SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )1
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American Resources Offshore, Inc.
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(Name of Issuer)
Common Stock, par value $0.00001 per share
- -----------------------------------------------------------------
(Title of Class of Securities)
029280104
- -----------------------------------------------------------------
(CUSIP No.)
Richard A. Hale
Hale Energy Services, Inc.
1 Deer Ridge Estate Blvd.
Kingwood, TX 77339
(281)359-7200
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Name, Address and Telephone Number of Persons Authorized to
Receive Notices and Communications
March 26, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a Statement on
Schedule 13G to report the acquisition that is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(e), 13d-1(f) or 13d-1(g), check the following box: ( )
Note. Schedules filed in paper format shall include a
signed original and five copies of the schedule, including all
exhibits. See Rule 13d-7(b) for other parties to whom copies are
to be sent.
(Continued on following pages)
(Page 1 of 9 Pages)
(1) The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosures provided
in a prior cover page.
The information required in the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18
of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes
Check the following box if a fee is being paid with this
Statement: ( )
CUSIP NO. 029280104 13D
1. NAME OF REPORTING PERSON
R. Hale Energy Services, Inc.
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
76-0520969
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)
-------
(b)
-------
Not applicable
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2 (D) OR 2 (E)
Not Applicable
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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Number of 7. SOLE VOTING POWER
Shares 0
------------------------------
Beneficially 8. SHARED VOTING POWER
Owned By 3,317,853
------------------------------
Each 9. SOLE DISPOSITIVE POWER
Reporting 0
------------------------------
Person 10. SHARED DISPOSITIVE POWER
3,317,853
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,317,853
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
SHARES
Not Applicable
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.4%
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14. TYPE OF REPORTING PERSON
CO
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CUSIP NO. 029280104 13D
1. NAME OF REPORTING PERSON
Richard A. Hale
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
###-##-####
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)
-------
(b)
-------
Not applicable
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2 (D) OR 2 (E)
Not Applicable
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Texas
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Number of 7. SOLE VOTING POWER
Shares 0
------------------------------
Beneficially 8. SHARED VOTING POWER
Owned By 3,317,853
------------------------------
Each 9. SOLE DISPOSITIVE POWER
Reporting 0
------------------------------
Person 10. SHARED DISPOSITIVE POWER
3,317,853
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,317,853
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
SHARES
Not Applicable
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.4%
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14. TYPE OF REPORTING PERSON
IN
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ITEM 1. Security and Issuer.
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This Schedule 13D relates to the Common Stock, $1.00001 par
value per share, of American Resources Offshore, Inc. ("ARO").
The address of ARO's principal executive office is 160 Morgan
Street, Versailles, Kentucky 40383.
ITEM 2. Identity and Background.
-----------------------
This Schedule 13 D is being filed by R. Hale Energy
Services, Inc. ("Hale"), a Texas corporation, and Richard A.
Hale, individually (the "Reporting Persons").
Corporate Reporting Person. The corporate Reporting Person
--------------------------
is R. Hale Energy Services, Inc., a Texas corporation ("Hale
Energy"). The principal business and office address of Hale
Energy is 1 Deer Ridge Estate Blvd., Kingwood, Texas 77339.
Hale Energy's principal business is the marketing of natural gas.
During the last five years neither Hale Energy nor any of its
executive officers or directors, have been (i) convicted in a
criminal proceeding (excluding traffic violations or smaller
misdemeanors) nor (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction that
resulted in or subjected Hale Energy to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
Richard A. Hale is the sole director and officer of Hale
Energy. Hale Energy is authorized to issue 1,000 shares of
common stock, all of which are issued and outstanding. Mr. Hale
directly owns all of the 1,000 shares (100%) of Hale Energy.
Individual Reporting Person. The individual Reporting
---------------------------
Person is Richard A. Hale. Mr. Hale is principally occupied as
Chairman of the Board, Chief Executive Officer and President of
R. Hale Energy Services, Inc. During the last five years Mr.
Hale has not been (i) convicted in a criminal proceeding
(excluding traffic violations or smaller misdemeanors) nor (ii) a
party to a civil proceeding of a judicial or administrative body
of competent jurisdiction that resulted in or subjected him to a
judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to
such laws.
