EXHIBIT 10.68
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of September 30,
1998, is entered into by and between Triton Energy Limited, a Cayman Islands
company (the "Company"), and HM4 Triton, L.P., a Cayman Islands exempted limited
partnership (the "Purchaser").
In consideration of the obligations of the Company and Purchaser under the
Stock Purchase Agreement (as hereinafter defined), the premises, mutual
covenants and agreements hereinafter contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
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"8% Preference Shares" means the 8% Convertible Preference Shares of the
Company, par value $.01 per share.
"8% Preference Shares Authorization" means the unanimous written consent of
the Board authorizing the 8% Preference Shares.
"Advice" shall have the meaning provided in Section 2.5 hereof.
"Affiliate" means, with respect to any Person, any Person who, directly or
indirectly, controls, is controlled by or is under common control with that
Person.
"Agreement" means this Shareholders Agreement, as such from time to time
may be amended.
"ARCO Shareholders Agreement" shall have the meaning provided in Section
4.3(ii) hereof.
"Asset Acquisition" shall mean (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged with
the Company or any Subsidiary of the Company or (ii) the acquisition by the
Company or any Subsidiary of the Company of assets of any Person comprising a
division, line of business or substantial portion of the assets of such Person.
"Asset Sale" shall mean any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (excluding any Sale and Leaseback Transaction or any pledge of
assets or stock by the Company or any of its Subsidiaries) to any Person other
than the Company or a wholly owned Subsidiary of the Company of (i) any Capital
Stock of any Subsidiary of the Company or (ii) any other property or assets of
the Company or any Subsidiary of the Company other than in the ordinary course
of business.
"Board" means the board of directors of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York City, New
York or Dallas, Texas are not required to be opened.
"Class Directors" shall have the meaning provided in Section 4.1.8 hereof.
"Commodity Agreement" shall mean any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Subsidiaries designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodities actually used or
bought or sold in the ordinary course of business of the Company and its
Subsidiaries.
"Common Stock" means the ordinary shares, $0.01 par value per share, of the
Company, and any shares or capital stock for or into which such Common Stock
hereafter is exchanged, converted, reclassified or recapitalized by the Company
or pursuant to an agreement to which the Company is a party.
"Common Stock Equivalents" means, without duplication with any other Common
Stock or Common Stock Equivalents, any rights, warrants, options, convertible
securities or indebtedness, exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock of the Company and securities convertible or
exchangeable into Common Stock of the Company, whether at the time of issuance
or upon the passage of time or the occurrence of some future event.
"Company" shall have the meaning set forth in the introductory paragraph
hereof.
"Consolidated EBITDA" shall mean, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary or
nonrecurring gains or losses), (B) Consolidated Interest Expense and (C)
Consolidated Non-Cash Charges, all as determined on a consolidated basis for
such Person and its Subsidiaries in conformity with GAAP.
"Consolidated Interest Expense" shall mean, with respect to any Person for
any period, without duplication, the sum of (i) the interest expense of such
Person and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Swap Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers acceptance financing or
similar facilities, and (e) all accrued interest and (ii) the interest component
of Capitalized Lease Obligations paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" of any Person shall mean, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided
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that there shall be excluded therefrom, without duplication, (a) gains and
losses from Asset Sales or abandonments or reserves relating thereto and the
related tax effects, (b) items classified as extraordinary or nonrecurring gains
and losses, and the related tax effects according to GAAP, (c) the net income
(or loss) of any Person acquired in a pooling of interests transaction accrued
prior to the date it becomes a Subsidiary of such first referred to Person or is
merged or consolidated with it or any of its Subsidiaries, (d) the net income of
any Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by contract,
operation of law or otherwise, (e) the net income of any Person, other than a
Subsidiary, except to the extent of the lesser of (x) dividends or distributions
paid to such first referred to Person or its Subsidiary by such Person and (y)
the net income of such Person (but in no event less than zero), and the net loss
of such Person shall be included only to the extent of the aggregate Investment
of the first referred to Person or a consolidated Subsidiary of such Person and
(f) any non-cash expenses attributable to grants or exercises of employee stock
options.
"Consolidated Non-Cash Charges" shall mean, with respect to any Person for
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Subsidiaries (excluding any such charges constituting an
extraordinary or nonrecurring item) reducing Consolidated Net Income of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP.
"Credit Agreements" means, collectively, (i) that certain Credit Agreement
between the Company and Soci t G n rale, Southwest Agency, dated October 8,
1997, as amended, (ii) that certain Credit Agreement between the Company and
Barclays Bank PLC, dated November 26, 1997, as amended, (iii) that certain
Credit Agreement between the Company and Toronto Dominion (Texas), Inc., dated
November 26, 1997, as amended, (iv) that certain Credit Agreement between the
Company and Union Bank of California, N.A., dated December 31, 1997, as amended,
(v) that certain Credit Agreement between the Company and Credit Suisse First
Boston, dated February 9, 1998, as amended, and (vi) that certain Demand
Promissory Note with Banque Paribas dated September 15, 1997.
"Currency Agreement" shall mean any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Current Market Price" of Common Stock or any other class of stock or other
security of the Company or any other issuer for any day shall mean the last
reported sales price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the New York Stock Exchange ( NYSE )
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or, if such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on The Nasdaq Stock Market or, if such security is not
quoted on The Nasdaq Stock Market, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ( NASDAQ )
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or, if bid and asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board or, if no such market is regularly made,
as determined by a majority of the Board based on advice of an independent
appraiser selected by a majority of the Board.
"Demand Registration" shall have the meaning set forth in Section 2.1.1
hereof.
"Demand Request" shall have the meaning set forth in Section 2.1.1. hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Excluded Registration" means a registration under the Securities Act of
(i) securities registered on Form S-8 or any similar successor form and (ii)
securities registered to effect the acquisition of all or a substantial portion
of the securities of a Person or a substantial portion of its assets or a merger
or other combination with another Person.
"GAAP" shall mean United States generally accepted accounting principles,
applied on a consistent basis for the periods involved.
"Holder" shall mean Purchaser and shall include all direct or indirect
transferees of Purchaser who shall become a party to this Agreement, and each
subsequent transferee of any such Holder who shall become a party to or
otherwise agree to be bound by this Agreement. Holders shall mean each Holder
collectively. If at any time there is more than one Holder, except as otherwise
specifically set forth in this Agreement, any notices, designations, consents,
or similar actions to be taken by the Holder or Holders hereunder shall be taken
as provided in Section 4.4.
"Immediate Family" means the spouse of an individual and the grandparents,
parents, siblings and children (and children and spouses of any of the
foregoing) of the individual or his or her spouse. An adopted child will be
treated as the child of his or her adoptive parent or parents if (but only if)
he or she was adopted before he or she reached 21 years of age.
"Inspectors" shall have the meaning provided in Section 2.5(x) hereof.
"Indebtedness" shall mean with respect to any Person, without duplication,
any liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations, (iv) incurred or assumed as the deferred purchase price of
property, or pursuant to conditional sale obligations and title retention
agreements (but excluding trade accounts payable arising in the ordinary course
of business), (v) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) for Indebtedness of
others guaranteed by such Person, (vii) for Interest Swap Obligations, Commodity
Agreements and Currency Agreements and (viii) for Indebtedness of any other
Person of the type referred to in clauses (i) through (vii) which is secured by
any Lien on any property or asset of such first referred to Person, the amount
of such Indebtedness being deemed to be the lesser of the value of such property
or asset or the amount of the Indebtedness so secured. The amount of
Indebtedness of any Person at any date shall be (A) the outstanding principal
amount of all unconditional obligations described above, as such amount would be
reflected on a balance sheet prepared in accordance with GAAP, and (B) with
respect to all contingent obligations described above, the maximum liability as
of such date of such Person for any guarantees of Indebtedness for borrowed
money of any other Person and the amount required under GAAP to be accrued with
respect to any other contingent obligation.
"Interest Swap Obligations" shall mean the obligations of any Person under
any interest rate protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap or other interest rate hedge or
arrangement.
"Investment" shall mean (i) any transfer or delivery of cash, stock or
other property of value in exchange for Indebtedness, stock or other security or
ownership interest in any Person by way of loan, advance, capital contribution,
guarantee or otherwise and (ii) an investment deemed to have been made by the
Company at the time any entity which was a Subsidiary of the Company ceases to
be such a Subsidiary in an amount equal to the value of the loans and advances
made, and any remaining ownership interest in, such entity immediately following
such entity ceasing to be a Subsidiary of the Company. The amount of any
non-cash Investment shall be the fair market value of such Investment, as
determined conclusively in good faith by management of the Company unless the
fair market value of such Investment exceeds $1,000,000, in which case the fair
market value shall be determined conclusively in good faith by the Board of
Directors at the time such Investment is made.
"Issue Date" shall have the meaning ascribed to such term under the 8%
Convertible Preference Shares Authorization.
"Junior Shares" has the meaning provided in the 8% Preference Shares
Authorization.
