EXHIBIT 10.6
MANAGEMENT INVESTOR SUBSCRIPTION AGREEMENT
This Management Investor Subscription Agreement (this "Investment
Agreement") dated as of February 21, 1997 is made by Xxxxxxx X. Xxxxxxxx (the
"Investor") for the benefit of Domain Energy Corporation, a Delaware corporation
(the "Company").
R E C I T A L S
WHEREAS, El Paso Tennessee Pipeline Co. (formerly named Tenneco
Inc.) ("Tenneco"), El Paso Natural Gas Company ("El Paso") and El Paso Merger
Company, an indirect wholly-owned subsidiary of El Paso ("Merger Company"),
entered into that certain Amended and Restated Agreement and Plan of Merger
dated as of June 19, 1996 pursuant to which, effective December 12, 1996, Merger
Company merged with and into Tenneco, resulting in Tenneco becoming an indirect,
wholly-owned subsidiary of El Paso;
WHEREAS, the Company has been incorporated at the direction of
Xxxxxxx X. Xxxxx, President and Chief Executive Officer of Tenneco Ventures
Corporation, an indirect, wholly-owned subsidiary of Tenneco ("Tenneco
Ventures"), and First Reserve Fund VII, Limited Partnership ("Fund VII");
WHEREAS, by assignment from Teleo Ventures, Inc., all of the
outstanding capital stock of which is owned by Xxxxxxx X. Xxxxx, the Company is
a party to a Stock Purchase Agreement, dated as of December 24, 1996 (the "Stock
Purchase Agreement") with El Paso pursuant to which the Company agreed to
purchase from El Paso all of the outstanding capital stock of Tenneco Ventures
and Tenneco Gas Production Corporation (the "Ventures Companies Acquisition");
WHEREAS, to provide funds for the Ventures Companies Acquisition,
pursuant to a Subscription Agreement dated as of December 31, 1996 (the "First
Reserve Subscription Agreement"), between the Company and Fund VII, Fund VII
agreed to purchase and did purchase from the Company, and the Company agreed to
issue and sell and did issue and sell to Fund VII, an aggregate of 9,519.4717
shares (the "First Reserve Shares") of Common Stock of the Company, par value
$.01 per share ("Common Stock") at a purchase price of $3,151.4354 per share;
WHEREAS, pursuant to an Amended and Restated Management Investor
Subscription Agreement dated as of February 12, 1997 between the Company and
Xxxxxxx X. Xxxxx, Xx. Xxxxx agreed to purchase from the Company, and the
Company agreed to issue and sell to Xx. Xxxxx, an aggregate of 237.9868 shares
of Common Stock at a purchase price of $3,151.4354 per share (the "Xxxxx
Shares");
WHEREAS, the Ventures Companies Acquisition was consummated on
December 31, 1996;
WHEREAS, all securityholders of the Company are required to execute
and deliver the Securityholders' Agreement among the Company and its
securityholders dated as of December 31, 1996 (the "Securityholders' Agreement")
and to be bound thereby, a copy of which Securityholders' Agreement is attached
to the Domain Energy Corporation Private Placement Memorandum dated February 13,
1997 relating to the offering of the Management Investors' Shares (as defined
below) (the "Memorandum") as Exhibit B thereto;
WHEREAS, pursuant to the Memorandum and separate Management Investor
Subscription Agreements (collectively, the "Management Investors Subscription
Agreements"), each of Xxxxxxx X. Xxxxxxxx, Xxxxxxxxx X. Xxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxxx X. Xxxxxx, Xxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxxx
(each of such persons individually a "Management Investor" and, collectively,
the "Management Investors") will be permitted to purchase from the Company, and
the Company will be authorized to issue and sell to the Management Investors, an
aggregate of 279.6674 shares (the "Management Investors' Shares" and,
collectively with the First Reserve Shares and the Xxxxx Shares, the "Shares")
of Common Stock;
WHEREAS, in reliance on exemptions from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and from applicable state securities laws (the "Blue Sky Laws"), the Shares were
offered, issued and sold to Fund VII and, in the case of Xx. Xxxxx and the
Management Investors will be offered, sold and issued to Xx. Xxxxx and the
Management Investors pursuant to the Memorandum, without registration under the
Securities Act or applicable Blue Sky Laws; and
WHEREAS, the Investor recognizes that there are conditions to and
requirements of exemptions applicable to any issuance of securities;
NOW, THEREFORE, in consideration of the premises, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows.