ITEM 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
As more fully described in Item 4 below, pursuant to the
terms of the Warrant (as defined below), Hale Energy possesses
the right, subject to certain conditions precedent, to purchase
shares of ARO Common Stock. To date, Hale Energy has not
exercised any rights under the Warrant. In the event that Hale
Energy does exercise any rights under the Warrant to purchase
shares of ARO Common Stock, it expects to fund such purchase with
working capital.
ITEM 4. Purpose of Transaction.
----------------------
On March 5, 1998, ARO purchased certain offshore assets of
TECO Oil & Gas, Inc. ("TECO"). A portion of the consideration
paid for such assets consisted of a promissory note in the amount
of $18.5 million issued by ARO in favor of TECO (the "Note").
The Note, which bears interest at the rate of 18 percent, matured
on October 1, 1998 and is secured by a second lien on all
properties of ARO and its subsidiary.
As an inducement to TECO to accept the Note, ARO and TECO
entered into a warrant agreement (the "Warrant Agreement")
granting TECO a common stock purchase warrant (the "Warrant"). A
copy of each of the Warrant Agreement and the Warrant are filed
as Exhibits 1 and 2 hereto, respectively, and are by this
reference incorporated herein. Because the Note was not paid in
full on or before October 1, 1998, TECO earned the right under
the Warrant to purchase 600,000 shares of ARO Common Stock at a
price per share of $2.67. Additionally, because the Note was not
paid in full on or before April 1, 1999, TECO has the right under
the Warrant to purchase, at a price per share of $0.00001, shares
of ARO Common Stock equal to twenty (20%) percent of the shares
of ARO Common Stock outstanding on the date of exercise. The
Warrant expires on July 1, 1999.
On March 26, 1999, Hale Energy acquired the $18.5 million
note from TECO for $500,0000 in cash which was funded with
working capital. Simultaneously with the acquisition of the
Note, TECO granted Hale Energy an irrevocable option to acquire
all its Warrants for ARO Common Stock or all shares obtained from
exercise of the Warrants, as applicable, at a price of $600,000,
payable in cash. A copy of the Stock Option Agreement between
Hall Energy and TECO is attached hereto as Exhibit 3.
Because of its default on the Note, ARO is also obligated
under the Warrant Agreement to increase the number of members of
its board of directors by two, and TECO has the right to
designate individuals to fill such positions. Under the Warrant
Agreement, ARO also agreed, while the Note remains unpaid, to
take all actions within its control to maintain such individuals
as directors of ARO. As of the date of this Schedule 13D, TECO
has not exercised its right to designate two directors of ARO,
but reserves its right to do so. In the event Hale Energy
exercises its option to acquire all of the ARO Warrants from
TECO, these rights would transfer to Hale Energy.
Except as set forth herein, Hale Energy does not have any
present plans arrangements or understandings that relate to or
would result in:
(i) the acquisition of any person of additional securities
of ARO, or the disposition of securities of ARO;
(ii) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving ARO or any of
its subsidiaries;
(iii) a sale or transfer of a material amount of assets
of ARO or of any of its subsidiaries;
(iv) any change in the present board of directors or
management of ARO, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies on
the board;
(v) a material change in the present capitalization or
dividend policy or ARO;
(vi) any other material change in ARO's business or
corporate structure, including but not limited to, if ARO is a
registered closed-end investment company, any plans or proposals
to make any changes in its investment policy for which a vote is
required by Section 13 of the Investment Company Act of 1940;
(vii) changes in ARO's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of ARO by any person;
(viii) causing a class of securities of ARO to be
delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a
registered national securities association;
(ix) a class of equity securities of ARO becoming eligible
for termination of registration pursuant to Section 12(g)(4) of
the Securities Act of 1933, as amended; or
(x) any action similar to any of those enumerated above.
Hale Energy expects to evaluate on a continuing basis its
goals and objectives, other available business opportunities, and
general economic and equity market conditions, as well as ARO's
business operations and prospects. Based on such evaluations,
from time to time in the future, Hale Energy may determine to
exercise its option to acquire the Warrant and the ARO shares
attendant thereto. Hale Energy may acquire additional shares of
ARO capital stock and may dispose of any shares of ARO Common
Stock issued to Hale Energy upon exercise of the Warrant in the
open market or in privately negotiated transactions at varying
prices.
