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EXHIBIT 1
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), is entered into
as of March 5, 2001, between Xxxxxxx Exploration Company, a Delaware corporation
(the "Company"), DLJMB Funding III, Inc., a Delaware corporation ("MB"), DLJ
Merchant Banking Partners III, LP, a Delaware limited partnership, ("MBP"), DLJ
Offshore Partners III, CV, a Netherlands Antilles limited partnership ("DOP")
and DLJ ESC II, LP, a Delaware limited partnership ("ESC") (collectively
referred to as "Investors").
WHEREAS, the Company has authorized the sale and issuance of an
aggregate of up to 500,000, shares of its Series A Preferred Stock (the
"Shares") and warrants to acquire 2,105,263 shares of its Common Stock, (the
"Warrants"), in the form attached hereto as Exhibit A;
WHEREAS, Investors desire to purchase the Shares and the Warrants on
the terms and conditions set forth herein; and
WHEREAS, the Company desires to issue and sell the Shares and the
Warrants to Investors on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, the Company and Investors hereby agree as follows:
ARTICLE I
TERMS OF THE TRANSACTION
1.1 Authorization of Shares. On or prior to the Closing (as defined in
Section 2.1 below), the Company shall have authorized (a) the sale and issuance
to Investors of the Shares and the Warrants and (b) the issuance of such shares
of Common Stock to be issued upon exercise of the Warrants (the "Warrant
Shares"). The Shares shall have the rights, preferences, privileges and
restrictions set forth in the Certificate of Designations of the Company, in the
form attached hereto as Exhibit B as amended by the Certificate of Amendment of
Certificate of Designations in the form attached hereto as Exhibit C (as so
amended, the "Certificate of Designations").
1.2 Sale and Purchase. Subject to the terms and conditions hereof, at
the Closing the Company hereby agrees to issue and sell to Investors, and
Investors agree to purchase from the Company, 500,000 Units at a purchase price
of Twenty Dollars ($20.00) per Unit, with each such Unit consisting of (i) one
Share and (ii) Warrants to purchase 4.210526 Warrant Shares and such Shares and
Warrants shall be allocated among the Investors as follows:
PREFERRED
INVESTOR STOCK WARRANTS
-------- --------- ---------
MBP 362,699 1,527,154
Offshore 15,307 64,451
MB 33,694 141,869
ESC 88,300 371,789
--------- ---------
TOTAL 500,000 2,105,263
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ARTICLE II
CLOSING
2.1 Closing. The closing of the sale and purchase of the Shares and
Warrants under this Agreement (the "Closing") shall take place at the offices of
Xxxxxxx Exploration Company, 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxx 0, Xxxxx 000,
Xxxxxx, Xxxxx 00000, at 10:00 a.m., local time, on the date of this Agreement or
at such other time or place as the Company and Investors may mutually agree (the
"Closing Date"). All closing transactions at the Closing shall be deemed to have
occurred simultaneously.
2.2 Closing into Escrow.
(a) At the Closing, subject to the terms and conditions
hereof, (i) the Company will deliver to Chase Manhattan Bank, a New
York state bank (the "Escrow Agent"), as escrow agent under an Escrow
Agreement of even date herewith in the form of Exhibit D hereto (the
"Escrow Agreement"), certificates issued in the name of each Investor
representing the applicable Shares and Warrants representing the
applicable Warrants to purchase Warrant Shares, and (ii) each Investor
will deliver to the Escrow Agent by wire transfer payment of the
purchase price for its Shares and Warrants.
(b) The Escrow Agreement shall provide that the Escrow Agent
shall release the certificates representing the applicable Shares and
Warrants to each Investor, and shall release the purchase price for
such Shares and Warrants to the Company, along with all interest
accruing thereon while on deposit under the Escrow Agreement, upon
receipt of a certificate executed by the Investors and the Company
stating either of the following:
(i) That
(A) the Company filed preliminary proxy
materials with the Securities and Exchange Commission
(the "SEC") in accordance with applicable rules under
the Exchange Act seeking stockholder approval at the
Company's annual stockholder's meeting to be held on
or before May 31, 2001 (the "Annual Meeting") of the
matters described in the Stockholders' Voting
Agreement dated March 1, 2001 by and among the
Company and certain of its stockholders (the
"Stockholders' Voting Agreement"), as more fully
described in Section 5.7 hereof,
(B) either (1) the SEC has notified (whether
orally or in writing) the Company or its
representative that it will not review such proxy
materials (which notice, if telephonic, shall be
certified to the Investors by the Company or its
representative in writing), (2) the SEC has notified
the Company that it will review such proxy materials,
the SEC has completed such review and the Company has
responded to all comments from the SEC to the SEC's
satisfaction, or (3) as of the date of mailing of the
proxy materials to stockholders of the Company the
Company has not received any notice, written or
otherwise, from the SEC that the SEC intends to
review such proxy materials, and upon the occurrence
of any of the events described in subsection 1, 2 or
3, above, the Company shall promptly certify the
occurrence of such event in writing to the Investors,
and
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(C) as of the record date for the annual
meeting to be held in accordance with Section 5.7
hereof, the parties to the Stockholders' Voting
Agreement held at least a majority of the outstanding
shares of Common Stock of the Company; or
(ii) That holders of a majority of the outstanding
shares of Common Stock have voted in favor of the matters
described in the Stockholders' Voting Agreement at the Annual
Meeting.
(c) The Escrow Agreement shall provide that the Escrow Agent
shall release the certificates representing the applicable Shares and
Warrants to the Company, and shall release the purchase price for such
Shares and Warrants to the Investors in the amounts originally
deposited with the Escrow Agent by each such Investor, along with all
interest accruing thereon while on deposit under the Escrow Agreement,
upon receipt of a certificate executed by the Investors and the Company
stating that holders of a majority of the outstanding shares of Common
Stock have failed to vote in favor of the matters described in the
Stockholders' Voting Agreement at the Annual Meeting.
(d) The Escrow Agreement shall provide that the Escrow Agent
shall release the certificates representing the applicable Shares and
Warrants, and shall release the purchase price for such Shares and
Warrants, as set forth in either paragraph (b) or (c) above upon
receipt of a certificate as set forth in paragraph (b) or (c),
respectively, signed by only the Company or the Investors, if (i) the
party signing such certificate also certifies that they have provided a
copy of such certificate to the other parties to the Escrow Agreement
in accordance with the notice provisions of the Escrow Agreement and
(ii) ten (10) calendar days shall have elapsed between the date on
which the Escrow Agent shall have received the certificate required by
paragraph (b) or (c) and the Escrow Agent shall not have received any
notice in accordance with the notice provisions of the Escrow Agreement
from another party to the Escrow Agreement protesting or otherwise
disputing, challenging or disagreeing with any assertion contained in
the certificate.
(e) In the event of any dispute under paragraph (d) above, the
parties agree to resolve such dispute by binding arbitration pursuant
to Section 10.8 hereof. Upon receipt of a certificate from the
prevailing party directing the Escrow Agent to make a distribution of
the Shares, Warrants, purchase price for such Shares and Warrants, and
interest thereon, all as specified in such certificate, which
certificate is accompanied by an arbitral order or award which states
on its face that it is rendered pursuant to this Agreement and provides
for such distribution as set forth in the certificate, the Escrow Agent
shall distribute such Shares, Warrants, purchase price for the Shares
and Warrants and interest thereon as directed by such certificate and
final arbitral order or award. Any such certificate and final arbitral
order or award shall override any notice or other document received by
the Escrow Agent pursuant to paragraph (d) above, except to the extent
that Escrow Agent has previously acted in accordance with the terms of
paragraphs (b) or (c) above.
(f) In the event that the Escrow Agent has not received a
certificate under paragraph (b), (c), (d) or (e) on or before June 15,
2001, the Escrow Agent shall release the certificates representing the
applicable Shares and Warrants to the Company, and shall release the
purchase price for such Shares and Warrants to the Investors in the
amounts originally
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deposited with the Escrow Agent by each such Investor, along with all
interest accruing thereon while on deposit under the Escrow Agreement,
upon receipt of a certificate on or after June 15, 2001 executed by the
Investors requesting such distribution.
(g) If the Shares and Warrants are released to the Company and
the purchase price for the Shares and the Warrants, along with interest
accruing thereon while on deposit under the Escrow Agreement, is
released to the Investors pursuant to the terms of the Escrow
Agreement, then the Shares and the Warrants shall not be deemed to have
been issued by the Company or to have been purchased by Investors
hereunder, and this Agreement and the Ancillary Documents shall
terminate; provided, however that the termination shall not release any
party hereto from liability for any breach of any provision, covenant
or agreement herein or in the Ancillary Documents prior to the
termination of this Agreement and the Ancillary Documents.
(h) The parties agree to deliver to the Escrow Agent the
certificates and such other instructions as may be required under the
Escrow Agreement in order to implement the provisions of this Section
2.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Investors, as of the date
hereof, that:
3.1 Corporate Organization. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority in all material
respects to own, lease, and operate its properties and to carry on its business
as now being conducted. No actions or proceedings to dissolve the Company are
pending or, to the best knowledge of the Company, threatened. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, except where the
failure to so qualify or to be in good standing would not reasonably be expected
to have a Material Adverse Effect.
3.2 Capitalization of the Company.
(a) On the Closing Date, the authorized capital stock of the Company
will consist of 50,000,000 shares of Common Stock and 10,000,000 shares of
preferred stock, $.01 par value, 2,250,000 of which are designated as Series A
Preferred Stock. As of the date hereof, (i) 15,979,544 shares of Common Stock
are outstanding and 1,013,334 shares of preferred stock are outstanding and (ii)
1,393,920 shares of Common Stock are reserved for issuance upon exercise of
outstanding employee, officer and director stock options and 15,129,143 shares
of Common Stock are reserved for issuance upon exercise of outstanding warrants
or conversion rights. All outstanding shares of capital stock of the Company
have been validly issued and are fully paid and nonassessable, and no shares of
capital stock of the Company are subject to, nor have any been issued in
violation of, preemptive or similar rights. On the Closing Date, the rights,
preferences, privileges and restrictions of the Shares will be as stated in the
Certificate of Designations.
(b) Except as set forth above in subparagraph (a) of this Section 3.2,
there are outstanding (i) no shares of capital stock or other voting securities
of the Company; (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or other voting securities of the
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Company; (iii) no options or other rights to acquire from the Company, and no
obligation of the Company to issue or sell, any shares of capital stock or other
voting securities of the Company or any securities of the Company convertible
into or exchangeable for such capital stock or voting securities; and (iv) no
equity equivalents, interests in the ownership or earnings, or other similar
rights of or with respect to the Company.