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ARTICLE I.
SUBSCRIPTION
Section 1.1. SUBSCRIPTION FOR SHARES. Subject to the terms and
provisions of this Investment Agreement, the Investor hereby irrevocably
subscribes for and agrees to purchase 79.3289 Shares (the "Investor Shares") at
$3,151.4354 per Share. The aggregate subscription price (the "Subscription
Price") shall be payable in cash, or in part in cash and in part by the delivery
by the Investor to the Company of a promissory note in the form of that attached
hereto as Exhibit A (the "Note") and a Pledge Agreement pledging the Investor
Shares and other equity securities issued by the Company, in the form of that
attached hereto as Exhibit B (the "Pledge Agreement"). The Subscription Price
will be paid and, if applicable, the Note and Pledge Agreement delivered upon
execution hereof by the Investor and acceptance hereof by the Company. Upon
payment of the Subscription Price and, if applicable, delivery of the Note and
Pledge Agreement, and upon execution of the Securityholders Agreement by the
Investor and his or her spouse, if applicable, the Company will issue the
Investor Shares, to be pledged by the Investor to secure the Note, if
applicable.
Section 1.2. INDEMNIFICATION. The Investor understands and
acknowledges the meaning and legal consequences of the representations,
warranties and agreements made by the Investor in this Investment Agreement and
that the Company has relied upon such representations, warranties and
agreements, and the Investor hereby agrees to indemnify and hold harmless the
Company, and all directors, officers, employees, stockholders, agents and
representatives thereof, from and against any and all claims, demands, losses,
damages, expenses or liabilities (including without limitation attorneys' fees)
due to or arising out of a breach of any such representations, warranties or
agreements. Notwithstanding the foregoing, however, no representation, warranty
or agreement made herein by the Investor shall in any manner be deemed to
constitute a waiver of any rights available to the Investor under federal or
state securities laws.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1. REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Investor, by executing this Investment Agreement, acknowledges, covenants,
agrees, represents and warrants that:
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(a) NO ASSURANCE OF PROFITS. The Investor recognizes that no
assurances of profits, ability to repay debt, cash distributions or capital
appreciation have been made or can be made regarding the Company.
(b) INVESTMENT FOR OWN ACCOUNT. The Investor Shares are being
acquired by the Investor solely for the Investor's own account, for investment
purposes only and not with a view to, and not for offer or sale in connection
with, any distribution or resale of the Investor Shares, and no one other than
the Investor has or will have any beneficial interest in the Investor Shares.
(c) ADEQUATE INFORMATION. The Company has made available and the
Investor has fully and completely reviewed the Memorandum and all such other
information that the Investor considers necessary or appropriate to evaluate the
risks and merits of an investment in the Investor Shares (including without
limitation, the Stock Purchase Agreement, the First Reserve Subscription
Agreement, the Securityholders' Agreement and the Credit Agreement). The
Investor has not distributed the Memorandum or this Investment Agreement or such
information to any person or entity other than the Investor's legal, tax and
accounting advisors, if any.
(d) OPPORTUNITY TO QUESTION. The Investor has had the opportunity to
question, and has questioned, to the extent the Investor has deemed necessary or
appropriate, representatives of the Company so as to receive answers and verify
information contained in the Memorandum or obtained in the Investor's
examination of the Company, including without limitation the information
referred to in paragraph (c) of this Section 2.1 and the Memorandum and all
other documents or information that the Investor has reviewed in relation to his
or her investment in the Investor Shares.
(e) NO OTHER REPRESENTATIONS. No oral or written representations
have been made to the Investor in connection with the Investor's acquisition of
the Investor Shares that were in any way inconsistent with the Memorandum or the
other information reviewed by the Investor.
