Execution Copy
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
1.
Purchase and Sale of the Shares ..................................
1
2.
Consideration ....................................................
1
3.
Seller's General Representations and Warranties ..................
1
3.1.
Ownership of Shares......................................
1
3.2.
Status of Seller ........................................
2
3.3.
Authorization; Consents; No Violations ..................
2
3.4.
No Assumption of Obligations ............................
2
3.5.
Full Disclosure; Correctness and Survival ...............
2
4. Seller's Representations and Warranties
Relating to the Company ........ 2
4.1.
Corporate Status; Capital Stock; Subsidiaries............
2
4.2.
Financial Statements ....................................
3
4.3.
Absence of Liabilities ..................................
3
4.4.
Directors and Officers; Agents ..........................
4
4.5.
Changes in Business and Other Events ....................
4
4.6.
Disputes, Investigations and Litigation .................
5
4.7.
Title to Property .......................................
5
4.8.
Real Property ...........................................
6
4.9.
Equipment ...............................................
6
4.10. Real
Property Leases .................................... 6
4.11.
Personal Property Leases ................................
6
4.12.
Condition of Assets .....................................
6
4.13.
Material Adverse Changes ................................
6
4.14.
Contracts, Agreements,
Commitments, Etc. ................ 7
4.15.
Compliance with Law; Licenses ...........................
8
4.16.
Books and Records .......................................
8
4.17.
Receivables..............................................
8
4.18.
Credit Agreements; Notes ................................
8
4.19.
Insurance ...............................................
8
4.20.
Taxes ...................................................
8
4.21.
Trademarks; Trade Names .................................
9
4.22. No
Zoning Violations .................................... 9
4.23.
Copyrights; Franchises, Etc. ............................
9
4.24.
Violation of Other Instruments ..........................
9
4.25.
Pension Plan; Employment Contracts; Labor Unions ........
9
4.26.
Certain Transactions; Other Interests ...................
9
5.
Representations and Warranties of Buyer ..........................
10
5.1.
Trust Status ............................................
10
5.2.
Authorization; Consents; No Violation; Etc. .............
10
5.3. Investment
Representations .............................. 10
6.
Certain Additional Agreements ....................................
10
6.1.
Conduct of Business .....................................
10
6.2.
Access to Records........................................
11
6.3.
Preservation of Business ................................
11
6.4.
Assignment of Rights and Warranties .....................
11
6.5.
Release of Company ......................................
12
6.6.
Further Assurances ......................................
12
6.7.
Other Schedules .........................................
12
6.8.
Satisfaction of Conditions ..............................
12
7.
Conditions .......................................................
13
7.1.
Conditions to Obligations of Buyer ......................
13
7.2.
Conditions to Obligations of Seller .....................
14
8.
Survival of Representations and Warranties; Indemnity ............
14
8.1.
Survival ................................................
14
8.2.
Seller's Indemnification of Buyer and the Company .......
14
8.3.
Notice to Seller; Defense; Compromise ...................
16
8.4.
Other Remedies ..........................................
16
8.5.
Set-Off .................................................
16
8.6.
Payment .................................................
16
8.7.
Seller's Access to Records ..............................
16
9.
Miscellaneous ....................................................
17
9.1.
Closing; Termination ....................................
17
9.2.
Risk of Loss ............................................
17
9.3.
Confidential Information ................................
17
9.4.
Finders; Fees and Expenses ..............................
18
9.5.
Notices .................................................
18
9.6.
Entire Agreement ........................................
18
9.7.
Non-Waiver ..............................................
18
9.8.
Parties in Interest .....................................
18
9.9.
Headings ................................................
19
9.10.
Exhibits and Schedules ..................................
19
9.11.
Aid in
Litigation ....................................... 19
9.12.
Section Designations ....................................
19
9.13. Use
of Information....................................... 19
9.14.
Governing Law ...........................................
19
<PAGE>
Schedules
Schedule 4.1:
List of States Where Qualified.....................
Schedule 4.4:
Directors and Officers; Agents.....................
Schedule 4.5:
Changes in Business and Other Events...............
Schedule 4.6:
Disputes, Investigations and Litigation............
Schedule 4.10:
Real Property Leases...............................
Schedule 4.11:
Personal Property Leases...........................
Schedule 4.14:
Contracts, Agreements Commitments, Etc.............