(c) Neither the execution of this Agreement nor the performance of the
Company's obligations hereunder, nor the consummation of any other transaction
currently contemplated by the Company or any of its Subsidiaries, will trigger
or cause any adjustment under any anti-dilution provisions or any other similar
provisions contained in any agreement as currently in effect that have the
effect of (i) causing a decrease in any exercise price or conversion price in
any security exercisable for or convertible into shares of Common Stock (a
"Common Stock Equivalent"), or (ii) causing an increase in the number of shares
of Common Stock that may be acquired upon conversion or exercise of a Common
Stock Equivalent.
3.3 Authority Relative to This Agreement. The Company has full
corporate power and authority to execute, deliver, and perform this Agreement
and to execute, deliver, and where applicable, perform the Ancillary Documents
to which it is a party and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by the Company of this
Agreement and the execution, delivery, and where applicable, performance by it
of the Ancillary Documents to which it is a party, and the consummation by it of
the transactions contemplated hereby and thereby, have been (or prior to the
Closing will have been) duly authorized by all necessary corporate action of the
Company. This Agreement has been duly executed and delivered by the Company and
constitutes, and each Ancillary Document executed or to be executed by the
Company has been, or when executed will be, duly executed and delivered by the
Company and constitutes, or when executed and delivered will constitute, a valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with its terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting creditors' rights generally and (ii) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
3.4 Noncontravention. The execution, delivery, and performance by the
Company of this Agreement and the execution, delivery, and where applicable, the
performance by it of Ancillary Documents to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby do not
and will not (i) conflict with or result in a violation of any provision of the
Company's Certificate of Incorporation, as amended, or the Company's Bylaws, as
amended, or the charter, bylaws, partnership agreement or other governing
instruments of any Subsidiary, (ii) conflict with or result in a violation of
any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any loss of material
benefit, or of any right of termination, cancellation, or acceleration under,
any Material Agreement, (iii) result in the creation or imposition of any
Encumbrance upon the properties of the Company or any Subsidiary or (iv)
assuming compliance with the matters referred to in Section 3.5, violate any
Applicable Law binding upon the Company or any Subsidiary, except, in the case
of clauses (ii), (iii) and (iv) above, for any such conflicts, violations,
defaults, terminations, cancellations, accelerations, or Encumbrances which
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company.
3.5 Consents and Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any Governmental
Entity is required to be obtained or made
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by the Company or any Subsidiary in connection with the execution, delivery, or
performance by the Company of this Agreement and the execution, delivery, and
where applicable, performance of Ancillary Documents to which it is a party or
the consummation of the transactions contemplated hereby and thereby, other than
(i) compliance with any applicable requirements of the Securities Act; (ii)
compliance with any applicable requirements of the Exchange Act; (iii)
compliance with any applicable state securities laws; (iv) filing of the
Certificate of Amendment of Certificate of Designations with the Delaware
Secretary of State; (v) compliance with any applicable requirements of the HSR
Act as a result of the exercise of any of the Warrants; and (vi) such consents,
approvals, orders, or authorizations which, if not obtained, and such
declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Except for such consents as are obtained before or contemporaneously with
consummation of the Closing, no consent or approval of any person other than the
Company, Investors or any Governmental Entity is required to be obtained or made
by the Company or any Subsidiary in connection with the execution, delivery, or
performance by the Company of this Agreement and execution, delivery and, where
applicable, performance of the Ancillary Documents to which it is a party or the
consummation of the transactions contemplated hereby and thereby, other than
such consents, approvals, orders, or authorizations which, if not obtained, and
such declarations, filings, or registrations which, if not made, would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
3.6 Authorization of Issuance; Reservation of Shares. When issued and
delivered pursuant to this Agreement and the Certificate of Designations against
payment therefor, the Shares and the Warrants will be validly issued, fully paid
and nonassessable. The Warrant Shares have been duly and validly reserved for
issuance. The issuances of the Shares and the Warrants are not subject to any
preemptive or similar rights.
3.7 Financial Condition. The audited consolidated balance sheet of the
Company and its Subsidiaries as at December 31, 1999 and the related
consolidated statement of income, stockholders' equity and cash flow of the
Company and its Subsidiaries for the fiscal year ended on said date, with the
opinion thereon of Price Waterhouse heretofore furnished to the Investors and
the unaudited consolidated balance sheet of the Company and its Subsidiaries as
at September 30, 2000 and their related consolidated statements of income,
stockholders' equity and cash flow of the Company and its Subsidiaries for the
six-month period ended on such date heretofore furnished to the Investors, are
complete and correct and fairly present the consolidated financial condition of
the Company and its Subsidiaries as at said dates and the results of its
operations for the fiscal year and the nine-month period on said dates, all in
accordance with GAAP, as applied on a consistent basis (subject, in the case of
the interim financial statements, to normal year-end adjustments). Neither the
Company nor any Subsidiary has on the Closing Date any debt, trade payables,
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in the Company's
financial statements provided to the Investors as set forth in this Section 3.7
or in Schedule 3.7 or except to the extent that the existence of any of the
foregoing would not have a Material Adverse Effect relative to the Company.
Since December 31, 1999, there has been no change or event having a Material
Adverse Effect relative to the Company, except as disclosed to the Investors in
writing. Since the date of the Financial Statements, neither the business nor
the properties of the Company's Subsidiaries, taken as a whole, have been
materially and adversely affected as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo, requisition or taking of property or cancellation of
contracts, permits or concessions by any Governmental Entity, riot, activities
of armed forces or acts of God or of any public enemy.
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3.8 Litigation. Except as disclosed in Schedule 3.8 hereto, at the
Closing Date there is no litigation, legal, administrative or arbitral
proceeding, investigation or other action of any nature pending or, to the
knowledge of the Company, threatened against or affecting the Company or any
Subsidiary which both (a) involves the possibility of any judgment or liability
against the Company or any Subsidiary not fully covered by insurance (except for
normal deductibles), and (b) would be more likely than not to have a Material
Adverse Effect relative to the Company.
3.9 ERISA. The Company and each ERISA Affiliate have complied in all
material respects with ERISA and, where applicable, the Code regarding each
Plan. Each Plan is, and has been, maintained in substantial compliance with
ERISA and, where applicable, the Code.
No act, omission or transaction has occurred which could result in
imposition on the Company or any ERISA Affiliate (whether directly or
indirectly) of an amount of $100,000 or more as (i) either a civil penalty
assessed pursuant to section 502(c), (i) or (1) of ERISA or a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary
duty liability damages under section 409 of ERISA.
No Plan (other than a defined contribution plan) or any trust created
under any such Plan has been terminated since September 2, 1974. No liability to
the PBGC in excess of $100,000 (other than for the payment of current premiums
which are not past due) by the Company or any ERISA Affiliate has been or is
expected by the Company or any ERISA Affiliate to be incurred with respect to
any Plan. No ERISA Event with respect to any Plan has occurred which could
reasonably be expected to result in liabilities of $100,000 or more.
Full payment when due has been made of all amounts which the Company or
any ERISA Affiliate is required under the terms of each Plan or applicable law
to have paid as contributions to such Plan, and no accumulated funding
deficiency in an amount of $100,000 or more (as defined in section 302 of ERISA
and section 412 of the Code), whether or not waived, exists with respect to any
Plan.
The actuarial present value of the benefit liabilities under each Plan
which is subject to Title IV of ERISA does not, as of the end of the Company's
most recently ended fiscal year, exceed the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA) of
such Plan allocable to such benefit liabilities by $100,000 or more. The term
"actuarial present value of the benefit liabilities" shall have the meaning
specified in section 4041 of ERISA.
None of the Company or any ERISA Affiliate sponsors, maintains, or
contributes to an employee welfare benefit plan, as defined in section 3(1) of
ERISA, including, without limitation, any such plan maintained to provide
benefits to former employees of such entities, that may not be terminated by the
Company or any ERISA Affiliate in its sole discretion at any time without any
material liability.
None of the Company or any ERISA Affiliate sponsors, maintains or
contributes to, or has at any time in the preceding six calendar years,
sponsored, maintained or contributed to, any Multiemployer Plan.
None of the Company or any ERISA Affiliate is required to provide
security under section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the Plan.
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3.10 Taxes. The Company has filed all United States Federal income tax
returns and all other tax returns which are required to be filed by it and has
paid all material taxes due pursuant to such returns or pursuant to any
assessment received by the Company, except for any taxes which are being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained. The charges, accruals and reserves on the books
of the Company in respect of taxes and other governmental charges are, in the
opinion of the Company, adequate. No tax lien has been filed and, to the
knowledge of the Company, no claim is being asserted with respect to any such
tax, fee or other charge, except for any taxes, fees or other charges which are
not material or which are being contested in good faith and by proper
proceedings and against which adequate reserves are being maintained.
3.11 Titles, etc.
(a) Subject to the matters set out in Schedule 3.11, each of the
Company and the Subsidiaries has good and defensible title, in all material
respects, to the material Oil and Gas Properties that are evaluated in the most
recently delivered reserve report, free and clear of all Liens, other than
Excepted Liens. Except for immaterial divergences, after giving full effect to
the Excepted Liens, the Company owns, in all material respects, the net
interests in production attributable to the Hydrocarbon Interests that are
evaluated in the most recently delivered reserve report, and the ownership of
such Hydrocarbon Interests shall not in any material respect obligate the
Company to bear the costs and expenses relating to the maintenance, development
and operations of each such Hydrocarbon Interest in an amount in excess of the
working interest of such Hydrocarbon Interest (without a corresponding increase
in net revenue interest). The Company does not believe, based upon information
in its possession, that its most recently delivered reserve report materially
overstates its oil and gas reserves, bearing in mind that reserves are evaluated
based upon estimates and assumptions with respect to which reasonable minds of
competent reserve engineers may differ.
(b) All leases and agreements necessary for the conduct of the business
of the Company and the Subsidiaries are valid and subsisting, in full force and
effect and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which would have a Material Adverse Effect on
the conduct of the business of the Company and the Subsidiaries.
(c) The Oil and Gas Properties presently owned, leased or licensed by
the Company and the Subsidiaries, including, without limitation, all easements
and rights of way, include all properties necessary to permit the Company and
the Subsidiaries to conduct their business in all material respects in the same
manner as its business has been conducted prior to the Closing Date.
(d) All of the properties of the Company and the Subsidiaries which are
reasonably necessary for the operation of their business are in good working
condition in all material respects and are maintained in accordance with prudent
business standards.
