Exhibit 10.1
Execution Version
COMPANY STOCK PURCHASE AGREEMENT
THIS COMPANY STOCK PURCHASE AGREEMENT (this
“ Agreement ”)
is made as of June 3, 2008, by and between CREDO PETROLEUM
CORPORATION, a Colorado corporation (NASDAQ: CRED) (the
“ Company ”),
and RCH ENERGY OPPORTUNITY FUND II, LP, each a limited partnership
organized under the laws of the State of Delaware (“
Purchaser ,” and
collectively with the Company, the “ Parties ”).
WHEREAS, the Board of Directors of the Company
(the “ Board ”)
has deemed it advisable and in the best interests of the Company to
issue and sell to Purchaser, and Purchaser desires to purchase from
the Company, 1,150,000 shares of newly-issued common stock, par
value $0.10 per share, of the Company (“ Stock ”) at a price of $14.50 per
share;
WHEREAS, concurrently with and as a condition
to the Closing (as hereinafter defined), Purchaser is purchasing
687,000 shares of Stock from certain directors of the Company (the
“ Tranche Two Stock
Purchase ”); and
WHEREAS, as an inducement and condition to the
Parties entering into this Agreement, Purchaser and the Company
desire to agree to a standstill provision with respect to the Stock
and to certain additional rights for Purchaser with respect Board
positions as further set forth herein;
NOW, THEREFORE, in consideration of the
foregoing and the respective representations, warranties,
covenants, agreements and conditions hereinafter set forth, and
intending to be legally bound hereby, the Parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF PURCHASED STOCK
1.1
Sale of Stock . Upon the terms and subject to the conditions
contained herein, upon (a) execution and delivery of this
Agreement by all the Parties hereto, (b) the execution and
delivery by Purchaser and the other parties thereto of the Stock
Purchase Agreement, dated as of the date hereof, among Purchaser
and James T. Huffman, Richard B. Stevens and William F. Skewes (the
“ Tranche Two Stock Purchase
Agreement ”) and (c) payment of the Purchase
Price Amount (as hereinafter defined) in accordance with
Section 1.2 hereof, the Company shall sell and transfer to
Purchaser, and Purchaser shall purchase and accept from the
Company, 1,150,000 shares of Stock (the “ Purchased Stock ”).
1.2
Payment by Purchaser . Upon the terms and subject to the
conditions contained herein and in payment for the aforesaid sale
and transfer of the Purchased Stock by the Company to Purchaser,
Purchaser shall deliver or cause to be delivered at the Closing to
the Company, by wire transfer or other means reasonably acceptable
to the Company, an aggregate sum in cash equal to $14.50 per share,
or $16,675,000 (the “ Purchase Price Amount ”).
1.3
Closing . Upon the terms and subject to the conditions set
forth herein, the closing of the purchase and sale of the Purchased
Stock (the “ Closing
”) shall be held at 10:00 a.m. Mountain Daylight Time on
the second business day following the satisfaction (or, to the
extent permitted, the waiver by the Parties entitled to the
benefits thereof) of the conditions set forth in Article V
(other than any of such conditions that by their nature are to be
fulfilled at Closing, but
subject to the fulfillment or waiver of such
conditions), or such other time and date as may be mutually agreed
by the Parties hereto (the “ Closing Date ”), at the offices
of Davis Graham & Stubbs LLP, 1550 17th Street,
Denver, CO 80202, or such other location as may be mutually agreed
to by the Parties hereto.
1.4
Stock Certificates . At the Closing, the Company shall
deliver one or more certificates representing the Purchased Stock,
each such certificate to be duly and validly issued in favor of
Purchaser and otherwise sufficient to vest in Purchaser good title
to the Purchased Stock.
1.5
Other Documents Delivered at Closing . The Parties shall
each take all such other actions required hereby to be performed,
and deliver all other documents, certificates and other items
required to be delivered by it, prior to or on the Closing Date,
including, without limitation, satisfying the conditions set forth
in Article V. All such documents and instruments
delivered to any Party pursuant hereto shall be in form and
substance, and shall be executed in a manner, reasonably
satisfactory to such Party and its counsel.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to Purchaser as follows:
2.1
Organization . The Company is a corporation, duly organized,
validly existing and in good standing under the laws of the State
of Colorado. The Company has the requisite corporate power
and authority to own, lease and operate its assets and properties
and to carry on its business as it is now being conducted.