ITEM 5. Interest in Securities of the Issuer.
------------------------------------
(a) Hale Energy beneficially owns approximately 3,317,853
shares of ARO Common Stock, consisting entirely of shares
issuable under the Warrant described in Item 4. The Warrant is
currently exercisable for (i) 600,000 shares, plus (ii) twenty
(20%) percent of the shares of ARO Common Stock outstanding on
the date of exercise. Currently, such additional twenty (20%)
percent equals approximately 2,717,853 shares based on 13,589,264
shares of ARO Common Stock outstanding as of April 1, 1999.
According to information provided by ARO, the Common Stock
outstanding as of April 1, 1999 consisted of (i) 10,261,074
shares of issued and outstanding ARO Common Stock, plus (ii)
3,530,080 shares of Common Stock issuable under all outstanding
options and other rights to purchase ARO Common Stock, less (iii)
201,890 shares of treasury stock. The aggregate total of
3,317,853 shares of ARO Common Stock beneficially owned by Hale
Energy represents 24.4% of the 13,589,264 shares of ARO Common
Stock outstanding on April 1, 1999, computed in accordance with
Rule 13d-3 of the Act.
By virtue of his ownership of the capital stock of Hale
Energy, Mr. Hale may be deemed to beneficially own the shares of
ARO Common Stock beneficially owned by Hale Energy.
(b) In the event Hale Energy were to purchase any shares of
ARO Common Stock covered by the Warrant, Hale Energy and Richard
A. Hale would have shared voting and investment power over such
shares.
(c) Neither Hale Energy, its officers and directors, nor
Richard A. Hale has effected any transaction in ARO Common Stock
during the past 60 days.
(d) Neither Hale Energy, its officers and directors, nor
Richard A. Hale has nor knows any other person who has the right
to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, any shares of ARO Common Stock
beneficially owed by Hale Energy and Richard A. Hale.
(e) Not applicable.
ITEM 6. Contracts, Arrangements, Understandings or
------------------------------------------
Relationships With Respect to Securities of the Issuer.
- ------------------------------------------------------
The Warrant Agreement provides that, under certain
circumstances, ARO will file a registration statement covering
the Warrant and/or any of the shares of ARO Common Stock issuable
upon its exercise and use its best efforts to cause such
registration statement to become effective and remain effective
for up to 180 days. Additionally, the Warrant Agreement provides
for certain "piggy-back" registration rights. There are no
contracts, arrangements, understandings or relationships among
the persons named in Item 2 or between such persons and any other
person with respect to the Common Stock of ARO, other than as
referred to herein.
ITEM 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit 1. Warrant Agreement dated as of March 5, 1998,
between American Resources Offshore, Inc.
(formerly known as American Resources of Delaware,
Inc.) and TECO Oil & Gas, Inc. (filed as Exhibit
10.91 to Amendment No. 1 to ARO's Current Report
on Form 8-K [File No. 0-21472] dated as of March
5, 1998 and incorporated herein by reference).
Exhibit 2. Warrant issued by American Resources Offshore,
Inc., (formerly known as American Resources of
Delaware, Inc.) in favor of TECO Oil & Gas, Inc.
Exhibit 3. Stock Option Agreement dated March 26, 1999,
between TECO Oil & Gas, Inc. and R. Hale Energy
Services, Inc.
SIGNATURE
---------
After reasonable inquiry and to the best of our knowledge
and belief, we certify that the information set forth in this
statement is true, complete and correct.
Date: April 5, 1999
/s/ Richard A. Hale
----------------------------------
Richard A. Hale, Individually
R. HALE ENERGY SERVICES, INC.
By: /s/ Richard A. Hale
-------------------------------
Richard A. Hale
President
EXHIBIT INDEX
Exhibit Description
1. Warrant Agreement dated as of March 5,
1998, between American Resources Offshore, Inc.