3.12 No Material Misstatements. Taken as a whole, the written
information, statements, exhibits, certificates, documents and reports furnished
to Investors by the Company or any Subsidiary in connection with the negotiation
of this Agreement do not contain any material misstatement of fact or omit to
state a material fact or any fact necessary to make the statements contained
therein not materially misleading in the light of the circumstances in which
made and with respect to the Company or any Subsidiary. As of the Closing Date,
there is no fact peculiar to the Company or Subsidiary which has a Material
Adverse Effect relative to the Company or in the future is reasonably
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likely to have (so far as the Company can now foresee) a Material Adverse Effect
and which has not been set forth in this Agreement or the other documents,
certificates and statements furnished to Investors by or on behalf of the
Company or any Subsidiary prior to, or on, the Closing Date in connection with
the transactions contemplated hereby.
3.13 Investment Company Act. Neither the Company nor any Subsidiary is
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
3.14 Public Utility Holding Company Act. Neither the Company nor any
Subsidiary is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
3.15 Subsidiaries. Except as set forth on Schedule 3.15, the Company
has no Subsidiaries. Each Subsidiary is a corporation or limited partnership,
duly incorporated or organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization, if applicable, and
has all requisite corporate power and authority in all material respects to own,
lease, and operate its properties and to carry on its business as now being
conducted. Each Subsidiary is duly qualified to do business as a foreign
corporation or limited partnership, if applicable, and is in good standing in
each jurisdiction where such qualification is necessary, except where the
failure to so qualify or to be in good standing would not reasonably be expected
to have a Material Adverse Effect. There are outstanding (i) no securities of
any Subsidiary of the Company convertible into or exchangeable for shares of
capital stock or other voting securities of any Subsidiary of the Company and
(ii) no options or other rights to acquire from any Subsidiary of the Company,
and no obligation of any Subsidiary of the Company to issue or sell, any shares
of capital stock or other voting securities of any Subsidiary of the Company or
any securities of any Subsidiary of the Company convertible into or exchangeable
for such capital stock or voting securities.
3.16 Defaults. Neither the Company nor any Subsidiary is in default nor
has any event or circumstance occurred which, but for the expiration of any
applicable grace period or the giving of notice, or both, would constitute a
default under any material agreement or instrument to which the Company is a
party or by which the Company is bound, which default would have a Material
Adverse Effect.
3.17 Environmental Matters. Except for matters which are more likely
than not to not to have a Material Adverse Effect (or with respect to (c), (d)
and (e) below, where the failure to take such actions is more likely than not to
not have a Material Adverse Effect):
(a) Neither any Oil and Gas Property of the Company or any of its
Subsidiaries nor the operations conducted thereon violate any order or
requirement of any court or Governmental Entity or any Environmental Laws;
(b) Without limitation of clause (a) above, no Oil and Gas Property of
the Company or any of its Subsidiaries nor the operations currently conducted
thereon or, to the best knowledge of the Company, by any prior owner or operator
of such property or operation, are in violation of or subject to any existing,
pending or threatened action, suit, investigation, inquiry or proceeding by or
before any court or Governmental Entity or to any remedial obligations under
Environmental Laws;
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(c) All notices, permits, licenses or similar authorizations, if any,
required to be obtained or filed by the Company or any of its Subsidiaries in
connection with the operation or use of any and all Property of the Company and
each of its Subsidiaries, including without limitation present, or to the best
of Company's knowledge, past treatment, storage, disposal or release of a
hazardous substance or solid waste into the environment, have been duly obtained
or filed, and the Company and each Subsidiary thereof are in compliance with the
terms and conditions of all such notices, permits, licenses and similar
authorizations;
(d) All hazardous substances, solid waste, and oil and gas exploration
and production wastes, if any, generated at any and all Oil and Gas Property of
the Company and each of its Subsidiaries have in the past, during the tenure of
ownership of the Company and its Subsidiaries and to the best of the Company's
knowledge, prior thereto, been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to
the best knowledge of the Company, all such transport carriers and treatment and
disposal facilities have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial endangerment to public
health or welfare or the environment, and are not the subject of any existing,
pending or threatened action, investigation or inquiry by any Governmental
Entity in connection with any Environmental Laws;
(e) The Company has taken all steps reasonably necessary to determine
and has determined that no hazardous substances, solid waste, or oil and gas
exploration and production wastes, have been disposed of or otherwise released
and there has been no threatened release of any hazardous substances on or to
any Oil and Gas Property of the Company or any of its Subsidiaries except in
compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment; and
(f) To the extent applicable, all Oil and Gas Property of the Company
and each of its Subsidiaries currently satisfies all design, operation, and
equipment requirements imposed by the OPA or scheduled as of the Closing Date to
be imposed by OPA during the term of this Agreement, and the Company does not
have any reason to believe that such Oil and Gas Property, to the extent subject
to OPA, will not be able to maintain compliance with the OPA requirements during
the term of this Agreement; and
(g) Neither the Company nor any of its Subsidiaries has any known
contingent liability in connection with any release or threatened release of any
oil, hazardous substance or solid waste into the environment.
3.18 Compliance with the Law. Neither the Company nor any Subsidiary
has violated any Governmental Requirement or failed to obtain any license,
permit, franchise or other governmental authorization necessary for the
ownership of any of its Oil and Gas Properties or the conduct of its business,
which violation or failure would have (in the event such violation or failure
were asserted by any Person through appropriate action) a Material Adverse
Effect. Except for such acts or failures to act as would not have a Material
Adverse Effect, the Oil and Gas Properties (and properties unitized therewith)
have been maintained, operated and developed in a good and workmanlike manner
and in conformity with all applicable laws and all rules, regulations and orders
of all duly constituted authorities having jurisdiction and in conformity with
the provisions of all leases, subleases or other contracts comprising a part of
the Hydrocarbon Interests and other contracts and agreements forming a part of
the Oil and Gas Properties; specifically in this connection, but subject to the
Material
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Adverse Effect qualification set forth above, (i) after the Closing Date, no Oil
and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time)
prior to the Closing Date and (ii) none of the xxxxx comprising a part of the
Oil and Gas Properties (or properties unitized therewith) are deviated from the
vertical more than the maximum permitted by applicable laws, regulations, rules
and orders, and such xxxxx are, in fact, bottomed under and are producing from,
and the well bores are wholly within, the Oil and Gas Properties (or in the case
of xxxxx located on properties unitized therewith, such unitized properties).
3.19 Insurance. Schedule 3.19 attached hereto contains an accurate and
complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by the Company and each
Subsidiary as of the Closing Date. All such policies are in full force and
effect, all premiums with respect thereto covering all periods up to and
including the Closing Date have been paid, and no notice of cancellation or
termination has been received with respect to any such policy. Such policies are
sufficient for compliance with all requirements of law and of all agreements to
which the Company or any Subsidiary is a party; are valid, outstanding and
enforceable policies; provide adequate insurance coverage in at least such
amounts and against at least such risks (but including in any event public
liability) as are usually insured against in the same general area by companies
engaged in the same or a similar business for the assets and operations of the
Company and each Subsidiary; will remain in full force and effect through the
respective dates set forth in Schedule 3.19 with the payment of additional
premiums; and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. Schedule 3.19
identifies all material risks, if any, which the Company, the Subsidiaries and
their respective Board of Directors or officers have designated as being self
insured. Neither the Company nor any Subsidiary has been refused any insurance
with respect to its assets or operations, nor has its coverage been limited
below usual and customary policy limits, by an insurance carrier to which it has
applied for any such insurance or with which it has carried insurance during the
last three years.
3.20 Hedging Agreements. Schedule 3.20 sets forth, as of the Closing
Date, a true and complete list of all Hedging Agreements (including commodity
price swap agreements, forward agreements or contracts of sale which provide for
prepayment for deferred shipment or delivery of oil, gas or other commodities)
of the Company and each Subsidiary.
3.21 Material Agreements. Set forth on Schedule 3.21 hereto is a
complete and correct list of all material agreements, leases, indentures,
purchase agreements, obligations in respect of letters of credit, guarantees,
joint venture agreements, and other instruments in effect or to be in effect as
of the Closing Date (other than Hedging Agreements) providing for, evidencing,
securing or otherwise relating to any material Debt of the Company or any
Subsidiary, and all obligations of the Company or any Subsidiary to issuers of
surety or appeal bonds (excluding operator's bonds, plugging and abandonment
bonds, and similar surety obligations obtained in the ordinary course of
business) issued for account of the Company or any such Subsidiary.
3.22 Gas Imbalances. As of the Closing Date, except as set forth in the
most recent Reserve Report furnished to Investors, on a net basis there are no
gas imbalances, take or pay or other prepayments with respect to the Company's
or any Subsidiary's Hydrocarbon Interests which would require the Company or
such Subsidiary to deliver five percent (5%) or more of the monthly production
from the Company's and its Subsidiaries' Hydrocarbons produced on a monthly
basis from
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the Hydrocarbon Interests, at some future time without then or thereafter
receiving full payment therefor.
3.23 Brokerage Fees. The Company has not retained any financial
advisor, broker, agent, or finder or paid or agreed to pay any financial
advisor, broker, agent, or finder on account of the sale by the Company and the
purchase by Investors of the Shares pursuant to this Agreement.
3.24 SEC Filings. The Company has complied in all material respects
with its obligations to file with the Securities and Exchange Commission all
forms, reports, schedules, statements and other documents required to be filed
by it since May 9, 1997 under the Securities Act and the Exchange Act. All
forms, reports, schedules, statements, and other documents (including all
amendments thereto) filed by the Company with the Securities and Exchange
Commission since such date are herein collectively referred to as the "SEC
Filings". The SEC Filings, at the time filed, complied in all material respects
with all applicable requirements of federal securities laws. None of the SEC
Filings, including, without limitation, any financial statements or schedules
included therein, at the time filed or as same may have been amended, contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
3.25 Stockholder Approval. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereunder require the approval
of the stockholders of the Company under the applicable listing rules of the
Nasdaq Stock Market, Inc.; provided, however, that the Warrants shall not be
exercisable until after approval of the stockholders of the Company as set forth
therein.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTORS
Each Investor represents and warrants to the Company that:
4.1 Organization. MB is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Each of ESC and
MBP is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. DOP is a limited partnership
(commanditaire vennootschap), duly organized, validly existing and in good
standing under the laws of the Netherlands Antilles. Each Investor has all
requisite corporate power and authority in all material respects to own, lease,
and operate its properties and to carry on its business as now being conducted.
No actions or proceedings to dissolve either Investor are pending or, to the
best knowledge of any Investor, threatened.
