Exhibit 10.5
MEMBERSHIP INTEREST AGREEMENT
THIS MEMBERSHIP INTEREST AGREEMENT ("Agreement"), dated as of June
18, 2002, by and between Xxxxxx X. Xxxxxxxx, a resident of the State of Texas
("Seller"), Myriad Gas Company, LLC, a Texas limited liability company (the
"Company"), and Texas Commercial Resources, Inc., a Texas corporation
("Purchaser").
WITNESSETH:
WHEREAS, Seller owns all of the issued and outstanding membership
interests (the "Interests") of Company;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller a certain amount of Interests of the Company equal to
85% of the issued and outstanding Interests of the Company, for the
consideration set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows;
ARTICLE I
DEFINED TERMS
Section 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings:
"Action" means any claim, action, suit, arbitration, inquiry,
proceeding or investigation by any Governmental Authority or other third party.
"Affiliates" of a party shall mean persons or entities that directly,
or indirectly through one or more intermediaries, control or are controlled by,
or are under common control with, such party.
"Code" means the Internal Revenue Code of 1986, as amended.
"Encumbrances" means liens, charges, pledges, options, mortgages,
deeds of trust, security interests, claims, restrictions (whether on voting,
sale, transfer, disposition or otherwise), easements and other encumbrances of
every type and description, whether imposed by law, agreement, understanding or
otherwise.
"Environmental Laws" means any and all applicable Laws pertaining to
health, safety, or the environment in effect in any and all jurisdictions in
which the Company has conducted operations or activities or owned or leased
property, including, without limitation, the Clear Air Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Rivers and Harbors Act of 1899, as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Safety and Health Act of
1970, as amended, the Resource Conservation and Recovery Act of 1976, as
amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, the Texas Water
Code, the Texas Solid Waste Disposal Act, and other environmental conservation
or protection laws.
"Facilities" means those certain facilities used for the retail
distribution of propane and related equipment and supplies owned and operated by
the Company.
"Governmental Authority" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or arbitral body.
"Governmental Order" means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered into by or with any
Governmental Authority.
"IRS" means the United States Internal Revenue Service.
"Law" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, requirement or rule of common law.
"Liabilities" means any and all debts, liabilities and obligations
(including, without limitation, all obligations relating to employees or former
employees of the Company), whether accrued or fixed, absolute or contingent,
matured or unmatured, or determined or determinable, including, without
limitation, those arising under any Law (including, without limitation, any
environmental law), Action or Governmental Order and those arising under any
contract agreement, arrangement, commitment or undertaking.
"Material Adverse Effect" shall mean a single event, occurrence or
fact that (together with all other events, occurrences and facts that could
reasonably be expected to result in a loss to the Company) would have, or might
reasonably be expected to have, a material adverse effect on the Company and its
business and operations.
"Materials of Environmental Concern" means any chemicals, pollutants,
contaminants, wastes (including ambient wastes, hazardous wastes, and liquid
industrial wastes), or other substances (including toxic, deleterious, or
hazardous substances), as defined, listed, or regulated pursuant to any
Environmental Laws, including asbestos-containing materials, polychlorinated
biphenyls, pesticides and oils, and petroleum (including crude oil and any
fraction thereof, natural gas, and natural gas liquids) and petroleum products
(as those exemplary terms are defined in or regulated under the United States
National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R.
xx.xx. 300.1 et. Seq. and other Environmental Laws.
"Permitted Encumbrances" means any and all of the following
encumbrances:
(a) Liens for taxes and assessments which are not yet due and payable
or, if due and payable, the validity of which is being contested in good faith
by appropriate legal proceedings;
(b) Rights existing under applicable laws or operating agreements or
similar contracts to assert liens against any properties of the Company, but not
including liens and other rights which have actually been asserted, unless the
Company disputes the validity of any such lien or the amount claimed to be owed
in connection therewith, or such lien or other right is not enforceable against
the interest of the Company;
2
(c) Any obligations or duties affecting any property to any
municipality or public authority with respect to any franchise, grant, license
or permit and all applicable laws, rules and orders of any Governmental
Authority;
(d) Any other Encumbrance that is not substantial in character,
amount or extent and does not materially detract from the value of the property
subject thereto; and
(e) Any Encumbrance created by Purchaser or any of its Affiliates.
Section 1.02. Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Sections of this Agreement set forth
below:
Term Section
---- -------
Agreement Preamble
Ancillary Documents Section 4.04
Cash Payment Section 2.03
Closing Section 3.01
Company Preamble
Financial Statements Section 4.08
Interests Preamble
Losses Section 7.02
Note Preamble
Purchase Price Section 2.02
Purchaser Preamble
Reference Balance Sheet Section 4.08
Securities Act Section 4.10
Seller Preamble
Shares Preamble
TCRI Stock Section 2.02
TCRI Warrants Section 2.02
3
ARTICLE II
PURCHASE AND SALE
Section 2.01. Purchase and Sale of Shares. At the Closing, and on the
terms and subject to the conditions set forth in this Agreement, Seller shall
sell, assign, transfer, and deliver to Purchaser, and Purchaser shall purchase
and accept from Seller, the Interests.
