARTICLE II
ISSUANCE AND PURCHASE OF SHARES AND WARRANTS
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2.1 ISSUANCE AND PURCHASE OF COMMON STOCK.
(a) Subject to the terms and conditions of this Agreement,
Seller will issue and sell to the Purchaser, and Purchaser will
subscribe for and purchase from Seller, 17,226,387 shares of Common
Stock at an aggregate purchase price of $15,000,000, payable in three
(3) installments of $5,000,000 each, as provided in this Section 2. The
sale of the shares of Common Stock is and will be made pursuant to
Regulation S promulgated under the Securities Act. In accordance with
Article VIII hereof, as promptly as practicable after the Closing,
Seller agrees to register such shares of Common Stock pursuant to a
registration statement on Form S-3. In the event Seller is not eligible
to use Form S-3, Seller may register the shares of Common Stock either
on Form S-1 or S-2.
(b) Subject to the terms and conditions of this Agreement, at
the Closing Date, Seller will issue and sell to Purchaser, and
Purchaser will subscribe for and purchase from Seller, 5,747,127 shares
of Common Stock at an aggregate purchase price of $5,000,000.
(c) Subject to the satisfaction of the Installment Conditions
(as hereinafter defined), between the Closing Date and September 30,
1998 at 5:00 p.m., Cleveland, Ohio time, Purchaser will make the second
installment under Section 2.1(a) and in accordance therewith will
purchase from Seller 5,747,127 shares of Common Stock at an aggregate
purchase price of $5,000,000. If the second installment is not made as
provided herein, Purchaser shall have no right to make the third
installment and shall have no rights under Sections 3.1 and 3.2.
(d) Subject to the satisfaction of the Installment Conditions,
between the Closing Date and September 30, 1999 at 5:00 p.m.,
Cleveland, Ohio time, Purchaser will make the third installment under
Section 2.1(a) and in accordance therewith will purchase from Seller
5,747,127 shares of Common Stock at an aggregate purchase price of
$5,000,000.
(e) Purchaser's obligation to make the second and third
installments provided for in Sections 2.1(c) and 2.1(d) of this
Agreement shall be conditioned upon: (i) the development of a business
plan for complementary business between Purchaser and Seller pursuant
to Article IV hereof, the satisfactory conclusion of which shall be
determined by Purchaser in its sole and exclusive discretion; and (ii)
Purchaser having the ability to cause the election of a majority of the
members of the Board of Directors as contemplated by Section 3.1 (the
"Installment Conditions"). ▇▇▇▇▇ ▇▇▇▇▇, President and Chairman to the
Board of Seller ("▇▇▇▇▇"), and ▇▇▇▇▇▇▇
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▇. ▇▇▇▇▇▇▇▇, ▇▇., Chief Executive Officer and Director of
Seller ("Lombardy") shall not be considered designees of Purchaser when
determining whether the Installment Conditions have been satisfied.
Purchaser shall exercise the provisions of Sections 2.1(c) and 2.1(d)
of this Agreement by delivering written notice of its intent to
exercise to the Secretary of Seller prior to the respective expiration
dates. Within three (3) business days following the delivery of such
notice, Purchaser shall deliver the sum of $5,000,000 to Seller by
certified or bank check or by wire transfer of immediately available
funds and Seller shall deliver to Purchaser a certificate representing
5,747,127 shares of Common Stock. Notwithstanding any other provision
of this Agreement, the provisions of Sections 2.1(c) and 2.1(d) shall
not be assignable by Purchaser except to an affiliate of Purchaser or a
successor by operation of law. In the event that the Installment
Conditions are not satisfied, Purchaser shall have no further
obligations to acquire any additional shares of Common Stock as
contemplated by Section 2.1(c) or (d), above.
2.2 CLOSING. The closing of the transactions contemplated herein
(the"Closing") shall take place at the offices of Nuon International bv, 6800 EZ
Arnhem, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, 10:00 a.m. Cleveland, Ohio
time on September 2, 1997, or such other time, date or place as the parties may
mutually agree (the "Closing Date"). At the Closing, (a) Purchaser shall pay to
Seller, by wire transfer of immediately available funds to an account designated
in writing by Seller, the purchase price for the shares described in Section
2.1(b) above, (b) Seller shall issue to Purchaser the shares described in
Section 2.1(a) above, and deliver to Purchaser a certificate for the 5,747,127
shares duly registered in the name of Purchaser; and (c) all other agreements
and other documents referred to in this Agreement shall be executed and
delivered by the relevant parties (to the extent not completed prior to the
Closing Date).
ARTICLE III
AGREEMENTS REGARDING BOARD REPRESENTATION
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3.1 BOARD MEMBERS. Effective upon the Closing, three of the current
nine members of Seller's Board of Directors shall resign and the
designees of Purchaser enumerated on Exhibit A attached hereto shall be added to
the Board of Directors of Seller, such that Purchaser's designees shall
constitute three of the nine members of Seller's Board of Directors. Effective
at such time as Purchaser makes the second installment payment described in
Section 2.1(c), two additional members of the Board of Directors other than
Purchaser's designees shall resign and two additional designees of Purchaser
shall be added to the Board of Directors, such that, from and after such time,
Purchaser's designees shall constitute a majority of Seller's Board of
Directors. Seller agrees that from and after the
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time Purchaser makes the second installment payment described in
Section 2.1(c) at each annual meeting of stockholders or any special meeting of
stockholders designed to elect directors, Seller will nominate such persons as
Purchaser shall designate such that the aggregate total of Purchaser designated
directors continuing in office and director-nominees shall comprise at least a
majority of Seller's Board of Directors. In the event any director of Seller
designated by Purchaser shall resign, retire, or die, Seller agrees to replace
such director with such other person as may be designated by Purchaser. In the
event Purchaser pays the second installment as contemplated by Sections 2.1(a)
and (c) above, but thereafter Purchaser's ownership of the outstanding shares of
Common Stock of Seller falls below (i) thirty-three and one third percent
(331/3%), Purchaser shall lose its right to designate a majority of the Board of
Directors or (ii) fifteen percent (15%), Purchaser shall lose its right to
designate three members of the Board of Directors.
3.2 ESTABLISHMENT OF EXECUTIVE COMMITTEE. Effective upon the Closing,
the Board of Directors shall establish and maintain in existence an executive
committee (the "Executive Committee"). The Executive Committee shall consist of
five members. Three of the members of the Executive Committee shall be the
designees of Purchaser as enumerated on Exhibit A attached hereto and the other
members of the Executive Committee shall be ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. The
Executive Committee shall have responsibility for all operations of Seller,
except major decisions, which shall require approval of a majority of the Board
of Directors. For purposes hereof, major decisions shall consist of any action
taken to effectuate any of the following:
(a) An increase in the number of authorized shares of Common Stock of
Seller;
(b) An acquisition of a substantial portion of the assets, stock,
partnership units or membership units of another company or
entity;
(c) The liquidation of Seller;
(d) The merger or consolidation of Seller with any person or entity;
(e) The sale, lease or other disposition of all or substantially all
of Seller's assets; and
(f) The repurchase by Seller of partnership interests of any
partnership in which Seller serves as General Partner.