4.2 Authority Relative to This Agreement. Each Investor has full
corporate or (if applicable) other power and authority to execute, deliver, and
perform this Agreement and execute, deliver and, where applicable, perform the
Ancillary Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery, and performance by
each Investor of this Agreement and execution, delivery, and, where applicable,
performance of the Ancillary Documents to which it is a party, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate (if applicable) action of such
Investor. This Agreement has been duly executed and delivered by each Investor
and constitutes, and each Ancillary Document executed or to be executed by each
Investor
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has been, or when executed will be, duly executed and delivered by such Investor
and constitutes, or when executed and delivered will constitute, a valid and
legally binding obligation of such Investor, enforceable against such Investor
in accordance with its terms, except that such enforceability may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws affecting creditors' rights generally and (ii) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
4.3 Noncontravention. The execution, delivery, and performance by each
Investor of this Agreement and the execution, delivery and, where applicable,
performance of Ancillary Documents to which it is a party and the consummation
by it of the transactions contemplated hereby and thereby do not and will not
(i) conflict with or result in a violation of any provision of MB's Certificate
of Incorporation or Bylaws or ESC's or MBP's Certificate of Limited Partnership
or partnership agreement, or DOP's Agreement of Limited Partnership, (ii)
conflict with or result in a violation of any provision of, or constitute (with
or without the giving of notice or the passage of time or both) a default under,
or give rise (with or without the giving of notice or the passage of time or
both) to any right of termination, cancellation, or acceleration under, any
bond, debenture, note, mortgage, indenture, lease, agreement or other instrument
or obligation to which any Investor is a party or by which Investor or any of
its properties may be bound, (iii) result in the creation or imposition of any
Encumbrance upon the properties of any Investor, or (iv) violate any Applicable
Law binding upon any Investor, except, in the case of clauses (ii), (iii) and
(iv) above, for any such conflicts, violations, defaults, terminations,
cancellations, accelerations, or Encumbrances which would not, individually or
in the aggregate, have a Material Adverse Effect on any Investor.
4.4 Consents and Approvals. No consent, approval, order, or
authorization of, or declaration, filing, or registration with, any Governmental
Entity is required to be obtained or made by Investors in connection with the
execution, delivery, or performance by Investors of this Agreement. No consent
or approval of any person other than any Governmental Entity is required to be
obtained or made by any Investor in connection with the execution, delivery or
performance by Investors of this Agreement and the execution, delivery and,
where applicable, performance of the Ancillary Documents to which it is a party.
4.5 Purchase for Investment. Each Investor understands that none of the
Shares, the Warrants or the Warrant Shares have been registered under the
Securities Act. Each Investor also understands that the Shares, the Warrants and
the Warrant Shares are being offered and sold pursuant to an exemption from
registration contained in the Securities Act based in part upon Investors'
representations contained in the Agreement. Each Investor hereby represents and
warrants as follows:
(a) Investor Bears Economic Risk. Each Investor has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company so that it is capable of
evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests. Without limiting the generality of the
foregoing, each Investor further represents that it has such knowledge regarding
the oil and gas industry and the business of the Company and the current
circumstances surrounding such industry and business that it is capable of
evaluating the merits and risks of the acquisition of the Shares, the Warrants
and the Warrant Shares. Each Investor must bear the economic risk of this
investment indefinitely unless the Shares, the Warrants or the Warrant Shares
are registered pursuant to the Securities Act, or an exemption from registration
is available. Each Investor understands that the Company has no present
intention
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of registering the Shares, the Warrants or the Warrant Shares. Each Investor
also understands that there is no assurance that any exemption from registration
under the Securities Act will be available and that, even if available, such
exemption may not allow an Investor to transfer all or any portion of the
Shares, Warrants or Warrant Shares under the circumstances, in the amounts or at
the times an Investor might propose.
(b) Acquisition for Own Account. Each Investor is acquiring the Shares,
the Warrants and Warrant Shares for such Investor's own account for investment
only, and not with a view towards their distribution.
(c) Investor Can Protect Its Interest. Each Investor represents that by
reason of its, or of its management's, business or financial experience, such
Investor has the capacity to protect its own interests in connection with the
transactions contemplated in this Agreement and the Ancillary Agreements.
Further, neither Investor is aware of no publication of any advertisement in
connection with the transactions contemplated in the Agreement.
(d) Accredited Investor. Each Investor represents that it is an
accredited investor within the meaning of Regulation D under the Securities Act.
(e) Company Information. Each Investor has had access to the Company's
SEC Filings and has had an opportunity to discuss the Company's business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review the Company's operations and
facilities. Each Investor has also had the opportunity to ask questions of, and
receive answers from, the Company and its management regarding the terms and
conditions of this investment. Each Investor hereby acknowledges and affirms
that it has completed its own independent investigation, analysis, and
evaluation of the Company and its subsidiaries, that it has made all such
reviews and inspections of the business, assets, results of operations,
condition (financial or otherwise), and prospects of the Company and its
subsidiaries as it has deemed necessary or appropriate, and that in making its
decision to enter into this Agreement and to consummate the transactions
contemplated hereby it has relied solely on its own independent investigation,
analysis, and evaluation of the Company and its subsidiaries, or that of its own
independent advisers in evaluating its investment in the Shares, Warrants and
Warrant Shares.
(f) Rule 144. Each Investor acknowledges and agrees that the Shares and
the Warrants, and, if issued, the Warrant Shares, must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Each Investor has been advised or is aware
of the provisions of Rule 144, which permits limited resale of shares purchased
in a private placement subject to the satisfaction of certain conditions,
including, among other things: the availability of certain current public
information about the Company, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any
three-month period not exceeding specified limitations.
(g) Transfer Restrictions. Each Investor acknowledges and agrees that
the Shares, the Warrants and the Warrant Shares are subject to restrictions on
transfer as set forth in Section 5.5, below, and further understands that the
Shares, the Warrants and the Warrant Shares will not have been registered
pursuant to the Securities Act or any applicable state securities laws, that the
Shares, the Warrants and the Warrant Shares will be characterized as "restricted
securities" under federal securities laws, and that under such laws and
applicable regulations the Shares, the Warrants and the Warrant Shares cannot be
sold or otherwise disposed of without registration under the Securities Act
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or an exemption therefrom. In this connection, each Investor represents that it
is familiar with Rule 144 promulgated under the Securities Act, as currently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act. Appropriate stop transfer instructions may be issued to the
transfer agent for securities of the Company (or a notation may be made in the
appropriate records of the Company) in connection with the Shares, the Warrants
or the Warrant Shares.
(h) Confirmation. The acquisition of the Shares by an Investor at the
Closing shall constitute such Investor's confirmation of the foregoing
representations.
4.6 No Other Shares. Except for such rights as may be conferred on an
Investor under the First Purchase Agreement or by this Agreement and the
Ancillary Documents, Investors do not beneficially own, directly or indirectly,
any shares of capital stock or other securities of the Company or any of its
Subsidiaries.
4.7 Financial Resources. Each Investor has the financial resources
available to it as are necessary to perform its obligations to acquire the
Shares pursuant to the terms of this Agreement.
4.8 Brokerage Fees. No Investor has retained any financial advisor,
broker, agent, or finder or paid or agreed to pay any financial advisor, broker,
agent, or finder on account of the sale by the Company and the purchase by
Investors of the Shares pursuant to this Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Reasonable Best Efforts.
(a) Each party hereto agrees that it will use its reasonable best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things reasonably necessary, proper, or advisable under Applicable
Laws to consummate the transactions contemplated by this Agreement, including,
without limitation, (i) cooperation in determining whether any consents,
approvals, orders, authorizations, waivers, declarations, filings, or
registrations of or with any Governmental Entity or third party are required in
connection with the consummation of the transactions contemplated hereby; (ii)
reasonable best efforts to obtain any such consents, approvals, orders,
authorizations, and waivers and to effect any such declarations, filings, and
registrations; (iii) reasonable best efforts to cause to be lifted or rescinded
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby; (iv)
reasonable best efforts to defend, and cooperation in defending, all lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby; and (v) the execution of any additional
instruments necessary to consummate the transactions contemplated hereby.
(b) Without limiting the generality of Section 5.1(a), to the extent
required by the HSR Act, each of the parties hereto shall (i) file or cause to
be filed, as promptly as practicable but in no event later than five (5)
consecutive Business Days after the execution and delivery of this Agreement,
with the Federal Trade Commission and the United States Department of Justice,
all reports and other documents required to be filed by such party under the HSR
Act concerning the transactions contemplated hereby and (ii) promptly comply
with or cause to be complied with any requests by the Federal Trade Commission
or the United States Department of Justice for additional information concerning
such transactions, in each case so that the waiting period applicable to this
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Agreement and the transactions contemplated hereby under the HSR Act shall
expire as soon as practicable after the execution and delivery of this
Agreement. Each party hereto agrees to request, and to cooperate with the other
party or parties in requesting, early termination of any applicable waiting
period under the HSR Act. Notwithstanding the foregoing, if any report or other
document is required to be filed by any Investor under the HSR Act solely as a
result of the purchase and sale of the Shares or the Warrants (with no regard to
any other securities held by such Investor or its Affiliates), the Company shall
pay any and all fees and expenses, including filing fees and legal expenses,
incurred by such Investor in connection with the filing of such reports or other
documents and any other actions required to comply with the provisions of the
HSR Act.
5.2 Press Releases. Except as may be required by Applicable Law or by
the rules of any national securities exchange or registered securities
association, prior to the Closing, neither Investors nor the Company shall issue
any press release with respect to this Agreement or the transactions
contemplated hereby without the prior consent of the other party (which consent
shall not be unreasonably withheld under the circumstances). Any such press
release required by Applicable Law or by the rules of any national securities
exchange or registered securities association shall only be made after
reasonable notice to the other party.
5.3 Fees and Expenses. Except as otherwise expressly provided in this
Agreement, all fees and expenses, including fees and expenses of counsel,
financial advisors and accountants, incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such fee or expense.
5.4 Survival. The representations and warranties made herein shall
survive the Closing, regardless of any investigation made by or on behalf of any
party, until the second anniversary of the Closing Date; provided, however, the
representations and warranties contained in Sections 3.9, 3.10 and 3.18 shall
survive until the expiration of the applicable statute limitations relating to
the subject matters of such representations and warranties (the "Survival
Date".) All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company herein for purposes of this
Section 5.5. No action may be brought with respect to a breach of any
representation or warranty after the Survival Date unless, prior to such time,
the party seeking to bring such an action has notified the other parties of such
claim, specifying in reasonable detail the nature of the loss suffered.