The Company is qualified to transact business and is in good
standing in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be
so qualified and in good standing has not had and would not
reasonably be expected to have a Company Material Adverse
Effect. For purposes of this Agreement, “ Company Material Adverse Effect
” means any result, occurrence, condition, fact,
change, violation, event or effect that, individually or in the
aggregate with any such other results, occurrences, conditions,
facts, changes, violations, events or effects, is, or is reasonably
likely to be, materially adverse to the condition (financial or
otherwise), business, assets, or results of operations of the
Company and its subsidiaries taken as a whole ; provided,
however, that a Company Material Adverse Effect shall not be
deemed to include effects to the extent resulting from
(i) changes after the date of this Agreement in GAAP or
regulatory accounting requirements applicable generally to the
Company, (ii) actions or omissions by the Company taken with
the specific prior written and informed consent of Purchaser,
(iii) changes in the prices of crude oil, natural gas or
natural gas products which do not have a materially
disproportionate effect on the Company relative to other industry
participants, (iv) changes in global or national political
conditions or general economic or market conditions which do not
have a materially disproportionate effect on the Company,
(v) any loss of employees resulting from the public disclosure
of this Agreement or any related transaction or (vi) any
change, in and of itself (as opposed to the facts underlying such
change), in the trading price or volume of the Company’s
capital stock.
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2.2
Authorization . The Company has full corporate power and
authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery
and performance by the Company of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by the Board, and no other corporate action on the part
of the Company or its shareholders is necessary to authorize the
execution and delivery by the Company of this Agreement or the
consummation of the purchase and sale of the Purchased Stock.
2.3
Execution; Validity of Agreement . This Agreement has been
duly executed and delivered by the Company, and assuming due and
valid authorization, execution and delivery hereof by Purchaser,
constitutes a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors’
rights generally, and (ii) laws relating to the availability
of specific performance, injunctive relief or other equitable
remedies.
2.4
Non-Contravention; Consents; Filings . The execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby and compliance by the Company
with any of the provisions hereof do not and will not
(a) conflict with or result in any breach of any provision of
the certificate of incorporation or by-laws of the Company,
(b) require any filing by the Company with, or the issuance or
grant to the Company of any permit, authorization, consent or
approval of, (i) any court, arbitrator or arbitral tribunal,
administrative agency or commission or other governmental or
regulatory authority or agency (a “ Governmental Entity ”) or
(ii) any other natural person, partnership, corporation,
limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, or other entity
or organization (a “ Person ”), (c) conflict with
or violate any order, writ, injunction, decree, statute,
rule or regulation applicable to, binding upon or enforceable
against the Company or any of its properties or assets,
(d) result in a violation or breach of, constitute (with or
without due notice or lapse of time or both) a default under, or
give rise to any right of termination, amendment, cancellation or
acceleration under, any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to
which the Company is a party or by which the Company or any of its
property or assets are bound or (e) result in the creation or
imposition of any lien, charge, encumbrance, security interest,
claim or right of others of whatever nature (each, a “
Lien ”) upon any
property or assets of the Company under any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument
or obligation to which the Company is a party or by which the
Company or any of its property or assets is bound, except for
(x) any filings, permits, authorizations, consents and
approvals as may be required under, and other applicable
requirements of, the Securities Act of 1933, as amended (the
“ Securities Act
”), the Securities Exchange Act of 1934, as amended (the
“ Exchange Act
”), and state securities or blue sky laws and (y) in the
case of clauses (b), (c), (d) or (e), as would not reasonably
be expected to have a Company Material Adverse Effect.
2.5
Good Title Conveyed . At the time of issuance, the Purchased
Stock will be duly authorized, validly issued, fully paid and
nonassessable and not subject to any preemptive rights. The
stock certificates and other instruments to be executed and
delivered by the Company to Purchaser at the Closing will be valid
and binding obligations of the Company, enforceable in accordance
with their respective terms, and will effectively vest in Purchaser
good title to all the
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Purchased Stock, free and clear of all Liens
whatsoever, except restrictions on transfer arising under the
Securities Act or any applicable state securities laws.