(formerly known as American Resources of Delaware,
Inc.) and TECO Oil & Gas, Inc. (filed as Exhibit
10.91 to Amendment No. 1 to ARO's Current Report
on Form 8-K [File No. 0-21472] dated as of March
5, 1998 and incorporated herein by reference).
2. Warrant issued by American Resources
Offshore, Inc., (formerly known as American
Resources of Delaware, Inc.) in favor of TECO Oil
& Gas, Inc.
3. Stock Option Agreement dated March 26,
1999, between TECO Oil & Gas, Inc. and R. Hale
Energy Services, Inc.
EXHIBIT 2
---------
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK OR OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT, OR (ii) AN APPLICABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933. ANY SALE PURSUANT
TO CLAUSE (ii) OF THE PRECEDING SENTENCE MUST BE ACCOMPANIED BY
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT SUCH EXEMPTION FROM REGISTRATION IS AVAILABLE IN
CONNECTION WITH SUCH SALE.
THE TRANSFER OR EXCHANGE OF THE WARRANT AND COMMON STOCK
UNDERLYING SUCH WARRANT REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
No. 1 Warrant Warrant
VOID AFTER 5:00 P.M. FLORIDA TIME
ON July 1, 1999
AMERICAN RESOURCES OF DELAWARE, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received TECO Oil and Gas,
Inc., the registered holder hereof or registered assigns (the
"Warrant Holder"), is the owner of the Warrant set forth above,
which entitles the owner thereof to purchase certain percentages
of the authorized and outstanding shares of the Common Stock as
set forth in the Warrant Agreement, par value $1.0001 per shares
(the "Common purchase price of $1.0001 per share (the "Exercise
Price"), and an additional 600,000 shares of authorized and
outstanding shares of Common Stock of American Resources of
Delaware, Inc. a Delaware corporation, at the purchase price of
$2.67 (the "Additional ARI Shares" and together with the Exercise
Price, the "Purchase Price"), subject to adjustment as described
in the Warrant Agreement referred to below on such dates and in
such amounts as described in the Warrant Agreement. The Warrant
Holder may pay the Purchase Price in cash, or by certified or
official bank check.
This Warrant Certificate is subject to, and entitled to the
benefits of, all of the terms, provisions and conditions of an
agreement dated March 5, 1998 (the "Warrant Agreement") between
the Company and TECO Oil & Gas, Inc., which Warrant Agreement is
hereby incorporated herein by reference and made a part hereof
and to which Warrant Agreement reference is hereby made for a
full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Company and
the Warrant Holder. Copies of the Warrant Agreement are on file
at the principal office of the Company.
The Warrant Holder hereof may be treated by the Company and
all other persons dealing with this Warrant Certificate as the
absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented hereby, or to the transfer
hereof on the books of the Company, any notice to the contrary
notwithstanding, and until such transfer on such books, the
Company may treat the Warrant Holder hereof as the owner for all
purposes.
The Warrant Certificate, upon surrender at the principal
office of the Company, may be exchanged for another Warrant
Certificate of like tenor and date evidencing a Warrant entitling
the Warrant Holder to purchase a like aggregate number of shares
of Common Stock as the Warrant evidenced by the Warrant
Certificate surrendered entitled to such Warrant Holder to
purchase. If this Warrant Certificate shall be exercised in
part, the Warrant Holder shall be entitled to receive upon
surrender hereof, another Warrant Certificate evidencing the
portion of the Warrant not exercised.
No fractional shares of Common Stock will be issued upon the
exercise of the Warrant evidenced hereby, but in lieu thereof a
cash payment will be made, as provided in the Warrant Agreement.
Neither the Warrant nor the Warrant Certificate entitles the
Warrant Holder hereof to any of the rights of a stockholder of
the Company except as set forth in the Warrant Agreement.
THIS WARRANT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW, AND, WITH RESPECT TO USURY, THE LAWS OF ANY
OTHER JURISDICTION WHOSE LAWS MAY BE APPLICABLE PURSUANT TO THE
PROVISIONS OF TITLE 12, SECTION 85 OF THE UNITED STATES CODE.
IN WITNESS WHEREOF, American Resources of Delaware, Inc. has
caused the signature of its Vice President and Secretary to be
printed hereon and its corporate seal to be printed hereon.