5.5 Transfer Restrictions.
(a) Notwithstanding any provision contained in this Agreement to the
contrary, each Investor agrees that it will not, directly or indirectly, sell,
assign, transfer, pledge, encumber, or otherwise dispose of any of the Shares,
Warrants or Warrant Shares except:
(i) In compliance with Rule 144; provided, however, that the
Investor shall provide the Company with copies of all filings made with
the Securities and Exchange Commission with respect to sales of
securities under Rule 144 and with such other information and documents
as the Company shall reasonably require in order to assure full
compliance with Rule 144; or
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(ii) Pursuant to a no-action letter or other interpretive
statement or release of the Securities and Exchange Commission to the
effect that the proposed sale or other disposition may be effected
without registration under the Securities Act; or
(iii) Pursuant to an applicable exemption (other than Rule
144) under the Securities Act; provided, however, that the Investor
shall have furnished the Company with an opinion of counsel, which
opinion and counsel shall be reasonably acceptable to the Company, to
the effect that such disposition does not require registration of such
securities under the Securities Act; provided further, however, that no
opinion of counsel shall be required in the case of a transfer to an
affiliate (as defined in Rule 405 of the Securities Act) of Investor if
such affiliate shall have furnished the Company with the
representations contained in Section 4.5 of this Agreement and shall
have agreed with the Company to be subject to the terms of this
Agreement to the same extent as if an original holder of securities
pursuant hereto.
(iv) Pursuant to an effective registration statement filed
under the Securities Act.
(b) It is agreed and understood by each Investor that the certificates
or instruments representing the Shares, Warrants and Warrant Shares shall each
be stamped or otherwise imprinted with a legend in substantially the following
form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE
RESTRICTIONS AND PRIVILEGES SPECIFIED IN A SECURITIES PURCHASE AGREEMENT, DATED
AS OF MARCH 5, 2001, BETWEEN XXXXXXX EXPLORATION COMPANY AND THE INITIAL HOLDERS
OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
XXXXXXX EXPLORATION COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE HOLDER
HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS CERTIFICATE AGREES TO BE
BOUND THEREBY."
5.6 Transaction Fee. The sum of One Hundred Thousand Dollars
($100,000), plus all reasonable out-of-pocket expenses incurred by the
Investors, including attorneys fees, shall be paid by the Company to Investors
on the Closing Date upon Closing.
5.7 Action at Annual Meeting of Stockholders.
(a) The Company shall take all action necessary in accordance with
applicable law and the Company's Certificate of Incorporation and Bylaws to have
the Company's common stockholders, at the Annual Meeting to be held on or before
May 31, 2001, consider and approve the matters described in the Stockholders
Voting Agreement dated March 1, 2001, by and among the Company and certain of
its stockholders, such approval, when so obtained, shall be referred to as the
"Stockholder Approval". The Company shall not mail or otherwise distribute the
proxy statement or information statement (or any related proxy materials or
amendments or supplements thereto, if any) relating to the Annual Meeting to its
stockholders without consultation with Investors and their counsel, and such
proxy statement or information statement and such other items shall, to the
extent
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same relate to the subject matter of the Stockholders Voting Agreement, be in
such form as Investors and their counsel shall approve (such approval not to
unreasonably withheld).
(b) The Company shall provide a certificate signed by a duly authorized
officer of the Company to each holder of Warrants promptly after the Annual
Meeting certifying whether the Stockholder Approval has been obtained at the
Annual Meeting and whether the Warrants are then exercisable.
5.8 Capitalization Certification. The Company shall provide,
immediately after the Closing, a schedule reflecting the capitalization of the
Company as of immediately after the transactions contemplated by this Agreement,
including at least the information provided in the representation in Section 3.2
and indicating the number of fully-diluted shares of Common Stock, and certified
by the Chief Financial Officer of the Company (the "Certificate"). Until the
second anniversary of the Closing Date, the Company shall amend the Certificate
at any time after the Closing to reflect any changes to the Certificate (which
in all cases shall reflect the capitalization of the Company as of immediately
after the transactions contemplated by this Agreement) if the Company learns
that the Certificate is incorrect or not complete in any respect.
Notwithstanding any provision contained in this Agreement, the Registration
Rights Agreement and the Warrant Certificate, if the number of fully-diluted
shares of Common Stock as reflected in the Certificate at any time is more than
34,608 shares in excess of 34,607,870 shares of Common Stock, then the number of
shares purchasable upon exercise of the Warrant shall be increased to a number
of shares equal to 6.08% of the fully-diluted shares of Common Stock. Upon any
such adjustment to the number of shares to be acquired upon exercise of the
Warrant, the holder of the Warrant shall deliver to the Company the Warrant
Certificate for cancellation and immediately thereupon the Company shall issue a
new Warrant Certificate reflecting the adjusted number of shares purchasable
thereunder. For purposes of this Section 5.8, the term "fully-diluted shares of
Common Stock" means the sum of shares of Common Stock outstanding, plus all
shares of Common Stock issuable pursuant to (i) the conversion or exchange of
securities that are convertible into or exchangeable for shares of Common Stock
or the exercise of any option, warrant or other right to acquire shares of
Common Stock from the Company, (ii) the conversion or exchange of any security
that is convertible into or exchangeable for any securities referenced in 5.8(i)
or the exercise of any security that is exercisable for any securities
referenced in 5.8(i), and (iii) the exercise of any rights under any agreement
regarding equity equivalents, interests in the ownership or earnings, or other
similar rights of or with respect to the Company.
5.9 Restrictions on Certain Actions. Investors hereby agree (subject to
the occurrence of the Closing ) that for a period of one year from the Closing
Date, Investors shall not, without the prior written approval of the Board of
Directors of the Company, in any manner, directly or indirectly, acquire for
their own accounts any Voting Securities (or beneficial ownership thereof),
except by way of stock dividends or other distributions or offerings made
available to holders of Voting Securities generally and except for acquisitions
of Common Stock upon exercise of the Warrants (as defined herein) or upon
exercise of the Warrants (as defined in the First Purchase Agreement). The
parties acknowledge that various Affiliates of the Investors are brokers or
investment advisors or are otherwise engaged in transactions in securities
generally as part of their ordinary course of business. The parties agree that
actions taken by Affiliates of the Investors as such in the ordinary course of
their business, such as acting as broker for clients acquiring shares of Voting
Securities, shall not be deemed a violation of any of the provisions of this
Section 5.9.
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ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
6.1 Representations and Warranties. All the representations and
warranties of Investors contained in this Agreement shall be true and correct in
all material respects, except as affected by transactions contemplated or
permitted by this Agreement.
6.2 Covenants and Agreements. Investors shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by them on or prior to the
Closing Date.
6.3 HSR Act. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or been terminated.
6.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
6.5 Consents. All consents, approvals, orders, authorizations and
waivers of, and all declarations, filings and registrations with, third parties
(including Governmental Entities) required to be obtained or made by or on the
part of the parties hereto, or otherwise reasonably necessary for the
consummation of the transactions contemplated hereby, shall have been obtained
or made, and all thereof shall be in full force and effect at the time of
Closing.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF INVESTORS
The obligations of Investors to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment on or prior
to the Closing Date of each of the following conditions:
7.1 Representations and Warranties. All the representations and
warranties of the Company contained in this Agreement shall be true and correct
in all material respects, except as affected by transactions contemplated or
permitted by this Agreement (or the announcement thereof).
7.2 Covenants and Agreements. The Company shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date.
7.3 HSR Act. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or been terminated.
7.4 Legal Proceedings. No Proceeding shall, on the Closing Date, be
pending or threatened seeking to restrain, prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.
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7.5 Consents. All consents, approvals, orders, authorizations and
waivers of, and all declarations, filings and registrations with, third parties
(including Governmental Entities) required to be obtained or made by or on the
part of the parties hereto, or otherwise reasonably necessary for the
consummation of the transactions contemplated hereby, shall have been obtained
or made, and all thereof shall be in full force and effect at the time of
Closing.
7.6 Legal Opinion. Xxxxxxxx & Xxxxxx, L.L.P., counsel to the Company,
shall have delivered to the Investors a legal opinion satisfactory in form and
substance to the Investors.
7.7 Closing Deliveries. The Escrow Agent shall have received the
certificates, instruments and documents required to be delivered by the Company
by Section 2.2.
ARTICLE VIII
COVENANTS
8.1 Affirmative Covenants. The Company covenants and agrees that, so
long as any of the Shares are outstanding:
(a) Financial Statements and Other Reports. The Company shall
deliver, or shall cause to be delivered, to the Investors:
(i) Annual Financial Statements. As soon as available
and in any event within 90 days after the end of each fiscal
year of the Company and its consolidated Subsidiaries for such
fiscal year, and the related consolidated and unaudited
consolidating balance sheets of the Company and its
consolidated Subsidiaries as at the end of such fiscal year,
and setting forth in each case in comparative form the
corresponding figures for the preceding fiscal year, and
accompanied by the related opinion of independent public
accountants which opinion shall state that said financial
statements fairly present the consolidated financial condition
and results of operations of the Company and its consolidated
Subsidiaries as at the end of, and for, such fiscal year and
that such financial statements have been prepared in
accordance with GAAP except for such changes in such
principles with which the independent public accountants shall
have concurred.
(ii) Quarterly Financial Statements. As soon as
available and in any event within 60 days after the end of
each of the first three fiscal quarterly periods of each
fiscal year of the Company, consolidated statements of income,
stockholders' equity, changes in financial position and cash
flow of the Company and its consolidated Subsidiaries for such
period and for the period from the beginning of the respective
fiscal year to the end of such period, and the related
consolidated and consolidating balance sheets as at the end of
such period.
(iii) Monthly Financial Statements. As soon as
available and in any event within forty-five (45) days after
the end of each calendar month that is not also the end of one
of the Company's first three fiscal quarterly periods or of
the Company's fiscal year, consolidated statements of income
and changes in financial position of the Company and its
consolidated Subsidiaries for such period and for the period
from the beginning of the respective fiscal year to the end of
such period, and the related consolidated balance sheets as at
the end of such period and beginning statements
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setting forth in each case in comparative form the
corresponding figures for the corresponding period in the
preceding fiscal year.
(b) SEC Filings, Etc. Promptly, upon its becoming available,
each financial statement, report, notice or proxy statement sent by the
Company to stockholders generally.
(c) Engineering Reports. Not later than April 30 and October
30 of each year, the Company shall furnish to the Investors a Reserve
Report as of the preceding December 31 and June 30, respectively. The
Reserve Report to be furnished in April of each year shall be prepared
by certified independent petroleum engineers or other independent
petroleum consultant(s) and the Reserve Reports to be furnished in
October of each year shall be prepared by or under the supervision of
the chief engineer or Vice President of Operations of the Company who
shall certify such Reserve Report to have been prepared in accordance
with the procedures used in the immediately preceding April Reserve
Report. At Company's option, the Reserve Report to be furnished in
October of each year may instead consist of a report from the
independent petroleum engineers referred to above on any new xxxxx and
a roll-forward by Company on any xxxxx previously reported in the
Reserve Report described in the immediately preceding April.
(d) Exchange Act Reports. At all times (i) timely file all
reports required to be filed by the Company under Section 13(d) or
Section 15 of the Exchange Act and the rules and regulations
thereunder, and (ii) if the Company is no longer subject to the
requirements of the Exchange Act, provide holders of the Shares reports
in substantially the same form and at the same times as would be
required if the Company were subject to the Exchange Act.