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Notwithstanding anything to the contrary contained above, until such
time as Purchaser has made the second installment payment, the issuance or sale
of any shares of Common Stock or of any rights to acquire shares of Common Stock
shall require the approval of the Executive Committee; provided, however, Seller
may issue options and shares of Common Stock pursuant to its existing stock
option and stock bonus plans and may issue shares of Common Stock to members of
its Board of Directors in lieu of director's fees.
3.3 VOTING AGREEMENT. In order to assure that the board representation
is as set forth in Section 3.1 above, that the Executive Committee is
established as set forth in Section 3.2 and to assure that certain other matters
are voted in accordance with Purchaser's instructions, Lombardy and ▇▇▇▇▇, at
Closing, shall agree to enter into a voting agreement with Purchaser (the
"Voting Agreement") in the form of EXHIBIT "B" attached hereto and incorporated
herein by reference.
ARTICLE IV
STRATEGIC ALLIANCE
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Purchaser and Seller have entered into this Agreement based upon their
mutual desire to establish a strategic alliance. This strategic alliance will be
based upon a business plan to be jointly developed between the parties and shall
reflect the parties' mutual goals to develop new business for Seller, as a
United States downstream vehicle for Purchaser, such as gas distribution, sales
to industrial customers, development of co-generation facilities and other
activities to optimally develop an overall synergetic relationship.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
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As a material inducement to Purchaser entering into this Agreement and
purchasing the Shares and acquiring the Warrants, Seller represents and warrants
to Purchaser as follows:
5.1 CORPORATE STATUS. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Seller has all requisite corporate power and authority to own or lease, as the
case may be, its properties and to carry on the Business as now conducted.
Seller and its Subsidiary are qualified or licensed to conduct business in all
jurisdictions where its or their ownership or lease of property and the conduct
of its or their business requires such qualification or licensing, except to the
extent that failure to so qualify or be licensed would not have a Material
Adverse Effect on Seller.
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There is no pending or threatened proceeding for the dissolution, liquidation or
insolvency of Seller or its Subsidiary. Seller's sole active Subsidiary is NCE
Securities, Inc.
5.2 CORPORATE POWER AND AUTHORITY. Seller has the corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder and consummate the transactions contemplated hereby. Seller has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated hereby
5.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by Seller and constitutes a legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms, except as the same may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
5.4 NO VIOLATION. The execution and delivery by Seller of this
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by Seller with the terms and provisions hereof, will not (a) result
in a violation or breach of, or constitute, with the giving of notice or lapse
of time, or both, a material default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or provisions
of Seller's Certificate of Incorporation, as amended, or Bylaws or of any
Contract to which Seller is a party or by which Seller or any material portion
of Seller's properties or assets may be bound, (b) violate any Requirement of
Law applicable to Seller, the Business or any material portion of Seller's
properties or assets or (c) result in the imposition of any Lien upon any of the
properties or assets of Seller, except where any of the foregoing would not have
a Material Adverse Effect on Seller.
5.5 CONSENTS/APPROVALS. No consent, approval, waiver or other action
by any Person under any Contract to which either Seller or its Subsidiary is a
party, or by which any of their respective properties or assets are bound, is
required or necessary for the execution, delivery or performance by Seller of
this Agreement and the consummation of the transactions contemplated hereby,
except where the failure to obtain such consents, filings, authorizations,
approvals or waivers or make such filings would not have a Material Adverse
Effect on Seller.
5.6 CAPITALIZATION. The authorized capital stock of Seller consists of
40,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock. As of
June 30, 1997, (a) 10,792,711 shares of Common Stock were validly issued and
outstanding, fully paid and non-assessable, (b) 76,106 shares of Series A
Preferred Stock were validly issued and
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outstanding, fully paid and non-assessable and (c) 268,264 shares of Series B
Preferred Stock were validly issued and outstanding, fully paid and
non-assessable. In addition, 7,351,664 shares of Common Stock are reserved for
issuance pursuant to exercise or conversion rights applicable to the
outstanding warrants, options and convertible notes listed on Schedule 5.6
hereof. Except (a) as contemplated by this Agreement, and (b) as set forth on
Schedule 5.6 hereof, there are (y) no rights, options, warrants, convertible
securities, subscription rights or other agreements, calls, plans, contracts or
commitments of any kind relating to the issued and unissued capital stock of,
or other equity interest in, Seller outstanding or authorized and (z) no
contractual obligations of Seller to repurchase, redeem or otherwise acquire
any shares of Common Stock.
5.7 VALID ISSUANCE OF SHARES. The shares of Common Stock that are being
purchased and/or issued hereunder, when issued, sold and delivered in accordance
with the terms of this Agreement for the consideration expressed herein will be
duly and validly issued, fully paid and non-assessable.
5.8 SEC REPORTS AND NASDAQ Compliance. Since March 31, 1996, Seller has
made in a timely manner all filings (the "SEC Reports") required to be made by
it under the Securities Act and the Exchange Act. The SEC Reports, when filed,
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and the securities laws, rules and
regulations of any state and pursuant to any Requirements of Law and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Seller has delivered or made accessible to Purchaser true accurate
and complete copies of the SEC Reports which were filed with the SEC since March
31, 1996, Seller has taken all necessary actions to ensure its continued
inclusion in, and the continued eligibility of the Common Stock for trading on,
the Nasdaq Small Cap Market.
5.9 SELLER DATA. Seller has made available to Purchaser its corporate
minutes, Certificate of Incorporation, as amended, and Bylaws, books and
records, all material Contracts, summaries of all loans and all leases, evidence
of all bank accounts and accurate and complete lists of each insurance policy
currently providing coverage for the real and personal property owned, operated
or leased together with copies of such policies, information regarding employee
compensation benefit plans, a list of all outstanding workers' compensation and
unemployment claims, all licenses and permits that Seller has with respect to
its operations and all outstanding citations or complaints relating to
environmental, health or safety laws or regulations (collectively, the "Seller
Data"). Seller acknowledges that Purchaser has relied on the Seller Data in
deciding to execute this Agreement and consummate the transactions contemplated
hereby.
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5.10 FINANCIAL STATEMENTS. Each of the balance sheets included in the
SEC Reports (including any related notes and schedules) fairly presents in all
material respects the consolidated financial position of Seller and its
Subsidiary as of its date, and each of the other financial statements included
in the SEC Reports (including any related notes and schedules) fairly presents
in all material respects the consolidated results of operations or other
information therein of Seller and its Subsidiary for the periods or as of the
dates therein set forth in accordance with GAAP consistently applied during the
periods involved (except that the interim reports are subject to normal
recurring adjustments which might be required as a result of year-end audit and
except as otherwise stated therein).