"Leverage Ratio" shall mean the ratio of (i) the aggregate outstanding
amount of Indebtedness of the Company and its Subsidiaries (including Permitted
Indebtedness) as of the date of calculation on a consolidated basis in
accordance with GAAP (subject to the terms described in the next paragraph) plus
(A) the aggregate liquidation preference on such date of (1) all outstanding
Preferred Stock of the Company's Subsidiaries (except Preferred Stock issued to
the Company or a wholly owned Subsidiary of the Company and except Preferred
Stock issued by Triton International Oil Corporation in respect of costs to
conduct petroleum operations pursuant to Section 8.3 of the Shareholders
Agreement with ARCO JDA Limited), (2) all Senior Shares, (3) all Parity
Liquidation Shares and (4) all other outstanding shares of Preferred Stock of
the Company the terms of which require, or permit the holder thereof to require,
the Company to redeem all or any portion thereof at a future date, but in the
case of clause (4), only with respect to the present value of such amount as
required to be redeemed or with respect to which the holders thereof could
require redemption, calculated at a discount rate equal to the weighted average
of the interest rates under the Credit Agreements (or any Refinancing
Indebtedness related thereto as from time to time in effect) (excluding in each
of cases (2), (3) and (4) such securities issued to a wholly-owned Subsidiary of
the Company) less (B) cash and the current market value of marketable securities
held by the Company and its Subsidiaries to (ii) the Consolidated EBITDA of the
Company for the four full fiscal quarters (the Four Quarter Period ) ending on
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or as of the most recent quarter end prior to the date of determination.
For purposes of this definition, the amount of Indebtedness which is issued
at a discount shall be deemed to be the accreted value of such Indebtedness at
the end of the Four Quarter Period, whether or not such amount is the amount
then reflected on a balance sheet prepared in accordance with GAAP. In addition
to the foregoing, for purposes of this definition, Consolidated EBITDA shall
be calculated on a pro forma basis after giving effect to (i) the incurrence of
the Indebtedness of such Person and its Subsidiaries and the issuance of the
Preferred Stock of such Person and its Subsidiaries (and the application of the
proceeds therefrom) giving rise to the need to make such calculation and any
incurrence (and the application of the proceeds therefrom) or repayment of other
Indebtedness, other than the incurrence or repayment of Indebtedness pursuant to
working capital facilities, at any time subsequent to the beginning of the Four
Quarter Period and on or prior to the date of determination, as if such
incurrence or issuance (and the application of the proceeds thereof), or the
repayment, as the case may be, occurred on the first day of the Four Quarter
Period, (ii) any Asset Sales or Asset Acquisitions (including without limitation
any Asset Acquisition giving rise to the need to make such calculation as a
result of such Person or one of its Subsidiaries (including any Person that
becomes a Subsidiary as a result of such Asset Acquisition) incurring, assuming
or otherwise becoming liable for Indebtedness or issuing Preferred Stock) at any
time on or subsequent to the first day of the Four Quarter Period and on or
prior to the date of determination, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Indebtedness and
the issuance of such Preferred Stock and also including any Consolidated EBITDA
associated with such Asset Acquisition) occurred on the first day of the Four
Quarter Period and (iii) cost savings resulting from employee terminations,
facilities consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other insurance
coverage and policies, standardization of sales representation commissions and
other contract rates, and reductions in taxes other than income taxes
(collectively Cost Savings Measures ), which cost savings the Company
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reasonably believes in good faith would have been achieved during the Four
Quarter Period as a result of such Asset Acquisitions (regardless of whether
such cost savings could then be reflected in pro forma financial statements
under GAAP, Regulation S-X promulgated by the Commission or any other regulation
or policy of the Commission), provided that both (A) such cost savings and Cost
Savings Measures were identified and such cost savings were quantified in an
officer's certificate delivered to the Board of Directors (with a copy delivered
to Purchaser) at the time of the consummation of the Asset Acquisition and such
officer 's certificate states that such officer believes in good faith that
actions will be commenced or initiated within 90 days of such Asset Acquisition
to effect such Cost Savings Measures and (B) with respect to each Asset
Acquisition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90 days
of such Asset Acquisition to effect the Cost Savings Measures identified in such
officer's certificate (regardless, however, of whether the corresponding cost
savings have been achieved).
"Majority Interest" shall have the meaning provided in Section 4.4 hereof.
"Material Adverse Effect" shall have the meaning provided in Section 2.1.5
hereof.
"NASD" shall have the meaning provided in Section 2.5(xiv) hereof.
"Original Number" shall have the meaning provided in Section 4.1.6 hereof.
"Parity Shares" has the meaning provided in the 8% Preference Shares
Authorization.
"Parity Dividend Shares" has the meaning provided in the 8% Preference
Shares Authorization.
"Parity Liquidation Shares" has the meaning provided in the 8% Preference
Shares Authorization.
"Permitted Indebtedness" shall mean, without duplication, (i) Indebtedness
outstanding on the First Closing Date, other than Indebtedness under the Credit
Facilities; (ii) Indebtedness of the Company or a Subsidiary incurred pursuant
to the Credit Agreements in an aggregate principal amount at any time
outstanding not to exceed $135 million; (iii) Interest Swap Obligations;
provided that such Interest Swap Obligations are entered into to protect the
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Company from fluctuations in interest rates of its Indebtedness; (iv)
obligations under Commodity Agreements and Currency Agreements, provided that
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such Commodity Agreements and Currency Agreements are entered into to protect
the Company from fluctuations in commodity prices and currency values,
respectively; (v) Refinancing Indebtedness; (vi) Indebtedness owed by the
Company to any wholly owned Subsidiary of the Company or by any Subsidiary of
the Company to the Company or any wholly owned Subsidiary of the Company; (vii)
Indebtedness in respect of performance bonds, letters of credit, bankers
acceptances and surety or appeal bonds provided by the Company or any of its
Subsidiaries to their customers in the ordinary course of their business; (viii)
Indebtedness required to be incurred pursuant to the Shareholders' Agreement
between Triton International Oil Corporation and ARCO JDA Limited; and (ix)
Indebtedness represented by Capitalized Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in a related business or incurred to refinance any
such purchase price or cost of construction or improvement, in each case
incurred no later than 365 days after the date of such acquisition or the date
of completion of such construction or improvement; provided, however, that the
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principal amount of any Indebtedness incurred pursuant to this clause (ix) shall
not exceed $10,000,000 at any time outstanding.
"Permitted Transfer" means any Transfer (a) with respect to a Holder who is
an individual, to a member of the Immediate Family of the Holder or a trust
whose sole beneficiaries are the Holder and/or members of the Immediate Family
of the Holder, (b) with respect to a Holder that is a corporation, partnership
or other entity (other than a trust), to an owner of at least 10% of the equity
interest in the corporation, partnership or other legal entity or to a general
partner of any partnership, (c) with respect to a Holder that is a trust, to any
beneficiary of the trust or any member of the Immediate Family of a beneficiary
of the trust, (d) to any Affiliate of a Holder, (e) pursuant to a pledge to
secure indebtedness provided that the pledgee agrees in writing that the
Registrable Shares subject to such Transfer shall be subject to the terms
hereof, (f) to any charitable trust, foundation or other charitable or
non-profit organization or entity, (g) to a Holder pursuant to the provisions of
Section 3.3, (h) pursuant to a merger, consolidation, share exchange, scheme of
arrangement or other similar transaction by the Company or pursuant to an
agreement to which the Company is a party, (i) by a Holder in response to a
tender or exchange offer for all of the outstanding Common Stock of the Company
and (j) by a Holder pursuant to a public offering registered under the
Securities Act or pursuant to Rule 144 promulgated under the Securities Act;
provided that, in each of case (a) through (f), the transferee agrees to be
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bound by the terms and provisions of this Agreement.
"Person" or "person" shall mean any individual, firm, partnership, company
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
"Preferred Stock" of any Person shall mean any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Records" shall have the meaning provided in Section 2.4(x) hereof.
"Refinancing Indebtedness" shall mean any refinancing by the Company of
Indebtedness of the Company or any of its Subsidiaries that does not (i) result
in an increase in the aggregate principal amount of Indebtedness (such principal
amount to include, for purposes of this definition, any premiums, penalties or
accrued interest paid with the proceeds of the Refinancing Indebtedness) of such
Person or (ii) create Indebtedness with (a) a Weighted Average Life to Maturity
that is less than the Weighted Average Life to Maturity of the Indebtedness
being refinanced or (b) a final maturity earlier than the final maturity of the
Indebtedness being refinanced.
"Registrable Shares" means at any time the 8% Preference Shares of the
Company and Common Stock owned by the Holder or Holders, whether owned on the
date hereof or acquired hereafter, including upon the conversion of 8%
Preference Shares by the Holder thereof or otherwise; provided, however, that
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Registrable Shares shall not include any shares (x) the sale of which has been
registered pursuant to the Securities Act and which shares have been sold
pursuant to such registration, or (y) which have been sold to the public
pursuant to Rule 144 promulgated under the Securities Act.
"Registration Expenses" shall have the meaning provided in Section 2.7
hereof.
"Replacement Shelf Registration Statement" shall have the meaning provided
in Section 2.2.3 hereof.
"Requesting Holder" shall have the meaning provided in Section 2.1.1(a)
hereof.
"Required Filing Date" shall have the meaning provided in Section 2.1.1(b)
hereof.
"Sale and Leaseback Transaction" shall mean any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of any property, whether owned by
the Company or any Subsidiary at the Issue Date or later acquired, which has
been or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced by
such Person on the security of such property.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Seller Affiliates" shall have the meaning provided in Section 2.8.1
hereof.