(e) Nasdaq Listing. Maintain at all times a valid listing for
the Common Stock on a national securities exchange or the National
Market System or SmallCap Market of the Nasdaq Stock Market, Inc.
(f) Further Assurances. The Company at its expense will
promptly execute and deliver to the Investors upon request all such
other documents, agreements and instruments to comply with or
accomplish the covenants and agreements of the Company in this
Agreement or any other agreements and documents executed by and between
the Company and the Investors.
8.2 Negative Covenants. The Company covenants and agrees that, so long
as at least 10% of the Shares are outstanding, without the prior written consent
of the persons holding 75% of the then outstanding Shares:
(a) Dividends, Distributions and Redemptions. The Company will
not declare or pay any dividend, purchase, redeem, or otherwise acquire
for value any, other than those issued under the First Purchase
Agreement, Parity Security or Junior Security now or hereafter
outstanding, return any capital or make a distribution of its assets to
its stockholders.
(b) Nature of Business. Neither the Company nor Xxxxxxx Oil &
Gas, L.P. will allow any material change to be made in the character of
its business as an independent oil and gas exploration and production
company.
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(c) Environmental Matters. Neither the Company nor any
Subsidiary will knowingly cause or permit any of its Property to be in
violation of, or knowingly do anything or permit anything to be done
which will subject any such Property to any remedial obligations under
any Environmental Laws, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such
violations or remedial obligations would have a Material Adverse
Effect.
(d) Transactions with Affiliates. Neither the Company nor any
Subsidiary will enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of Property or the
rendering of any service, with any Affiliate unless such transactions
are otherwise not in violation of this Agreement, and are upon fair and
reasonable terms no less favorable to it than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.
ARTICLE IX
AMENDMENT AND WAIVER
9.1 Amendment. This Agreement may not be amended except by an
instrument in writing signed by or on behalf of all the parties hereto.
9.2 Waiver. No failure or delay by a party hereto in exercising any
right, power, or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power, or privilege. The provisions
of this Agreement may not be waived except by an instrument in writing signed by
or on behalf of the party against whom such waiver is sought to be enforced.
ARTICLE X
MISCELLANEOUS
10.1 Notices. All notices, requests, demands, and other communications
required or permitted to be given or made hereunder by any party hereto shall be
in writing and shall be deemed to have been duly given or made if (i) delivered
personally, (ii) sent by prepaid overnight courier service, or (iii) sent by
telecopy or facsimile transmission, answer back requested, to the parties at the
following addresses (or at such other addresses as shall be specified by the
parties by like notice):
(a) If to the Company:
Xxxxxxx Exploration Company
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, XX 00000
Attention: Chief Financial Officer
Telefax: 000-000-0000
with a copy to:
Xxxxxxxx & Knight L.L.P.
0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxx Xxxxxxxxxxx
Telefax: 000-000-0000
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(b) If to MB, MBP or ESC, to such Investor at:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx, Xxx Xxxxx
Telefax: 000-000-0000
with a copy to:
Gardere Xxxxx Xxxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxxxxx III
Telefax: 000-000-0000
(c) If to DOP:
c/o DLJ Offshore Management N.V.
Xxxx X. Xxxxxxxxxx 00
Xxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx, Antilles
Fax: 000-000-000-0000
with a copy to:
Gardere Xxxxx Xxxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxxxxx III
Telefax: 000-000-0000
Such notices, requests, demands, and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended recipient, or (ii) if sent by telecopy or facsimile transmission, when
the answer back is received.
10.2 Entire Agreement. This Agreement, together with the Schedules,
Exhibits, Annexes, and other writings referred to herein or delivered pursuant
hereto, constitutes the entire agreement between the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the parties and their Affiliates
with respect to the subject matter hereof.
10.3 Binding Effect; Assignment; No Third Party Benefit. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Agreement, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other party. Nothing in this
Agreement, express or implied, is
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intended to or shall confer upon any person other than the parties hereto, and
their respective heirs, legal representatives, successors, and permitted
assigns, any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement.
10.4 Severability. If any provision of this Agreement is held to be
unenforceable, then this Agreement shall be considered divisible and such
provision shall be deemed inoperative to the extent it is deemed unenforceable,
and in all other respects this Agreement shall remain in full force and effect
to the maximum extent permitted by Applicable Law.
10.5 Injunctive Relief. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under this Agreement or at law or in equity.
10.6 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
10.7 Jurisdiction. Except as otherwise expressly provided in this
Agreement, any suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby may be brought in the United States
District Court for the Southern District of New York or any other New York State
court sitting in New York City, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. Without limiting the foregoing, each
party agrees that service of process on such party as provided in Section 10.01
shall be deemed effective service of process on such party.
10.8 Binding Arbitration. In the event of any dispute, difference or
question arising out of relating to the release of the Shares, Warrants,
purchase price for the Shares and Warrants, and interest thereon accruing while
such amounts are deposited under the Escrow Agreement ("Dispute") between any of
the parties hereto ("Disputing Parties") which cannot be otherwise resolved by
the Disputing Parties themselves, the Dispute will be settled by arbitration by
an arbitrator mutually acceptable to the Disputing Parties in an arbitration
proceeding conducted in Houston, Texas in accordance with the rules existing at
the date hereof of the American Arbitration Association. If the Disputing
Parties hereto cannot agree on an arbitrator within ten (10) days of the
initiation of the arbitration proceeding, an arbitrator shall be selected for
the Disputing Parties by the American Arbitration Association. The Disputing
Parties shall use their best efforts to have the arbitral proceeding conclude
and a judgement rendered by the arbitrator within forty (40) business days of
the initiation of the arbitration proceeding. The decision of such arbitrator
shall be final and
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judgement upon the award rendered by the arbitration may be entered in any court
having jurisdiction thereof, and the costs (including, without limitation,
reasonable fees and expenses of counsel and experts for the Disputing Parties)
of such arbitration (including the cost to enforce or preserve the rights
awarded in the arbitration) shall be borne by the Disputing Party whom the
decision of the arbitrator is against. If the decision of the arbitrator is not
clearly against one of the Disputing Parties, or the decisions of the arbitrator
is against more than one Disputing Party on one or more issues, costs of such
arbitration shall be borne equally by the Disputing Parties.
10.9 Counterparts. This Agreement may be executed by the parties hereto
in any number of counterparts, each of which shall be deemed an original, but
all of which shall constitute one and the same agreement. Each counterpart may
consist of a number of copies hereof each signed by less than all, but together
signed by all, the parties hereto.
ARTICLE XI
DEFINITIONS
11.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it in this Article:
"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such first
Person, (ii) any director or officer of such first Person or of any Person
referred to in clause (i) above and (iii) if any Person in clause (i) above is
an individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled by any such member or trust. For purposes of this definition, any
Person which owns directly or indirectly 50% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 50% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to "control" (including, with its correlative meanings, "controlled by"
and "under common control with") such corporation or other Person.
"Ancillary Documents" means each agreement, instrument, and document
(other than this Agreement) executed or to be executed by the Company or any
Investor in connection with the sale and purchase of the Shares and Warrants and
the other transactions contemplated by this Agreement.
"Applicable Law" means any statute, law, rule, or regulation or any
judgment, order, writ, injunction, or decree of any Governmental Entity to which
a specified person or property is subject.
"Board Representative" means any representative of Investors on the
Board, to the extent (a) nominated to the Board pursuant to Article VIII of the
First Purchase Agreement and (b) acting in his or her capacity as a member of
the Board.
"BOG" means Xxxxxxx Oil & Gas, L.P.
"Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in Austin, Texas are authorized or obligated
by law or executive order to close.
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"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time and any successor statute.
"Common Stock" means the common stock, par value of $.01 per share, of
the Company, and such other class of securities as shall represent the common
equity of the Company.
"Debt" shall mean, for any Person the sum of the following (without
duplication): (i) all obligations of such Person for borrowed money or evidenced
by bonds, debentures, notes or other similar instruments (including principal,
interest, fees and charges); (ii) all obligations of such Person (whether
contingent or otherwise) in respect of bankers acceptances, letters of credit,
surety or other bonds and similar instruments; (iii) all obligations of such
Person to pay the deferred purchase price of Property or services (other than
for borrowed money) excluding Trade Payables; (iv) all obligations under leases
which shall have been, or should have been, in accordance with GAAP, recorded as
capital leases in respect of which such Person is liable (whether contingent or
otherwise); (v) all obligations under leases (other than capital leases and oil
and gas leases) which require such Person or its Affiliate to make payments
exceeding $100,000 over the term of such lease, including payments at
termination, which are substantially equal to at least eighty percent (80%) of
the purchase price of the Property subject to such lease plus interest at an
imputed market rate of interest; (vi) all Debt (as described in the other
clauses of this definition) of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person; (vii) all Debt (as
described in the other clauses of this definition) of others guaranteed by such
Person or in which such Person otherwise assures a creditor against loss of the
Debt of others; (viii) all obligations or undertakings of such Person to
maintain or cause to be maintained the financial position or covenants of others
including without limitation agreements expressed as an agreement to purchase
the Debt or Property of others or otherwise; (x) obligations to pay for goods or
services whether or not such goods or services are actually received or utilized
by such Person; (xi) any capital stock of such Person in which such Person has a
mandatory obligation to redeem such stock; (xii) the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received payment; and (xiii) all obligations of
such Person under Hedging Agreements.
"Encumbrances" means liens, charges, pledges, options, mortgages, deeds
of trust, security interests, claims, restrictions (whether on voting, sale,
transfer, disposition, or otherwise), easements, and other encumbrances of every
type and description, whether imposed by law, agreement, understanding, or
otherwise.