5.11 LITIGATION. Except as set forth in the SEC Reports, there are no
actions, suits, proceedings or investigations (including any purportedly on
behalf of Seller) pending or, to Seller's knowledge, threatened against or
affecting the Business or properties of Seller, whether at law or in equity or
before or by any federal, state, municipal, or other governmental department,
commission, board, agency, court or instrumentality, domestic or foreign, except
for claims which, in the aggregate, do not and will not have a Material Adverse
Effect on Seller or the Business. Seller is not operating under, subject to, in
violation of or in default with respect to any judgment, order, writ, injunction
or decree of any court or federal, state, municipal or other governmental
department, commission, board, agency, or instrumentality, domestic or foreign.
5.12 COMPLIANCE WITH LAW. Seller is not in violation of any laws,
governmental orders, rules or regulations, whether federal, state or local, to
which it, or any of its properties are subject, except for such violations as
not and will not have a Material Adverse Effect on Seller or the Business.
5.13 ENVIRONMENTAL PROTECTION.
(a) As used in this Agreement, each of the following terms have the
indicated meaning:
(i) "Real Property" means the real property now or formerly
owned or used by Seller;
(ii) "Environmental Law" means Federal, state, foreign or
local laws, statutes, rules, regulations, and ordinances and common law
requirements relating to the environment, including those relating to
nuisance or trespass; to releases, discharges, emissions, or disposals
to air, water, land, or groundwater; to the withdrawal or use of
groundwater; to the exposure to toxic, hazardous or other
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controlled, prohibited, or regulated substances; or to the
transportation, storage, disposal, management or release of such
substances;
(iii) "Hazardous Material" means (A) any pollutant or
contaminant regulated by any governmental body, agency or authority,
(B) petroleum or any petroleum products, (C) any asbestos or other
material composed of or containing asbestos, and (D) any hazardous,
toxic or dangerous substance defined as such in (or for purposes of)
the Comprehensive Environmental Response, Compensation and Liability
Act, as amended, or any other Environmental Law.
(b) Except as set forth on Schedule 5.13 or in the SEC Reports filed
prior to the date hereof, as of the date hereof:
(i) Seller has not received any written notices, demand
letters or written requests for information relating to matters that
are pending and unresolved as of the date hereof from any governmental
body, agency, official or authority or third party indicating that
Seller or any Partnership of which Seller has an ownership interest may
be in violation of, or liable under, any Environmental Law;
(ii) There are no actions, suits, or proceedings pending or,
to the knowledge of Seller, no investigation pending or action, suit,
proceeding, or investigation threatened against Seller or involving any
of the Real Property before any court or arbitrator or any governmental
body, agency, official or authority relating to any violation, or
alleged violation, of any Environmental Law;
(iii) No reports have been filed with a governmental
authority, or are required to be filed, by Seller concerning the
release of any Hazardous Material or the threatened or actual violation
of any Environmental Law;
(iv) Seller has not received written notice that any part of
the Real Property has been, is, or will be listed as a site containing
Hazardous Material that requires further investigation and/or
remediation pursuant to any Environmental Law;
(v) To the knowledge of Seller, Seller has not incurred, and none of
the Real Property is currently subject to, any material liabilities, fixed or
contingent, relating to any suit, settlement, court order, administrative order,
judgement or claim asserted under any Environmental Law; and
(vi) Seller has all material permits required by applicable
Environmental Laws and is in compliance with the provisions of all such permits
in all material respects.
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5.14 JUDGMENTS, ORDERS AND CONSENT DECREES. Seller is not subject to
any judgment, ruling, injunction, order, writ or decree of, or agreement with,
any court, arbitrator or regulatory authority limiting, restricting or adversely
affecting the consummation of the transactions contemplated by this Agreement.
5.15 MATERIAL CHANGES. Except as set forth in the SEC Reports, or as
otherwise contemplated herein since March 31, 1997, there has been no Material
Adverse Change in Seller. Except as set forth in the SEC Reports since March 31,
1997, except for the conversion offer with respect to the Series A Preferred
Stock and Series B Preferred Stock, there has not been (i) any direct or
indirect redemption, purchase or other acquisition by Seller of any shares of
the Common Stock, Series A Preferred Stock or Series B Preferred Stock or (ii)
any declaration, setting aside or payment of any dividend or other distribution
by Seller with respect to the Common Stock, Series A Preferred Stock or Series B
Preferred Stock.
5.16 COMPLIANCE WITH SECURITIES LAWS. The sale of the shares of Common
Stock is and will be (based in part upon the representations and warranties of
Purchaser contained in this Agreement) in compliance with Regulation S under the
Securities Act.
5.17 SALES OUTSIDE OF THE UNITED STATES. Seller has not offered the
shares of Common Stock to any person in the United States or any "U.S. person"
as that term is defined in Rule 902(o) of Regulation S (based in part upon the
representations and warranties of Purchaser contained in this Agreement).
5.18 NO DIRECTED SELLING EFFORTS. Neither Seller nor any Person acting
for or on behalf of Seller has conducted any "directed selling efforts" as that
term is defined in Rule 902(b) of Regulation S.
5.19 NO COMMISSIONS. Except for its obligations to Messrs. ▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Seller has not incurred any obligation for any finder's or
broker's or agent's fees or commissions in connection with the sale of the
shares.
5.20 Full Disclosure. No representation or warranty by Seller pursuant
to this Agreement omits to state a material fact necessary to make the
representations or warranties of Seller under this Agreement not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
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As a material inducement to Seller entering into this Agreement and
issuing the Shares and Warrants, Purchaser represents and warrants to Seller as
follows:
6.1 POWER AND AUTHORITY. Purchaser is a limited liability company duly
organized, validly existing and in good standing under the laws of the
Netherlands. Purchaser has the power and authority under applicable law to
execute and deliver this Agreement and consummate the transactions contemplated
hereby, and has all necessary authority to execute, deliver and perform its
obligations under this Agreement and consummate the transactions contemplated
hereby. Other than the approval of its Supervisory Board, which Purchaser shall
seek to obtain immediately upon execution of this Agreement, Purchaser has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement and the transactions contemplated hereby. The management of
Purchaser agrees to recommend this Agreement's approval to the Supervisory
Board.
6.2 NO VIOLATION. The execution and delivery by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby, and the
compliance by Purchaser with the terms and provisions hereof, will not (a)
result in a violation or breach of, or constitute, with or without due notice or
lapse of time or both, a material default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms, conditions or
provisions of Purchaser's governing documents or any Contract to which Purchaser
is a party or by which Purchaser or any material portion of Purchaser's
properties or assets may be bound, (b) violate any Requirement of Law applicable
to Purchaser or any material portion of Purchaser's properties or assets or (d)
result in the imposition of any Lien upon any of the properties or assets of
Purchaser, except where any of the foregoing would not have a Material Adverse
Effect on Purchaser.