Section 2.02. Purchase Price and Payment. In consideration of the
sale of the Interests to Purchaser, Purchaser shall issue to Seller shares of
common stock, par value $.01 per share ("TCRI Stock") of Purchase, and/or
warrants to purchase TCRI Stock, under the following terms and conditions:
a. 100,000 shares of TCRI Stock to be issued by the
Purchaser to Seller at the Closing (as defined in Section 3.01);
b. 125,000 shares of TCRI Stock to be issued by the
Purchaser to Seller 90 days after the Closing Date if the Company
meets its revenue projections equal to
_______________________________; and
c. if the Company meets revenue projections equal to
_______________, six months after the Closing Date, the Purchaser
shall issue to Seller either (i) 175,000 shares of TCRI Stock, or
(ii) warrants to purchase 175,000 shares of TCRI Stock, exercisable
by Seller for a period of 24 months from the date of issuance of the
warrant with a cashless exercise option (the "TCRI Warrants").
The consideration set forth in Sections 2.02(a), 2.02(b) and 2.02(c) above is
collectively referred to herein as the "Purchase Price".
ARTICLE III
CLOSING
Section 3.01. Closing. Subject to the terms of this Agreement, the
sale and purchase of the Shares contemplated by this Agreement shall take place
at a closing of the transactions contemplated hereby (the "Closing") to be held
at the offices of Xxxxxxxx & Xxxxxx, LLP, 0000 Xxxxx Xxxxxx, Xxxxx 0000 Xxxxxxx,
Xxxxx on the date which is the later of (a) June [30], 2002 or (b) the
satisfaction of all closing conditions set forth in this Article III, or at such
other place or at such other time or on such other date as Seller and Purchaser
may mutually agree upon in writing (the day on which the Closing takes place
being the "Closing Date").
Section 3.02. Conditions to the Closing.
(a) The obligations of Seller to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
(i) All the representations and warranties of Purchaser
contained in this Agreement, and in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith on or prior to the Closing Date, shall be true and correct in all
material respects as of the date made and (having been deemed to have been made
again on and as of the Closing Date) shall be true and correct in all material
respects on and as of the Closing Date, except as affected by transactions
permitted by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such specified
date.
4
(ii) Purchaser shall have performed and complied with in
all material respects all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date.
(b) The obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
(i) All the representations and warranties of Seller and
the contained in this Agreement, and in any
agreement, instrument, or document delivered pursuant hereto or in connection
herewith on or prior to the Closing Date, shall be true and correct in all
material respects as of the date made and (having been deemed to have been made
again on and as of the Closing Date) shall be true and correct in all material
respects on and as of the Closing Date, except as affected by transactions
permitted by this Agreement and except to the extent that any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such specified
date.
(ii) Seller shall have performed and complied with in all
material respects all covenants and agreements
required by this Agreement to be performed or complied with by Seller on or
prior to the Closing Date.
Section 3.03. Closing Deliveries by Seller. At the Closing, Seller
shall execute, acknowledge (where appropriate) and deliver, or cause to be
executed, acknowledged (where appropriate) and delivered, to Purchaser the
following:
(a) Certificates evidencing the Interests, duly endorsed in blank or
accompanied by appropriate stock powers.
(b) A certificate, executed by Seller, dated as of the Closing Date,
certifying that (i) the representations and warranties of Seller in this
Agreement are true and correct in all material respects as of the Closing (or,
in the case of representations and warranties which address matters only as of a
particular date, as of such particular date), with the same effect as though
made as of such date, (ii) that each covenant or agreement of Seller in this
Agreement to be complied with at or prior to Closing shall have been complied
with in all material respects and (iii) no Action (excluding any such matter
initiated by Purchaser or any of its Affiliates) is pending or, to Seller's
knowledge, threatened before and no injunction issued by any Governmental
Authority seeking to enjoin or restrain or prohibit, delay, or restrain the
performance of or to obtain damages or other relief in connection with this
Agreement, or the consummation of the transactions contemplated hereby.
5
Section 3.04. Closing Deliveries by Purchaser. At the Closing,
Purchaser shall execute, acknowledge (where appropriate) and deliver, or cause
to be executed, acknowledged (where appropriate) and delivered, to Seller the
following:
(a) A certificate or certificates evidencing the TCRI Stock duly
issued and registered in the name of Seller, subject to the vesting schedule and
the other terms and conditions set forth in Section 2.02, attached hereto and
made a part hereof.
(b) A certificate, executed by the duly authorized officer of the
Purchaser, dated as of the Closing Date, certifying that (i) the representations
and warranties of Purchaser in this Agreement are true and correct in all
material respects as of the Closing, with the same effect as though made as of
such date (or, in the case of representations and warranties which address
matters only as of a particular date, as of such particular date), (ii) that
each covenant or agreement of Purchaser in this Agreement to be complied with at
or prior to Closing shall have been complied with in all material respects and
(iii) no Action (excluding any such matter initiated by Seller or any of
Seller's Affiliates) is pending or, to Purchaser's knowledge, threatened before
any court or governmental agency seeking to enjoin or restrain or prohibit,
delay, or restrain the performance of or to obtain damages or other relief in
connection with this Agreement, or the consummation of the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that:
Section 4.01. Organization; Good Standing. The Company is a limited
liability company duly formed under the laws of Texas. The Company has all
requisite power and authority to own and lease its properties and assets and to
carry on its business as currently conducted.
Section 4.02. Articles of Organization and Regulations. Seller has
made available to Purchaser accurate and complete copies of (i) the Articles of
Organization and Regulations of the Company as currently in effect, (ii) the
membership interest records, including a complete list of all of the members, of
the Company, and (iii) the minutes of all meetings of the members and/or
managers of the Company, any committees of such members and/or managers, (and
all consents in lieu of such meetings).