"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to the environment in effect in any and all jurisdictions in which
the Company or any Subsidiary is conducting or at any time has conducted
business, or where any Oil and Gas Property of the Company or any Subsidiary is
located, including without limitation, the Oil Pollution Act of 1990 ("OPA"),
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the Federal
Water Pollution Control Act, as amended, the Occupational Safety and Health Act
of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water ACT, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. As used in the
provisions hereof relating to Environmental Laws, the term "oil" shall have the
meaning specified in OPA, the terms "hazardous substance" and "release" (or
"threatened release") have the meanings specified in CERCLA, and the
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terms "solid waste" and "disposal" (or "disposal") have the meanings specified
in RCRA; provided that to the extent the laws of the state in which any Oil and
Gas Property of the Company or any Subsidiary is located establish a meaning for
"oil", "hazardous substance," "release," "solid waste" or "disposal" which is
broader than that specified in either OPA, CERCLA or RCRA, such broader meaning
shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Company or any Subsidiary of the Company
would be deemed to be a "single employer" within the meaning of section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the
Code.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments or other
governmental charges or levies not yet due or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP; (ii) Liens in connection with workmen's compensation,
unemployment insurance or other social security, old age pension or public
liability obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or other like
Liens arising by operation of law in the ordinary course of business or incident
to the exploration, development, operation and maintenance of Oil and Gas
Properties or customary landlord's liens, each of which is in respect of
obligations that have not been outstanding more than 90 days or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been maintained in accordance with GAAP; (iv) any Liens reserved
in leases or farmout agreements for rent or royalties and for compliance with
the terms of the farmout agreements or leases in the case of leasehold estates,
to the extent that any such Lien referred to in this clause does not materially
impair the use of the property covered by such Lien for the purposes for which
such property is held or materially impair the value of such property subject
thereto; (v) encumbrances (other than to secure the payment of borrowed money or
the deferred purchase price of property or services), easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations in any
rights of way or other property for the purpose of roads, pipelines,
transmission lines, transportation lines, distribution lines for the removal of
gas, oil, coal or other minerals or timber, and other like purposes, or for the
joint or common use of real estate, rights of way, facilities and equipment, and
defects, irregularities, zoning restrictions and deficiencies in title of any
rights of way or other property which in the aggregate do not materially impair
the use of such rights of way or other property for the purposes of which such
rights of way and other property are held or materially impair the value of such
property subject thereto; (vi) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(vii) Liens (including "Excepted Liens") permitted by or created pursuant to the
Senior Credit Agreement and Liens permitted by or created pursuant to the
Subordinated Credit Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"First Purchase Agreement" means that certain Securities Purchase
Agreement dated as of November 1, 2000, between the Company, MB and ESC.
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"Governmental Entity" means any court or tribunal in any jurisdiction
(domestic or foreign) or any public, governmental, or regulatory body, agency,
department, commission, board, bureau, or other authority or instrumentality
(domestic or foreign).
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or
requirement (in the case of banking regulatory authorities whether or not having
the force of law), including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls, of any
Governmental Entity.
"Hedging Agreements" shall mean any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange or
protection agreements or any option with respect to any such transaction.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Hydrocarbon Interests" shall mean all rights, titles, interests and
estates now or hereafter acquired in and to oil and gas leases, oil, gas and
mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee
interests, overriding royalty and royalty interests, net profit interests and
production payment interests, including any reserved or residual interests of
whatever nature.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip gasoline,
natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined or separated therefrom.
"Lien" shall mean any interest in property securing an obligation owed
to, or a claim by, a person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to (i)
the lien or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (ii) production payments and the like payable
out of Oil and Gas Properties. The term "Lien" shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances affecting
property. For the purposes of this Agreement, a Person shall be deemed to be the
owner of any property which it has acquired or holds subject to a conditional
sale agreement, or leases under a financing lease or other arrangement pursuant
to which title to the Property has been retained by or vested in some other
Person in a transaction intended to create a financing.
"Material Adverse Effect" means, relative to the Company or the
Investors, as the case may be, any change, development, or effect (individually
or in the aggregate) which is, or is reasonably likely to be, materially adverse
(i) to the business, assets, results of operations, condition (financial or
otherwise), or prospects of the Company and the Subsidiaries considered as a
whole, or the Investors, as the case may be, or (ii) to the ability of the
Company or the Investors, as the case may be, to perform on a timely basis any
material obligation of the Company or the Investors, as the case may be, under
this Agreement or any agreement, instrument, or document entered into or
delivered in connection herewith.
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"Material Agreement" means (a) any written agreement, contract, lease,
commitment, understanding, instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any of their
respective properties may be bound involving total value or consideration or
liability in excess of $500,000, (b) any loan or credit agreement, bond,
debenture, note, mortgage or indenture by which the Company or any Subsidiary or
any of their respective properties may be bound, or (c) any agreement set forth
as an exhibit to the Company's Form 10-K for the fiscal year ended December 31,
1999.
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; all
presently existing or future unitization, pooling agreements and declarations of
pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental Authority)
which may affect all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests; all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon Interests, including all oil in tanks, the lands covered thereby
and all rents, issues, profits, proceeds, products, revenues and other incomes
from or attributable to the Hydrocarbon Interests; all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil xxxxx, gas xxxxx, injection xxxxx or other xxxxx,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, appliances, tools, implements, cables, wires, towers, casing,
tubing and rods, similar equipment, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, enterprise,
unincorporated organization, or Governmental Entity.
"Plan" shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained
or contributed to by the Company, any Subsidiary or an ERISA Affiliate or (ii)
was at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Company, any Subsidiary or an ERISA Affiliate.
"Proceeding" means any action, suit or proceeding, whether civil,
criminal, administrative, arbitrative or investigative, any appeal in such an
action, suit or proceeding, and any inquiry or investigation that could lead to
such an action, suit or proceeding.
"Reasonable best efforts" means a party's best efforts in accordance
with reasonable commercial practice and without the incurrence of unreasonable
expense.
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"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated November 1, 2000, by and among the Company, MB and ESC, as
amended by that certain First Amendment to Registration Rights Agreement, dated
as of the date hereof, by and among the Company and the Investors.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Agreement" means that certain Amended and Restated
Credit Agreement dated as of February 17, 2000, by and between BOG, Bank of
Montreal, as Agent, and the Lenders signatory thereto, as amended on October 31,
2000, together with the "Loan Documents" described therein.
"Subordinated Credit Agreement" means the Subordinated Credit Agreement
dated as of October 31, 2000 by and between BOG, Shell Capital, Inc., as Agent,
and the Lenders signatory thereto, together with the "Loan Documents" described
therein.
"Subsidiaries" means Xxxxxxx Oil & Gas, L.P.; Xxxxxxx, Inc.; Xxxxxxx
Holdings I, LLC and Xxxxxxx Holdings II, LLC.
"Voting Securities" means shares of Common Stock and any other
securities of the Company entitled to vote generally for the election of
directors or any other securities (including, without limitation, rights,
warrants, and options) convertible into or exchangeable or exercisable for any
of the foregoing (whether or not presently convertible, exchangeable, or
exercisable).
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
THE COMPANY:
XXXXXXX EXPLORATION COMPANY
Address:
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000 By:
Xxxxxx, XX 00000 ------------------------------------
INVESTORS:
Address: DLJ ESC II, LP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 By: DLJ LBO Plans Management Corporation
Attn: Xxx Xxxxx/Xxxxxx Xxxxxxxxx General Partner
By:
--------------------------------
30
31
Address: DLJMB FUNDING III, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 By:
------------------------------------
Address: DLJ MERCHANT BANKING PARTNERS III, L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 By: DLJ Merchant Banking III, Inc.
Managing General Partner
By:
------------------------------
Address: DLJ OFFSHORE PARTNERS III, C.V.
c/o DLJ Offshore Management N.V.
Xxxx X. Xxxxxxxxxx 00 By: DLJ Merchant Banking III, Inc.
Willemstad, Curacao Managing General Partner
Netherlands, Antilles
By:
------------------------------
31
32
SCHEDULE 3.7
LIABILITIES
Any matter disclosed in any Schedule hereto (or in the First Purchase Agreement
or any Schedule thereto) and any additional matter disclosed in Xxxxxxx
Exploration Company's financial statements and/or any information provided,
whether orally or in writing, to the Board Representative.
33
SCHEDULE 3.8
LITIGATION
NONE
34
SCHEDULE 3.11
TITLES, ETC.
(a) The rights and interests afforded Gasco Limited Partnership ("Gasco") and
its successors and assigns under the terms of (i) that certain Expense
Allocation and Participation Agreement dated as of April 1, 1996, by and between
Gasco and BOG, as heretofore and/or hereafter amended, expanded, supplemented,
renewed and/or extended, and (ii) that certain Expense Allocation and
Participation Agreement II dated as of April 1, 1997, by and between Gasco and
BOG, as heretofore and/or hereafter amended, expanded, supplemented, renewed
and/or extended, and (iii) that certain Expense Allocation and Participation
Agreement III dated as of March 1, 1998, by and between Gasco and BOG, as
heretofore and/or hereafter amended, expanded, supplemented, renewed and/or
extended.
(b) The rights and interests afforded Middle Bay Oil Company ("Middle Bay") and
its successors and assigns under the terms of that certain Expense Allocation
and Participation Agreement dated as of April 1, 1996, by and between Middle Bay
and BOG, as heretofore and/or hereafter amended, modified, expanded,
supplemented, renewed and/or extended.
(c) The rights and interests afforded Xxxxxxxx Production Company ("Xxxxxxxx")
and its successors and assigns under the terms of that certain Anadarko Basin
Joint Participation Agreement dated as of May 1, 1996, by and between BOG and
Xxxxxxxx, as heretofore and/or hereafter amended, modified, expanded,
supplemented, renewed and/or extended.
(d) The rights and interests afforded Vintage Petroleum, Inc. ("Vintage") and
its successors and assigns under the terms of that certain Anadarko Basis Joint
Participation Agreement dated as of May 1, 1996, by and between BOG and Vintage,
as heretofore and/or hereafter amended, modified, expanded, supplemented,
renewed and/or extended.
(e) The rights and interests afforded Xxxxxxx-Xxxx (Delaware) LLC ("Duke") and
its successors and assigns under the terms of that certain Joint Development
Agreement dated as of February 17, 1999, by and between Duke and BOG, as
heretofore amended.
(f) The rights and interests afforded third parties under the terms of various
farmout, exploration, joint participation and/or operating agreements, whether
now existing or hereafter entered into and further as heretofore and/or
hereafter amended, modified, expanded, supplemented, renewed and/or extended,
under or in relation to which BOG agrees to farm-out to one or more third
parties one or more Oil and Gas Property and/or undertakes with one or more
third party(ies) the joint exploration and/or development of one or more Oil and
Gas Properties (which rights and interests may include, without limitation,
rights under Area of Mutual Interests agreements and rights in respect of
forfeiture of all or a portion of BOG's interests in an Oil and Gas Property, or
part thereof or interest therein, that is triggered by an election not to
participate in a proposed operation);
(g) Consulting agreements, whether now existing or hereafter entered into and
further as heretofore and/or hereafter amended, expanded, supplemented, renewed
and/or extended, with third party geologists, landmen or other oil and gas
industry participants who agree to perform services in return, in whole or in
part, for an overriding royalty interest or other interest in or relating to any
Oil and Gas Properties; and
(h) Any other matters or encumbrances typically accepted by a reasonably prudent
owner of Oil and Gas Properties.
35
SCHEDULE 3.15
SUBSIDIARIES
Xxxxxxx, Inc.
Xxxxxxx Oil & Gas, X.X.
