EXHIBIT 10.38
EXHIBIT B to
Letter Agreement Dated June 30, 1997, by and among
Cliffwood Exploration Company, Cliffwood
Production Co., ▇▇▇▇▇▇▇ Exploration Company and
Blue Moon Exploration Company
CLIFFWOOD OIL & GAS CORP.
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT ("Agreement") is dated as of May 21, 1996 by
and among Cliffwood Oil & Gas Corp., a Texas corporation (the "Company"), and
each of the persons signatory hereto who are all shareholders of the Company
(each a "Shareholder" and together the "Shareholders").
SECTION 1. DEFINITIONS. As used in this Agreement:
(a) "Stock" means all shares of stock of the Company, regardless of
differing classes, which may now or hereafter be issued.
(b) "Disposition" means each transaction, voluntary or involuntary and
whether occurring by operation of law or otherwise, which has the purpose and/or
effect of making (1) a change in ownership of Stock; or (2) a change in the
identity of the holder or owner of legal or beneficial title to any Stock
including, without limitation, any transfer or pledge of Stock.
(c) "Persons" means any individual, legal representative, estate, trust,
partnership, limited liability company, corporation, unincorporated association,
joint venture, or other entity.
(d) "Personal Representative" means, with respect to any Person, the
conservator, executor, executrix, administrator, administratrix, attorney in
fact, trustee, or agent of such Person or such Person's estate.
SECTION 2. GENERAL RESTRICTION ON DISPOSITION OF STOCK. Except with the prior
written consent of at least two-thirds of the Shareholders, no Shareholder may
make any Disposition, or allow any Disposition to be made, except in compliance
with this Agreement. Any attempted Disposition in breach of this Agreement shall
be void and of no effect. Notwithstanding the foregoing, Shareholders who are
employed by the Company shall be permitted to sell, transfer or otherwise convey
Stock to other employees of the Company.
SECTION 3. RIGHT OF FIRST REFUSAL.
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(a) Any Shareholder may make a Disposition at any time to the Company or
another Shareholder.
(b) Any Shareholder desiring to make a Disposition to a Person other than
the Company or another Shareholder shall first deliver a Sale Notice offering to
sell his Stock to the Company and/or the other Shareholders, whereupon the
Company and the Shareholders shall have the right and option (but not the
obligation) to purchase all the Stock which is referenced in the Sale Notice in
accordance with this Section 3.
(c) The Shareholder shall simultaneously deliver the written Sale Notice
to the Company and to each other Shareholder. The Sale Notice shall identify (i)
the Shareholder delivering it, (ii) its date, (iii) the relevant number of
shares of Stock, (iv) the name or names of, and the proposed purchase price per
share to be paid by, any proposed purchaser(s) or transferee(s), and (v) the
terms for payment of the proposed purchase price.
(d) The Company shall have the right and option (but not the obligation),
for a period of thirty (30) days following the date of the Sale Notice, to
purchase all or any portion of the Stock which is the subject of the Sale
Notice.
(e) The Company may only purchase less than all of the relevant Stock if
it receives the written commitment of the Shareholders that they will purchase
the balance of such Stock. If the Company does not exercise its option to
purchase all of the Stock which is the subject of a Sale Notice for any reason,
the Company, within the thirty (30) day period referenced in Section (_), shall
notify the selling Shareholder and the other Shareholders in writing of such
fact, the Company shall specify the number of shares of the Stock which the
Company will not purchase.
(f) In the event the Company purchases less than all of the Stock which is
the subject of the Sale Notice, the other Shareholders shall have the option to
purchase all of the shares of the Stock which the Company does not to purchase.
If the Company purchases some Stock, but not all, then the other Shareholders
shall have the obligation to purchase the balance in accordance with their
written commitment described above.
(g) If more than one of such other Shareholders elects to purchase Stock
pursuant to the Sale Notice and they fail to agree among themselves as to the
proportions in which they shall purchase such Stock, each such electing
Shareholder shall purchase that portion of such Stock which bears the same ratio
to all of such Stock as the number of shares of Stock owned by such electing
Shareholder (as of the date of the Sale Notice) bears to the aggregate number of
shares of Stock then owned by all of such electing Shareholders.
(h) The Company and other Shareholders shall exercise any option granted
hereunder by giving written notice to the selling Shareholder of their intent to
purchase such Stock.
(i) The closing of a purchase and sale of Stock hereunder shall take
place, unless otherwise mutually agreed upon between the seller and the
purchaser(s), on the ninetieth (90th) day
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after the date of the Sale Notice. The closing shall be at the principal office
of the Company, and payment of the purchase price and delivery of all required
documents shall occur at the closing. The selling Shareholder shall deliver to
the purchasing party or parties (i) the certificate(s) evidencing the Stock
being sold, (ii) an executed assignment of such Stock containing general
warranties of title, no liens and authority of the assignor to make such
assignment, and (iii) an executed stock power, all in proper form for the valid
transfer of the purchased Stock on the records of the Company.
(j) The price per share to be paid upon the purchase of Stock pursuant to
this Agreement shall be the amount set forth in the Sale Notice, payable in
accordance with the terms described in the Sale Notice.