(f) KNOWLEDGE AND EXPERIENCE. The Investor has such knowledge and
experience in financial, tax and business matters, including without limitation
substantial experience in evaluating and investing in common stock and other
securities (including without limitation the common stock and other securities
of new and speculative companies and companies engaged in oil and gas
exploration and production), so as to enable the Investor to utilize the
information referred to in paragraph (c) of this Section 2.1 and all other
information made available to the Investor in order to evaluate the risks and
merits of an investment in the Investor Shares and to make an informed
investment decision with respect thereto. In addition,
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the Investor has been advised to consult with an attorney regarding legal
matters concerning the Company and to consult with a tax and/or accounting
advisor regarding the tax consequences of investing in the Company and
purchasing the Investor Shares.
(g) INDEPENDENT DECISION. The Investor is not relying on the Company
or any references to any legal or other opinion in the materials reviewed by the
Investor with respect to the tax considerations of the Investor relating to an
investment in the Investor Shares pursuant to Section 1.1 hereof. The Investor
has relied solely on its own examination and independent investigation of the
Company, the Investor Shares and Securityholders' Agreement in making its
decision to acquire the Investor Shares.
(h) FINANCIAL CONDITION. The Investor's financial condition and
income are such that (i) the Investor is under no present need to dispose of any
portion of the Investor Shares to satisfy any existing or contemplated
undertaking or indebtedness and (ii) the Investor is able to bear the economic
risk of investment in the Investor Shares, including the risk of losing the
entire investment and the risk of not being able to sell or transfer any of the
Investor Shares for an indefinite period of time. In this regard, the Investor
recognizes that the Securityholders' Agreement contains a prohibition on any
transfer of such Shares for the period described in the Memorandum.
(i) RESTRICTED SECURITIES. The Investor understands that the
Investor may be required to bear the economic risk of investment in the Investor
Shares for an indefinite period of time because the Investor Shares (i) may not,
without full compliance with the registration and prospectus delivery
requirements of the Securities Act and applicable Blue Sky Laws, be offered,
sold or delivered except in a transaction exempt from, or not subject to, the
registration and prospectus delivery requirements of the Securities Act and
applicable Blue Sky Laws and (ii) are additionally subject to all of the
prohibitions, restrictions and other limitations on transfer set forth in the
Securityholders' Agreement. The Investor understands that the Company has no
obligation to cause or permit the registration of any of the Investor Shares
under the Securities Act or any Blue Sky Laws except as set forth in the
Securityholders' Agreement.
(j) RESTRICTIONS ON RESALE OR TRANSFER. The Investor will not
transfer or pledge any or all of the Investor Shares in violation of the
Securityholders' Agreement or the Securities Act or any applicable Blue Sky Laws
and in the event that the Investor pledges any of the Investor Shares to a
person or entity other than the Company or another party to the Securityholders'
Agreement (to the extent permitted under the Securityholders' Agreement, the
Securities Act and any applicable Blue Sky
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Laws), the Investor will comply with the Securityholders' Agreement in
connection therewith, will advise the pledgee of the transfer restrictions
imposed on the Investor Shares by this Investment Agreement and will use his or
her best efforts to obtain an undertaking from such pledgee not to transfer such
Investor Shares in violation of the Securities Act or applicable Blue Sky Laws.
(k) RESTRICTIVE LEGEND. The certificates from time to time
evidencing the Investor Shares may, at the Company's sole option, bear a legend
that provides that the Investor Shares have not been registered under the
Securities Act or any applicable Blue Sky Laws and that the Investor Shares may
not be transferred unless the Company is first delivered a legal opinion,
satisfactory to the Company in its sole discretion, to the effect that such
transfer may be made without compliance with the registration and prospectus
delivery requirements of the Securities Act and applicable Blue Sky Laws. Such
legal opinion shall be given by counsel satisfactory to the Company in its sole
discretion, at the Investor's expense. Under the terms of the Securityholders'
Agreement, the certificates representing the Shares are required to bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO THE PROVISIONS
(INCLUDING THE RESTRICTIONS ON TRANSFER) SET FORTH IN THAT CERTAIN
SECURITYHOLDERS' AGREEMENT DATED AS OF DECEMBER 31, 1996 AMONG DOMAIN
ENERGY CORPORATION (THE "COMPANY"), FIRST RESERVE FUND VII, LIMITED
PARTNERSHIP AND THE INDIVIDUALS AND TRUSTS SIGNATORY THERETO, AS SUCH
AGREEMENT MAY BE AMENDED (AS AMENDED, IF AMENDED, THE "SECURITYHOLDERS'
AGREEMENT"), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT (AND THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES THAT SUCH
SECURITIES MAY NOT AND WILL NOT) BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF (1) EXCEPT IN COMPLIANCE WITH THE
SECURITYHOLDERS' AGREEMENT AND (2) EXCEPT AS OTHERWISE PROVIDED IN THE
SECURITYHOLDERS' AGREEMENT, UNLESS AND UNTIL SUCH SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT
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AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL FOR THE
HOLDER SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED. ADDITIONALLY, IF THE HOLDER IS A CITIZEN OR
RESIDENT OF ANY COUNTRY OTHER THAN THE UNITED STATES, OR THE HOLDER
DESIRES TO EFFECT ANY SUCH TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY
MUST BE FURNISHED WITH A SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL
FOR THE HOLDER THAT SUCH TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH
COUNTRY."