"Senior Shares" shall have the meaning provided in the 8% Convertible
Preference Shares Authorization.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement dated
August 31, 1998, between the Company and Purchaser.
"Subsidiary" of any Person means (i) a corporation a majority of whose
outstanding shares of capital stock or other equity interests with voting power,
under ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by one or more subsidiaries of such Person or
by such Person and one or more subsidiaries of such Person, and (ii) any other
Person (other than a corporation) in which such Person, a subsidiary of such
Person or such Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (x) at least a majority
ownership interest or (y) the power to elect or direct the election of the
directors or other governing body of such Person. For purposes hereof, Triton
International Oil Corporation shall be deemed a Subsidiary of the Company.
"Suspension Notice" shall have the meaning provided in Section 2.6 hereof.
"Third-Party Sale" means any Transfer other than a Permitted Transfer.
"TIOC" shall have the meaning provided in Section 4.3(ii) hereof.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on The Nasdaq Stock Market, or if such
securities are not quoted on The Nasdaq Stock Market, in the applicable
securities market in which the securities are traded.
"Transfer" means any direct or indirect sale, transfer, pledge or other
disposition of Registrable Shares.
"Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
Section 1.2 Rules of Construction. Unless the context otherwise
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requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words in the plural
include the singular;
(4) provisions apply to successive events and transactions; and
(5) "herein", "thereof" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
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2.1.1 Request for Registration.
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(a) At any time after September 30, 1999, one or more Holders may
request the Company, in writing (a "Demand Request"), to effect the registration
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under the Securities Act of all or part of its or their Registrable Shares (a
"Demand Registration"); provided that the Registrable Shares proposed to be sold
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by the Holders requesting a Demand Registration (the Requesting Holders, which
term shall include parties deemed Requesting Holders pursuant to Section 2.1.5
hereof) represent, in the aggregate, more than 20% of the total number of
Registrable Shares held by all Holders (a "Registrable Amount").
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(b) Each Demand Request shall specify the number of Registrable Shares
proposed to be sold (which shall represent, in the aggregate, more than 20% of
the total number of Registrable Shares held by all Holders) and the intended
method of disposition thereof. Subject to Section 2.1.6, the Company shall file
the Demand Registration within 45 days after receiving a Demand Request (the
"Required Filing Date") and shall use all commercially reasonable efforts to
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cause the same to be declared effective by the SEC as promptly as practicable
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after such filing; provided, that the Company need effect only five Demand
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Registrations; provided, further, that if any Registrable Shares requested to be
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registered pursuant to a Demand Request under this Section 2.1 are excluded from
a registration pursuant to Section 2.1.4 below, the Holders shall have the
right, with respect to each such exclusion, to one additional Demand
Registration under this Section 2.1 with respect to such excluded Registrable
Shares; and provided, further, that the Company shall not be obligated to file a
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registration statement relating to a registration request under this Section 2.1
more frequently than once in any nine month period or within a period of six
months after the effective date of any other registration statement of the
Company other than an Excluded Registration or any registration statement filed
at the request or on behalf of, or for the benefit of, another securityholder of
the Company (other than pursuant to this Section 2.1) in which Holders were not
entitled to include all Registrable Shares requested to be included therein.
2.1.2 Effective Registration and Expenses. A registration will not
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count as a Demand Registration until it has become effective (unless (i) (A) the
Requesting Holders shall have made a written request for a registration which is
subsequently withdrawn by the Requesting Holders with respect to a number of
Registrable Securities such that the number of Registrable Securities requested
to be included in such registration statement is less than a Registrable Amount
after the Company has filed a registration statement with the SEC in connection
therewith, (B) the Company has performed its obligations hereunder in all
material respects and (C) there has not been any event, change or effect which,
individually or in the aggregate, has had or would be reasonably likely to have
a material adverse effect on the business, operations, prospects, assets,
condition (financial or otherwise) or results of operations of the Company, or
(ii) such registration statement is not declared effective solely as a result of
the failure of the Requesting Holders to take all actions reasonably required in
order to have the registration and the related registration statement declared
effective by the SEC, in which case such demand will count as a Demand
Registration unless the Requesting Holders pay all Registration Expenses, as
hereinafter defined, in connection with such withdrawn registration); provided,
that if, after it has become effective, an offering of Registrable Shares
pursuant to a registration is interfered with by any stop order, injunction, or
other order or requirement of the SEC or other governmental agency or court,
such registration will be deemed not to have been effected and will not count as
a Demand Registration, unless such order, injunction or requirement shall have
been imposed solely as a result of the actions of the Requesting Holders or the
failure of the Requesting Holders to take all actions reasonably required in
order to prevent such imposition, in which case such registration shall be
counted as a Demand Registration without regard to whether it is so interfered
with . Subject to the following sentence, in the event that a Demand Request is
made by a Holder that is subsequently withdrawn by that Holder, all Registration
Expenses incurred in connection therewith shall be borne by that Holder and such
withdrawn Demand Request shall not be counted as a Demand Registration in
determining the number of Demand Registrations to which the Holders are entitled
pursuant to Section 2.1.1(b). In the event that a Demand Request is made by a
Holder that is subsequently withdrawn by that Holder, all Registration Expenses
shall be borne by the Company if (i) the Company has not performed its
obligations hereunder in all material respects or (ii) there has been any event,
change or effect which, individually or in the aggregate, has had or would be
reasonably likely to have a material adverse effect on the business, operations,
prospects, assets, condition (financial or otherwise) or results of operations
of the Company; and in such case a withdrawn Demand Request shall not be counted
as a Demand Registration in determining the number of Demand Registrations to
which the Holders are entitled pursuant to Section 2.1.1(b).
2.1.3 Selection of Underwriters. If requested by the Requesting
---------------------------
Holders, the offering of Registrable Shares pursuant to a Demand Registration
shall be in the form of a firm commitment underwritten offering. The
Requesting Holders of a majority of the Registrable Shares to be registered in a
Demand Registration shall determine whether the offering shall be in the form of
a firm commitment underwriting and, if so, shall select the investment banking
firm or firms to manage the underwritten offering; provided that such selection
shall be subject to the consent of the Company, which consent shall not be
unreasonably withheld.
2.1.4 Priority on Demand Registrations. No securities to be sold for
----------------------------------
the account of any Person (including the Company) other than a Requesting Holder
shall be included in a Demand Registration if the managing underwriter or
underwriters shall advise the Requesting Holders in writing that the inclusion
of such securities will materially and adversely affect the price or success of
the offering (a "Material Adverse Effect"). Furthermore, in the event the
------------------------
managing underwriter or underwriters shall advise the Requesting Holders that
even after exclusion of all securities of other Persons pursuant to the
immediately preceding sentence, the amount of Registrable Shares proposed to be
included in such Demand Registration by Requesting Holders is sufficiently large
to cause a Material Adverse Effect, the Registrable Shares of the Requesting
Holders to be included in such Demand Registration shall equal the number of
shares which the Requesting Holders are so advised can be sold in such offering
without a Material Adverse Effect and such shares shall be allocated pro rata
among the Requesting Holders on the basis of the number of Registrable Shares
held by the Requesting Holders.
2.1.5 Rights of Nonrequesting Holders. Upon receipt of any Demand
----------------------------------
Request, the Company shall promptly (but in any event within 10 days) give
written notice of such proposed Demand Registration to all other Holders, who
shall have the right, exercisable by written notice to the Company within 15
days of their receipt of the Company's notice, to elect to include in such
Demand Registration such portion of their Registrable Securities as they may
request. All Holders requesting to have their Registrable Shares included in a
Demand Registration in accordance with the preceding sentence shall be deemed to
be "Requesting Holders" for purposes of this Section 2.1.
2.1.6 Deferral of Filing. The Company may defer the filing (but not
--------------------
the preparation) of a registration statement required by Section 2.1 until a
date not later than 180 days after the Required Filing Date (or, if longer, 180
days after the effective date of the registration statement contemplated by
clause (ii) below) if (i) at the time the Company receives the Demand Request,
the Company or any of its Subsidiaries are engaged in confidential negotiations
or other confidential business activities, disclosure of which would be required
in such registration statement (but would not be required if such registration
statement were not filed), and the Board of the Company determines in good faith
that such disclosure would be materially detrimental to the Company and its
shareholders or would have a material adverse effect on any such confidential
negotiations or other confidential business activities, or (ii) prior to
receiving the Demand Request, the Board had determined to effect a registered
underwritten public offering of the Company's securities for the Company's
account and the Company had taken substantial steps (including, but not limited
to, selecting a managing underwriter for such offering) and is proceeding with
reasonable diligence to effect such offering. A deferral of the filing of a
registration statement pursuant to this Section 2.1.6 shall be lifted, and the
requested registration statement shall be filed forthwith, if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed by the Company or terminated, or, in the case of
a deferral pursuant to clause (ii) of the preceding sentence, the proposed
registration for the Company's account is abandoned. In order to defer the
filing of a registration statement pursuant to this Section 2.1.6, the Company
shall promptly (but in any event within 10 days), upon determining to seek such
deferral, deliver to each Requesting Holder a certificate signed by an executive
officer of the Company stating that the Company is deferring such filing
pursuant to this Section 2.1.6 and, subject to applicable confidentiality
agreements, a general statement of the reason for such deferral and an
approximation of the anticipated delay. Within 20 days after receiving such
certificate, the holders of a majority of the Registrable Shares held by the
Requesting Holders and for which registration was previously requested may
withdraw such Demand Request by giving notice to the Company; if withdrawn, the
Demand Request shall be deemed not to have been made for all purposes of this
Agreement. The Company may defer the filing of a particular registration
statement pursuant to this Section 2.1.6 only once.