(k) No selling Shareholder shall be obligated to consummate a sale after a
Sale Notice has been accepted, unless the following conditions have been
satisfied by the purchasing parties or waived by the selling Shareholder:
(1) The Company has fully repaid any loans made by the selling
Shareholder to the Company ("Shareholder Loan"); and
(2) In the event the selling Shareholder is not repaid a Shareholder
Loan, the purchasing parties, prior to or contemporaneously with the
consummation of such sale, shall indemnify, defend and hold the selling
Shareholder harmless from any and all liability or loss with respect to
the Shareholder Loan.
SECTION 4. NOTICES. Any Sale Notice or other notice ("notice") required or
permitted to be given to any Person, must be given in writing and may be given
(i) by certified or registered U.S. mail, return receipt requested, postage
prepaid, or (ii) by delivery in person. A notice deposited in the United States
mail in the manner above described shall be effective three (3) days after
deposit. Notice given in any other manner shall be deemed delivered and
effective only if and when received by the party to be notified. For purposes of
notice hereunder, the addresses of the parties shall be those as set out in the
corporate records of the Company. Any party to this Agreement shall have the
right to change his address for notice by giving at least three (3) days written
notice of such change of address to each other party hereto.
SECTION 5. ENDORSEMENT OF STOCK CERTIFICATES. All certificates representing
Stock now owned or hereafter acquired by the Shareholders shall be endorsed on
the back thereof as follows:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
A SHAREHOLDERS' AGREEMENT, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY, AND SAID SHARES MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT IN
STRICT ACCORDANCE WITH THE TERMS OF THAT SHAREHOLDERS' AGREEMENT. A
COPY OF THE SHAREHOLDERS' AGREEMENT WILL BE FURNISHED WITHOUT CHARGE
TO THE HOLDER OF THIS CERTIFICATE UPON RECEIPT BY THE
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COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED
OFFICE OF A WRITTEN REQUEST FROM THE HOLDER REQUESTING
SUCH COPY."
Such certificate shall be endorsed an the front thereof as follows:
"SEE RESTRICTIONS ON TRANSFER ON REVERSE SIDE."
SECTION 6. SUPERMAJORITY VOTE. The Shareholders acknowledge that the Texas
Business Corporation Act currently requires the affirmative vote of holders of
at least two-thirds of the outstanding shares of each class with respect to any
proposed merger, share exchange,-- or disposition (other than by pledge, deed of
trust or trust indenture) of all or substantially all of the property and assets
of the Company outside the usual and regular course of business.
SECTION 7. MISCELLANEOUS.
(a) This Agreement shall be subject to and governed by the laws of the
State of Texas and each of the parties hereto hereby irrevocably attorns to
jurisdiction and venue in ▇▇▇▇▇▇ County, Texas.
(b) Whenever the context requires, the gender of all words used herein
shall include the masculine, feminine, and neuter, and the number of all words
shall include the singular and the plural.
(c) This Agreement shall be binding upon and inure to the benefit of the
Company and all of the Shareholders, and their respective heirs, devisees,
Personal Representative, successors and permitted assigns.
(d) This Agreement may be amended from time to time by an instrument in
writing signed by all those who are parties to this Agreement at the time of
such amendment, such instrument being designated on its face as an amendment to
this Agreement.
(e) This Agreement shall terminate automatically upon the bankruptcy,
receivership or dissolution of the Company, upon the occurrence of any event
which reduces the number of Shareholders to one. This Agreement may also be
terminated by an instrument in writing signed by all those Persons who are
parties to this Agreement at the time of the signing of such instrument.
(f) Any Shareholder who sells or otherwise transfers such Shareholder's
Stock shall cease to be a party to this Agreement and shall have no further
rights hereunder, except as otherwise specified herein.
(g) Each party hereto acknowledges that a remedy at law far any breach or
attempted breach of this Agreement hereof will be inadequate, agrees that each
other party hereto shall be entitled to specific performance and injunctive and
other equitable relief (without the necessity of proof of actual damages) in
case of any such breach or attempted breach, and further agrees to waive
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ny requirement for the securing or posting of any band in connection with the
obtaining of any such injunctive or other equitable relief.
(h) This instrument constitutes the entire agreement of the parties hereto
with respect to the ownership of the Stock and there are no other agreements,
whether oral or written, between the parties hereto with respect to the
ownership of such Stock.
(i) The captions of this Agreement are for convenience only and shall not
be considered a part of, nor effect the construction of interpretation of, any
provision of this Agreement.
(j) The various terms, provisions, and covenants herein contained shall be
deemed to be separate and severable, and the invalidity or unenforceability of
any of them shall in no manner effect or impair the validity or enforceability
of the remainder of such terms, provisions, and covenants.
(k) This Agreement may be executed simultaneously in two or more
counterparts, each of which shall in such event be deemed an original but all of
which together shall constitute one and the same instrument.
(l) Time shall be conclusively deemed to be of the essence of this
Agreement whenever time limits are imposed herein for the performance of any
obligations by any of the parties hereto, or whenever the accrual of any rights
to any party depends on the passage of time.
(m) If any action at law or in equity is necessary to enforce the
provisions of this Agreement, the prevailing parties shall be reimbursed by the
other party for all reasonable attorney's fees, costs and necessary
disbursements incurred by the prevailing party in enforcing this Agreement in
addition to any and all other relief to which such prevailing party may be
entitled.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
effective as of the dates first above written.
/S/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
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