AMERICAN RESOURCES OF DELAWARE,
INC., a Delaware corporation
By:
-------------------------------
Name: David J. Stetson
Its: General Counsel
Attest:
- ---------------------------
ASSIGNMENT
(To be executed only upon assignment of Warrant Certificate)
For value received, hereby sells, assigns
---------------
and transfers unto the within Warrant Certificate,
--------------
together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ,
---------------------
attorney, to transfer said Warrant Certificate on the books of
the within-named Company, with full power of substitution in the
premises.
Dated: , 19
----------------- ---
--------------------------------------
NOTE: The above
signature should correspond exactly with
the name on the face of this Warrant
Certificate.
PURCHASE FORM
(To be executed upon exercise of Warrant). To American Resources
of Delaware, Inc.:
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the Warrant Certificate for, and
to purchase thereunder, shares of Common Stock, as
------
provided for therein, and tenders herewith payment of the
purchase price in full in the form of cash or a certified or
official bank check in the amount of $ .
---------
Please issue a certificate or certificates for such shares
of Common Stock in the name of, and pay any cash for any
fractional shares to:
Name:
----------------------------
(Please Print Name,
Address and Social
Security No.)
Signature:
-----------------------
NOTE: The above signature
should correspond exactly with
the name on the face of this
Warrant Certificate or with the
name of assignee appearing in
the assignment form below.
And, if said number of shares shall not be all the shares
purchasable under the within Warrant Certificate, a new Warrant
Certificate is to be issued in the name of said undersigned for
the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash.
Dated: , 19 Signature:
------------- --- -------------------
-----------------------------
Please Print Name
EXHIBIT 3
---------
STOCK OPTION AGREEMENT
----------------------
THIS STOCK OPTION AGREEMENT dated as of March 26, 1999 (the
"Agreement") is entered into by and between TECO OIL & GAS, INC.
("TECO"), a Florida corporation, and R. HALE ENERGY SERVICES,
INC. ("HALE"), a Texas corporation. TECO is the holder of the
Note, dated March 5, 1998, of American Resources Offshore, Inc.
(ARO) in the original principal amount of $18,500,000. In
accordance with the Assignment and Assumption Agreement, dated
the date hereof (the "Assignment Agreement"), between TECO and
HALE, TECO has agreed to convey the Note and its rights under the
Loan Documents, as therein defined, to HALE. TECO is also the
holder of warrants ("Warrants") to purchase common stock of ARO,
as successor by merger to American Resources of Delaware, Inc.
("ARI"), pursuant to the Warrant Agreement, dated as of March 5,
1998, between TECO and ARI (the "Warrant Agreement"). As a
condition and inducement toTECO's willingness to enter into the
Assignment Agreement, and in connection therewith, TECO hereby
grants to HALE an option to acquire TECO's Warrants, or the
Warrant Shares, as defined in the Warrant Agreement, upon the
terms and subject to the conditions set forth herein.
Accordingly, in consideration of the foregoing and of the
mutual covenants and agreements set forth herein and for other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as
follows:
1. GRANT OF OPTION.
---------------
In consideration of payment of TEN DOLLARS AND NO/100
($10.00) DOLLARS, receipt of which is hereby acknowledged (the
"Option Amount"), TECO hereby grants to HALE an irrevocable
option (the "Option") to acquire all its Warrants for Common
Stock of ARI, or all Warrant Shares obtained from exercise of the
Warrants by TECO, as applicable, in the manner set forth below,
at a price of $600,000 (the "Exercise Price"), payable in cash.
2. EXERCISE OF OPTION.
------------------
(a) The Option may only be exercised by HALE, in whole
but not in part, at any time from the date hereof to and
including July 1, 2000. In the event HALE wishes to exercise the
Option, HALE shall deliver to TECO a written notice (an "Exercise
Notice") specifying the date and time designated by HALE for a
closing (the "Closing"), which Exercise Notice shall be delivered
at least five business days prior to the date of such Closing.
The Closing shall be held at the offices of TECO, or its counsel.