Section 2.2 Piggyback Registrations.
------------------------
2.2.1 Right to Piggyback. Each time the Company proposes to register
--------------------
any of its equity securities (other than pursuant to an Excluded Registration)
under the Securities Act for sale to the public (whether for the account of the
Company or the account of any securityholder of the Company and including any
registration statement pursuant to Rule 415 under the Securities Act (such as a
"universal shelf" registration statement), including the Replacement Shelf
Registration Statement) or proposes to make such an offering of equity
securities pursuant to a previously filed registration statement pursuant to
Rule 415 under the Securities Act and the form of registration statement to be
used permits the registration of Registrable Shares, the Company shall give
prompt written notice to each Holder of Registrable Shares (which notice shall
be given not less than 30 days prior to the effective date of the Company s
registration statement), which notice shall offer each such Holder the
opportunity to include any or all of its or his Registrable Shares in such
registration statement, subject to the limitations contained in Section 2.2.2
hereof. Each Holder who desires to have its or his Registrable Shares included
in such registration statement shall so advise the Company in writing (stating
the number of shares desired to be registered and the intended method of
disposition) within 20 days after the date of such notice from the Company. Any
Holder shall have the right to withdraw such Holder's request for inclusion of
such Holder's Registrable Shares in any registration statement pursuant to this
Section 2.2.1 by giving written notice to the Company of such withdrawal.
Subject to Section 2.2.2 below, the Company shall use all commercially
reasonable efforts to include in such registration statement all such
Registrable Shares so requested to be included therein; provided, however, that
the Company may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding with the
registration of all other equity securities originally proposed to be
registered.
2.2.2 Priority on Registrations. If the Registrable Shares requested
---------------------------
to be included in the registration statement by any Holder differ from the type
of securities proposed to be registered by the Company and the managing
underwriter advises the Company that due to such differences the inclusion of
such Registrable Shares would cause a Material Adverse Effect, then (i) the
number of such Holder's or Holders' Registrable Shares to be included in the
registration statement shall be reduced to an amount which, in the opinion of
the managing underwriter, would eliminate such Material Adverse Effect or (ii)
if no such reduction would, in the opinion of the managing underwriter,
eliminate such Material Adverse Effect, then the Company shall have the right to
exclude all such Registrable Shares from such registration statement provided no
other securities of such type are included and offered for the account of any
other Person in such registration statement. Any partial reduction in number of
Registrable Shares to be included in the registration statement pursuant to
clause (i) of the immediately preceding sentence shall be effected pro rata
based on the ratio which such Holder's requested shares bears to the total
number of shares requested to be included in such registration statement by all
Persons other than the Company who have requested that their shares be included
in such registration statement. If the Registrable Shares requested to be
included in the registration statement are of the same type as the securities
being registered by the Company and the managing underwriter advises the Company
in writing that the inclusion of such Registrable Shares would cause a Material
Adverse Effect, the Company will be obligated to include in such registration
statement, as to each Holder, only a portion of the shares such Holder has
requested be registered equal to the ratio which such Holder's requested shares
bears to the total number of shares requested to be included in such
registration statement by all Persons who have requested that their shares be
included in such registration statement. If the Company initiated the
registration, then the Company may include all of its securities in such
registration statement before any of such Holder's requested shares are
included. If another securityholder initiated the registration, then the
Company may not include any of its securities in such registration statement
unless all Registrable Shares requested to be included in the registration
statement by all Holders are included in such registration statement. If as a
result of the provisions of this Section 2.2.2 any Holder shall not be entitled
to include all Registrable Securities in a registration that such Holder has
requested to be so included, such Holder may withdraw such Holder's request to
include Registrable Shares in such registration statement prior to its
effectiveness. No Holder may participate in any registration statement
hereunder unless such Person (x) agrees to sell such Person's Registrable Shares
on the basis provided in any underwriting arrangements approved by the Company
and (y) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, and other documents reasonably required
under the terms of such underwriting arrangements; provided, however, that no
such Person shall be required to make any representations or warranties in
connection with any such registration other than representations and warranties
as to (i) such Person's ownership of his or its Registrable Shares to be sold or
transferred free and clear of all liens, claims, and encumbrances, (ii) such
Person's power and authority to effect such transfer, and (iii) such matters
pertaining to compliance with securities laws and other applicable laws and
governmental rules and regulations, if any, as may be reasonably requested;
provided further, however, that the obligation of such Person to indemnify
pursuant to any such underwriting arrangements shall be several, not joint and
several, among such Persons selling securities, and the liability of each such
Person will be in proportion to, and provided further that such liability will
be limited to, the net amount received by such Person from the sale of his or
its Registrable Shares pursuant to such registration.
Section 2.3 Shelf Registration.
-------------------
2.3.1 Replacement Shelf Registration. Upon the written request of
--------------------------------
Purchaser at any time after the Second Closing Date, the Company promptly shall
prepare and file with the SEC a universal shelf registration statement pursuant
to Rule 415 under the Securities Act to supersede and replace the Company s
existing universal shelf registration statement (registration no. 333-11703)
currently effective under the Securities Act and shall include therein such
Registrable Shares as Holder shall request (but in no event less than a
Registrable Amount) (the "Replacement Shelf Registration Statement"). The
-------------------------------------------
Company shall use all commercially reasonable efforts to cause such Replacement
Shelf Registration Statement to become effective under the Securities Act, and
at any time after the effectiveness thereof when the Company elects to effect an
offering of securities pursuant to the Replacement Shelf Registration Statement,
Holder shall be entitled to exercise its rights under Section 2.1 (subject to
the first sentence of Section 2.1.1 with respect to any demand for any offering
to be made pursuant thereto) and Section 2.2.1 with respect to such offering.
2.3.2 Use of Shelf Registration. At any time that Holder requests a
----------------------------
Demand Registration pursuant to Section 2.1 or to include Registrable Shares in
a registration statement pursuant to Section 2.2, in each case with respect to
the Replacement Shelf Registration Statement or any other "shelf" registration
statement, the provisions of Sections 2.1 and 2.2, including references in such
Sections to "file", "register" or "included in", as relating to the rights
of the Holders to request to include Registrable Shares in a registration
statement to be filed with the SEC shall be construed as referring to a
request to have Registrable Shares included in such registration statement
pursuant to Section 2.2 in the case of the initial filing of such
registration statement or to a request to include Registrable Shares in an
offering to be effected pursuant to such registration statement pursuant to
Section 2.1 or 2.2, as applicable, in the case of an offering to be effected
pursuant to a registration statement that previously has been declared
effective under the Securities Act.
Section 2.4 Holdback Agreement. Unless the managing underwriter
-------------------
otherwise agrees, each of the Company and the Holders agrees, and the Company
agrees, in connection with any underwritten registration, to use its reasonable
efforts to cause its Affiliates to agree, not to effect any public sale or
private offer or distribution of any Common Stock or Common Stock Equivalents
during the ten business days prior to the effectiveness under the Securities Act
or pricing of any underwritten offering pursuant to a registration statement in
which Registrable Securities are included and during such time period after the
effectiveness under the Securities Act of any underwritten registration or
pricing of underwritten securities (not to exceed 90 days) (except, if
applicable, as part of such underwritten registration) as the Company and the
managing underwriter may agree.