Schedule 4.18:
Credit Agreements and Notes Payable of the Company.
Schedule 4.19:
Insurance Coverage.................................
Schedule 4.26:
Certain Transactions; Other Interests..............
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE
AGREEMENT, made and entered into this 19th day of July,
2004, by and among Continental Resources,
Inc., an Oklahoma corporation
("Seller"), and Harold Hamm, an individual
("Hamm") and Bert H. Mackie, as
Trustee of the Harold Hamm DST Trust (the
"DST Trust") and of the Harold Hamm HJ
Trust ("the "HJ Trust" and, together with
Hamm and the DST Trust, the "Buyer").
WHEREAS, Seller
owns 100 shares (the "Shares") of the Common Stock, without
par value ("Common Stock"), of Continental
Gas, Inc., an Oklahoma corporation
(the "Company"), which Shares constitute
all of the issued and outstanding
shares of capital stock of the Company;
and
WHEREAS, Seller
wishes to sell the Shares to Buyer, and Buyer wishes to
purchase the Shares from Seller, subject to
all of the provisions of this
Agreement;
NOW THEREFORE,
in consideration of their respective covenants herein, of
the warranties and representations set
forth herein, and for other valuable
consideration the receipt and sufficiency
of which are acknowledged, the parties
hereto, intending to be legally bound
hereby, agree as follows:
1. Purchase and
Sale of the Shares. At the Closing (as defined in Section
9.1.1), subject to all conditions and
provisions hereof, Seller shall sell,
convey, transfer, assign and deliver the
Shares to Buyer, and Buyer shall
purchase and accept the Shares from
Seller.
2. Consideration. In consideration
of its purchase of the Shares from
Seller, Buyer will, at the Closing, pay an
aggregate purchase price of
$22,607,000, which shall be paid in cash to
Seller.
3. Seller's
General Representations and Warranties. As an inducement to
Buyer to enter into this Agreement and to
Purchase the Shares hereunder, Seller
represents, warrants and agrees that:
3.1. Ownership of Shares. Seller has, and will at the Closing
have,
good and valid
title to the Shares, in full ownership, free and clear of
all, liens,
encumbrances, charges, equities, proxies, voting trusts,
restrictions,
agreements and imperfections of title. No person or entity
other than
Seller has, or will at the Closing have, any interest whatever
in the Shares
either of record or beneficially, except such interest as is
created in Buyer
by virtue of this Agreement. At and after the Closing,
Buyer will have
good and valid title to the Shares, in full ownership,
subject to no,
and free and clear of all, liens, encumbrances, charges,
equities,
proxies, voting trusts, restrictions, agreements and
imperfections of
title other than those, if any, which are solely done or
suffered by
Buyer. The certificates representing the shares contain, and
will at the
Closing contain, no restrictive legend other than a restricted
securities
legend or reference to any agreement or provision of the
Certificate of
Incorporation or By-Laws of the Company.
3.2. Status of
Seller. The Seller is a corporation duly organized,
validly existing
and in good standing under the laws of the State of
Oklahoma. Seller
has all requisite powers, authority and legal capacity to
own its
properties and assets (including the Shares), to conduct its
business as
presently conducted, and to enter into this Agreement and
consummate the
transactions contemplated hereby.
3.3. Authorization Consents; No Violations; Etc. The execution
and
consummation of
this Agreement by Seller have been duly and validly
authorized and
approved by all necessary action on the part of Seller. No
approvals,
authorizations or consents, other than those already duly
obtained, are
necessary to permit Seller to enter into this Agreement and
consummate the
transactions contemplated hereby. The execution of this
Agreement and
the consummation of the transactions contemplated hereby does
not and will not
violate, conflict with or constitute a breach of or
default under
the Seller's Certificate of Incorporation or By-Laws, or
under any term
or provision of any instrument, contract, commitment,
statute,
regulation, or judicial or administrative order, award,
judgment
or decree to
which Seller is a party or by or to which Seller or any of
Seller's assets
(including the Shares) are bound or subject; and does not
and will not
result in the creation or imposition of any adverse claim or
interest, or any
lien, encumbrance, charge, equity or restriction of any
nature whatever,
upon or affecting the Shares, other than as created in
Buyer by virtue
of this Agreement. This Agreement has been duly executed on
behalf of
Seller, is legal, valid and binding with respect to each
Seller,
and is
enforceable against Seller in accordance with its terms.