Section 4.03. Capitalization of the Company. The authorized
membership interests of the Company consist of one (1) membership interest, of
which, as of the date hereof, one interest is outstanding and no interests are
held in the Company's treasury. All outstanding membership interests of the
Company have been validly issued and are fully paid and nonassessable, and no
membership interest of the Company is subject to, nor have any been issued in
violation of, preemptive or similar rights. Except as set forth above in this
Section, there are (and as of the Closing Date there will be) outstanding (i) no
interests or securities of the Company other than those membership interests
issued to the parties set forth on Exhibit A, (ii) no securities of the Company
convertible into or exchangeable for membership interests or other voting
securities of the Company, (iii) no options or other rights to acquire from the
Company, and no obligation of the Company to issue or sell, any membership
interests or other voting securities of the Company or any securities of the
Company convertible into or exchangeable for such membership interests or voting
securities, and (iv) no equity equivalents, interests in the ownership or
earnings, or other similar rights of or with respect to the Company. There are
(and as of the Closing Date there will be) no outstanding obligations of the
Company to repurchase, redeem, or otherwise acquire any of the foregoing
interests, securities, options, equity equivalents, or rights. Company is not a
party to, or is aware of, any voting agreement, voting trust, or similar
agreement or arrangement relating to the Company's membership interests.
6
Section 4.04. Due Authorization; Execution and Delivery. Seller has
full power and authority to enter into and perform this Agreement and any
documents or instruments to be entered into as contemplated or required by this
Agreement (collectively, the "Ancillary Documents") and to which Seller is a
party, and to carry out the transactions contemplated hereby and thereby. Prior
to the Closing, Seller will have taken all requisite action to approve the
execution and delivery of this Agreement and the Ancillary Documents to which it
is a party and the transactions contemplated hereby and thereby. This Agreement
and each of the Ancillary Documents to which Seller is a party constitutes the
legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as may be limited by the availability of
equitable remedies or by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally (whether such
rights are considered at law or in equity).
Section 4.05. Noncontravention. The execution, delivery, and
performance by Seller of this Agreement and the Ancillary Documents to which
Seller is a party, and the consummation by Seller of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or result
in a violation of any provision of, or constitute (with or without the giving of
notice or the passage of time or both) a default under, or give rise (with or
without the giving of notice or the passage of time or both) to any right of
termination, cancellation or acceleration under, or require any consent,
approval, authorization or waiver of, or notice to, any party to, any material
bond, debenture, note, mortgage, indenture, lease, contract, agreement or other
instrument or obligation to which Seller or the Company is a party or by which
Seller, the Company, or the assets of the Company, may be bound, (ii) result in
the creation or imposition of any Encumbrance upon any assets of the Company,
except for Permitted Encumbrances, or (iii) assuming compliance with the matters
referred to in Section 4.07, violate any Law binding upon the Company or Seller
or any of the Assets of the Company or Seller, except for any such conflicts,
violations, defaults, terminations, cancellations, encumbrances or accelerations
which would not, individually or in the aggregate, have a Material Adverse
Effect on the Company or Seller, and except, in the case of clause (i) above,
for such consents, approvals, authorizations and waivers that have been obtained
and are unconditional and in full force and effect and such notices that have
been duly given.
Section 4.06. Governmental Approvals. No approval, authorization,
consent, order or other action of, or filing with, any governmental authority or
administrative agency is required in connection with the execution and delivery
by Seller of this Agreement or the consummation of the transactions contemplated
hereby, other than (i) filings with or approvals by other Governmental
Authorities to occur in the ordinary course following the consummation of the
transaction contemplated by this Agreement and (ii) such consents, approvals,
orders or authorizations which, if not obtained, and such declarations, filings,
or registrations which, if not made, would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
7
Section 4.07. Subsidiaries. The Company does not own, directly or
indirectly, any capital stock or other securities of any corporation or have any
direct or indirect equity or ownership interest in any other Person except for
an ownership interest in Myrid/Commanders Point LLC.
Section 4.08. Financial Statements. Seller has delivered to Purchaser
copies of (i) the Company's [unaudited] balance sheet at December 31, 2001 and
[unaudited] statements of operations, cash flows, and changes in members' equity
for the year then ended and (ii) the Company's unaudited balance sheet (the
"Reference Balance Sheet") at April 30, 2002 (the "Balance Sheet Date") and
unaudited statements of operations, cash flows, and changes in members' equity
for the month then ended (collectively, the "Financial Statements"). The
Financial Statements are complete and correct and have been prepared from the
books and records of the Company in conformity with generally accepted
accounting principles applied on a basis consistent with preceding years
throughout the periods involved, except that the unaudited Financial Statements
are not accompanied by notes or other textual disclosure required by generally
accepted accounting principles. The Financial Statements fairly present in all
material respects, on the basis stated therein and on the date hereof, the
financial position of the Company at the respective dates therein specified and
its results of operations and cash flows for the periods the ended and do not
omit to state any information necessary to make such Financial Statements not
misleading.