Section 2.5 Registration Procedures. Whenever any Holder has requested
-----------------------
that any Registrable Shares be registered pursuant to this Agreement, the
Company will use its commercially reasonable efforts to effect the registration
and the sale of such Registrable Shares in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as reasonably possible:
(i) prepare and file with the SEC a registration statement on any
appropriate form under the Securities Act with respect to such Registrable
Shares and use all commercially reasonable efforts to cause such registration
statement to become effective;
(ii) prepare and file with the SEC such amendments, post-effective
amendments, and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days (or such lesser
period as is necessary for the underwriters in an underwritten offering to sell
unsold allotments) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Shares and the underwriters
of the securities being registered such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus), any
documents incorporated by reference therein and such other documents as such
seller or underwriters may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by such seller or the sale of such
securities by such underwriters (it being understood that, subject to Section
2.6 and the requirements of the Securities Act and applicable state securities
laws, the Company consents to the use of the prospectus and any amendment or
supplement thereto by each seller and the underwriters in connection with the
offering and sale of the Registrable Shares covered by the registration
statement of which such prospectus, amendment or supplement is a part);
(iv) use all commercially reasonable efforts to register or qualify
such Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the managing underwriter reasonably requests; use all
commercially reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each seller to
consummate the disposition of the Registrable Shares owned by such seller in
such jurisdictions (provided, however, that the Company will not be required to
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (B) consent to
general service of process in any such jurisdiction);
(v) promptly notify each seller and each underwriter and (if requested
by any such Person) confirm such notice in writing (A) when a prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective amendment, when the
same has become effective, (B) of the issuance by any state securities or other
regulatory authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Shares under state securities or "blue
sky" laws or the initiation of any proceedings for that purpose, and (C) of the
happening of any event which makes any statement made in a registration
statement or related prospectus untrue in any material respect or which requires
the making of any changes in such registration statement, prospectus or
documents so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and, as promptly as practicable
thereafter, prepare and file with the SEC and furnish a supplement or amendment
to such prospectus so that, as thereafter deliverable to the purchasers of such
Registrable Shares, such prospectus will not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(vi) make generally available to the Company's securityholders an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act no later than 30 days after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after the
effective date of a registration statement, which earnings statement shall cover
said 12-month period, and which requirement will be deemed to be satisfied if
the Company timely files complete and accurate information on Forms 10-Q, 10-K
and 8-K under the Exchange Act and otherwise complies with Rule 158 under the
Securities Act;
(vii) if requested by the managing underwriter or reasonably requested
by any seller promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or any seller reasonably
requests to be included therein, including, without limitation, with respect to
the Registrable Shares being sold by such seller, the purchase price being paid
therefor by the underwriters and with respect to any other terms of the
underwritten offering of the Registrable Shares to be sold in such offering, and
promptly make all required filings of such prospectus supplement or
post-effective amendment;
(viii) as promptly as practicable after filing with the SEC of any
document which is incorporated by reference into a registration statement (in
the form in which it was incorporated), deliver a copy of each such document to
each seller;
(ix) cooperate with the sellers and the managing underwriter to
facilitate the timely preparation and delivery of certificates (which shall not
bear any restrictive legends unless required under applicable law) representing
securities sold under any registration statement, and enable such securities to
be in such denominations and registered in such names as the managing
underwriter or such sellers may request and keep available and make available to
the Company's transfer agent prior to the effectiveness of such registration
statement a supply of such certificates;
(x) promptly make available for inspection by any seller, any
underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent or representative
retained by any such seller or underwriter (collectively, the "Inspectors"), all
----------
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
-------
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information requested
by any such Inspector in connection with such registration statement; provided,
that, unless the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide any
information under this subparagraph (x) if (A) the Company believes, after
consultation with counsel for the Company, that to do so would cause the Company
to forfeit an attorney-client privilege that was applicable to such information
or (B) if either (1) the Company has requested and been granted from the SEC
confidential treatment of such information contained in any filing with the SEC
or documents provided supplementally or otherwise or (2) the Company reasonably
determines in good faith that such Records are confidential and so notifies the
Inspectors in writing unless prior to furnishing any such information with
respect to (A) or (B) such Holder of Registrable Securities requesting such
information agrees to enter into a confidentiality agreement in customary form
and subject to customary exceptions; and provided, further that each Holder of
Registrable Securities agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company at its expense, to undertake appropriate action
and to prevent disclosure of the Records deemed confidential;
(xi) furnish to each seller and underwriter a signed counterpart of (A)
an opinion or opinions of counsel to the Company, and (B) a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the sellers or managing
underwriter reasonably requests;
(xii) use all commercially reasonable efforts to cause the Registrable
Shares included in any registration statement to be (A) listed on each
securities exchange, if any, on which securities of the same type issued by the
Company are then listed, or (B) authorized to be quoted and/or listed (to the
extent applicable) on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") or The New York Stock Exchange if the Registrable
------
Shares so qualify and securities of the same type issued by the Company are so
listed or quoted;
(xiii) provide a CUSIP number for the Registrable Shares included in
any registration statement not later than the effective date of such
registration statement;
(xiv) cooperate with each seller and each underwriter participating in
the disposition of such Registrable Shares and their respective counsel in all
reasonable respects in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. ("NASD");
----
(xv) during the period when the prospectus is required to be delivered
under the Securities Act, file within the required time periods all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act;
(xvi) notify each seller of Registrable Shares promptly of any request
by the SEC for the amending or supplementing of such registration statement or
prospectus or for additional information;
(xvii) prepare and file with the SEC promptly any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for the Company or the managing underwriter, is required in
connection with the distribution of the Registrable Shares;
(xviii) enter into such agreements (including underwriting agreements
in the managing underwriter's customary form) as are customary in connection
with an underwritten registration; and
(xix) advise each seller of such Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the SEC suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for such purpose and promptly
use all commercially reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible moment if such stop
order should be issued.
Section 2.6 Suspension of Dispositions. Each Holder agrees by
----------------------------
acquisition of any Registrable Shares that, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the kind
------------------
described in Section 2.5(v)(C), such Holder will forthwith discontinue
disposition of Registrable Shares until such Holder's receipt of the copies of
the supplemented or amended prospectus, or until it is advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and has
------
received copies of any additional or supplemental filings which are incorporated
by reference in the prospectus, and, if so directed by the Company, such Holder
will deliver to the Company all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such Registrable Shares
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time period regarding the effectiveness of
registration statements set forth in Section 2.4(ii) hereof shall be extended by
the number of days during the period from and including the date of the giving
of the Suspension Notice to and including the date when each seller of
Registrable Shares covered by such registration statement shall have received
the copies of the supplemented or amended prospectus or the Advice. The Company
shall use its commercially reasonable efforts and take such actions as are
reasonably necessary to render the Advice as promptly as practicable.
Section 2.7 Registration Expenses. All expenses incident to the
----------------------
Company's performance of or compliance with this Article 2 including without
limitation, (i) all registration and filing fees, (ii) all fees and expenses
associated with filings required to be made with the NASD (including, if
applicable, the fees and expenses of any qualified independent underwriter as
such term is defined in Schedule E of the By-Laws of the NASD, and of its
counsel), as may be required by the rules and regulations of the NASD, (iii)
fees and expenses of compliance with securities or "blue sky" laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Shares), (iv) rating agency fees, (v) printing
expenses (including expenses of printing certificates for the Registrable Shares
in a form eligible for deposit with Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by a holder of
Registrable Shares), (vi) messenger and delivery expenses, (vii) the Company s
internal expenses (including without limitation all salaries and expenses of its
officers and employees performing legal or accounting duties), (viii) the fees
and expenses incurred in connection with any listing of the Registrable Shares,
(ix) fees and expenses of counsel for the Company and its independent certified
public accountants (including the expenses of any special audit or cold comfort
letters required by or incident to such performance), (x) securities acts
liability insurance (if the Company elects to obtain such insurance), (xi) the
fees and expenses of any special experts retained by the Company in connection
with such registration, and (xii) the fees and expenses of other persons
retained by the Company, subject to Section 2.1.2., will be borne by the
Company, whether or not any registration statement becomes effective; provided
that in no event shall Registration Expenses include any underwriting discounts
or commissions or transfer taxes or the fees and expenses of counsel for the
Holders.
Section 2.8 Indemnification.
---------------
2.8.1 The Company agrees to indemnify and reimburse, to the fullest
extent permitted by law, each seller of Registrable Shares, and each of its
employees, advisors, agents, representatives, partners, members, officers, and
directors and each Person who controls such seller (within the meaning of the
Securities Act or the Exchange Act) and any agent or investment advisor thereof
(collectively, the "Seller Affiliates") (A) against any and all losses, claims,
-----------------
damages, liabilities, and expenses, joint or several (including, without
limitation, attorneys' fees and disbursements except as limited by Section
2.8.3) based upon, arising out of or resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, or preliminary prospectus relating to the offer and sale of
Registrable Shares or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (B) against any and all
loss, liability, claim, damage, and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement (effected with the Company s
consent) of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon,
arising out of or resulting from any such untrue statement or omission or
alleged untrue statement or omission, and (C) against any and all costs and
expenses (including reasonable fees and disbursements of counsel) as may be
reasonably incurred in investigating, preparing, or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon, arising out of or
resulting from any such untrue statement or omission or alleged untrue statement
or omission, to the extent that any such expense or cost is not paid under
subparagraph (A) or (B) above; except insofar as the same are made in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of such seller or any Seller Affiliate specifically for inclusion
in the registration statement or arise from such seller's or any Seller
Affiliate's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such seller or Seller Affiliate with a sufficient number of copies of
the same. The reimbursements required by this Section 2.8.1 will be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses incurred.
2.8.2 In connection with any registration statement in which a seller
of Registrable Shares is participating, each such seller will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the fullest extent permitted by law, each such seller will
indemnify and reimburse the Company and its directors and officers and each
Person who controls the Company (within the meaning of the Securities Act or the
Exchange Act) against any and all losses, claims, damages, liabilities, and
expenses (including, without limitation, reasonable attorneys fees and
disbursements except as limited by Section 2.8.3) based upon, arising out of or
resulting from any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, prospectus, or any preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with any information or affidavit so
furnished in writing by such seller or any of its Seller Affiliates specifically
for inclusion in the registration statement; provided that the obligation to
indemnify will be several, not joint and several, among such sellers of
Registrable Shares, and the liability of each such seller of Registrable Shares
will be in proportion to, and provided further that such liability will be
limited to, the net amount received by such seller from the sale of Registrable
Shares pursuant to such registration statement; provided, however, that such
seller of Registrable Shares shall not be liable in any such case to the extent
that prior to the filing of any such registration statement or prospectus or
amendment thereof or supplement thereto, such seller has furnished in writing to
the Company information expressly for use in such registration statement or
prospectus or any amendment thereof or supplement thereto which corrected or
made not misleading information previously furnished to the Company.