3. CONDITIONS TO CLOSING.
---------------------
The obligation of TECO to assign the Warrants, or
Warrant Shares, to HALE hereunder is subject to the conditions
that (i) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any Federal, state
or local administrative agency or commission or other Federal,
state or local governmental authority or instrumentality, if any,
required in connection with the issuance of the Warrants or
Warrant Shares hereunder shall have been obtained or made, as the
case may be; and (ii) no preliminary or permanent injunction or
other order by any court of competent jurisdiction prohibiting or
otherwise restraining such transfer shall be in effect.
4. CLOSING.
-------
At Closing, (i) TECO shall deliver to HALE (a) its
Warrants duly endorsed or assigned, without recourse,
representation or warranty of any kind, with any necessary
documents of transfer as HALE may reasonably require and/or (b)
certificates representing all Warrant Shares acquired by TECO
from any prior exercises of the Warrants during the term of this
Agreement, duly endorsed for transfer, without recourse,
representation or warranty of any kind, and (ii) HALE shall pay
to TECO the Exercise Price by wire transfer of immediately
available funds or by delivery of a certified check or bank
check.
5. REPRESENTATIONS AND WARRANTIES OF TECO.
--------------------------------------
TECO represents and warrants to HALE that (i) TECO is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Florida and has the corporate
power and authority to enter into this Agreement and to carry out
its obligations hereunder; (ii) the execution and delivery of
this Agreement by TECO and consummation by TECO of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of TECO and no other
corporate proceedings on the part of TECO are necessary to
authorize this Agreement or any of the transactions contemplated
hereby; and (iii) this Agreement has been duly executed and
delivered by TECO and constitutes a legal, valid and binding
obligation of TECO and, assuming this Agreement constitutes a
legal, valid and binding obligation of HALE, is enforceable
against TECO in accordance with its terms.
6. REPRESENTATIONS AND WARRANTIES OF HALE.
--------------------------------------
HALE represents and warrants to TECO that (i) HALE is a
corporation duly incorporated, validly existing and in good
standing under the laws of the Texas and has the corporate power
and authority to enter into this Agreement and to carry out its
obligations hereunder; (ii) the execution and delivery of this
Agreement by HALE and the consummation by HALE of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of HALE and no other
corporate proceedings on the part of HALE are necessary to
authorize this Agreement or any of the transactions contemplated
hereby; (iii) this Agreement has been duly executed and delivered
by HALE and constitutes a legal, valid and binding obligation of
HALE and, assuming this Agreement constitutes a legal, valid and
binding obligation of TECO , is enforceable against HALE in
accordance with its terms; and (iv) any Warrant Shares acquired
upon exercise of the Option will not be acquired by HALE with a
view to the public distribution thereof and HALE will not sell or
otherwise dispose of such shares in violation of applicable law
or this Agreement.
7. DISCLAIMERS.
-----------
(a) TECO does not undertake, by execution of this
Agreement, to exercise any Warrants during the term of the
Warrant Agreement and, in the event that the Warrant Agreement
shall terminate or lapse unexercised, TECO shall have no
obligation hereunder to deliver Warrants or Warrant Shares to
HALE.
(b) HALE acknowledges that TECO may possess material
information regarding ARO not known to HALE, including, without
limitation, information received from ARO on a confidential
basis. HALE agrees that TECO shall have no liability to HALE with
respect to nondisclosure of such information except to the extent
of any breach by TECO of its representations, warranties,
covenants and agreements set forth in this Agreement.
(c) Except as may be expressly provided herein, TECO
has not made and does not make any representations or warranties,
or assume any responsibility with respect to, the validity,
genuineness, due authorization, execution, delivery, legality,
sufficiency and enforceability or collectability of the Warrant
Agreement, the Warrants or the Warrant Shares.
(d) HALE acknowledges that it is a sophisticated buyer
with respect to the Warrants and the Warrant Shares, has adequate
information concerning the business and financial condition of
ARO, and its affiliates, to make an informed decision regarding
the purchase or the Warrants and the Warrant Shares under the
Warrant Agreement, and has independently and without reliance
upon TECO made its own analysis and decision to enter into this
Agreement. HALE acknowledges that TECO has not made and does not
make any representation or warranty, either express or implied,
of any character or kind, except as expressly set forth in this
agreement. HALE acknowledges that the assignment and transfer of
the Warrants or the Warrant Shares, as the case may be, as
contemplated by the Warrant Agreement, is irrevocable and without
recourse to TECO except with respect to any remedies resulting
from breaches by TECO of this Agreement.