3.4. No Assumption of Obligations. The execution and consummation
of
this Agreement
by Buyer do not and will not obligate Buyer under or with
respect to, or result
in the assumption by Buyer of any obligations of
Seller under or
with respect to, any liability, agreement or commitment of
Seller or the
Company, including, without limitation, any shareholders' or
similar
agreement relating to the ownership of common stock of the
Company,
or regulating
the business, affairs, properties or finances of the Company.
3.5. Full Disclosure; Correctness and Survival. No representation
or
warranty of
Seller contained in this Agreement, no exhibit or schedule
referred to in
or attached to this Agreement, and no certification or
document
furnished or to be furnished in connection with this Agreement
or
the transactions
contemplated hereby (all of which shall be deemed
representations
and warranties hereunder and for all purposes of this
Agreement)
contains or will contain any untrue statement of a material
fact, or omits
or will omit to state a material fact necessary to make the
statements made,
in the circumstances under which they were made, not
misleading. All
such representations and warranties (i) are true and
correct as of
the date of this Agreement and will be true and correct on
the date of the
Closing, and (ii) shall survive the Closing and any audit
or investigation
by Buyer.
4. Seller's
Representations and Warranties Relating to the Company. As an
inducement to Buyer to enter into this
Agreement and to purchase the Shares
hereunder, Seller represents, warrants and
agrees that:
4.1. Corporate Status; Capital Stock; Subsidiaries. The Company is
a
corporation duly
organized, validly existing and in good standing under the
laws of the
State of Oklahoma. The Company is qualified as a foreign
corporation in
good standing under the laws of each other state or
jurisdiction in
which, because of property owned or business conducted by
the Company, the
Company is required to be qualified to do business. The
Company has in
Oklahoma and each such other state or jurisdiction full
power and
authority to own or lease (as the case may be) its properties
and
assets therein
and to conduct its business and operations therein in the
manner in which
the same have been and are owned, leased and conducted,
respectively.
The Company is qualified to do business as a foreign
corporation in
each state or jurisdiction set forth in Schedule 4.1 hereto,
and is not
required to be so qualified in any other state or jurisdiction
by virtue of the
nature of its business, operations, activities, properties
or assets.
The authorized capital stock of the Company consists of 100 shares
of
Common Stock,
without par value, of which 100 shares (constituting the
Shares) are
issued and outstanding. All of the Shares have been issued in
compliance with
all applicable requirements, are duly and validly issued
and are fully
paid and non-assessable. The Company holds no treasury shares
and has no
subscription, warrant, option, put, call, right or other
agreement,
commitment or understanding, either firm or conditional, to
offer, sell,
issue or repurchase any of its capital stock or other
securities or
obligations. All taxes applicable to the issuance or transfer
of capital stock
of the Company have been paid, and no preemptive rights or
other rights
applicable to such stock have been violated by any such
issuance or
transfer or will be violated by virtue of this Agreement or its
consummation.
The Company has no subsidiaries and has no direct or indirect
interest
in the ownership
of any corporation, trust, partnership, joint venture,
proprietorship,
association or other entity.
4.2. Financial Statements. The unaudited financial statements of
the
Company at
December 31, 2003, and for the four fiscal years then ended,
and
those of the
Company at May 31, 2004, and for the five-month period then
ended, copies of
all of which financial statements and reports thereon have
been delivered
to Buyer, are true and correct in all material respects and
present fairly
the financial condition of the Company at such dates and for
such periods and
have been prepared in accordance with generally accepted
accounting
principles applied consistently during the periods covered
thereby and on a
basis consistent with prior periods. Seller will deliver
to Buyer, as
soon as available, all monthly financial statements of the
Company that
become available prior to the Closing.