2.8.3 Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such notice
shall not limit the rights of such Person except to the extent that the
indemnifying party is materially prejudiced thereby) and (B) unless such
indemnified party has been advised by counsel that a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided, however,
that any person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such person unless
(i) the indemnifying party has agreed to pay such fees or expenses, (ii) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person, (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such indemnified party and the indemnifying party, and such indemnified party
shall have been advised by counsel in writing that there is a conflict of
interest on the part of counsel employed by the indemnifying party to represent
such indemnified party, or (iv) the indemnified party's counsel shall have
advised the indemnified party that there are defenses available to the
indemnified party that are different from or in addition to those available to
the indemnifying party and that the indemnifying party is not able to assert on
behalf of or in the name of the indemnified party (in which case of either (iii)
or (iv), if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action or proceeding on behalf of such indemnified party but shall have the
right to participate through its own counsel). If such defense is not assumed
by the indemnifying party as permitted hereunder, the indemnifying party will
not be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). If
such defense is assumed by the indemnifying party pursuant to the provisions
hereof, such indemnifying party shall not settle or otherwise compromise the
applicable claim unless (1) such settlement or compromise contains a full and
unconditional release of the indemnified party or (2) the indemnified party
otherwise consents in writing (such consent not to be unreasonably withheld).
An indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless any indemnified party shall have been advised by
counsel in writing that a conflict of interest exists between such indemnified
party and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the reasonable fees
and disbursements of such additional counsel or counsels.
2.8.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 2.8.1 or Section 2.8.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, liabilities, or expenses (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the actions which resulted in
the losses, claims, damages, liabilities or expenses or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect the relative benefits of the indemnified
party and indemnifying party from the offering of the securities covered by such
registration statement as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party, and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 2.8.4 were determined by pro rata allocation (even if
the Holders or any underwriters or all of them were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 2.8.4. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities, or expenses (or actions in respect thereof) referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or, except
as provided in Section 2.8.3, defending any such action or claim.
Notwithstanding the provisions of this Section 2.8.4, no Holder shall be
required to contribute an amount greater than the dollar amount by which the
proceeds received by such Holder with respect to the sale of any Registrable
Shares exceeds the amount of damages which such Holder has otherwise been
required to pay by reason of such statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders obligations in this
Section 2.8.4 to contribute shall be several in proportion to the amount of
Registrable Shares registered by them and not joint.
If sufficient indemnification is available under this Section 2.8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 2.8.1 and Section 2.8.2 without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.8.4.
2.8.5 The indemnification and contribution provided for under this
Stockholders Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director, or controlling Person of such indemnified party and will survive the
transfer of securities.
ARTICLE 3
RESTRICTIONS ON TRANSFER
Section 3.1 General. Any Third-Party Sale shall be subject to
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compliance with provisions of this Article 3.
Section 3.2 Transfer Restrictions. During the one year period
----------------------
following the date hereof, the Holder shall not engage in any Third-Party Sales
without the Company's prior written consent.
Section 3.3 Right of First Offer. (a) Until the earlier of the fifth
---------------------
annual anniversary of the date hereof or the date on which Purchaser and its
Affiliates own less than 10% of the then outstanding Common Stock (assuming
conversion of all Common Stock Equivalents, including all 8% Preference Shares,
then held by Purchaser and its Affiliates) prior to consummating any Third-Party
Sale in respect of Common Stock, 8% Preference Shares or a combination of Common
Stock and 8% Preference Shares that constitute, in the aggregate, more than 9.9%
of the then outstanding Common Stock (assuming conversion of all Common Stock
Equivalents, including all 8% Preference Shares, then held by Purchaser and its
Affiliates proposed to be sold) to any one buyer or related group of buyers in a
single transaction or a series of related transactions, Purchaser or any
Affiliate of Purchaser (the "Offeror") will deliver to the Company a written
-------
notice (an "Offer Notice") specifying the aggregate number of Registrable
-------------
Securities intended to be Transferred and the minimum consideration (the "Offer
-----
Price") for which the Offeror proposes in good faith to sell the Registrable
-----
Securities to be offered in such Third-Party Sale (the "Offered Shares"). Upon
--- --------------
receipt of such notice, the Company shall have 30 days to notify the Offeror in
writing (the "ROFO Notice") of the identity of one or more designated buyers
------------
(collectively, the "Designated Buyer") of the Offered Shares (which may include
----------------
the Company). The Designated Buyer shall then have an additional 30 days from
the date the Company notifies the Offeror to close the acquisition of the
Offered Shares.
(b) Rights to Purchase Offered Shares. If the Designated Buyer
-------------------------------------
delivers to the Offeror a written notice (an "Acceptance Notice") within 30 days
-----------------
following delivery of the ROFO Notice (the "ROFO Acceptance Period"), stating
----------------------
that such Designated Buyer is willing to purchase all of the Offered Shares for
the Offer Price and on the other terms, if any, as are set forth in the Offer
Notice, the Offeror will sell all (but not less than all) of the Offered Shares
to such Designated Buyer, and such Designated Buyer will purchase such Offered
Shares from the Offeror, on the proposed terms and subject to the conditions set
forth in the Offer Notice and below ; provided, however, that if the Offer Price
-------- -------
is payable in whole or in part in property (which term shall include the
securities of any issuer other than the Company) other than cash, the Designated
Buyer may pay, in lieu of such property, a sum of cash equal to the fair market
value of such property as determined by the selling Holder and the Designated
Buyer in good faith or, if the selling Holder and the Designated Buyer do not
agree on the fair market value of such property within five (5) days after the
delivery of the Acceptance Notice, then each of the selling Holder and the
Designated Buyer shall select one nationally recognized independent appraiser
(with each of the selling Holder and the Designated Buyer bearing the expense of
the appraiser selected by it) to determine the fair market value of that
property and the average of the appraised fair market values of that property as
determined by those appraisers shall be deemed the fair market value of that
property for purposes of this Article 3.
(c) The ROFO Closing. The consummation of any purchase of the Offered
-----------------
Shares by the Designated Buyer pursuant to this Section 3.3 (the "ROFO Closing")
------------
will occur no later than the last day of the ROFO Acceptance Period, at such
time and place as may be agreed upon by the Offeror and the Designated Buyer or,
if such parties fail to agree to such time and place, at the offices of the
Offeror at 000 Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 at 10:00 a.m.
(Central Time) on the last business day of the ROFO Acceptance Period. At the
ROFO Closing, (1) the Designated Buyer will deliver to the Offeror by certified
or official bank check or wire transfer to an account designated by the Offeror
an amount in immediately available funds equal to the aggregate Offer Price for
the Offered Shares, and (2) the Offeror will deliver one or more certificates
evidencing the Offered Shares, together with such other duly executed
instruments or documents (executed by the Offeror) as may be reasonably
requested by the Designated Buyer to acquire the Offered Shares.
(d) Right to Consummate Third-Party Sale If no ROFO Notice or no
----------------------------------------
Acceptance Notice relating to the proposed Third-Party Sale is delivered to the
Offeror prior to the expiration of the applicable period set forth above, or an
Acceptance Notice is so delivered to the Offeror but the ROFO Closing fails to
occur prior to the expiration of the ROFO Closing Period (unless the Designated
Buyer was ready, willing and able prior to the expiration of the ROFO Closing
Period to consummate the transactions to be consummated by the Designated Buyer
at the ROFO Closing), the Offeror may (without affecting its rights, if any,
arising out of such failure) consummate the Third-Party Sale, but only (1)
during the 6-month period immediately following the expiration of the applicable
30 day period (in the event that no ROFO Notice or Acceptance Notice, as the
case may be, was timely delivered to the Offering Holder) or the 6-month period
immediately following the expiration of the ROFO Closing Period (in the event
that an Acceptance Notice was timely delivered to the Offeror but the ROFO
Closing failed timely to occur) and, (2) at a price at least equal to 95% of the
Offer Price.
ARTICLE 4
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
Section 4.1 Board.
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4.1.1 Board Representation. Subject to the provisions of Section 4.1.6
--------------------
below, Holder shall be entitled to designate individuals for nomination for
election to the Board as follows:
(i) for so long as the Board consists of ten members, Holder shall be
entitled to designate four nominees;
(ii) if the number of members constituting the entire Board shall be
increased or decreased from ten, Holder shall be entitled to designate a number
of nominees so that such nominees, if elected, would constitute that percentage
of the total number of members of the Board that the number of directors Holder
was entitled to nominate immediately prior to such increase or decrease bears to
the total number of directorships on the entire Board immediately prior to such
increase or decrease, with any fractional directorship resulting from such
calculation being rounded up to the next whole number.
Members of the Board designated by Holder pursuant to this Section 4.1.1 or
elected to fill a vacancy by members designated by Holder as provided in
subsection 4.1.4 herein shall be referred to as the "Holder Designees". Subject
----------------
to Section 4.1.6, the Company and the Board shall take such actions as necessary
to cause Holder Designees to be nominated and submitted to the shareholders for
election to the Board as provided in Sections 4.1.2 and 4.1.3.