The Investor has read and understands the restrictions on transfer set forth in
such legend and in the Securityholders' Agreement and agrees to comply with all
such restrictions.
(l) FURTHER ACTIONS. The Investor shall, at the Company's expense,
take all further actions necessary to facilitate the issuance of the Investor
Shares to the Investor under an appropriate exemption from registration under
the Securities Act and applicable Blue Sky Laws, including without limitation
providing the Company with such information as the Company may require to
complete a Form D and any related or similar forms or applications required
under the Securities Act or applicable Blue Sky Laws.
(m) AUTHORIZATION; LEGAL COMPETENCE. The Investor has full power and
authority to execute this Investment Agreement and to invest in the Investor
Shares, and this Investment Agreement constitutes the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with its terms.
(n) NO "MERIT REVIEW". The Investor understands that no
commissioners of securities or equivalent officials of any state have made any
finding or determination relating to the fairness of an investment in the Shares
and that no such person has recommended or endorsed the Shares.
The provisions hereof shall inure to the benefit of the Company, its
successors and assigns and shall be binding upon the Investor, his or her legal
representatives, successors and assigns.
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IN WITNESS WHEREOF, the Investor has executed this Management
Investor Subscription Agreement as of February 21, 1997.
INVESTOR
/s/ XXXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXXXX
Acknowledged and Accepted as of February 21, 1997:
DOMAIN ENERGY CORPORATION
By:/s/XXXXXXX X. XXXXX
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
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Management Investor Subscription Agreement
PROMISSORY NOTE
$87,000.00 Houston, Texas
February __, 1997
FOR VALUE RECEIVED, the undersigned, Xxxxxxx X. Xxxxxxxx (the
"Executive"), hereby unconditionally promises to pay to the order of Domain
Energy Corporation, a Delaware corporation (the "Company") at its offices, in
lawful money of the United States of America, the principal amount of
EIGHTY-SEVEN THOUSAND DOLLARS ($87,000.00). The principal amount shall be paid
on the earliest to occur of (i) if there has occurred a Qualified Public
Offering (as such term is defined in the Securityholders Agreement (the
"Securityholders Agreement") dated as of December 31, 1996 by and among the
Company, the Executive and the individuals and trusts party thereto), the
Executive's termination of employment by the Company for Cause or without Good
Reason by the Executive, (ii) if there has occurred a Qualified Public Offering,
one year after the Executive's termination of employment without Cause by the
Company or with Good Reason by the Executive, (iii) the disposition of any of
the Investor Shares (as such term is defined in the Management Investor
Subscription Agreement referred to below) by the Executive, provided, that the
Executive shall be required only to pay that amount of the principal amount
which is equal to the proceeds received from any such disposition (with any
outstanding unpaid principal remaining subject to this sentence) and (iv)
December 31, 2003 (the "Maturity Date"). The Executive further agrees to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding at an interest rate equal to 8% on (x) June 30 and
December 31 of each year (each such date, a "Interim Interest Payment Date"),
(y) the Maturity Date and (z) with respect to the amount of any optional
repayment, on the date of any such optional repayment; provided, however, that
with respect to interest payments due pursuant to clause (x) above, on written
notice given to Company not less than 15 days prior to any Interim Interest
Payment Date the Executive may elect to satisfy his or her interest payment
obligations by increasing the principal amount of this note by the amount of
such interest due. Such an election shall apply to all interest payments due on
all future Interim Interest Payment Dates until revoked. "Cause" shall mean,
except as otherwise provided in an employment agreement between the Company and
the Executive, (i) the commission of an act of fraud or embezzlement or other
willful misconduct against the Company or its affiliates (including the
unauthorized disclosure of confidential or proprietary information of the
Company or any of its subsidiaries
which results in material financial loss to the Company or any of its
affiliates), (ii) the commission by the Executive of a felony, or (iii) the
