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EXHIBIT 10.5
ENERGY AUCTION EXCHANGE, INC.
SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
FEBRUARY 28, 1999
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TABLE OF CONTENTS
PAGE
1. AGREEMENT TO SELL AND PURCHASE.............................................................1
1.1 Authorization of Shares...........................................................1
1.2 Sale and Purchase.................................................................1
2. CLOSING, DELIVERY AND PAYMENT..............................................................1
2.1 Closing...........................................................................1
2.2 Delivery..........................................................................2
2.3 Subsequent Sale of Shares.........................................................2
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................2
3.1 Organization, Good Standing and Qualification.....................................2
3.2 Capitalization; Voting Rights.....................................................2
3.3 Authorization; Binding Obligations................................................3
3.4 Liabilities.......................................................................3
3.5 Title to Properties and Assets; Liens, Etc........................................3
3.6 Intellectual Property.............................................................3
3.7 Compliance with Other Instruments.................................................3
3.8 Litigation........................................................................3
3.9 Proprietary Information and Inventions Agreement..................................4
3.10 Offering Valid....................................................................4
3.11 Compliance with Laws..............................................................4
3.12 Material Contracts................................................................4
3.13 Disclosure........................................................................4
3.14 Permits...........................................................................4
3.15 Balance Sheet.....................................................................4
3.16 Changes...........................................................................5
3.17 Obligation of Chief Executive Officer.............................................5
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS...........................................6
4.1 Requisite Power and Authority.....................................................6
4.2 Investment Representations........................................................6
(a) Purchaser Bears Economic Risk............................................6
(b) Acquisition for Own Account..............................................6
(c) Purchaser Can Protect Its Interest.......................................6
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TABLE OF CONTENTS
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(d) Accredited Investor....................................................................7
(e) Rule 144...............................................................................7
(f) Residence..............................................................................7
4.3 Transfer Restrictions...........................................................................7
5. CONDITIONS TO CLOSING....................................................................................7
5.1 Conditions to Purchasers' Obligations at Each Closing...........................................7
(a) Representations and Warranties True; Performance of Obligations........................7
(b) Legal Investment.......................................................................7
(c) Consents, Permits, and Waivers.........................................................7
(d) Filing of Restated Certificate.........................................................8
(e) Investors' Rights Agreement............................................................8
(f) Board of Directors.....................................................................8
(g) Proceedings and Documents..............................................................8
(h) Execution of Clearinghouse Agreement...................................................8
5.2 Conditions to Obligations of the Company........................................................8
(a) Representations and Warranties True....................................................8
(b) Performance of Obligations.............................................................8
(c) Filing of Restated Certificate.........................................................8
(d) Investors' Rights Agreement............................................................8
(e) Consents, Permits, and Waivers.........................................................8
6. COVENANT OF THE COMPANY..................................................................................9
6.1 Grant of More Favorable Terms...................................................................9
7. MISCELLANEOUS............................................................................................9
7.1 Governing Law...................................................................................9
7.2 Survival........................................................................................9
7.3 Successors and Assigns..........................................................................9
7.4 Entire Agreement................................................................................9
7.5 Severability...................................................................................10
7.6 Amendment and Waiver...........................................................................10
7.7 Notices........................................................................................10
7.8 Expenses.......................................................................................10
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TABLE OF CONTENTS
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PAGE
7.9 Attorneys' Fees................................................................................10
7.10 Titles and Subtitles...........................................................................10
7.11 Counterparts...................................................................................10
7.12 Broker's Fees..................................................................................10
7.13 Exculpation Among Purchasers...................................................................11
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INDEX OF EXHIBITS
Schedule of Purchasers Exhibit A
Restated Certificate of Incorporation Exhibit B
Investors' Rights Agreement Exhibit C
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ENERGY AUCTION EXCHANGE, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
entered into as of this 28th day of February, 1999, by and among ENERGY AUCTION
EXCHANGE, INC., a Delaware corporation (the "COMPANY"), and each of those
persons and entities, severally and not jointly, whose names are set forth on
the Schedule of Purchasers attached hereto as Exhibit A (which persons and
entities are hereinafter collectively referred to as "PURCHASERS" and each
individually as a "PURCHASER").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of two million (2,000,000) shares of its Series A Preferred Stock (the
"SERIES A STOCK");
WHEREAS, ▇▇▇▇▇▇▇ Energy Services, LLC desires to purchase an aggregate
of six hundred sixty-six thousand six hundred sixty-six (666,666) shares of
Series A Stock, $.001 par value (the "SHARES") on the terms and conditions set
forth herein;
WHEREAS, the Company desires to issue and sell the Shares to Purchasers
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. AGREEMENT TO SELL AND PURCHASE
1.1 AUTHORIZATION OF SHARES. On or prior to the First Closing (as
defined in Section 2 below), the Company shall have authorized (i) the sale and
issuance to Purchasers of the Series A Stock and (ii) the issuance of such
shares of Common Stock to be issued upon conversion of the Series A Stock (the
"CONVERSION SHARES"). The Series A Stock and the Conversion Shares shall have
the rights, preferences, privileges and restrictions set forth in the Restated
Certificate of Incorporation of the Company, in the form attached hereto as
Exhibit B (the "RESTATED CERTIFICATE").