Section 4.09. Absence of Undisclosed Liabilities. To the best
knowledge of Seller, the Company does not have any Liability (whether accrued,
absolute, contingent, unliquidated, or otherwise, whether or not known to the
Company, and whether due or to become due), except (i) Liabilities reflected on
the Reference Balance Sheet, (ii) Liabilities that have arisen since the date of
the Reference Balance Sheet in the ordinary course of business (none of which is
a material liability for breach of contract), (iii) Liabilities arising under
executory contracts entered into in the ordinary course of business (none of
which is a material liability for breach of contract), and (iv) other
Liabilities that, in the aggregate, are not material to the Company.
Section 4.10. Absence of Certain Changes. Since the Balance Sheet
Date (i) there has not been any event or condition that might reasonably be
expected to result in a Material Adverse Effect on the Company; (ii) the Company
has not incurred any material liability, engaged in any material transaction or
entered into any material agreement outside the ordinary course of business
consistent with past practice, other than as contemplated under this Agreement;
and (iii) the Company has not taken any of the actions set forth in Section
6.01, except as permitted thereunder.
Section 4.11. Tax Matters. The Company has (and as of the Closing
Date will have) (i) duly filed all material federal, state, local and foreign
tax returns required to be filed by or with respect to it with the IRS or other
applicable taxing authority, (ii) paid all material taxes due, or claimed by any
taxing authority to be due, from or with respect to it, except taxes that are
being contested in good faith and for which adequate reserves have been set
aside as disclosed on Schedule 4.11, and (iii) made all material deposits
required with respect to taxes, in each such case to the extent that the failure
to do so would result in the imposition of any Encumbrance, other than a
Permitted Encumbrance, on any material portion of the assets of the Company.
There has been no issue raised or adjustment proposed (and none is pending) by
the IRS or any other taxing authority in connection with any tax returns of the
Company. No waiver or extension of any statute of limitations as to any federal,
state, local or foreign tax matter has been given by or requested from the
Company. The Company has not filed a consent under Section 341(f) of the Code.
The Company has elected to be taxed as a [partnership][corporation].
8
Section 4.12. Title to Assets. As of the Closing Date, to the best
knowledge of the Xxxxxx, the Company will have good and defensible title, or
with respect to the material assets which it then leases, valid leasehold
rights, to all of the material assets owned by it, free and clear of all
Encumbrances other than Permitted Encumbrances.
Section 4.13 Litigation. To Seller's knowledge, there are no
Governmental Orders and no Actions pending or threatened against of affecting
the Company, which, if adversely determined, could reasonably be expected to
materially and adversely affect the Company or which challenges the validity or
propriety of any of the transactions contemplated by this Agreement.
Section 4.14. Compliance with Laws. To Seller's knowledge, the
Company has complied in all material respects with all Laws relating to the
ownership or operation of the Facilities, except for noncompliance with such
Laws which, individually or in the aggregate, does not and will not have a
Material Adverse Effect on the Company, except that the Company is required to
make certain filings with the Texas Railroad Commission that cannot be made
until the Company has obtained a general liability insurance policy, which is
does not currently have, and neither the Company nor Seller has received any
written notice of any action, which has not been dismissed or otherwise disposed
of, that the Company and Seller have not so complied.
Section 4.15. Certain Agreements. Set forth on Schedule 4.15 is an
accurate and complete list of all contracts, agreements, leases, licenses,
plans, arrangements or commitments, written or oral (collectively, "agreements")
(i) relating to the borrowing of money by the Company or to the guarantee or
assumption by the Company of any obligations of others, (ii) relating to the
purchase or distribution of propane, or (iii) pursuant to which the Company is
obligated to expend or has the right to receive more than $10,000 in any
12-month period and which is not subject to cancellation by the Company upon
less than 60 days' notice without penalty. Each of such agreements is a valid
and binding agreement of the Company and the other party or parties thereto,
enforceable against the Company and such other party or parties in accordance
with its terms. The Company is not in breach of or in default under, nor has any
event occurred which (with or without the giving of notice or the passage of
time or both) would constitute a default by the Company under, any material
provision of any of such agreements, and the Company has not received any notice
from, or given any notice to, any other party indicating that the Company is in
breach of or in default under any of such agreements. To the knowledge of the
Company and Sellers, no other party to any of such agreements is in breach of or
in default under such agreements, and no assertion has been made by the Company
of any such breach or default.
9
Section 4.16. ERISA. During the past five years, neither the Company
nor any of its affiliates have made or been required to make contributions to
any "multiemployer plan", as defined in Section 3(37) of ERISA. The Company and
all the affiliates of the Company have paid and discharged promptly when due all
liabilities and obligations arising under ERISA or the Code of a character which
if unpaid or unperformed might result in the imposition of a lien against any
assets of the Company or any Subsidiary. For purposes of this Section only, an
"affiliate" of any person means any other person that, together with such
person, would be treated as a single employer under Section 414 of the Code.
Section 4.17. Insurance. The Company maintains the policies of
insurance described on Schedule 4.17.
Section 4.18. Intellectual Property. The Company owns or is licensed
to use all trademarks, tradenames, copyrights, technology, know-how and
processes necessary for the conduct of its business as currently conducted and
as anticipated for the retail distribution of propane and operation of the
Facilities (the "Intellectual Property"). No claim has been asserted or is
pending by any third party challenging or questioning the use of the
Intellectual Property or the validity or effectiveness of any use of the
Intellectual Property by the Company, and the use of the Intellectual Property
by the Company does not infringe on the rights of any third party.