4.3. Absence of Liabilities. The Company has and will on the
Closing
Date have no
debt, liability, obligation or commitment, absolute or
contingent,
known or unknown, other than: (a) those set forth (and not
exceeding the
amounts so set forth) in the Balance Sheet of the Company at
May 31, 2004
(which Balance Sheet forms part of the financial statements
referred to in
Section 4.2) and not paid or discharged after the date
thereof; (b)
debts which have been incurred in the ordinary course of
business,
consistent with past practices, from June 1, 2004 through the
date of this
Agreement, have not been paid or discharged, and do not
constitute a
breach or violation of any warranty, representation or
agreement set
forth herein; (c) debts which will be, from the date of this
Agreement
through the date of the Closing, incurred in the ordinary
course
of business,
consistent with past practices, not in breach or violation of
any warranty,
representation or agreement set forth herein, and not
previously paid
or discharged; and (d) those arising and not past due
pursuant to
agreements listed on any Schedule hereto, accurate and complete
copies of which
have been delivered to Buyer, and with respect to which
there is no
default or arrearage and no breach or violation of any
warranty,
representation or agreement set forth herein. The aggregate
debts
referred to in
clauses (b) and (c) above that are unpaid at the Closing
Date will not be
a material amount. The Company has no liability as insurer
of the risks of
third parties.
4.4. Directors and Officers; Agents. The present directors and
officers of the
Company are accurately listed in Schedule 4.4 annexed
hereto. Except
as listed in Schedule 4.4, the Company has no outstanding
powers of
attorney or similar instruments by which officers or agents are
designated or
appointed. All officers serve at the pleasure of the Board of
Directors. The
authority of the Company's present directors and officers to
act in its
behalf will, upon submission of the resignations of such
persons, cease
without further act on the part of the Company.
4.5. Changes in Business and Other Events. Except as fully
described
and explained on
Schedule 4.5 attached hereto, the Company has not since
May 31,
2004.
4.5.1. Performed or committed itself to perform any act or
entered into or committed itself to enter into any transaction
other
than in the ordinary course of its business consistent with
past
practices during prior periods;
4.5.2. Increased or agreed to increase any form of
compensation,
direct or indirect, to any of its directors, officers, employees
or
agents;
4.5.3. Transferred, sold, mortgaged, pledged, encumbered or
disposed of any of its assets other than in the ordinary course
of
business;
4.5.4. Made or permitted any amendment or termination of any
material contract, agreement or commitment to which it is a party
or
by which it may be bound;
4.5.5. Written off any receivables as worthless or
uncollectible;
4.5.6. Paid or accrued or committed itself to pay any bonus,
direct or indirect, or any severance pay to any director,
officer,
agent or employee;
4.5.7. Made any capital expenditure or committed to make any
capital expenditure, and the Company' does not have any
unfulfilled
commitments to make capital expenditures, whenever made or
entered
into;
4.5.8. Distributed any of its assets by means of a declaration
or
payment of dividends, redemption or purchase of shares or other
securities, or payment to any pension or profit-sharing fund,
or
otherwise;
4.5.9.
Paid or become liable to pay any taxes, assessments, fees,
penalties, interest or other governmental (state or federal)
charges,
other than in the ordinary course of business;
4.5.10. Issued any security or committed itself to issue any
security;
4.5.11. Been the subject of any order or, to the best of
Seller's
knowledge, investigation by any regulatory authority or by the
Oklahoma Tax Commission, the Oklahoma Corporation Commission,
the
Justice Department of the United states, or any public or
private
consumer protection or other agency, committee or organization;
or
been subject within the past three fiscal years to any agreement
or
decree with respect to its employment or business or
advertising
practices;
4.5.12. Experienced any material casualty or similar loss
(whether or not covered by insurance);
4.5.13. Engaged in any act which, if such act had been taken
after the date of this Agreement, would have violated Section 6.1
of
this Agreement; and
4.6. Disputes, Investigations and Litigation. Except as set forth
on
Schedule 4.6
attached hereto, the Company is not:
4.6.1. Involved in any dispute or pending or known threatened
claim or lawsuit or similar proceeding, as plaintiff, defendant
or
other party;
4.6.2. The subject of or subject to any known pending or
threatened governmental investigation or claim or similar
proceeding,
and none of its officers, directors, stockholders, employees or
customers is so involved in connection with the Company's
affairs;
4.6.3. Aware (nor is any Seller aware) of any facts which would
lead to a reasonable belief that such a dispute, claim, lawsuit
or
proceeding is likely to arise; or
4.6.4. Subject or party to any judgment, order, writ,
injunction
or decree of any court or governmental agency. 4.7. Title to
Property.