4.1.2 Initial Board Designees. Simultaneously with the execution and
-------------------------
delivery of this Agreement, the Company and the Board shall take such actions as
necessary to cause the Board to consist of ten members, four vacancies to exist
on the Board, and to cause four Holder Designees to fill such vacancies on the
Board created pursuant to the terms of the Stock Purchase Agreement.
4.1.3 Annual Meeting.
---------------
(a) At each annual meeting of the Company's shareholders or any
extraordinary meeting in lieu thereof at which the term of any Holder Designee
is to expire or prior to which there shall be less than the maximum number of
Holder Designees serving on the Board, Holder shall be entitled to designate for
nomination as a director the number of individuals as necessary so that, if such
designees are elected to the Board at such annual meeting or any extraordinary
meeting in lieu thereof, the maximum number of Holder Designees shall be serving
on the Board. The Company agrees to cause each Holder Designee so designated by
Holder to be nominated for election to the Board at each annual meeting of the
Company's shareholders or any extraordinary meeting in lieu thereof. To the
extent the Company's proxy statement for any annual meeting of shareholders, or
any extraordinary meeting in lieu thereof, includes a recommendation regarding
the election of any other nominees to the Company's Board, the Company agrees to
include a recommendation of its Board that the shareholders also vote in favor
of each Holder Designee standing for election at such meeting. The Company
shall take all actions necessary to ensure that the Articles of Association of
the Company as in effect immediately following the date hereof do not, at any
time thereafter, conflict in any respect with the provisions of this Section
4.1.
(b) If, at any time Holder fails to advise (at least 90 days prior to
the next annual meeting) the Board in writing of its intention to designate the
number of directors which Holder is then entitled to designate for nomination at
the next annual meeting of the Company's shareholders or extraordinary meeting
in lieu thereof (other than any such meeting that occurs within 90 days after
the resignation of a director designated by Holder, in which case such writing
shall be delivered within a reasonable amount of time prior to the mailing of
proxy materials for such meeting), then the rights granted under this Section
4.1 with respect to the designation of Holder Designees shall be applicable for
such meeting only with respect to the number of nominees as indicated in such
writing, if any, that Holder intends to designate, but shall continue to be
fully effective with respect to subsequent meetings and interim vacancies. At
each annual meeting or extraordinary meeting in lieu thereof for which Holder
does not advise the Board of its intention to nominate the maximum number of
directors which it is entitled to nominate for such meeting, the nominees for
election to the Board, other than those nominated by Holder, shall be determined
by the Board and the Company.
4.1.4 Board Committees. For so long as Holder is entitled to nominate
-----------------
at least one Holder Designee, the Company and the Board shall take such actions
as necessary to cause at least one Holder Designee to be elected to, and to at
all times be a member of, each committee established by the Board.
4.1.5 Vacancies. If, prior to his election to the Board pursuant to
---------
Section 4.1.1 hereof, any Holder Designee shall be unable or unwilling to serve
as a director of the Company, then the Holder shall be entitled to nominate a
replacement who shall then be a Holder Designee for purposes of this Section 4.
If, following an election or appointment to the Board pursuant to Section 4.1.1
hereof, any Holder Designee shall resign or be removed or be unable to serve for
any reason prior to the expiration of his term as a director of the Company,
then the Holder shall, within 30 days of such event, notify the Board in writing
of a replacement Holder Designee, and the Company and the Board shall take such
action as necessary to cause such replacement Holder Designee to be appointed to
the Board and each applicable committee thereof to fill the unexpired term of
the Holder Designee who such new Holder Designee is replacing.
4.1.6 Reduction/Termination of Rights. The right of the Holder to
---------------------------------
designate directors under this Section 4.1 shall be reduced and terminate as
follows:
If at any time after the Second Closing the number of shares of Common
Stock and 8% Preference Shares (assuming conversion of such shares into Common
Stock) held of record by Purchaser and its Affiliates, collectively, represent
less than the below specified percentage of the number of shares of Common Stock
into which a number of 8% Preference Shares equal to the Original Number would
be convertible as of such time of determination, the number of directors that
Holder shall be entitled to designate shall be reduced to the number indicated:
PERCENTAGE HELD HOLDER
BY PURCHASER AND ITS AFFILIATES DIRECTORS
----------------------------------- ---------
Less than 75% but equal to
or more than 50% 3
Less than 50% but equal to
or more than 25% 2
Less than 25% but equal to
or more than 1% 1
Less than 1% 0
For purposes of this Agreement, "Original Number" shall mean the aggregate
---------------
number of 8% Preference Shares purchased by Purchaser pursuant to the terms of
the Stock Purchase Agreement (including 8% Preference Shares purchased pursuant
to the Rights (as defined in the Stock Purchase Agreement)).
Upon written request to Holder at any time that the number of Holder
Designees exceeds the number of directors Holder shall be entitled to designate
pursuant to this Section 4.1.5, Holder shall cause one or more Holder Designees
to resign from the Board as necessary to reduce the number of Holder Designees
to the number Holder is then entitled to designate.
4.1.7 Fees; Costs and Expenses. Except as provided in the following
---------------------------
sentence, Holder Designees shall not receive an annual retainer, meeting fees or
other consideration for serving on the Board (or committees thereof) or any
Board of Directors of any Subsidiary of the Company. The Company will pay or
reimburse each Holder Designee for all reasonable out-of-pocket expenses
incurred by such Holder Designee in connection with its participation in
meetings of the Board (and committees thereof) and the Boards of Directors (and
committees thereof) of the Subsidiaries of the Company.
4.1.8 Class Director Limitation. Notwithstanding the term of this
---------------------------
Section 4.1, if, at any time that Holder holds a majority of the outstanding 8%
Preference Shares and the holders of 8% Preference Shares are entitled, voting
separately as a class, to elect directors pursuant to Section 9(c) of the 8%
Preference Shares Authorization, the number of Holder Designees that Holder is
entitled to designate pursuant to this Section 4.1, when added to the two
directors the holders of 8% Preference Shares are entitled to elect pursuant to
Section 9(c) of the 8% Preference Shares Authorization (the "Class Directors"),
---------------
constitutes 50% or more of the members of the Board, the number of directors
Holder is entitled to designate pursuant to this Section 4.1 shall be reduced to
a number so that such Holder Designees and the Class Directors, collectively,
constitute less than 50% of the total Board until the earlier of the date on
which (i) Holder no longer owns a majority of the outstanding 8% Preference
Shares or (ii) the Class Directors and the number of Holder Designees Holder is
entitled to designate pursuant to this Section 4.1, collectively, constitute
less than 50% of the Board.
Section 4.2 Other Activities of the Holder; Fiduciary Duties. It is
--------------------------------------------------
understood and accepted that the Holder and its Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable law, nothing in
this Agreement shall limit the current or future business activities of the
Holder or its Affiliates whether or not such activities are competitive with
those of the Company and its Subsidiaries. Nothing in this Agreement, express
or implied, shall relieve any officer or director of the Company (including any
designee of a Holder pursuant to Section 4.1.1) or any of its Subsidiaries of
any fiduciary or other duties or obligations they may have to the Company's
shareholders.