6.3 CONSENTS/APPROVALS. No consent, approval, waiver or other action
by any Person under any Contract to which Purchaser is a party, or by which any
of Purchaser's properties or assets are bound, is required or necessary for the
execution, delivery or performance by Purchaser of this Agreement and the
consummation of the transactions contemplated hereby, except where the failure
to obtain such consents, filings, authorizations, approvals or waivers or make
such filings would not prevent or delay the consummation of the transactions
contemplated by this Agreement or otherwise prevent Purchaser from performing
Purchaser's obligations hereunder or have a Material Adverse Effect on
Purchaser.
6.4 ENFORCEABILITY. This Agreement has been duly executed and delivered
by Purchaser and constitutes a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as
enforceability may be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally and general equitable
principles regardless of whether enforceability is considered in a proceeding at
law or in equity.
6.5 OFFSHORE TRANSACTION. Purchaser represents and warrants to Seller
that: (i) Purchaser is not a U.S. person as defined in Rule 902 of Regulation S;
(ii) at the time of execution of this Agreement, Purchaser was outside of the
United States; (iii) Purchaser is not acquiring the Common Stock for the account
or benefit of any U.S. person; and (iv) the sale of the shares of Common Stock
has not been prearranged with any buyer in the United States.
6.6 INVESTMENT PURPOSE. The shares of Common Stock being acquired by
Purchaser pursuant to this Agreement are being acquired for Purchaser's own
account and not with a view to or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act. Purchaser understands that the shares of Common Stock have not been
registered under the Securities Act by reason of their contemplated issuance in
a transaction believed to be exempt from the registration and prospectus
delivery requirements of the Securities Act, and in transactions believed to be
exempt from the registration and/or qualification provisions of the appropriate
state securities laws. Purchaser has such knowledge and experience in financial
and business matters that it is capable of independently evaluating the risks
and merits of purchasing or acquiring the shares of Common Stock. No reoffer or
sale of the shares of Common Stock will be made to any U.S. person or for the
account or benefit of a U.S. person for a period ending not earlier than 45 days
after the date of acquisition of such shares of Common Stock (each such period
being hereinafter referred to as a "Restricted Period"). The prohibition against
reoffer or sale of the shares of Common Stock applies only to those shares
acquired before the then applicable Restricted Period. For example, the shares
of Common Stock acquired at Closing may be sold during the Restricted Period
applicable to any shares of Common Stock acquired in the second installment.
6.7 NO PUT OPTION OR SHORT POSITION. The Purchaser covenants that
neither it nor its affiliates nor any person acting on its or their behalf has
the intention of entering, or will enter, during a Restricted Period, into any
put option, short position or other similar instrument or position with respect
to the shares of Common Stock acquired immediately preceding such Restricted
Period and neither Purchaser nor any of its affiliates nor any Person acting on
its or their behalf will use at any time the shares acquired pursuant to this
Agreement to settle any put option, short position or other similar instrument
or position that may have been entered into prior to the execution of this
Agreement.
6.8 RELIANCE ON REPRESENTATIONS OF THE PURCHASER. The Purchaser
understands that the shares of Common Stock are being offered and sold to it in
reliance on specific
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exemptions from the registration requirements of the U.S. securities laws and
that the Seller is relying on the truth, warranties and agreements of Purchaser
set forth herein in order to determine the availability of such exemptions and
the eligibility of the Purchaser to acquire the shares.
6.9 NO COMMISSIONS. Except for its obligations to Messrs. ▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Purchaser has not incurred any obligation for any finder's
or broker's or agent's fees or commissions in connection with the purchase of
the shares.
ARTICLE VII
COVENANTS
---------
7.1 FILINGS. Each of Seller and Purchaser shall make on a prompt and
timely basis all governmental or regulatory notifications and filings required
to be made by it for the consummation of the transactions contemplated hereby.
7.2 PUBLIC ANNOUNCEMENTS. Except for the initial release of Seller
announcing this Agreement, neither party will issue a press release or make any
other public announcement regarding the transactions contemplated by this
Agreement without the approval of the other party, unless the parties are
advised by counsel that immediate disclosure is required by law. In the event
the parties are required by law to make a disclosure, they shall use all
reasonable efforts to agree upon the text of such disclosure. In addition, the
parties shall use all reasonable efforts to agree upon the text of the initial
release.
7.3 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
7.4 COOPERATION. Each of Seller and Purchaser agree to cooperate with
the other in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
Requirement of Law or the rules of the Nasdaq Small Cap Market in connection
with the transactions contemplated by this Agreement and to use their respective
best efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions. Except as may be specifically
required hereunder, neither of the Parties or their respective Affiliates shall
be required to agree to take any action that in the reasonable opinion of such
party would result in or produce a Material Adverse Effect on such party.
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7.5 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt
notice to the other party of the occurrence, or non-occurrence, of any event
which would be likely to cause any representation or warranty herein to be
untrue or inaccurate, or any covenant, condition or agreement herein not to be
complied with or satisfied.
7.6 NECESSARY ACTIONS. Each of the parties shall use its reasonable
best efforts to take, or cause to be taken, all appropriate actions, and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated herein, including, without limitation, using its reasonable best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to Contracts
with Seller and its Subsidiary as are necessary for the consummation of the
transactions contemplated hereby. The parties also agree to use best efforts to
defend all lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby and to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby.
7.7 DUE DILIGENCE AND CONFIDENTIALITY. Prior to the date hereof,
Purchaser and its agents or representatives commenced and, from and after the
date hereof, shall be permitted to continue Purchaser's legal and financial due
diligence review of Seller, in anticipation of the Closing, and shall have full
access to all relevant information regarding Seller and its assets to determine
that all financial and other information that has been and will be provided to
Purchaser is reasonably accurate. Purchaser acknowledges that such information
shall be and remain confidential. In the event that the transactions
contemplated by this Agreement do not close, Purchaser shall return to Seller
all documents previously furnished to Purchaser by Seller, and any copies or
extracts prepared by or on behalf of Purchaser. Purchaser and its agents and
representatives hereby agree that they will not at any time divulge or use any
confidential or other proprietary information regarding Seller, except to the
extent (i) required by law, (ii) otherwise available from third parties, or
(iii) previously known to Purchaser from sources other than Seller. Seller shall
not divulge or use any confidential or propriety information regarding
Purchaser, except to the extent (i) required by law, (ii) otherwise available
from third parties, or (iii) previously known to Seller from sources other than
Purchaser.