Section 4.19. Environmental Matters. To Seller's knowledge:
(a) None of the Company's properties, whether leased or
owned, xxxxx, or assets located thereon (the "Properties") do not contain, and
have not contained, any Materials of Environmental Concern in amounts or
concentrations that (i) constitute or would constitute a violation of, or (ii)
could reasonably be expected to give rise to liability under, any Environmental
Law.
(b) The Properties and all operations on or at the
Properties are and have been in compliance with all applicable Environmental
Laws, and there is neither any contamination nor any violation of any
Environmental Law with respect to the Properties or the business operated by the
Company that could interfere with the continued operation of the Properties or
materially impair the fair value of the Properties.
(c) Neither the Company nor Seller has received any notice
of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or business of the Company. The Company and
Seller do not have any knowledge or reason to believe that any such notice will
be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of from the Properties in violation of, or in a manner
or to a location that could reasonably be expected to give rise to liability
under any Environmental Law, nor have any Materials of Environmental Concern
been generated, treated, stored, or disposed of at, on, or under any of the
Properties in violation of, or in a manner that could reasonably be expected to
give rise to liability under, any Environmental Law.
10
(e) No judicial proceeding or governmental or
administrative action is pending or threatened, under any Environmental Law to
which the Company is or will be named a party with respect to the Properties or
business of the Company, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative
or judicial requirements outstanding under any Environmental Law with respect to
the Properties or business of the Company.
(f) No release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Company in connection with the Properties or otherwise in
connection with the business of the Company has occurred in violation of or in
amounts or in a manner that could reasonably be expected to give rise to
liability under Environmental Laws.
Section 4.20. Brokerage Fees. Neither Seller nor its Affiliates have
retained any financial advisor, broker, agent, or finder or paid or agreed to
pay any financial advisor, broker, agent, or finder on account of this Agreement
or any transaction contemplated hereby. Seller shall indemnify and hold harmless
Purchaser from and against any and all losses, claims, damages and liabilities
(including legal and other expenses reasonably incurred in connection with
investigating or defending any claims or actions) with respect to any finder's
fee, brokerage commission or similar payment in connection with any transaction
contemplated hereby asserted by any person on the basis of any act or statement
made or alleged to have been made by Seller.
Section 4.21. Full Disclosure. No representation or warranty made by
Seller in this Agreement, and no statement of Seller contained in any document,
certificate, or other writing furnished or to be furnished by Seller pursuant
hereto or in connection herewith, contains or will contain, at the time of
delivery, any untrue statement of a material fact or omits or will omit, at the
time of delivery, to state any material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they are
made, not misleading. Seller knows of no matter that has not been disclosed to
Purchaser pursuant to this Agreement that has or, so far as Seller can now
reasonably foresee, will have a Material Adverse Effect. Seller has delivered or
made available to Purchaser accurate and complete copies of all agreements,
documents, and other writings referred to or listed in this Article IV or any
Schedule hereto.
Section 4.22. Interests. Seller is (and at the Closing will be) the
sole record and beneficial owner of, upon consummation of the transactions
contemplated hereby Purchaser will acquire valid title to, the Interests, free
and clear of all Encumbrances, other than (i) Permitted Encumbrances or (ii)
restrictions on transfer that may be imposed by federal or state securities
laws.
Section 4.23. Investment Intent. Seller is acquiring the TCRI Stock
and/or the TCRI Warrants (as well as the shares of TCRI Stock underlying the
TCRI Warrants) for Seller's own account for investment and not with a view to,
or for sale or other disposition in connection with, any distribution of all or
any part thereof, except (i) in an offering covered by a registration statement
filed with the Securities and Exchange Commission under the Securities Act of
1933 (the "Securities Act") or (ii) pursuant to an applicable exemption under
the Securities Act.
11
Section 4.24. Disclosure of Information. Seller acknowledges that it
or its representatives have been furnished with information regarding Purchaser
and its business, assets, results of operation, and financial condition. Seller
further represents that it has had an opportunity to ask questions of and
receive answers from Purchaser regarding Purchaser and its business, assets,
results of operation and financial condition and the terms and conditions of the
issuance of the TCRI Stock and TCRI Warrants. The foregoing, however, shall not
limit or modify the representations and warranties of Purchaser in Article V,
shall not limit the rights of the Company prior to and in anticipation of any
issuance of the TCRI Stock pursuant hereto, and shall not limit the disclosure
requirements of applicable federal and state securities laws.
Section 4.25. Restricted Securities. Seller understands that the TCRI
Stock and/or the TCRI Warrants (as well as the shares of TCRI Stock underlying
the TCRI Warrants) will not have been registered pursuant to the Securities Act
or any applicable state securities laws, that the TCRI Stock and/or the TCRI
Warrants (as well as the shares of TCRI Stock underlying the TCRI Warrants) will
be characterized as "restricted securities" under federal securities laws, and
that under such laws and applicable regulations the TCRI Stock and/or the TCRI
Warrants (as well as the shares of TCRI Stock underlying the TCRI Warrants)
cannot be sold or otherwise disposed of without registration under the
Securities Act or an exemption therefrom.
Section 4.26. Legend. It is agreed and understood by the Company that
the certificates representing the TCRI Stock and/or the TCRI Warrants (as well
as the shares of TCRI Stock underlying the TCRI Warrants) shall each
conspicuously set forth on the face or back thereof, in addition to any legends
required by Law or other agreement, a legend in substantially the following
form:
THE SHARES/WARRANTS REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. SUCH SHARES/WARRANTS MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNLESS THEY ARE FIRST REGISTERED PURSUANT TO
THAT ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE
CORPORATION RECEIVES A WRITTEN OPINION OF COUNSEL, WHICH OPINION AND
COUNSEL ARE SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED.