2.6
Capitalization of the Company . As of May 31, 2008, the
authorized capital stock of the Company consisted of 20,000,000
shares of Stock, of which 9,330,536 shares were issued and
outstanding and 185,610 shares were held in the treasury of the
Company. The only shares of Stock reserved for issuance as of
such date consisted of 1,234,110 shares that were reserved or held
for issuance pursuant to the Company’s equity compensation
plans. Except as referred to in the foregoing sentence, there
are no outstanding subscriptions, options, warrants, rights
(including “phantom” stock rights), preemptive rights
or other contracts, commitments, understandings or arrangements,
including any right of conversion or exchange under any outstanding
security, instrument or agreement (together, “ Options ”), obligating the
Company or any of its Subsidiaries to issue or sell any capital
stock of the Company or to grant, extend or enter into any Option
with respect thereto.
2.7
Subsidiaries . The only material subsidiaries of the Company
are SECO Energy Corporation, a Nevada corporation, and United Oil
Corporation, an Oklahoma corporation (each a “ Subsidiary ” and together, the
“ Subsidiaries
”). All of the outstanding capital shares of each of
the Subsidiaries are owned, beneficially and of record, by the
Company or a Subsidiary wholly owned, directly or indirectly, by
the Company, free and clear of all Liens, except as would not
reasonably be expected to have a Company Material Adverse
Effect.
2.8
Redemption or Repurchase of Stock . As of the date hereof,
there are no outstanding contractual obligations of the Company or
either Subsidiary to repurchase, redeem or otherwise acquire any
Stock or any capital shares of either Subsidiary, or, except as
would not reasonably be expected to have a Company Material Adverse
Effect, to provide funds to, or make any investment (in the form of
a loan, capital contribution or otherwise) in, any Subsidiary or
any other Person.
2.9
SEC Reports and Financial Statements .
(a)
Since January 1, 2005, the Company has filed with the
Securities and Exchange Commission (the “ SEC ”) all material forms,
reports, schedules, registration statements, and other documents
(together with all amendments thereof and supplements thereto) (as
such documents have since the time of their filing been amended or
supplemented, the “ Company
SEC Reports ”) required to be filed by the Company
with the SEC. As of their respective dates and giving effect
to any amendments or supplements thereto filed prior to the date of
this Agreement, the Company SEC Reports (i) complied as to
form in all material respects with the requirements of the
Securities Act, the rules and regulations thereunder, the
Exchange Act and the rules and regulations thereunder, as the
case may be, and (ii) did not contain any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading.
(b)
The audited consolidated financial statements and unaudited interim
consolidated financial statements (including, in each case, the
notes, if any, thereto) included in the Company SEC Reports (the
“ Company Financial
Statements ”) complied as to form in all
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material respects with the published
rules and regulations of the SEC with respect thereto and were
prepared in accordance with United States generally accepted
accounting principles in all material respects.
2.10
Absence of Certain Changes or Events . Except as disclosed
in the Company SEC Reports filed prior to the date of this
Agreement, since October 31, 2006, there has not been any
change, event or development that had, or would be reasonably
expected to have, individually or when aggregated with any other
change(s), event(s) or development(s), a Company Material
Adverse Effect.
2.11
Undisclosed Liabilities . Except (a) as reflected or
otherwise reserved against on the balance sheet dated contained in
the Company’s Form 10-Q for the quarter ended
January 31, 2008, (b) for liabilities incurred since
January 31, 2008 in the ordinary course of business consistent
with past practice, (c) for liabilities incurred in the
ordinary course under existing contracts (and not relating to any
breach or violation thereof), (d) for liabilities for
investment banking, accounting and legal fees incurred in
connection with the negotiation, execution and delivery of this
Agreement, the Tranche Two Stock Purchase Agreement and other
negotiations involving Purchaser, (e) for liabilities which
have been discharged or paid in full, and (f) for liabilities
that have not had, and are not reasonably likely to have,
individually or in the aggregate, a Company Material Adverse
Effect, the Company has not incurred any liabilities (whether
accrued, absolute, contingent or otherwise) of any nature that
would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of the Company and its
consolidated subsidiaries (including the notes thereto) since
January 31, 2008.
2.12
Hedging . Except pursuant to a hedge agreement covering
80 MMbtus at NYMEX basis prices, ranging from $10.35 to $10.60 for
the production months of December 2008 through March 2009
and except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement or as would not reasonably be expected
to have a Company Material Adverse Effect, (a) the Company and
its Subsidiaries have no obligations as of the date of this
Agreement for the delivery of hydrocarbons attributable to any of
the Company’s or either of its Subsidiary’s properties
in the future on account of prepayment, advance payment,
take-or-pay or similar obligations without then or thereafter being
entitled to receive full value for the delivery of such
hydrocarbons, and (b) neither the Company nor either of its
Subsidiaries is bound by futures, hedge, swap, collar, put, call,
floor, cap, option or other contracts which are intended to benefit
from or reduce or eliminate the risk of fluctuations in the price
of commodities.