willful failure to render services to the Company or any of its affiliates in
accordance with his or her employment which failure amounts to a material
neglect of duties to the Company or any of its affiliates; and "Good Reason"
shall mean, except as otherwise provided in an employment agreement between the
Company and the Executive, (x) any material reduction by the Company of the
Executive's authority, duties or responsibilities (except in connection with the
termination of the Executive's employment for Cause, as a result of Permanent
Disability, as such term is defined below, or as a result of the Executive's
death or Retirement, as such term is defined below), (y) any reduction by the
Company in the Executive's base salary or (z) the Company's moving the
Executive's place of employment outside the Houston, Texas metropolitan area.
Notwithstanding the immediately preceding sentence, the definitions in any
employment agreement in effect on the date hereof between the Company and the
Executive of "Cause" and "Good Reason" shall supersede and replace the
definitions of "Cause" and "Good Reason" in the immediately preceding sentence
and shall be deemed incorporated by reference in this Note in their entirety.
The following shall constitute "Events of Default" under the terms
of this Note:
(i) default in payment when due and payable, upon acceleration
or otherwise, of principal of this Note;
(ii) default for five (5) days or more in the payment when due
of interest on the Note.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
For purposes of this Note, the Executive shall be deemed to have a
"Permanent Disability" if the Executive is unable to engage in the activities
required by the Executive's job by reason of any medically determined physical
or mental impairment which can be expected to result in death or which can be
expected to last for a continuous period of not less than 12 months.
For purposes of this Note, "Retirement" shall mean the voluntary
termination of employment by the Executive at age 62 or older (or such other age
as may be approved by the Board of Directors of the Company) after having been
employed by the Company for at least three years after the date hereof.
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This Note is subject to optional prepayment in whole or in part at
any time. Reference is hereby made to the Pledge Agreement for a description of
the properties and assets in which a security interest has been granted.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable by the Company.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Capitalized terms not otherwise defined herein shall have the
meanings assigned to such terms in the Management Investor Subscription
Agreement dated as of February __, 1997 between the Company and the Executive
(the "Management Investor Subscription Agreement").
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
XXXXXXX X. XXXXXXXX
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Management Investor Subscription Agreement
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of February __, 1997, made by Xxxxxxx X.
Xxxxxxxx (the "EXECUTIVE") in favor of Domain Energy Corporation, a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company has agreed to make a loan (the "Loan") to the
Executive for the acquisition of Investor Shares (as defined in the Management
Investor Subscription Agreement of even date herewith between the Company and
the Executive (the "Management Investor Subscription Agreement")), to be
evidenced by a note substantially in the form of Exhibit A to the Management
Investor Subscription Agreement (the "Note");
WHEREAS, the Executive will be the legal and beneficial owner of the
shares of Pledged Stock (as hereinafter defined) issued by the Company; and
WHEREAS, it is a condition precedent to the obligation of the Company to
make the Loan to the Executive that the Executive shall have executed and
delivered this Pledge Agreement to the Company.
NOW, THEREFORE, in consideration of the premises and to induce the Company
to make the Loan, the Executive hereby agrees with the Company, as follows:
1. DEFINED TERMS. (a) Unless otherwise defined herein, terms defined in
the Note or the Management Investor Subscription Agreement and used herein shall
have the meanings assigned to them in the Note and the Management Investor
Subscription Agreement, respectively.
(b) The following terms shall have the following meanings:
"AGREEMENT": this Pledge Agreement, as the same may be amended, modified
or otherwise supplemented from time to time.
"CODE": the Uniform Commercial Code from time to time in effect in the
State of New York.