12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 5.01. Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Texas and has all requisite corporate power and authority to own
and lease its properties and carry on its business as currently conducted.
Section 5.02. Due Authorization; Execution and Delivery. Purchaser
has full power and authority to enter into this Agreement and the Ancillary
Documents to which it is a party and to carry out its obligations hereunder. The
execution and delivery by Purchaser of this Agreement and the Ancillary
Documents to which it is a party and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Purchaser. This Agreement and the Ancillary Documents to which
Purchaser is a party have been duly executed and delivered by Purchaser and
constitute the legal, valid and binding obligations of Purchaser, enforceable
against it in accordance with their respective terms, except as may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally or general equitable principles.
Section 5.03. TCRI Stock and TCRI Warrants. The TCRI Stock and/or the
TCRI Warrants (as well as the shares of TCRI Stock underlying the TCRI Warrants)
have been duly authorized for issuance and, if and when delivered by Purchaser
in accordance with the provisions of this Agreement, will be validly issued
fully paid and nonassessable.
ARTICLE VI
CERTAIN COVENANTS AND OTHER AGREEMENTS
Section 6.01. Conduct and Preservation of Business. Except in the
ordinary course of business consistent with past practice, or as expressly
provided in this Agreement, during the period from the date hereof to the
Closing, the Company shall not, and Seller shall not permit the Company to,
without the prior written consent of Purchaser:
(i) incur, guarantee or assume any indebtedness for
borrowed money;
(ii) mortgage or pledge any of the assets of the Company or
create or suffer to exist any Encumbrance thereupon, other than the Permitted
Encumbrances and Encumbrances in favor of Purchaser;
(iii) sell, lease, transfer, or otherwise dispose of,
directly or indirectly, any material part of the assets of the Company;
(iv) amend, modify or change any existing material lease or
contract relating to purchase or the retail distribution or propane;
13
(v) take any action which would or might make any of the
representations or warranties of Sellers or the Company contained in this
Agreement untrue or inaccurate as of any time from the date of this Agreement to
the Closing or would or might result in any of the conditions set forth in this
Agreement not being satisfied;
(vi) issue or sell any of capital stock of the Company, or
grant or commit to grant any options, warrants or other rights to subscribe for,
or purchase, or otherwise acquire, any shares of capital stock of the Company,
or issue or commit to issue any securities convertible into or exchangeable for
shares of capital stock of the Company;
(vii) change or amend its Articles of Organization or
Regulation of the Company;
(viii) allow any material contract of the Company to be
terminated or to be materially modified prior to the full term of the contract;
or
(ix) authorize or propose, or agree in writing or otherwise to take,
any of the actions described in this Section.
Section 6.02. Access to Records and Properties. Subject to
requirements of confidentiality imposed by contract or by law, Sellers will, and
Sellers will cause the Company to, make available to Purchaser and its
accountants, counsel and other representatives, access during normal business
hours to the properties, books and records of Sellers relating to the Company
and to the properties, books and records of the Company, and will allow their
officers and representatives to be available to Purchaser for consultation.
Section 6.03. Taxes; Other Charges. All sales and use taxes resulting
from the consummation of the transactions contemplated hereby shall be borne by
Seller, and the parties shall cooperate in obtaining all exemptions from such
taxes. All other registration, transfer, recording, and deed and stamp taxes and
fees incurred in connection with the consummation of the transactions
contemplated hereby shall be borne by Seller.
Section 6.04. Best Efforts. Seller and Purchaser shall take all
reasonable action necessary to consummate the transactions contemplated by this
Agreement and will use all necessary and reasonable means at its disposal to
obtain all necessary consents and approvals of other persons and governmental
authorities required to enable it to consummate the transactions contemplated by
this Agreement, as necessary. Each party shall promptly make all filings,
applications, statements and reports to all governmental agencies or entities
which are required to be made prior to the Closing Date by or on its behalf
pursuant to any statute, rule or regulation in connection with the transactions
contemplated by this Agreement, and copies of all such filings, applications,
statements and reports shall be provided to the other.
Section 6.05. Insurance. The Company and TCRI will work together to
obtain adequate general liability insurance as required.
Section 6.06. Public Announcements. Prior to the Closing Date,
neither Seller nor Purchaser shall disclose information or make a public
announcement relating to the transactions contemplated by this Agreement,
without the prior written consent of the other parties hereto.
14
ARTICLE VII
INDEMNIFICATION
Section 7.01. Survival. All representations, warranties, covenants
and agreements made by any party to this Agreement or pursuant hereto shall be
deemed to be material and to have been relied upon by the parties hereto and
shall survive the Closing for two years after the Closing Date.
Section 7.02. Indemnification by Seller. Subject to the limitations
set forth in Sections 7.01 and 7.04, Seller shall indemnify and hold harmless
Purchaser from, against, for and in respect of:
(a) any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances (collectively,
"Losses") suffered, sustained, incurred or required to be paid by Purchaser and
arising from the breach of any written representation, warranty, agreement or
covenant of Seller or the Company contained in this Agreement; and
(b) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by Purchaser in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 7.02;
provided only that Purchaser shall not be entitled under this Section to receive
indemnification for that portion, if any, of any Losses, costs or expenses which
is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment. As used in this Section the term
"Purchaser" refers to Purchaser and to each director, officer, agent, trustee,
manager, attorney, employee, representative and Affiliate of Purchaser.