7.8 OTHER OFFERS. From the date hereof until the Closing Date or the
earlier termination of this Agreement, Seller will not, and will use its best
efforts to cause the officers, directors, employees and other agents of Seller
not to, directly or indirectly, (i) take any action to encourage, solicit or
initiate any Acquisition Proposal (as defined below), provided that no (x) press
release made by Seller or (y) Acquisition Proposal initiated and made by Lomak
Petroleum, Inc. ("Lomak") or any of its affiliates ("Lomak Proposal"), shall
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be deemed a violation of this clause (i), or (ii) engage or participate in
discussions or negotiations or enter into agreements with any Person with
respect to an Acquisition Proposal, or in connection with an Acquisition
Proposal disclose any nonpublic information relating to Seller or afford access
to the properties, books or records of Seller to any Person, except that Seller
may take action described in this clause (ii) if (A) such action is taken in
connection with an unsolicited Acquisition Proposal, including any Lomak
Proposal, and (B) the failure to take such action would constitute a breach of
the fiduciary duties of the Board of Directors of Seller (as advised by legal
counsel to Seller). Seller will promptly notify Purchaser orally and in writing
of any Acquisition Proposal or any inquiries with respect thereto. Any such
written notification shall include the identity of the Person making such
inquiry or Acquisition Proposal and a description of the material terms of such
Acquisition Proposal (or the nature of the inquiry) and shall indicate whether
Seller is providing or intends to provide the person making the Acquisition
Proposal with access to nonpublic information relating to Seller. For purposes
of this Agreement, "Acquisition Proposal" means any good faith offer or proposal
for (x) a merger or other business combination involving Seller and any Person
(other than Purchaser), (y) an acquisition by any Person (other than Purchaser)
of assets or earning power of Seller, in one or more transactions representing
25% or more of the consolidated assets or earning power of Seller, or (z) an
acquisition by any Person (other than Purchaser) of securities representing 15%
or more of the voting power of Seller.
7.9 USE OF PROCEEDS. The parties agree that a portion of the initial
$5,000,000 to be received by Seller on the Closing Date will be used to retire
the indebtedness due Lomak (approximately $1,453,670 at March 31, 1997).
ARTICLE VIII
REGISTRATION RIGHTS
-------------------
Purchaser shall have the following registration rights with respect to
the shares of Registrable Securities:
8.1 REQUIRED REGISTRATION. As promptly as practicable after the
Closing, Seller agrees to register all of the Registrable Securities pursuant to
a registration statement on Form S-3 (the "Shelf Registration Statement"). In
the event Seller is ineligible to use Form S-3, Seller shall register all of the
Registrable Securities on Form S-1 or S-2. Seller shall file on a timely basis
all filings required to be made by it under the Securities Act and the Exchange
Act and shall use its best efforts to cause the Shelf Registration Statement to
be declared effective as quickly as practicable and subject to the terms and
conditions hereof, to maintain the effectiveness of the Shelf Registration
Statement until the earlier of: (i) September 30, 2001, or (ii) such time that
all shares of Common Stock acquired hereunder have been sold under the Shelf
Registration Statement or an exemption from registration.
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8.2 REGISTRATION PROCEDURES.
(a) In connection with the registration required by this Article VIII,
Seller shall, at its own expense:
(i) prepare and file with the SEC a registration statement
with respect to such Registrable Securities (the "Registration
Statement");
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective to comply with the provisions of the Securities Act
with respect to the sale or other disposition of the Registrable
Securities covered by such registration statement in accordance with
this Article VIII;
(iii) furnish to such selling security holders such number of
prospectuses and other documents that are included in the Shelf
Registration Statement as Purchaser may reasonably request from time to
time,
(iv) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions of the
United States as Purchaser may request to enable it to consummate the
disposition in such jurisdiction of the Registrable Securities covered
by such Registration Statement, provided that Seller will not be
required to (A) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
Article VIII, or (B) consent to general service of process in any such
jurisdiction,
(v) notify Purchaser at any time when the prospectus included
in such Registration Statement is required to be delivered under the
Securities Act, of the happening of any event which would cause such
prospectus to contain an untrue statement of a material fact or omit
any fact necessary to make the statement therein in light of the
circumstances under which they are made not misleading and, at the
request of Purchaser, prepare a supplement or amendment to such
prospectus, so that, as thereafter delivered to purchasers of such
shares, such prospectus will not contain any untrue statements of a
material fact or omit to state any fact necessary to make the
statements therein in light of the circumstances under which they are
made not misleading; provided, however, that if the Board of Directors
of Seller determines in good faith that due to a contemplated
financing, acquisition or disposition the filing of any supplement or
amendment would cause harm to Seller, then Seller may defer
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the filing of any such supplement or amendment pending the
consummation of such financing, acquisition or disposition;
(vi) use its best efforts to cause all such Registrable
Securities covered by such Registration Statement to be listed on each
securities exchange on which similar securities issued by Seller are
then listed and to obtain all necessary approvals from such exchange
for trading thereon,
(vii) provide a transfer agent and registrar for all such
Registrable Securities covered by such Registration Statement not later
than the effective date of such registration statement;
(viii) to the extent permitted by the Securities Act, upon the
sale of any Registrable Securities pursuant to such Registration
Statement, remove all restrictive legends from all certificates or
other instruments evidencing such registrable securities to the extent
permitted by the Securities Act, and
(ix) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC.
(b) It shall be a condition precedent to the obligations of Seller to
take any action pursuant to this Article VIII in respect of the securities which
are to be registered at the request of Purchaser that Purchaser furnish to
Seller such information regarding the securities held by Purchaser and the
intended method of disposition of Purchaser's Registrable Securities as Seller
shall reasonably request and as shall be required in connection with the action
taken by Seller
8.3 REGISTRATION EXPENSES. Except as required by law, all expenses
incurred by Seller in complying with this Article VIII, including all
registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel and accountants for Seller, blue sky fees and expenses
(including fees and disbursements of counsel related to all blue sky matters)
("Registration Expenses") incurred in connection with any registration,
qualification or compliance pursuant this Article VIII shall be borne by Seller;
except that all underwriting discounts, selling commissions or cost
reimbursements applicable to a sale incurred in connection with any Registrable
Securities and the legal fees of Purchaser shall be borne by Purchaser.
8.4 FURTHER INFORMATION. If Registrable Securities owned by Purchaser
are included in any registration, Purchaser shall use reasonable efforts to
cooperate with Seller and shall furnish Seller such information regarding itself
as Seller may reasonably request and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
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ARTICLE IX
INDEMNIFICATION
---------------
9.1 INDEMNIFICATION GENERALLY. Subject to Section 11.3, for a period
of three (3) years following the Closing, Seller, on the one hand, and
Purchaser, on the other hand (each an Indemnifying Party as defined below),
shall indemnify the other from and against any and all losses, damages,
liabilities, claims, charges, actions, proceedings, demands, judgments,
settlement costs and expenses of any nature whatsoever (including, without
limitation, attorneys' fees and expenses) resulting from any breach of a
representation, warranty or covenant by the Indemnifying Party and all claims,
charges, actions or proceedings incident to or arising out of the foregoing.