"COLLATERAL": the Pledged Stock and all Proceeds.
"COLLATERAL ACCOUNT": any account established to hold money Proceeds,
maintained under the sole dominion and control of the Company.
"DEFAULT": any event that is or with the passage of time or the giving of
notice or both would be an Event of Default under the Note.
"OBLIGATIONS": the collective reference to the unpaid principal of and
interest on the Note and all other obligations and liabilities of the Executive
to the Company (including, without limitation, interest accruing at the then
applicable rate provided in the Note after the maturity of the Loan and interest
accruing at the then applicable rate provided in the Note after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Executive, whether or not a
claim for post-filing or postpetition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in connection
with the Note and this Agreement or any other document made, delivered or given
in connection therewith, in each case whether on account of principal, interest,
costs, expenses or otherwise.
"PERSON": any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof or any other entity.
"PLEDGED STOCK": the shares of capital stock listed on SCHEDULE 1 hereto,
together with all stock certificates received upon exercise of any such options
or rights of any nature whatsoever that may be issued or granted by the Company
to the Executive while this Agreement is in effect.
"PROCEEDS": all "proceeds" as such term is defined in Section 9-306(l) of
the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, shall include, without limitation, all dividends or
other income from the Pledged Stock, collections thereon or distributions with
respect thereto.
"SECURITIES ACT": the Securities Act of 1933, as amended.
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(a) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section and
paragraph references are to this Agreement unless otherwise specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
2. PLEDGE; GRANT OF SECURITY INTEREST. The Executive hereby delivers to
the Company all the Pledged Stock and hereby grants to the Company a first
security interest in the Collateral, as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
3. STOCK POWERS. Concurrently with the delivery to the Company of each
certificate representing one or more shares of Pledged Stock to the Company, the
Executive shall deliver an undated stock power covering such certificate, duly
executed in blank by the Executive with, if the Company so requests, signature
guaranteed.
4. COVENANTS. The Executive covenants and agrees with the Company that,
from and after the date of this Agreement until this Agreement is terminated and
the security interests created hereby are released:
(a) If the Executive shall (i) as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization), option
or rights, whether in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock, or otherwise in respect thereof or
(ii) acquire ownership of shares of Common Stock upon the exercise of stock
options, the Executive shall accept the same as the agent of the Company, hold
the same in trust for the Company, and deliver the same forthwith to the Company
in the exact form received, duly endorsed by the Executive to the Company, if
required, together with an undated stock power covering such certificate duly
executed in blank by the Executive and with, if the Company so requests,
signature guaranteed, to be held by the Company, subject to the terms hereof, as
additional collateral security for the Obligations.
(b) Without the prior written consent of the Company, the Executive
will not (1) sell, assign, transfer, exchange, or otherwise dispose of, or
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grant any option with respect to, the Collateral, (2) create, incur or permit to
exist any lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the security
interests created by this Agreement or (3) enter into any agreement or
undertaking restricting the right or ability of the Executive or the Company to
sell, assign or transfer any of the Collateral.
(c) The Executive shall maintain the security interest created by
this Agreement as a first, perfected security interest and shall defend such
security interest against claims and demands of all Persons whomsoever. At any
time and from time to time, upon the written request of the Company, and at the
sole expense of the Executive, the Executive will promptly and duly execute and
deliver such further instruments and documents and take such further actions as
the Company may reasonably request for the purposes of obtaining or preserving
the full benefits of this Agreement and of the rights and powers herein granted.
If any amount payable under or in connection with any of the Collateral shall be
or become evidenced by any promissory note, other instrument or chattel paper,
such note, instrument or chattel paper shall be immediately delivered to the
Company, duly endorsed in a manner satisfactory to the Company, to be held as
Collateral pursuant to this Agreement.
(d) The Executive shall pay, and save the Company harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any
and all stamp, excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral or in connection with any of
the transactions contemplated by this Agreement.
5. CASH DIVIDENDS; VOTING RIGHTS. Unless an Event of Default shall have
occurred and be continuing and the Company shall have given notice to the
Executive of the Company's intent to exercise its corresponding rights pursuant
to Section 6 below, the Executive shall be permitted to receive all cash
dividends paid in respect of the Pledged Stock and to exercise all voting and
corporate rights with respect to the Pledged Stock.