1.2 SALE AND PURCHASE. Subject to the terms and conditions hereof, at
the First Closing (as hereinafter defined), the Company hereby agrees to issue
and sell to each Purchaser, severally and not jointly, and each Purchaser agrees
to purchase from the Company, severally and not jointly, the number of Shares
set forth opposite such Purchaser's name on Exhibit A at a purchase price of
Seven Dollars and Fifty Cents ($7.50) per share.
2. CLOSING, DELIVERY AND PAYMENT
2.1 CLOSING. The initial closing of the sale and purchase of the Shares
under this Agreement (the "FIRST CLOSING") shall take place on the date hereof,
at the offices of ▇▇▇▇▇▇ Godward LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or at such other time or place as the Company and Purchasers may
mutually agree. The closing of the sale and
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purchase of the shares of Series A Stock under Section 2.3 below shall take
place at such time(s) and place(s) as the Company and Purchasers participating
therein shall mutually agree (each, a "SUBSEQUENT CLOSING") (the First Closing
and any Subsequent Closing are collectively referred to herein as a "CLOSING"
and each such date is referred to as a "CLOSING DATE").
2.2 DELIVERY. At each Closing, subject to the terms and conditions
hereof, the Company will deliver to the Purchasers certificates representing the
number of Shares to be purchased at each Closing by each Purchaser, against
payment of the purchase price therefor by check or wire transfer made payable to
the order of the Company or conversion of outstanding promissory notes.
2.3 SUBSEQUENT SALE OF SHARES. The Company may sell up to the balance
of the authorized shares of Series A Stock not sold at the First Closing. Except
as otherwise set forth herein, all such sales shall be made on the terms and
conditions set forth in this Agreement. Any shares of Series A Stock sold
pursuant to this Section 2.3 shall be deemed to be "Shares" for all purposes
under this Agreement and any purchasers thereof shall be deemed to be
"Purchasers" for all purposes under this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions delivered to the
Purchasers, the Company hereby represents and warrants to each Purchaser as
follows:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite corporate power and
authority to own and operate its properties and assets, to execute and deliver
this Agreement and the Investors' Rights Agreement, in the form attached hereto
as Exhibit C (the "INVESTORS' RIGHTS AGREEMENT"), to issue and sell the Shares
and the Conversion Shares and to carry out the provisions of this Agreement, the
Investors' Rights Agreement, and the Restated Certificate and to carry on its
business as presently conducted and as presently proposed to be conducted.
3.2 CAPITALIZATION; VOTING RIGHTS. The authorized capital stock of the
Company, immediately prior to the Closing, will consist of (a) five million
(5,000,000) shares of Common Stock, five hundred thousand (500,000) shares of
which are issued and outstanding, and up to twenty percent (20%) of the
outstanding shares of capital stock of the Company which are reserved or will be
reserved in the future for issuance by the Company or a subsidiary thereof to
key employees, consultants and others affiliated with the Company or a
subsidiary thereof pursuant to stock grant, stock purchase and/or option plans
or any other stock incentive program, arrangement or agreement approved by the
Company's Board of Directors and (b) two million (2,000,000) shares of Preferred
Stock, all of which are designated Series A Preferred Stock, none of which are
issued and outstanding. All issued and outstanding shares of the Company's
Common Stock (i) have been duly authorized and validly issued, (ii) are fully
paid and nonassessable and (iii) were issued in compliance with all applicable
state and federal laws concerning the issuance of securities. The rights,
preferences, privileges and restrictions of the Shares are as stated in the
Restated Certificate. The Conversion Shares have been duly and validly reserved
for issuance. Except as may be granted pursuant to this Agreement, there are no
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outstanding options, warrants, rights (including conversion or preemptive rights
and rights of first refusal), proxy or stockholder agreements, or agreements of
any kind for the purchase or acquisition from the Company of any of its
securities. When issued in compliance with the provisions of this Agreement and
the Restated Certificate, the Shares and the Conversion Shares will be validly
issued, fully paid and nonassessable and will be free of any liens or
encumbrances.