Section 4.3 Actions Requiring Consent of Purchaser. From and after the
--------------------------------------
First Closing and for so long after the Second Closing as Purchaser and its
Affiliates, collectively, hold of record shares of Common Stock and 8%
Preference Shares (assuming conversion into Common Stock of all 8% Preference
Shares held by Purchaser and its Affiliates) representing in the aggregate at
least (x) 50% of the number of shares of Common Stock into which a number of 8%
Preference Shares equal to the Original Shares would be convertible as of such
time of determination or (y) 10% of the number of outstanding shares of Common
Stock, determined giving effect to the full conversion of all outstanding
securities of the Company convertible or exchangeable for Common Stock, in
addition to any other vote or consent of shareholders required by law or by the
Company's Articles of Association, without the prior written consent of Holder,
the Company shall not, and shall not permit any Subsidiary to:
(i) Amend, alter or repeal any of the provisions of the Articles of
Association of the Company or the 8% Preference Shares Authorization that
affects the voting powers, rights or preferences of the holders of the 8%
Preference Shares; provided, however, that action to authorize or create or to
-------- -------
increase the authorized amount of any Junior Shares, shall not be deemed to
affect the voting powers, rights or preferences of the holders of 8% Preference
Shares;
(ii) Merge, consolidate or enter into a similar business combination,
scheme of arrangement or transaction, effect any reorganization,
reclassification, recapitalization or other transaction or event in connection
with a plan pursuant to which a majority of the outstanding Common Stock or any
of the 8% Preference Shares (or, with respect to any Subsidiary of the Company,
any shares or stock of such Subsidiary) shall be exchanged for, converted into,
acquired for or constitute solely the right to receive securities, cash or other
property (whether by means of an exchange offer, liquidation, tender, offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) or otherwise reorganize with or into one or more entities (other than
a merger of a wholly-owned Subsidiary of the Company into another wholly-owned
Subsidiary of the Company); provided that this clause (ii) shall not prohibit
--------
(x) the restructure of Triton International Oil Corporation ("TIOC") and its
----
Subsidiaries pursuant to Section 14.1 of the Shareholders Agreement between TIOC
and ARCO JDA Limited (the "ARCO Shareholders Agreement") or (y) any
-----------------------------
consolidation, merger or reorganization of a Subsidiary of the Company in
connection with a transaction permitted by clause (iv) below and which does not
affect (or result in any exchange, conversion or similar effect on) any
outstanding Common Stock or any of the 8% Preferenced Shares;
(iii) Authorize or create, modify the terms of or increase the
authorized amount of, (1) any shares of any class or series or of any security
convertible into shares of any class or series ranking prior to the 8%
Preference Shares in the distribution of assets on any liquidation, dissolution
or winding up of the Company or any Subsidiary or in the payment of dividends,
(2) any class of Parity Shares, Parity Liquidation Shares or Parity Dividend
Shares, (3) any class or series of Junior Shares or any security convertible
into or exchangeable for any class or series of Junior Shares that, pursuant to
their terms, require, or permit the holders thereof to require, the Company or
any Subsidiary to redeem all or any portion of such Junior Shares, or (4) any
class or series of any other equity security other than Junior Shares or any
security convertible into or exchangeable for any class or series of any other
equity security other than Junior Shares;
(iv) Sell, lease to a third party or otherwise dispose of (in a single
transaction or a series of related transactions) assets comprising in excess of
50% of the market value of the assets of the Company and its Subsidiaries as a
whole or dissolve, liquidate or terminate the Company;
(v) Other than regular dividends on the Company's 5% Convertible
Preference Shares in accordance with the terms thereof as in effect on the date
hereof and subject to subsection 3(i) of the 8% Preference Shares Authorization,
declare, pay or set aside for payment any dividends or other distributions
(whether in cash, shares or property) with respect to, or redeem or otherwise
purchase, any Junior Shares or, in the case of any Subsidiary of the Company,
any shares or stock held other than by the Company or any wholly-owned
Subsidiary of the Company; provided that this clause (v) shall not prohibit the
--------
payment of dividends on and/or redemption of shares of TIOC pursuant to the
ARCO Shareholders Agreement;
(vi) Directly, or indirectly through any Subsidiary of the Company,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (other than Permitted Indebtedness) or issue, or
permit any Subsidiary of the Company to issue, any Preferred Stock (except
Preferred Stock issued to the Company or a wholly owned Subsidiary of the
Company); provided, however, that the Company and its Subsidiaries may incur
-------- -------
Indebtedness and, subject to the other limitations of this Section 4.3,
issue shares ofPreferred Stock if, in either case, the Company's Leverage
Ratio at the time of incurrence of such Indebtedness or the issuance of such
Preferred Stock, as the case may be, after giving pro forma effect to such
incurrence or issuance as of such date and to the use of proceeds therefrom
is less than 2.5 to 1; provided, further, that this clause (vi) shall not
prohibit the issuance of Preferred Stock by TIOC pursuant to Section 8.3
of the ARCO Shareholders Agreement;
(vii) Issue any shares of 8% Preference Shares other than (a) pursuant
to the terms of the Stock Purchase Agreement and the Rights Offering (as defined
in the Stock Purchase Agreement) and (b) as Additional Shares pursuant to
subsection 3(b) of the 8% Preference Shares Authorization;
(viii) Issue any shares of a class of shares ranking pari passu or
prior to the 8% Convertible Preference Shares with respect to dividends or to
the distribution of assets in liquidation or, in the case of any Subsidiary of
the Company, issue any shares or stock to any Person other than the Company or
any Subsidiary of the Company (provided that this clause (viii) shall not
prohibit the issuance of Preferred Stock by TIOC pursuant to Section 8.3 of the
ARCO Shareholders Agreement);
(ix) Commence or effect any tender or exchange offer made by the
Company or any Subsidiary for all or any portion of the Common Stock; or
(x) Decrease the number of shares designated as 8% Convertible
Preference Shares as provided in Section 1 of the 8% Preference Shares
Authorization.
Section 4.4 Action by Holder. At any time there shall be more than one
----------------
Holder, the designation of Holder Designees and the consent of Holder required
for actions referred to in this Agreement shall be effected by delivery to the
Company of a written instrument designating such Holder Designees or granting
(or denying) such consent executed by Holders holding a majority of outstanding
Common Stock (calculated giving effect to the full conversion of all 8%
Preference Shares held by all Holders) (a "Majority Interest"). Each such
-----------------
written instrument shall indicate the number of 8% Preference Shares held by the
Holder or Holders executing same and shall contain a certification that such
Holders 8% Preference Shares represent a Majority Interest.
ARTICLE 5
TERMINATION
The provisions of this Agreement, unless earlier terminated pursuant to
their terms, shall terminate on the tenth anniversary of the date of this
Agreement.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Notices. Any notices or other communications required or
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permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows (or at such
other address as may be substituted by notice given as herein provided):
If to the Company:
c/o Triton Exploration Services Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: President
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been given or
made as of the date so delivered if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and five calendar days
after mailing if sent by registered or certified mail (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
Section 6.2 Third Party Registration Rights. The Company is not a
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party, or otherwise subject, to any agreement granting registration rights to
any other Person with respect to the securities of the Company. The Company
will not on or after the date of this Agreement enter into any agreement
granting (a) demand registration rights to any other Person with respect to the
securities of the Company, or (b) piggy-back registration rights to any other
Person that are not junior or subordinate to the rights granted to the holders
of Registrable Securities under Sections 2.1 and 2.2 hereof, without the written
consent of the holders of a majority of the then outstanding Registrable Shares.
Any agreement entered into pursuant to such consent shall not be amended without
a further written consent of the holders of a majority of the then outstanding
Registrable Shares.
Section 6.3 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE
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GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. This Agreement shall be
construed, interpreted, and enforced in accordance with the laws of the State of
Texas, excluding any choice-of-law provisions thereof. Each of the parties
hereby (a) irrevocably submits to the exclusive jurisdiction of the United
States Federal District Court for the Northern District of Texas, sitting in
Dallas County, Texas, the United States of America, in the event such court has
jurisdiction or, if such court does not have jurisdiction, to any district court
sitting in Dallas County, Texas, the United States of America, for the purposes
of any suit, action or proceeding arising out of or relating to this Agreement,
including any claims by any Indemnified Persons for indemnity pursuant to
Section 5 hereof, (b) waives, and agrees not to assert in any such suit, acting
or proceeding, any claim that (i) it is not personally subject to the
jurisdiction of such court or of any other court to which proceedings in such
court may be appealed, (ii) such suit, action or proceeding is brought in an
inconvenient forum or (iii) the venue of such suit, action or proceeding is
improper and (c) expressly waives any requirement for the posting of a bond by
the party bringing such suit, action or proceeding. Each of the parties
consents to process being served in any such suit, action or proceeding by
mailing, certified mail, return receipt requested, a copy thereof to such party
at the address in effect for notices hereunder, and agrees that such services
shall constitute good and sufficient service of process and notice thereof.
Nothing in this Section 7 shall affect or limit any right to serve process in
any other manner permitted by law.
Section 6.4 Successors and Assigns. Whether or not an express
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assignment has been made pursuant to the provisions of this Agreement,
provisions of this Agreement that are for the Holders benefit as the holders of
any Registrable Shares are also for the benefit of, and enforceable by, all
subsequent holders of Registrable Shares and such subsequent holders shall be
deemed to be Holders and to have become parties to this Agreement (including
without limitation for purposes of Article IV hereof), except as otherwise
expressly provided herein; provided that the provisions of this Agreement shall
not be for the benefit of, applicable to or enforceable by any transferee, and
such transferee shall not be deemed a Holder for purposes of this Agreement of
Registrable Shares if the Holder effecting such transfer expressly shall have
designated such transferee as not constituting a Holder subject to or entitled
to the benefit of this Agreement at or prior to the effectiveness of the
transfer of Registrable Shares to such transferee. Subject to the preceding
sentence, this Agreement shall be binding upon the Company, each Holder, and
their respective successors and permitted assigns.
Section 6.5 Duplicate Originals. All parties may sign any number of
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copies of this Agreement. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
Section 6.6 Severability. In case any provision in this Agreement
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shall be held invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby.
Section 6.7 Specific Performance. The Company and the Holder or
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Holders recognize that if the Company refuses to perform under the provisions of
this Agreement, monetary damages alone will not be adequate to compensate the
Holder or Holders for its or their injury. The Holder or Holders shall
therefore be entitled, in addition to any other remedies that may be available,
to obtain specific performance of the terms of this Agreement.
Section 6.8 No Waivers; Amendments.
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6.8.1 No failure or delay on the part of the Company or any Holder in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.
6.8.2 Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Company and
the Holders holding a majority of the Registrable Shares.
Section 6.9 No Affiliate Liability. The partners, members, officers,
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directors, shareholders and Affiliates of a Holder, the Company or their
respective Affiliates shall not have any personal liability or obligation to any
Person arising under this Agreement in such capacities.
SIGNATURES TO SHAREHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first written above.
TRITON ENERGY LIMITED
By:/s/ Xxxxxx X. Xxxxxxx, III
Xxxxxx X. Xxxxxxx, III
Chief Executive Officer,
General Counsel and Secretary
HM4 TRITON, L.P.
By: HM Fund IV Cayman LLC,
its general partner
By: /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Senior Vice President
Address:
000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