6. RIGHTS OF THE COMPANY. If an Event of Default shall occur and be
continuing and the Company shall give notice of its intent to exercise such
rights to the Executive the Company shall have the right to receive any and all
cash dividends paid in respect of the Pledged Stock and make application thereof
to the Obligations in such order as the Company may determine.
7. REMEDIES. (a) If an Event of Default shall have occurred and be
continuing, at any time at the Company's election, the Company may apply all or
any
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part of Proceeds held in any Collateral Account in payment of the Obligations in
such order as the Company may elect.
(b) If an Event of Default shall have occurred and be continuing,
the Company may exercise, in addition to all other rights and remedies granted
in this Agreement and in any other instrument or agreement securing, evidencing
or relating to the obligations, all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, the Company, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Executive or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, in the over-the-counter market, at any exchange, broker's
board or office of Company or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Company shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of the Collateral so sold, free of any right or equity of redemption in the
Executive, which right or equity is hereby waived or released. The Company shall
apply any Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in respect
thereof or incidental to the care or safekeeping of any of the Collateral or in
any way relating to the Collateral or the rights of the Company hereunder,
including, without limitation, reasonable attorneys' fees and disbursements of
counsel to the Company, to the payment in whole or in part of the Obligations,
in such order as the Company may elect, and only after such application and
after the payment by the Company of any other amount required by any provision
of law, including, without limitation, Section 9-504(l)(c) of the Code, need the
Company account for the surplus, if any, to the Executive. To the extent
permitted by applicable law, the Executive waives all claims, damages and
demands it may acquire against the Company arising out of the exercise by it of
any rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition. The
Executive shall remain liable for any deficiency if the proceeds of any sale or
other disposition of Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Company to collect such
deficiency.
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8. EXECUTION OF FINANCING STATEMENTS. Pursuant to Section 9-402 of the
Code, the Executive authorizes the Company to file financing statements with
respect to the Collateral without the signature of the Executive in such form
and in such filing offices as the Company reasonably determines appropriate to
perfect the security interests of the Company under this Agreement. A carbon,
photographic or other reproduction of this Agreement shall be sufficient as a
financing statement for filing in any jurisdiction.
9. NOTICES. All notices, requests and demands to or upon the Company or
the Executive to be effective shall be in writing (or by telex, facsimile or
similar electronic transfer confirmed in writing) and shall be deemed to have
been duly given or made (1) when delivered by hand or (2) if given by mail, when
deposited in the mails by certified mail, return receipt requested, or (3) if by
telex, facsimile or similar electronic transfer, when sent and receipt has been
confirmed, addressed to the Company or the Executive at its address or
transmission number for notices provided on the signature page hereto. The
Company and the Executive may change their addresses and transmission numbers
for notices by notice in the manner provided in this Section 9.
10. SEVERABILITY. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11. AMENDMENTS IN WRITING; NO WAIVER; CUMULATIVE REMEDIES. (a) None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Executive and
the Company, PROVIDED that any provision of this Agreement may be waived by the
Company in a letter or agreement executed by the Company or by telex or
facsimile transmission from the Company.
(b) The Company shall not by any act (except by a written instrument
pursuant to paragraph 11(a) hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default ot Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of the
Company, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Company of any right or
remedy hereunder on
6
any one occasion shall not be construed as a bar to any right or remedy which
the Company would otherwise have on any future occasion.
(c) The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.
12. SECTION HEADINGS. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
successors and assigns of the Executive and shall inure to the benefit of the
Company and their successors and assigns.
14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
7
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly
executed and delivered as of the date first above written.
By:
Spouse:
Address for Notices:
0000 Xxxxxxxxxx
Xxxxxxx, Xxxxx 00000
Fax: (____) ____-______
Accepted this ____ day of February, 1997
DOMAIN ENERGY CORPORATION
By:
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
Address for Notices:
Domain Energy Corporation
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Fax: (000) 000-0000
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SCHEDULE 1
TO PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
1. Stock Certificate No. 0003, representing 79.3289 shares of Common Stock,
par value $.01 per share, of Domain Energy Corporation.