3.3 AUTHORIZATION; BINDING OBLIGATIONS. All corporate action on the
part of the Company, its officers, directors and stockholders necessary for the
authorization of this Agreement and the Investors' Rights Agreement, the
performance of all obligations of the Company hereunder and thereunder at the
Closing and the authorization, sale, issuance and delivery of the Shares
pursuant hereto and the Conversion Shares pursuant to the Restated Certificate
has been taken or will be taken prior to the Closing. The Agreement and the
Investors' Rights Agreement, when executed and delivered, will be valid and
binding obligations of the Company enforceable in accordance with their terms.
3.4 LIABILITIES. The Company has no liabilities and, to its knowledge,
knows of no contingent liabilities not otherwise disclosed to the Purchasers,
except current liabilities incurred in the ordinary course which have not been,
either in any individual case or in the aggregate, materially adverse to the
financial condition or operating results of the Company.
3.5 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, and good title to its
leasehold interests, in each case subject to no mortgage, pledge, lien, lease,
encumbrance or charge.
3.6 INTELLECTUAL PROPERTY. The Company owns or possesses sufficient
legal rights to all patents, trademarks, service marks, trade names, copyrights,
trade secrets, information and other proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted. The Company
has not received any communications alleging that it has violated or, by
conducting its business as proposed would violate, any proprietary rights of any
other person, nor is the Company aware of any basis for the foregoing.
3.7 COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery, and
performance of and compliance with this Agreement and the Investors' Rights
Agreement, and the issuance and sale of the Shares pursuant hereto and of the
Conversion Shares pursuant to the Restated Certificate, will not, with or
without the passage of time or giving of notice, result in any such material
violation, or be in conflict with or constitute a default under any such term,
or result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
3.8 LITIGATION. There is no action, suit, proceeding or investigation
pending or, to the Company's knowledge, currently threatened against the Company
which might result, either individually or in the aggregate, in any material
adverse change in the assets, condition, affairs or prospects of the Company.
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3.9 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. Each current
employee, officer, consultant and contractor of the Company has executed a form
of Proprietary Information and Inventions Agreement.
3.10 OFFERING VALID. Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 4.2 hereof, the offer, sale
and issuance of the Shares and the Conversion Shares will be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), and will have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws.
3.11 COMPLIANCE WITH LAWS. The Company's business has been conducted in
compliance with all applicable laws and regulations of governmental authorities,
except for such violations that have been cured or that, individually or in the
aggregate, may not reasonably be expected to have a material adverse effect on
the business, operations, financial condition or prospects of the Company.
3.12 MATERIAL CONTRACTS. Except for transactions contemplated by this
Agreement, the Company is not a party to (and is not otherwise bound by) any of
the following: (i) any employment or consulting contract, (ii) any agreement
providing for the issuance or repurchase of any securities of the Company, (iii)
any agreement in respect of registration rights, preemptive rights, rights of
first refusal, voting rights or other rights of security holders, (iv) any
agreement evidencing or providing for any indebtedness for borrowed money or (v)
any other agreement that could reasonably be deemed material to the Company,
except the Letter of Intent, by and between the Company and The Oil & Gas Asset
Clearinghouse, Inc., dated as of March 1, 1999, and the definitive agreements
that are executed in connection therewith (the "DEFINITIVE CLEARINGHOUSE
AGREEMENTS").
3.13 DISCLOSURE. Neither this Agreement nor any schedule hereto, nor
any written disclosure document furnished by or on behalf of the Company to the
Purchaser or counsel to the Purchaser in connection with the transactions
contemplated by this Agreement, when read together, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any information
contained within any of the foregoing relating to future events or the projected
future financial performance of the Company, including any financial projections
or descriptions of potential strategic or business relationships between the
Company and third parties.
3.14 PERMITS. The Company has all franchises, permits, licenses and
other authority necessary for its business as now being conducted and believes
it can obtain, without undue burden or expense, any similar authority for its
business as planned to be conducted. The Company is not in default in any
material respect under any such franchise, permit, license or other authority.