Section 7.03. Indemnification by Purchaser. Subject to the
limitations set forth in Sections 7.01 and 7.04, Purchaser shall indemnify and
hold Seller harmless from, against, for and in respect of:
(a) any and all Losses suffered, sustained, incurred or required to
be paid by Seller and arising from the breach of any written representation,
warranty, agreement or covenant of Purchaser contained in this Agreement; and
(b) all reasonable costs and expenses (including, without limitation,
attorneys' fees, interest and penalties) incurred by Seller in connection with
any action, suit, proceeding, demand, assessment or judgment incident to any of
the matters indemnified against in this Section 7.03;
provided only that Seller shall not be entitled under this Section to receive
indemnification for that portion, if any, of any Losses, costs or expenses which
is proximately caused by its own individual gross negligence or willful
misconduct, as determined in a final judgment.
15
Section 7.04. Indemnification Procedures. The obligations and
liabilities of each indemnifying party hereunder with respect to claims
resulting from the assertion of liability by the other party or indemnified
third parties shall be subject to the following terms and conditions:
(a) The indemnified party shall give prompt written notice (which in
no event shall exceed 30 days from the date on which the indemnified party first
became aware of such claim or assertion) to the indemnifying party of any claim
which might give rise to a claim by the indemnified party against the
indemnifying party based on the indemnity agreements contained in Sections 7.02
or 7.03 hereof, stating the nature and basis of said claims and the amounts
thereof, to the extent known. The failure to so notify, or any delay in so
notifying, the indemnifying party will not relieve the indemnifying party of its
obligations under Sections 7.02 or 7.03, except solely to the extent that such
failure actually and materially prejudices the indemnifying party.
(b) If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity agreements contained in Section 7.02 or 7.03
hereof, the action, suit or proceeding shall, upon the written acknowledgment by
the indemnifying party that it is obligated to indemnify under such indemnity
agreement, be defended (including all proceedings on appeal or for review which
counsel for the indemnified party shall deem appropriate) by the indemnifying
party. The indemnified party shall have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at the
indemnified party's own expense unless (i) the employment of such counsel and
the payment of such fees and expenses both shall have been specifically
authorized in writing by the indemnifying party in connection with the defense
of such action, suit or proceeding, or (ii) counsel to such indemnified party
shall have reasonably concluded and specifically notified the indemnifying party
that there may be specific defenses available to it which are different from or
additional to those available to the indemnifying party or that such action,
suit or proceeding involves or could have an effect upon matters beyond the
scope of the indemnity agreements contained in Sections 7.02 or 7.03 hereof, in
any of which events the indemnifying party, to the extent made necessary by such
defenses, shall not have the right to direct the defense of such action, suit or
proceeding on behalf of the indemnified party. In the latter such case only that
portion of such fees and expenses of the indemnified party's separate counsel
reasonably related to matters covered by the indemnity agreements contained in
Section 7.02 or 7.03 hereof shall be borne by the indemnifying party. The
indemnified party shall be kept fully informed of such action, suit or
proceeding at all stages thereof whether or not it is represented by separate
counsel.
(c) The indemnified party shall make available to the indemnifying
party and its attorneys and accountants all books and records of the indemnified
party relating to such proceedings or litigation and the parties hereto agree to
render to each other such assistance as they may reasonably require of each
other in order to ensure the proper and adequate defense of any such action,
suit or proceeding.
(d) The indemnified party shall not make any settlement of any claims
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld or delayed.
16
(e) The amount of Losses required to be paid by any party to
indemnify any other party pursuant to this Article VII as a result of any Losses
shall be reduced to the extent of (i) any amounts actually received by such
other party after the Closing Date pursuant to the terms of the insurance
policies (if any) covering such Losses and (ii) any correlative net tax benefit
realized or to be realized by the party suffering such Losses.
(f) The indemnification obligations of Seller or Purchaser pursuant
to this Article VII shall be limited to actual damages and shall not include
incidental, consequential, indirect, punitive or exemplary damages.
ARTICLE VIII
TERMINATION
Section 8.01. Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing
in the following manner:
(a) by mutual written consent of Seller and Purchaser; or
(b) by either Seller or Purchaser, if the Closing shall not have
occurred on or before [June 30], 2002, unless such failure to close shall be due
to a breach of this Agreement by the party seeking to terminate this Agreement
pursuant to this clause (b); or
(c) by either Seller or Purchaser, if there shall be any Law that
makes consummation of the transactions contemplated hereby illegal or otherwise
prohibited or a Governmental Authority shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby, and such
order, decree, ruling or other action shall have become final and nonappealable;
or
(d) by Seller, if (i) any of the representations and warranties of
Purchaser contained in this Agreement shall not be true and correct in any
material respect, when made or at any time prior to the Closing as if made at
and as of such time (except to the extent that any such representation or
warranty is made as of a specified date, in which case such representation or
warranty must have been true and correct in all material respects as of such
specified date), in any respect which is material to Purchaser or the ability of
Purchaser to consummate the transactions contemplated hereby, or (ii) Purchaser
shall have failed to fulfill in any material respect any of its material
obligations under this Agreement, which failure is material to the obligations
of Purchaser under this Agreement, and, in the case of each of clauses (i) and
(ii), such misrepresentation, breach of warranty, or failure (provided it can be
cured) has not been cured within 30 days after written notice thereof from
Seller to Purchaser; or
(e) by Purchaser, if (i) any of the representations and warranties of
Seller contained in this Agreement shall not be true and correct in any material
respect, when made or at any time prior to the Closing as if made at and as of
such time (except to the extent that any such representation or warranty is made
as of a specified date, in which case such representation or warranty must have
been true and correct in all material respects as of such specified date), in
any respect which is material to Seller or the ability of Seller to consummate
the transactions contemplated hereby, or (ii) Seller shall have failed to
fulfill in any material respect any of its material obligations under this
Agreement, which failure is material to the obligations of Seller under this
Agreement, and, in the case of each of clauses (i) and (ii), such
misrepresentation, breach of warranty, or failure (provided it can be cured) has
not been cured within 30 days after written notice thereof from Purchaser to
Seller.