9.2 INDEMNIFICATION RELATING TO REGISTRATION RIGHTS.
(a) With respect to any registration, qualification or compliance
effected or to be effected pursuant to Article VIII of this Agreement, Seller
shall indemnify Purchaser, each of Purchaser's directors and officers, each
underwriter (as defined in the Securities Act) of the securities sold by
Purchaser, and each Person who controls (within the meaning of the Securities
Act) Purchaser or such underwriter (a "Controlling Person") from and against all
losses, damages, liabilities, claims, charges, actions, proceedings, demands,
judgments, settlement costs and expenses of any nature whatsoever (including,
without limitation, attorneys' fees and expenses) of Purchaser, or any such
underwriter or Controlling Person based upon:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained, on the effective date thereof, in any
Registration Statement, any preliminary or final prospectus contained
therein, or any amendment or supplement thereto,
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statement therein, in the light of the circumstances under which it was
made, not misleading, or
(iii) any violation by Seller of the Securities Act applicable
to Seller, or of any blue sky or other state securities laws or any
rule or regulation promulgated thereunder applicable to Seller;
in each case, relating to any action or inaction required of Seller in
connection with any such registration, qualification or compliance, and, subject
to Section 9.3 below, will reimburse
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each such Person entitled to indemnity under this Section 9.2 for all legal and
other expenses reasonably incurred in connection with investigating or defending
any such loss, damage, liability, claim, charge, action, proceeding, demand,
judgment or settlement; provided, however, the foregoing indemnity and
reimbursement obligation shall not be applicable to the extent that (y) any such
matter arises out of or is based on any untrue statement (or alleged untrue
statement) or omission (or alleged omission) made in reliance upon and in
conformity with written information furnished to Seller by or on behalf of such
Person specifically for use in such prospectus, offering circular or other
document, or any supplement or amendment thereto, or (z) in the case of any
non-underwritten offering, to the extent that any such losses, claims, damages,
liabilities or expenses arise out of or are based upon the fact that a current
copy of the prospectus was not sent or given to the Person asserting any such
losses, claims, damages, liabilities or expenses at or prior to the written
confirmation of the sale of the securities to such Person if it is determined
that it was the responsibility of Purchaser or such Controlling Person to
provide such Person with a current copy of the prospectus and such current copy
of the prospectus would have cured the defect giving rise to such losses,
claims, damages, liabilities or expenses.
(b) With respect to any registration, qualification or compliance
effected or to be effected pursuant to this Agreement, Purchaser shall indemnify
Seller, from and against all losses, damages, liabilities, claims, charges,
actions, proceedings, demands, judgments, settlement costs and expenses of any
nature whatsoever (including, without limitation, attorneys' fees and expenses)
of Seller based upon:
(i) any untrue statement (or alleged untrue
statement) of a material fact contained, on the effective date
thereof, in any Registration Statement, any preliminary or
final prospectus contained therein, or any amendment or
supplement thereto;
(ii) any omission (or alleged omission) to state
therein a material fact required to be stated therein or
necessary to make the statement therein, in the light of the
circumstances under which it was made, not misleading,
(iii) any violation by Purchaser of the Securities
Act applicable to Seller or Purchaser, or of any blue sky or
other state securities laws or any rule or regulation
promulgated thereunder applicable to Seller or Purchaser; or
(iv) the fact that a current copy of the prospectus
was not sent to the Person asserting such losses, claims,
damages, liabilities or expenses at or prior to the written
confirmation of the sale of the securities with respect to
such Person if it is determined that it was the responsibility
of Purchaser to
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provide such Person with a current copy of the
prospectus and such current copy would have cured the defect
giving rise to such losses, claims, damages, liabilities or
expenses,
in each case, relating to any action or inaction required of Purchaser in
connection with any such registration, qualification or compliance, and, subject
to Section 9.3 below, will reimburse Seller for all legal and other expenses
reasonably incurred in connection with investigating or defending any such loss,
damage, liability, claim, charge, action, proceeding, demand, judgment,
settlement or deficiency; provided, however, the indemnity and reimbursement
obligation arising under Section 9.2 (a) or 9.2 (b) shall only be applicable to
the extent that any such matter arises out of or is based on any untrue
statement (or alleged untrue statement) or omission (or alleged omission) made
in reliance upon and in conformity with written information furnished to Seller
by or on behalf of Purchaser specifically for use in such registration
statement, prospectus, or any supplement or amendment thereto,
9.3 INDEMNIFICATION PROCEDURES. Each Person entitled to
indemnification under this Article IX (an "Indemnified Party") shall give notice
as promptly as reasonably practicable to each party required to provide
indemnification under this Article IX (an "Indemnifying Party") of the
commencement of any action, suit, proceeding or investigation or threat thereof
made in writing in respect of which indemnity may be sought hereunder; provided,
however, failure to so notify an Indemnifying Party shall not relieve such
Indemnifying Party from any liability that it may have otherwise than on account
of this indemnity agreement so long as such failure shall not have materially
prejudiced the position of the Indemnifying Party. Upon such notification, the
Indemnifying Party shall assume the defense of such action if it is a claim
brought by a third party, and after such assumption the Indemnifying Party shall
not be entitled to reimbursement of any expenses incurred by it in connection
with such action except as described below. In any such action, any Indemnified
Party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
contrary or (ii) the named parties in any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing or conflicting interests between them. An
Indemnifying Party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel in any one jurisdiction for all parties indemnified by such Indemnifying
Party with respect to such claim, unless in the reasonable judgment of any
Indemnified Party a conflict of interest may exist between such Indemnified
Party and any other of such Indemnified Parties with respect to such claim, in
which event the Indemnifying Party shall be obligated to pay the fees and
expenses of such additional counsel or counsels. The Indemnifying Party shall
not be liable
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for any settlement of any proceeding effected without its written consent (which
shall not be unreasonably withheld or delayed by such Indemnifying Party), but
if settled with such consent or if there be final judgment for the plaintiff,
the Indemnifying Party shall indemnify the Indemnified Party from and against
any loss, damage or liability by reason of such settlement or judgment.
ARTICLE X
CONDITIONS TO CLOSING
---------------------
10.1 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE CLOSING. The
respective obligations of each party to effect the Closing shall be subject to
the fulfillment of the following condition which may be waived, in whole or in
part, to the extent permitted by applicable law:
(a) NO ORDER. No Governmental Authority or other agency or commission
or federal or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive order,
decree, injunction, or other order (whether temporary, preliminary or permanent)
which is in effect and which materially restricts prevents or prohibits
consummation of the Closing or any transaction contemplated by this Agreement;
provided, however, that each of the Parties agree that it will use its best
efforts to fulfill its obligations under Section 10.1 and, in addition, each of
the Parties will use its reasonable best efforts to cause any such decree,
judgment, injunction or other order to be vacated or lifted. The parties
acknowledge that they will be making a filing with the Committee on Foreign
Investment in the United States pursuant to the Exon-▇▇▇▇▇▇ Amendment, Section
5021 of the Omnibus Trade and Competitiveness Act of 1988 and will cooperate
with each other in preparing and making such filing.