3.15 BALANCE SHEET. The Company has delivered to each Purchaser an
unaudited balance sheet (the "BALANCE SHEET") as of February 28, 1999 (the
"STATEMENT DATE"). The
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Balance Sheet, together with notes thereto, presents an as-if consolidation
statement of ▇▇▇▇▇▇▇ Energy Services, LLC and the Company as of such date and is
complete and correct in all material respects.
3.16 CHANGES. Except in connection with the Definitive Clearinghouse
Agreements, since the Statement Date, there has not been, to the Company's
knowledge:
(a) Any change in the assets, liabilities, financial condition
or operations of the Company from that reflected in the Balance Sheet, other
than changes in the ordinary course of business, none of which individually or
in the aggregate has had or is expected to have a material adverse effect on
such assets, liabilities, financial condition or operations of the Company;
(b) Any resignation or termination of any key officers of the
Company; and the Company, to the best of its knowledge, does not know of the
impending resignation or termination of employment of any such officer;
(c) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, business or
prospects or financial condition of the Company;
(d) Any direct or indirect loans made by the Company to any
stockholder, employee, officer or director of the Company, other than advances
made in the ordinary course of business;
(e) Any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(f) Any declaration or payment of any dividend or other
distribution of the assets of the Company;
(g) Any debt, obligation or liability incurred, assumed or
guaranteed by the Company, except those for immaterial amounts and for current
liabilities incurred in the ordinary course of business; and
(h) Any sale, assignment or transfer of any patents,
trademarks, copyrights, trade secrets or other intangible assets.
3.17 OBLIGATION OF CHIEF EXECUTIVE OFFICER. ▇▇▇▇ ▇▇▇▇▇▇▇, the Company's
President and Chief Executive Officer, will devote a majority of his business
time to the conduct of the business of the Company.
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4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company as follows
(such representations and warranties do not lessen or obviate the
representations and warranties of the Company set forth in this Agreement):
4.1 REQUISITE POWER AND AUTHORITY. Purchaser has all necessary power
and authority under all applicable provisions of law to execute and deliver this
Agreement and the Investors' Rights Agreement and to carry out their provisions.
All action on Purchaser's part required for the lawful execution and delivery of
this Agreement and the Investors' Rights Agreement have been or will be
effectively taken prior to the Closing. Upon their execution and delivery, this
Agreement and the Investors' Rights Agreement will be valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application affecting enforcement of creditors' rights,
(ii) general principles of equity that restrict the availability of equitable
remedies and (iii) to the extent that the enforceability of the indemnification
provisions of the Investors' Rights Agreement may be limited by applicable laws.
4.2 INVESTMENT REPRESENTATIONS. Purchaser understands that neither the
Shares nor the Conversion Shares have been registered under the Securities Act.
Purchaser also understands that the Shares are being offered and sold pursuant
to an exemption from registration contained in the Securities Act based in part
upon Purchaser's representations contained in the Agreement. Purchaser hereby
represents and warrants as follows:
(a) PURCHASER BEARS ECONOMIC RISK. Purchaser has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Purchaser must bear the economic risk of
this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares or any shares of its Common Stock.
Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow Purchaser to transfer all or any portion
of the Shares or the Conversion Shares under the circumstances, in the amounts
or at the times Purchaser might propose.
(b) ACQUISITION FOR OWN ACCOUNT. Purchaser is acquiring the
Shares and the Conversion Shares for Purchaser's own account for investment
only, and not with a view towards their distribution.
(c) PURCHASER CAN PROTECT ITS INTEREST. Purchaser represents
that by reason of its, or of its management's, business or financial experience,
Purchaser has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement. Further, Purchaser is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.
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(d) ACCREDITED INVESTOR. Purchaser represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) RULE 144. Purchaser acknowledges and agrees that the
Shares, and, if issued, the Conversion Shares must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available. Purchaser has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act, which permits
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the
availability of certain current public information about the Company, the resale
occurring following the required holding period under Rule 144 and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(f) RESIDENCE. If the Purchaser is an individual, then the
Purchaser resides in the state or province identified in the address of the
Purchaser set forth on Exhibit A; if the Purchaser is a partnership,
corporation, limited liability company or other entity, then the office or
offices of the Purchaser in which its investment decision was made is located at
the address or addresses of the Purchaser set forth on Exhibit A.