2.13
Legal Proceedings . Except as disclosed in the Company SEC
Reports filed prior to the date of this Agreement, (a) there are no
pending or, to the knowledge of the Company, threatened actions,
suits, arbitrations or proceedings relating to or affecting the
Company, either of its Subsidiaries or any of their respective
assets and properties that, individually or in the aggregate, have
had or would reasonably be expected to have a Company Material
Adverse Effect, (b) there are no pending or, to the knowledge
of the Company, threatened Governmental Entity investigations or
audits relating to or affecting the Company, either of its
Subsidiaries or any of their respective assets and properties that,
individually or in the aggregate, have had or would reasonably be
expected to have a Company Material Adverse Effect, and
(c) neither the Company nor either of its Subsidiaries is
subject to any orders of any Governmental Entity that
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are
specific to the Company and that, individually or in the aggregate,
have had or would reasonably be expected to have a Company Material
Adverse Effect.
2.14
Permits and Licenses . The Company and each of its
Subsidiaries possess all licenses, certificates, permits and other
authorizations issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective
businesses, except for any such failures to possess the same as
would not have a Company Material Adverse Effect. Neither the
Company nor either of its Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
license, certificate, authorization or permit that, individually or
in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would have a Company Material Adverse Effect.
2.15
Taxes . Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, (a) the Company and its
Subsidiaries have filed all foreign, federal, state and local tax
returns that are required to be filed (or have requested extensions
thereof), except for any failures to file that, individually or in
the aggregate, have not had and would not reasonably be expected to
have a Company Material Adverse Effect and (b) the Company and
its Subsidiaries have paid all taxes required to be paid by them
and any other assessments, fines or penalties levied against them,
to the extent that any of the foregoing is or was due and payable,
except for any assessments, fines or penalties that are currently
being contested in good faith, and except in the case of
(a) or (b), matters that, individually or in the aggregate,
have not had and would not reasonably be expected to have a Company
Material Adverse Effect.
2.16
Compliance with ERISA . Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement or as would
not reasonably be expected to have a Company Material Adverse
Effect, (a) each of the Company and its Subsidiaries has
fulfilled its obligations, if any, under the minimum funding
standards of Section 302 of the United States Employee
Retirement Income Security Act of 1974 (“ ERISA ”) and the regulations and
published interpretations thereunder with respect to each
“plan” (as defined in Section 3(3) of ERISA
and such regulations and published interpretations) in which its
employees are eligible to participate and each such plan (excluding
any multiemployer plan, as defined in Section 3(37) of ERISA,
that is not sponsored or maintained by the Company or its
Subsidiaries) is in compliance with the presently applicable
provisions of ERISA and such regulations and published
interpretations and (b) the Company and its Subsidiaries have
not incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for the payment of premiums in the ordinary
course) or to any such plan under Title IV of ERISA.
2.17
Absence of Violations and Defaults . None of the
Company and its Subsidiaries is in violation or default of
(a) any provision of its formation or governing documents in
any material respect, (b) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan
agreement or other agreement, obligation, condition, covenant or
instrument to which it is a party, by which it is bound or to which
its property is subject, or (c) any statute, law, rule,
regulation, judgment, order or decree of any court, regulatory
body, administrative agency, governmental body, arbitrator or other
authority having jurisdiction over it or any of its properties or
assets, as applicable, except, in the case of clauses (b) or
(c), for any violations or defaults that have not had and would not
reasonably be expected to have a Company Material Adverse
Effect.
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2.18
Labor Matters . No labor problem or dispute with the
employees of the Company or its Subsidiaries exists or, to the
knowledge of the Company, is threatened or imminent, and the
Company is not aware of any existing or imminent labor disturbance
by the employees of any of its or its Subsidiaries’ principal
suppliers, contractors or customers, that in any such case has had
or would reasonably be expected have a Company Material Adverse
Effect.
2.19
Environmental Matters . Except as disclosed in the Company
SEC Reports filed prior to the date of this Agreement or as would
not reasonably be expected to have a Comp
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