10.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF PURCHASER. The
obligations of Purchaser to proceed with the Closing are also subject to the
following conditions any and all of which may be waived, in whole or in part, to
the extent permitted by applicable law:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects as of the Closing Date as though made on and as of the
Closing Date, except that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date.
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(b) AGREEMENTS AND COVENANTS. Seller shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
(c) CERTIFICATE. Seller shall have delivered to Purchaser a certificate
from its secretary, dated the Closing Date, certifying in such detail as
Purchaser may reasonably request to Seller's fulfillment of the conditions
specified in subsections (a) and (b) above and such other evidence as to
Seller's compliance with the provisions of this Agreement as Purchaser may
reasonably request.
(d) WAIVER OF LOMBARDY AND ▇▇▇▇▇. Lombardy and ▇▇▇▇▇ shall have
delivered to Purchaser a waiver of the change in control provisions contained in
their employment agreements on terms mutually satisfactory to Purchaser,
Lombardy & ▇▇▇▇▇.
(e) VOTING AGREEMENT. Purchaser, Lombardy and ▇▇▇▇▇ shall have entered
into the Voting Agreement.
(f) SHARE CERTIFICATE. Seller shall have delivered to Purchaser a
certificate for the 5,747,127 shares of Common Stock being acquired at Closing.
(g) CONDITION OF THE BUSINESS AND PROPERTIES. Between the date of this
Agreement and the Closing Date, Seller shall have continued to operate its
Business in its regular and ordinary course, and shall not have suffered a
Material Adverse Effect.
(h) CERTIFICATE OF INCORPORATION AND BYLAWS. Seller shall have
delivered to Purchaser a copy of Seller's Certificate of Incorporation and
Bylaws certified as of the Closing Date by the Secretary of Seller.
(i) CERTIFIED RESOLUTIONS. Seller shall have delivered to Purchaser
resolutions of Seller's Board of Directors, or an authorized committee thereof,
authorizing and approving the transactions contemplated by this Agreement
certified by the Secretary of Seller.
(j) THIRD PARTY CONSENTS. Seller shall have delivered to Purchaser the
consents of its institutional lender and any other third party or Governmental
Authority necessary in order for Seller to enter into, and perform its
obligations under, this Agreement.
(k) LEGAL OPINION OF COUNSEL. Purchaser shall have received a legal
opinion from ▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP, counsel for Seller and ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L. counsel for Lombardy and ▇▇▇▇▇, each dated as of the
Closing Date with respect to, among other things, the authorization and
enforceability of this Agreement and related instruments
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and the issuance of the Shares, in form and substance reasonably satisfactory to
Purchaser and its counsel.
(l) SUPERVISORY BOARD. Purchaser shall have obtained the approval of
its Supervisory Board.
10.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF SELLER. The
obligations of Seller to proceed with the Closing is also subject to the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects as of the Closing as though made on and as of the Closing,
except that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date.
(b) AGREEMENT AND COVENANTS. Purchaser shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Closing.
(c) CERTIFICATE. Purchaser shall have delivered to Seller the
certificate of its Secretary, dated the Closing Date, certifying in such detail
as Seller may reasonably request to Purchaser's fulfillment of the conditions
specified in subsections (a) and (b) above, and such other evidence as to
Purchaser's compliance with the provisions of this Agreement as Seller may
reasonably request.
(d) CERTIFIED RESOLUTIONS. Purchaser shall have delivered to Seller
certified resolutions of Purchaser's Board of Directors and Supervisory Board
authorizing and approving the transactions contemplated by this Agreement.
ARTICLE XI
TERMINATION
-----------
11.1 EVENTS OF TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date, as follows:
(a) by mutual written agreement of the parties;
(b) by Seller or Purchaser if the transactions contemplated by
this Agreement have not been consummated on or before September 15,
1997, provided,
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however, that the right to terminate this Agreement
shall not be available to a party whose failure to fulfill any
obligation under this Agreement has been the cause or resulted in the
failure of the Closing Date to occur on or before such date;
(c) by Seller upon written notice to Purchaser, upon and
during the continuance of a breach of any representation, warranty,
covenant or agreement on the part of Purchaser set forth in this
Agreement, or if any representation or warranty of Purchaser shall have
become untrue, in either case such that the conditions set forth in
Section 10.3 would not be satisfied on the Closing Date (a "Terminating
Purchaser Breach");
(d) by Purchaser upon written notice to Seller, upon and
during the continuance of a breach of any representation, warranty,
covenant or agreement on the part of Seller set forth in this
Agreement, or if any representation or warranty of Seller shall have
become untrue, in either case such that the conditions set forth in
Section 10.2 would not be satisfied on the Closing Date (a "Terminating
Seller Breach"); and
(e) by Seller, if (i) Seller receives an unsolicited written
Acquisition Proposal that the Board of Directors of Seller, or a
committee thereof, determines in good faith that the failure to
terminate this Agreement in order to accept such Acquisition Proposal
would constitute a breach of the fiduciary duties of the Board of
Directors of Seller (as advised by legal counsel to Seller), and (ii)
Seller accepts such Acquisition Proposal; provided that Seller shall
not be permitted to terminate this Agreement pursuant to this paragraph
(e) unless it has provided Purchaser with written notification that
includes the identity of the Person making such Acquisition Proposal
and a description of the material terms of such Acquisition Proposal in
accordance with Section 7.8 and Seller's intent to so terminate this
Agreement; provided, further, that Purchaser shall receive the fees set
forth in Section 11.2(c) immediately prior to any termination pursuant
to this paragraph (e) by wire transfer in same day funds.
11.2 EFFECT OF TERMINATION.
(a) If this Agreement is validly terminated pursuant to
Section 11.1(a) or (b) hereof, no party hereto will have any liability
to the other party hereto except that any such termination shall be
without prejudice to any claim which either party may have against the
other for breach of this Agreement (or any representation, warranty,
covenant, or agreement included herein).
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(b) If this Agreement is validly terminated pursuant to
Section 11.1(c) or (d) hereof by a non-breaching party, in addition to
any other remedy available to the non-breaching party, all reasonable
out-of-pocket expenses incurred in connection
with this Agreement and the transactions contemplated hereby will be
reimbursed promptly by the breaching party.
(c) If this Agreement is terminated by Seller pursuant to
Section 11.1(e), then Seller shall pay Purchaser a cash fee of $125,000
(the "Purchaser Fee"). In addition to the Purchaser Fee, Seller shall
reimburse Purchaser in the amount of $65,000 for all of its expenses
and fees in connection with the transactions contemplated by this
Agreement prior to the termination of this Agreement and in connection
with the negotiation, preparation, execution, performance and
termination of this Agreement, the structuring of the transactions
contemplated by this Agreement and agreements relating thereto.