4.3 TRANSFER RESTRICTIONS. Each Purchaser acknowledges and agrees that
the Shares and, if issued, the Conversion Shares are subject to restrictions on
transfer as set forth in the Investors' Rights Agreement.
5. CONDITIONS TO CLOSING
5.1 CONDITIONS TO PURCHASERS' OBLIGATIONS AT EACH CLOSING. Purchasers'
obligations to purchase the Shares at each Closing are subject to the
satisfaction, at or prior to each such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. With respect to the First Closing, the representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of such Closing Date with the same force and effect as
if they had been made as of such Closing Date, and the Company shall have
performed all obligations and conditions herein required to be performed or
observed by it on or prior to such Closing. With respect to any Subsequent
Closing, the Company shall have delivered an updated Schedule of Exceptions, and
the representation and warranties made by the Company in Section 3 hereof, as
modified by such revised Schedule of Exceptions, shall be true and correct in
all material respects as of such Closing Date, and the Company shall have
performed all obligations and conditions herein required to be performed or
observed by it on or prior to such Closing.
(b) LEGAL INVESTMENT. On the Closing Date, the sale and
issuance of the Shares and the proposed issuance of the Conversion Shares shall
be legally permitted by all laws and regulations to which Purchasers and the
Company are subject.
(c) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the
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transactions contemplated by the Agreement and the Investors' Rights Agreement
(except for such as may be properly obtained subsequent to the Closing).
(d) FILING OF RESTATED CERTIFICATE. The Restated Certificate
shall have been filed with the Secretary of State of the State of Delaware.
(e) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights
Agreement, substantially in the form attached hereto as Exhibit C, shall have
been executed and delivered by the parties thereto.
(f) BOARD OF DIRECTORS. Upon the Closing, the authorized size
of the Board of Directors of the Company shall be three (3) members and the
Board shall consist of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with two (2) vacancies existing.
(g) PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
hereby and all documents and instruments incident to such transactions shall be
reasonably satisfactory in substance and form to the Purchasers and their
special counsel, and the Purchasers and their special counsel shall have
received all such counterpart originals or certified or other copies of such
documents as they may reasonably request.
(h) EXECUTION OF CLEARINGHOUSE AGREEMENT. The Definitive
Clearinghouse Agreements shall have been executed by all parties thereto.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The Company's obligation
to issue and sell the Shares at the Closing is subject to the satisfaction, on
or prior to such Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties made by the Purchasers in Section 4 hereof shall be true and
correct in all material respects at the date of each Closing, with the same
force and effect as if they had been made on and as of said date.
(b) PERFORMANCE OF OBLIGATIONS. Purchasers shall have
performed and complied with all agreements and conditions herein required to be
performed or complied with by Purchasers on or before each Closing.
(c) FILING OF RESTATED CERTIFICATE. The Restated Certificate
shall have been filed with the Secretary of State of the State of Delaware.
(d) INVESTORS' RIGHTS AGREEMENT. An Investors' Rights
Agreement, substantially in the form attached hereto as Exhibit C, shall have
been executed and delivered by the Purchasers.
(e) CONSENTS, PERMITS, AND WAIVERS. The Company shall have
obtained any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
Investors' Rights Agreement (except for such as may be properly obtained
subsequent to the Closing).
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6. COVENANT OF THE COMPANY
6.1 GRANT OF MORE FAVORABLE TERMS. No Purchaser of preferred stock of
the Company shall receive different terms than are set forth in this Agreement,
the Investors' Rights Agreement and the Restated Certificate of Incorporation,
unless all Purchasers receive an equivalent benefit on a share for share basis.
If the Company now or hereafter proposes to extend different terms to a
Purchaser of preferred stock of the Company, each Purchaser will be notified
prior to the date of the transaction and provided full details thereof,
including copies of all relevant documentation. The Company shall offer to
extend equivalent rights and benefits to each Purchaser, by amendment to this
Agreement, the Investors' Rights Agreement and/or the Restated Certificate of
Incorporation, or in such other fashion that is appropriate under the
circumstances and satisfactory in the reasonable opinion of such Purchaser. This
provision, however, shall not apply to any strategic relationships, licensing
transactions or commercial agreements entered into between the Company and a
subsequent Purchaser that are part of a broader strategic relationship, so long
as the terms of the rights granted to such Purchaser with respect to their
preferred stock are not more favorable than those granted to the Purchasers
hereunder. The provisions of this Section 6.1 shall terminate upon the earlier
to occur of: (i) the sale and issuance by the Company of an aggregate of two
million (2,000,000) (as adjusted for stock splits, stock dividends and the like)
shares of Series A Stock (inclusive of the Shares sold at the First Closing);
and (ii) the sale and issuance of shares of preferred stock in which the gross
proceeds to the Company are at least $1,000,000 and the price per share is more
than $7.50 (as adjusted for stock splits, stock dividends and the like) (a
"SENIOR SALE"). Furthermore, the provisions of this Section 6.1 shall have no
application to a Senior Sale.
7. MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Colorado without regard to its
conflict-of-laws rules.
7.2 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of the Shares from time to time.
7.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, including the Investors' Rights Agreement, and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
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7.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
7.6 AMENDMENT AND WAIVER.
(a) This Agreement may be amended or modified only upon the
written consent of the Company and holders of a majority of the Shares (treated
as if converted and including any Conversion Shares into which the Shares have
been converted that have not been sold to the public).
(b) The obligations of the Company and the rights of the
holders of the Shares and the Conversion Shares under the Agreement may be
waived only with the written consent of the holders of a majority of the Shares
(treated as if converted and including any Conversion Shares into which the
Shares have been converted that have not been sold to the public).
7.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified; (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient, if not, then on the next business
day; (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
Company at the address as set forth on the signature page hereof and to
Purchaser at the address as set forth on Exhibit A hereto or at such other
address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
7.8 EXPENSES. The Company shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
the Agreement. The Company shall reimburse the reasonable fees and expenses in
an amount not to exceed $5,000.00 of one special counsel to the Purchasers
incurred in connection with the negotiation, execution, delivery and performance
of this Agreement and the transactions contemplated thereby.
7.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
7.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of the Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
7.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.12 BROKER'S FEES. Each party hereto represents and warrants that no
agent, broker, investment banker, person or firm acting on behalf of or under
the authority of such party hereto
10.
16
is or will be entitled to any broker's or finder's fee or any other commission
directly or indirectly in connection with the transactions contemplated herein.
Each party hereto further agrees to indemnify each other party for any claims,
losses or expenses incurred by such other party as a result of the
representation in this Section 7.12 being untrue.
7.13 EXCULPATION AMONG PURCHASERS. Each Purchaser acknowledges that it
is not relying upon any person, firm, or corporation, other than the Company and
its officers and directors, in making its investment or decision to invest in
the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Shares and Conversion
Shares.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
11.
17
IN WITNESS WHEREOF, the parties hereto have executed the SERIES A
PREFERRED STOCK PURCHASE AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASERS:
ENERGY AUCTION EXCHANGE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/
------------------------------------- ----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Name:
Executive Officer --------------------------
Title:
-------------------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Address:
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ------------------------
--------------------------------
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
18
PURCHASERS:
ANSCHUTZ FAMILY INVESTMENT COMPANY LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
Title:
------------------------------
Address:
----------------------------
------------------------------------
A.C.E. INVESTMENT PARTNERSHIP
By: /s/
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address:
----------------------------
------------------------------------
SERIES A PREFERRRED STOCK PURCHASE AGREEMENT
19
EXHIBIT A
SCHEDULE OF PURCHASERS
FIRST CLOSING
NAME AND ADDRESS SHARES AGGREGATE PURCHASE PRICE
---------------- ------ ------------------------
▇▇▇▇▇▇▇ Energy Services, LLC 666,666 $4,999,995.00
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SUBSEQUENT CLOSING
NAME AND ADDRESS SHARES AGGREGATE PURCHASE PRICE
---------------- ------ ------------------------
Anschutz Family Investment Company LLC 515,069 $ 3,863,017.50(1)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
A.C.E. Investment Partnership 22,065 $ 165,487.50(2)
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Sequel Limited Partnership II 535,671 $ 4,017,532.50(3)
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Washing
Greenwood Gulch Ventures, LLC 33,333 $ 249,997.50
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇
Energetic Investors LLC 133,333 $ 999,997.50
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., P.C
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------
1 Includes interest in the aggregate amount of $28,020.88
2 Includes interest in the aggregate amount of $496.25
3 Includes interest in the aggregate amount of $17,534.24
20
EXHIBIT B
RESTATED CERTIFICATE OF INCORPORATION
21
EXHIBIT C
INVESTORS' RIGHTS AGREEMENT