17
Section 8.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01 by Seller or Purchaser, this
Agreement shall become void and have no effect, except that the agreements
contained in this Article VIII and in Sections [9.01, 9.03 and 9.11] shall
survive the termination hereof.
Section 8.03. Certain Remedies Not Exclusive. Except as specifically
set forth herein, the rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law. The rights and
remedies of any party based upon, arising out of or otherwise in respect of any
inaccuracy in or breach of any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Expenses. Except as otherwise expressly provided
herein, each party shall pay the fees and expenses incurred by it in connection
with the transactions contemplated by this Agreement. If any action is brought
for breach of this Agreement or to enforce any provision of this Agreement, the
prevailing party shall be entitled to recover court costs, arbitration expenses
and reasonable attorneys' fees.
Section 9.02. Amendment. This Agreement may be amended at any time
but only by an instrument in writing signed by the parties hereto.
Section 9.03. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if (i) mailed by certified mail,
return receipt requested, or delivered by nationally recognized overnight
delivery service, to the parties at the addresses set forth below (or at such
other address for a party as shall be specified by like notice), or (ii) sent by
facsimile to the number set forth below (or such other number for a party as
shall be specified by proper notice hereunder), or (iii) sent by email to the
email address set forth below (or such other email address for a party as shall
be specified by proper notice hereunder):
If to Purchaser, to:Texas Commercial Resources, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxx
Facsimile: __________________
Email: xxxxxxx@xx0.xxx
with copies (which shall not constitute notice) to:
18
Xxxxxxxx & Knight, LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Facsimile: 000-000-0000
Email: xxxxxx@xxxxx.xxx
If to Seller: Xx. Xxxxxx X. Xxxxxxxx
0000 Xxxxxx Xxx Xxxxx
Xxxxxxx, Xxxxx 00000
Email: xxxxxxx@xxxxxx.xxx
Fax: ___________________
Section 9.04. Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
heirs and permitted assigns. This Agreement may not be assigned by any party
without the prior written consent of the other parties hereto.
Section 9.05. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Section 9.06. Headings. The headings of the Sections of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.
Section 9.07. Entire Agreement. This Agreement and the exhibits and
documents referred to herein contain the entire understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, warranties, conveyances or undertakings other than those
expressly set forth herein. This Agreement supersedes any prior agreements and
understandings between the parties with respect to the subject matter.
Section 9.08. Waiver. No attempted waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement, will be
effective unless evidenced by an instrument in writing by the party against whom
the enforcement of any such waiver or consent is sought.
Section 9.09. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 9.10. Severability. If any term or other provision of this
Agreement is held invalid, illegal or incapable of being enforced under any rule
or law, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in a materially adverse
manner with respect to either party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
19
Section 9.11. Intended Beneficiaries. The rights and obligations
contained in this Agreement are hereby declared by the parties hereto to have
been provided expressly for the exclusive benefit of such entities as set forth
herein and shall not benefit, and do not benefit, any unrelated third parties.
Section 9.12. Consent to Jurisdiction.
(a) The parties hereto hereby irrevocably submit to the jurisdiction
of the courts of the State of Texas and the federal courts of the United States
of America located in Texas, and appropriate appellate courts therefrom, over
any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or proceeding may be heard and determined
in such courts. The parties hereby irrevocably waive, to the fullest extent
permitted by Law, any objection which they may now or hereafter have to the
laying of venue of any dispute arising out of or relating to this Agreement or
any of the transactions contemplated hereby brought in such court or any defense
of inconvenient forum for the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
This consent to jurisdiction is being given solely for purposes of this
Agreement and is not intended to, and shall not, confer consent to jurisdiction
with respect to any other dispute in which a party to this Agreement may become
involved.
(b) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action, or proceeding of the nature
specified in subsection (a) above by the mailing of a copy thereof in the manner
specified by the provisions of Section 9.03.
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be duly executed as of the date first above written by their
respective officers thereunto duly authorized.
SELLER:
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxx X.. Xxxxxxxx
MYRIAD GAS COMPANY, LLC
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxx, manager
20
PURCHASER:
TEXAS COMMERCIAL RESOURCES, INC.
By: /s/ B. Xxxxx Xxxxxx
----------------------
B. Xxxxx Xxxxxx, Chief Financial Officer
21
EXHIBIT A
List of the Company Members
Certificate
Name Interests Number
---- --------- -----------
Xxxxxx X. Xxxxxxxx One
22