(d) It is understood and agreed by the parties hereto that the
Purchaser Fee and other expenses and fees provided for in Section
11.2(c) are intended to constitute liquidated damages, since the actual
amount of damages that would be sustained by Purchaser as a result of a
termination of this Agreement pursuant to Section 11.1(e) is difficult,
if not impossible, to ascertain. The agreement of the parties with
regard to the payment of the foregoing sums as liquidated damages
represents a good faith effort by each of the parties to establish the
reasonable amount of restitution necessary to provide for recovery of
all costs and expenses associated with efforts to consummate the
transactions contemplated by this Agreement, including, without
limitation, opportunity costs.
11.3 PURCHASER FEE. If Purchaser has received the Purchaser Fee,
Purchaser shall not assert or pursue in any manner, directly or indirectly,
whether arising under tort, contract, or otherwise, any claim or cause of action
(i) against the person submitting an Acquisition Proposal or (ii) against Seller
or any of its directors, officers, shareholders or representatives based in
whole or in part upon its or their receipt, consideration, recommendation, or
approval of an Acquisition Proposal, or upon this Agreement, including Seller's
exercise of its right of termination under Section 11.1.
11.4 REIMBURSEMENT TO SELLER. In the event Purchaser is unable to close
the transaction, solely as a result of its inability to obtain its Supervisory
Board approval as required by Section 10.2(l), then Purchaser shall reimburse
Seller for all of its expenses and fees in connection with the transactions
contemplated by this Agreement prior to the termination of this Agreement and in
connection with the negotiation, preparation, performance and termination of
this Agreement, in the amount of $50,000. If Seller has
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received the payment referenced in this Section 11.4, Seller shall not assert or
pursue in any manner, directly or indirectly, whether arising under tort,
contract, or otherwise, any claim or cause of action against Purchaser or any of
its directors, officers, shareholders or representatives based in whole or in
part upon this Agreement.
ARTICLE XII
MISCELLANEOUS.
--------------
12.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such Party shall designate
in writing to the other Party):
if to Seller to:
North Coast Energy, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, Halter & ▇▇▇▇▇▇▇▇ LLP
1400 ▇▇▇▇▇▇▇▇ Investment Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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if to Purchaser:
Nuon International bv
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇ J. M. J. Blomen, Managing Director
Telecopy: (▇▇▇)▇▇-▇▇-▇▇▇-▇▇▇▇
with a copy to:
Kahn, Kleinman, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Co., L.P.A.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
2600 Tower at Erieview
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
12.2 LOSS OR MUTILATION. Upon receipt by Seller from Purchaser of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of a certificate representing shares of Common Stock
and an indemnity reasonably satisfactory to Seller (it being understood that the
written agreement of Purchaser or an Affiliate of Purchaser shall be a
sufficient indemnity), Seller will execute and deliver, in lieu thereof, a new
stock certificate of like tenor to Purchaser provided, in the case of
mutilation, no indemnity shall be required if the certificate representing
shares in identifiable form is surrendered to Seller for cancellation. Purchaser
shall be required to pay all fees in connection with any indemnity bond required
by the transfer agent and registrar of the Common Stock.
12.3 SURVIVAL. Each representation, warranty, covenant and agreement of
the parties set forth in this Agreement is independent of each other
representation, warranty, covenant and agreement. Each representation and
warranty made by any party in this Agreement shall survive the Closing for a
period of three (3) years.
12.4 REMEDIES.
(a) Each of Seller and Purchaser acknowledges that the other party
would not have an adequate remedy at law for money damages in the event that any
of the covenants or agreements of such party in this Agreement was not performed
in accordance with its terms, and it is therefore agreed that each of Seller and
Purchaser in addition to and without limiting
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any other remedy or right such party may have, shall have the right to an
injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach and enforcing specifically the terms and provisions
hereof, and each of Seller and Purchaser hereby waive any and all defenses such
party may have on the ground of lack of jurisdiction or competence of the court
to grant such an injunction or other equitable relief.
(b) All rights, powers and remedies under this Agreement or otherwise
available in respect hereof at law or in equity shall be cumulative and not
alternative, and the exercise or beginning of the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such Party
12.5 ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules attached hereto) and other documents delivered at the Closing pursuant
hereto, contain the entire understanding of the parties in respect of the
subject matter hereof and supersede all prior agreements and understandings
between or among the parties with respect to such subject matter The exhibits
and schedules hereto constitute a part hereof as though set forth in full above
12.6 EXPENSES; TAXES. Except as otherwise provided in this Agreement,
the parties shall pay their own fees and expenses, including their own counsel
fees, incurred in connection with this Agreement or any transaction contemplated
hereby. Further, except as otherwise provided in this Agreement, any sales tax,
stamp duty, deed transfer or other tax (except taxes based on the income of
Purchaser) arising out of the sale of the shares of Common Stock by Seller to
Purchaser and consummation of the transactions contemplated by this Agreement
shall be paid by Seller.
12.7 AMENDMENT. This Agreement may not be modified or amended except by
a writing executed by the parties hereto.
12.8 WAIVER. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
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12.9 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and legal permitted assigns. Neither party may assign its
rights and obligations hereunder without the prior written consent of the other
party, which consent shall not be unreasonably withheld, conditioned or delayed.
12.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
12.11 HEADINGS. The headings contained in this Agreement are for
convenience of reference only and are not to be given any legal effect and shall
not affect the meaning or interpretation of this Agreement.
12.12 GOVERNING LAW INTERPRETATION. This agreement shall be construed
in accordance with and governed for all purposes by the laws of the state of
Delaware.
12.13 SEVERABILITY. The parties stipulate that the terms and provisions
of this Agreement are fair and reasonable as of the date of this Agreement.
However, if any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because
excessively broad or vague as to duration, geographical scope, activity or
subject, it shall be construed by limiting, reducing or defining it, so as to be
enforceable.
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IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be duly executed and delivered as of the day and year first set
forth above.
SELLER:
NORTH COAST ENERGY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title:_______________________________
PURCHASER:
NUON International bv
By: /s/ ▇▇▇ J.M.J. Blomen
Title:__________________________________
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LIST OF EXHIBITS AND SCHEDULES
------------------------------
SECTION REFERENCE OF
EXHIBIT AGREEMENT DESCRIPTION
-----------------------------------------------------------------------------------------
A 3.1 Purchaser's Board Designees
-----------------------------------------------------------------------------------------
B 3.3 Voting Agreement
SECTION REFERENCE OF
SCHEDULE AGREEMENT DESCRIPTION
-----------------------------------------------------------------------------------------
5.6 5.6 Purchase Rights
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5.13 5.13 Environmental