The property and assets of the Company include:
4.7.1. The assets set forth or reflected in the balance sheet
of
the Company at May 31, 2004 except for those disposed of in the
ordinary course of business after the date of such balance sheet
at
not less than the fair market value of such asset at the date
of
disposition and except for the distribution by the Company to
the
Seller of all of the Company's proved oil and natural gas
properties;
4.7.2. All other properties and assets presently carried on the
Company's books or used in its business (including, without
limitation, the facts, information, know-how, processes, trade
secrets, customer lists and information and similar
confidential
matters referred to in Section 6.9) at any time since its
incorporation, except those disposed of in the ordinary course
of
business since that date for adequate consideration;
4.7.3. Certain computer software, permits, licenses and bonds
owned by the Company and used by the Company in the operation of
its
(the "Licenses"); and
4.7.4. Certain service contracts, none of which are material to
the operation of the business of the Company (the "Service
Contracts").
As used herein, the term "Contracts" include the Licenses and
the
Service Contracts.
The Company has good and valid title to the properties and
assets
that it purports to own (including, without limitation, the
Contracts)
and has valid leasehold interests in all of its remaining
properties
and assets, in each case free and clear of any imperfection of
title,
lien, encumbrance, security interest, charge, equity or
restriction,
other than liens arising solely by operation of law with respect
to
obligations which are not delinquent and the existence of which
does
not violate Section 4.3, or liens arising under any security
agreement
referred to in and scheduled in accordance with Section 4.14
hereof,
none of which liens secure obligations of any person, firm,
corporation or entity other than the Company.
4.8. Real Property. The Company owns no real property or
interests
therein.
4.9. Equipment. The Company maintains complete and accurate records
of
all furniture,
fixtures and equipment owned by it and the basis upon which
the same is
depreciated for tax and book purposes.
4.10. Real Property Leases. Except as set forth in Schedule 4.10,
the
Company is not a
party to nor bound by any real property leases.
4.11. Personal Property Leases. Except as set forth in Schedule
4.11,
the Company is
not a party to nor bound by any lease of furniture,
fixtures,
equipment or other personal property.
4.12. Condition of Assets. All of the assets and properties owned
or
used by the
Company in its business are in the possession of the Company,
are fit for the
purposes for which they are intended, and are in good
condition,
normal wear and tear excepted.
4.13. Material Adverse Changes. There has been no material
adverse
change since May
31, 2004 in the gross revenues, results of operations,
financial
condition, business, organization, operations, personnel,
properties or
assets of the Company, or in its relationship with customers,
employees,
agents, banks or other financial institutions or others with
which it has a
business relationship. Neither Seller nor the Company is
aware of any
presently-existing facts which could reasonably be expected to
have or cause
such a material adverse effect in the future.
4.14. Contracts, Agreements, Commitments, Etc. Schedule 4.14
attached
hereto lists (or
incorporates by specific reference to a listing set forth
in any other
Schedule attached hereto) all material oral or written
agreements,
contracts, commitments and understandings, together with all
amendments and
proposed amendments thereto, to which the Company is a party
or by which it
or its assets are affected or bound, including (but not
limited to) all
such agreements, contracts, commitments and understandings:
(a) with or involving any Seller or any Affiliate of any
Seller;
(b) with or relating to the employees, agents or consultants of
the
Company;
(c) involving non-competition covenants by or in favor of the
Company;
(d) with or involving any labor union or resulting from or relating
to
any collective
bargaining process;
(e) for or relating to the purchase or sale of capital assets;
(f) for or relating to the lease of personal or real property;
(g) respecting any pension or profit-sharing plan, retirement
plan,
stock purchase
plan, stock option plan or any similar employee benefit plan
or arrangement,
formal or informal and whether covering one or more past or
present
employees, agents, consultants, stockholders, directors, or
officers of the
Company;
(h) with respect to any guaranty, subordination or similar type
arrangement
affecting indebtedness or obligations of the Company or any
other person,
firm, corporation, association or other entity;
(i) evidencing any lien or other encumbrance affecting any of
the
significant
assets and properties, or securing any of the accounts
receivable of
the Company;
(j) affecting or regulating the management of the Company or
the
powers, rights
and duties of its stockholders, directors and officers; and
(k) regulating or affecting the Company's business, properties,
assets,
operations, or methods thereof.
Each agreement, contract, commitment and understanding which is or
is
required to be
listed or referred to in Schedule 4.14 or other Schedules
attach