(e) HALE acknowledges and represents that (a) it is an
"accredited investor", as that term is defined in Regulation D
promulgated under the Securities Act of 1933, as amended, and (b)
it will not be purchasing the Warrants or the Warrant Shares with
a view to or for resale in connection with any distribution or
public offering of all or any part thereof or any interest
therein in a manner which would violate the applicable securities
laws.
13. EFFECT.
------
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns. Nothing contained in this Agreement, express
or implied, is intended to confer upon any person other than the
parties hereto and their respective successors and permitted
assigns any rights or remedies of any nature whatsoever by reason
of this Agreement.
14. SPECIFIC PERFORMANCE.
--------------------
The parties recognize and agree that if for any reason
any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached,
immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy.
Accordingly, each party agrees that in addition to other remedies
the other party shall be entitled to an injunction restraining
any violation or threatened violation of the provisions of this
Agreement. In the event that any action shall be brought in
equity to enforce the provisions of the Agreement, neither party
will allege, and each party hereby waives the defense, that there
is an adequate remedy at law.
15. ENTIRE AGREEMENT.
----------------
This Agreement and the Assignment Agreement (including
the appendices and exhibits thereto) constitute the entire
agreement between the parties with respect to the subject matter
hereof and supersede all other prior agreements and
understandings, both written and oral, between the parties with
respect to the subject matter hereof.
16. FURTHER ASSURANCES.
------------------
Each party will execute and deliver all such further
documents and instruments and take all such further action as may
be necessary in order to constitute the transactions contemplated
hereby.
17. VALIDITY.
--------
The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in
full force and effect. In the event any governmental entity of
competent jurisdiction holds any provision of this Agreement to
be null, void or unenforceable, the parties hereto shall
negotiate in good faith and shall execute and deliver an
amendment to this Agreement in order, as nearly as possible, to
effectuate, to the extent permitted by law, the intent of the
parties hereto with respect to such provision.
18. NOTICES.
-------
All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or
by commercial delivery service, or sent via telecopy (receipt
confirmed) to the parties at the following addresses or telecopy
numbers (or at such other address or telecopy numbers for a party
as shall be specified by like notice):
(a) if to HALE, to:
Richard A. Hale
R. Hale Energy Services, Inc.
1 Deer Ridge Estate Boulevard
Kingwood, TX 77339
Tel: (281) 348-2484
Fax: (281) 359-4473
(b) if to TECO, to:
Royston K. Eustace
Senior Vice President
Business Development
TECO Energy, Inc.
P. O. Box 111
Tampa, FL 33601-0111
Tel: 813-228-4323
Fax: 813-228-4811
with a copy to:
Palmer & Dodge LLP
One Beacon Street
Boston, MA 02108
Attn: Richard Hiersteiner, Esq.
Tel: (617) 573-0100
Fax: (617) 227-4420
19. GOVERNING LAW.
-------------
This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida applicable to
agreements made and to be performed entirely within such state.
20. COUNTERPARTS.
------------
This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but both of
which, taken together, shall constitute one and the same
instrument.
21. EXPENSES.
--------
Except as otherwise expressly provided herein or in the
Acquisition Agreement, all costs and expenses incurred in
connection with the transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
22. AMENDMENTS; WAIVER.
------------------
This Agreement may be amended by the parties hereto and
the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties
hereto, or, in the case of a waiver, by an instrument signed on
behalf of the party waiving compliance.
23. ASSIGNMENT.
----------
Neither of the parties hereto may sell, transfer,
assign or otherwise dispose of any of its rights or obligations
under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers as of the date first above written.
R. HALE ENERGY SERVICES, INC.
By: /s/ R. A. Hale
------------------------------
Name: R. A. Hale
Title:
President
TECO OIL & GAS, INC.
By: /s/ R. K. Eustace
------------------------------
Name: Royston K. Eustace
Title:
President