Xxxxxxx Holdings I, LLC
Xxxxxxx Holdings II, LLC
Xxxxxxx-Xxxx (Delaware) LLC is not a Subsidiary for purposes of this Agreement.
The address for each of the foregoing is:
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxx
36
SCHEDULE 3.19
Insurance
INTEREST Property Coverage
Carrier Security Insurance Company of Hartford
Policy Period August 1, 2000 to August 1, 2001
Policy No. MXI 97700841
Limits $1,755,000 (Austin), $115,000 (Houston)-personal;
$2,515,000 computer equipment
Deductible $1,000 each occurrence
INTEREST Commercial General
Carrier Scottsdale Insurance Company
Policy Period August 1, 2000 to August 1, 2001
Policy No. CLS0696909
Limits $2,000,000 general aggregate
$1,000,000 product/completed ops/
injury/each occurrence/underground/
non-owned auto liability
$100,000 fire to rended properties
$5,000 medical expenses
Deductible $5,000 per claim
INTEREST Workers' Comp/Employee
Carrier Texas Workers' Compensation Insurance Fund
Policy Period August 1, 2000 to August 1, 2001
Policy No. TSF-0012623201-19990801
Limits $1,000,000
Deductible None
INTEREST Primary Umbrella Liability
Carrier Scottsdale Insurance Company
Policy Period August 1, 2000 to August 1, 2001
Policy No. UMS0006605
Limits $10,000,000 per occurrence
$10,000,000 general aggregate
$10,000,000 products/completed ops aggregate
Retention $10,000 applicable only to Coverage B
INTEREST Excess Primary Umbrella
Carrier National Union Fire Insurance Company
Policy Period August 1, 2000 to August 1, 2001
Policy No. 346 28 89
Limits $20,000,000 each occurrence excess
$20,000,000 aggregate
Retention None
INTEREST Control of Well
Carrier Lexington Insurance Company
Policy Period August 1, 2000 to August 1, 2001
Policy No. 8524882
Limits $5,000,000 control of well/extra expense/
seepage & pollution
$500,000 care, custody and control
Retention $25,000 - $100,000 control of well/extra expense/
seepage & pollution
$10,000 care, custody and control
37
INTEREST Directors and Officers
Carrier Federal Insurance Company (Chubb & Son)
Policy Period May 30, 2000 to May 30, 2001
Policy No. 81643273
Limits $5,000,000
Retention $0-250,000 per claim
38
SCHEDULE 3.20
HEDGING AGREEMENTS
ISDA Master Agreement dated as of February 26, 1998, as amended, together with
any confirmation and written call options.
39
SCHEDULE 3.21
MATERIAL AGREEMENTS
(a) the Senior Credit Agreement (and any Debt arising or permitted thereunder)
and the Subordinated Credit Agreement (and any debt arising or permitted
thereunder).
(b) Two Bridge Point Lease Agreement dated as of September 20, 1996, by and
between Investors Life Insurance Company of North America and Xxxxxxx Oil & Gas,
L.P., as amended (office lease).
(c) Capital Lease/Financing Agreements for purchase of software and/or
equipment, more particularly described as follows:
(d) the First Purchase Agreement.
ENDING
LESSOR DATE DESCRIPTION
------ -------- -----------
SIEMENS CREDIT CORP 7/1/02 AUSTIN PHONE SYSTEM
UNIVERSAL FINANCE & LEASING
EQUIPMENT 1/10/01 WORKSTATION
UNIVERSAL FINANCE & LEASING
EQUIPMENT 4/21/01 WORKSTATION
BA CREDIT CORP 8/18/01 WORKSTATION
FIRST SIERRA FINANCIAL, INC 2/1/02 WORKSTATION
(d) INSURANCE PREMIUM FINANCING AGREEMENTS:
PREMIUM FINANCING AGREEMENT DATED JUNE 6, 2000 RELATING TO 1-YEAR O&D
POLICY.
PREMIUM FINANCING AGREEMENT DATED AUGUST 1, 2000 RELATING TO W.C.,
G.L., PROPERTY, UMBRELLA AND OEE POLICIES.
(e) THE MATTERS DISCLOSED IN THE OTHER SCHEDULES.
(f) AGREEMENT FOR XXXXXXX-XXXX (DELAWARE), LLC AND/OR THE "JDA" DESCRIBED
THEREIN.
40
EXHIBIT A TO
SECURITIES PURCHASE AGREEMENT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND
PRIVILEGES SPECIFIED IN THIS WARRANT CERTIFICATE AND IN A SECURITIES PURCHASE
AGREEMENT, DATED AS OF MARCH 5, 2001, BETWEEN XXXXXXX EXPLORATION COMPANY AND
THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF XXXXXXX EXPLORATION COMPANY AND WILL BE FURNISHED WITHOUT
CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS
CERTIFICATE AGREES TO BE BOUND THEREBY.
WARRANT CERTIFICATE
NUMBER OF WARRANTS: ______________ WARRANT NO. __________
This Warrant certificate ("Warrant Certificate") certifies that, for
value received, ______________________ is the registered holder of the number of
warrants (the "Warrants") set forth above. Each Warrant entitles the holder
thereof, at any time or from time to time during the Exercise Period, to
purchase from the Company one fully paid and nonassessable share of Common Stock
at the Exercise Price, subject to adjustment as provided herein. Initially
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement.
"Common Stock" means the common stock, $.01 par value per
share, of the Company and such other class of securities as shall then
represent the common equity of the Company.
"Company" means Xxxxxxx Exploration Company, a Delaware
corporation.
"Exercise Period" means the period of time between the day
immediately following the date that Stockholder Approval, as defined in
the Securities Purchase Agreement, is obtained and 5:00 p.m. (New York
City time) on the Expiration Date.
"Exercise Price," subject in all circumstances to adjustment
in accordance with Section 2, means $4.75 per share.
"Expiration Date" means the tenth anniversary of the Closing
Date.
"Issuance Date" means the Closing Date.
"Person" means any individual, corporation, company,
partnership, joint venture, trust, limited liability company,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.
41
"Preferred Stock" means shares of the Series A Preferred
Stock, par value $0.01 per share, of the Company.
"Preferred Value" per share of Preferred Stock means the
Stated Value of such Share, plus, without duplication, all accrued and
unpaid dividends on such share to and including the applicable date of
Warrant exercise.
"Price" means the average of the "high" and "low" prices as
reported in The Wall Street Journal's listing for such day (corrected
for obvious typographical errors) or if such shares are not reported in
such listing, the average of the reported sales prices on the largest
national securities exchange (based on the aggregate dollar value of
securities listed) on which such shares are listed or traded, or if
such shares are not listed or traded on any national securities
exchange, then the average of the reported sales prices for such shares
in the over-the-counter market, as reported on the National Association
of Securities Dealers Automated Quotations System, or, if such prices
shall not be reported thereon, the average of the closing bid and asked
prices so reported, or, if such prices shall not be reported, then the
average of the closing bid and asked prices reported by the National
Quotations Bureau Incorporated. The "Average" Price per share for any
period shall be determined by dividing the sum of the Prices determined
for the individual trading days in such period by the number of trading
days in such period.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of March 5, 2001, between the Company and the
Investors.
"Stated Value" means the stated value per share of Preferred
Stock, which is $20.00 per share.
Section 1. EXERCISE OF WARRANTS. (a) The Warrants may be exercised in
whole or in part, at any time or from time to time, during the Exercise Period,
by (i) presentation and surrender to the Company at its address set forth in
Section 10 of this Warrant Certificate with the Election To Exercise, attached
hereto as Exhibit A, duly completed and executed, and (ii) payment of the
Exercise Price, for the number of Warrants being exercised by either: (1) bank
draft or cashiers check, or (2) provided that the Company receives at least 5
days prior notice and subject to Section 1(d), delivery to the Company of
certificate(s) representing a number of shares of Preferred Stock having an
aggregate Preferred Value equal to the aggregate Exercise Price for the number
of Warrants being exercised. If the aggregate Preferred Value of the Preferred
Stock delivered in payment of the aggregate Exercise Price exceeds (because of
fractional shares) the aggregate Exercise Price for the number of Warrants being
exercised; then (subject to Section 1(d)) the Company will promptly pay to the
holder of the Warrants in cash such excess amount; provided that such excess
amount shall in no event be more than the Preferred Value of one share of
Preferred Stock. If the holder of this Warrant Certificate at any time exercises
less than all the Warrants, the Company shall issue to such a holder a warrant
certificate identical in form to this Warrant Certificate, but evidencing a
number of Warrants equal to the number of Warrants originally represented by
this Warrant Certificate less the number of Warrants previously exercised.
Likewise, upon the presentation and surrender of this Warrant Certificate to the
Company at its address set forth in Section 10 and at the request of the holder,
the Company will, without expense, at the option of the holder, issue to the
holder in substitution for this Warrant Certificate one or more warrant
certificates in identical form and for an aggregate number of Warrants equal to
the number of Warrants evidenced by this Warrant Certificate.
2
42
(b) To the extent that the Warrants have not been exercised at
or prior to the Expiration Date, such Warrants shall expire and the rights of
the holder shall become void and of no effect.
(c) Upon surrender of this Warrant Certificate in conformity
with the foregoing provisions, the Company shall transfer to the holder of this
Warrant Certificate appropriate evidence of ownership of the shares of Common
Stock or other securities or property (including any money) to which the holder
is entitled, registered or otherwise placed in, or payable to the order of, the
name or names of the holder or such transferee as may be directed in writing by
the holder, and shall deliver such evidence of ownership and any other
securities or property (including any money) to the Person or Persons entitled
to receive the same, together with an amount in cash in lieu of any fraction of
a share.
(d) In connection with payment of the Exercise Price with
shares of Preferred Stock, the Company may require that at the time of such
exercise it receive representations and warranties from the applicable holder of
the Warrants regarding such holder's title to the Preferred Stock and the lack
of encumbrances thereon. If the Company is unable to consummate an exercise of
Warrants through payment of the Exercise Price with shares of Preferred Stock
because of any limitations contained or construed in the Delaware General
Corporation Law, the Company shall use its best efforts to take all such action
as may be necessary to place the Company in a position to do so. In the event
the Company, after the taking of any action by it as contemplated above, is
unable to consummate such exercise, the Company shall accept such number of
shares of Preferred Stock in payment as it shall then be authorized to do so
under the Delaware General Corporation Law.
(e) The Company shall not be required to issue a fractional
share of Common Stock upon the exercise of Warrants. As to any fraction of a
share which the Warrant holder would otherwise be entitled to purchase upon such
exercise, the Company may pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the Price per share of Common Stock on
the date of exercise.
Section 2. ANTIDILUTION ADJUSTMENTS. The shares of Common Stock
purchasable on exercise of the Warrants are shares of Common Stock as
constituted as of the Issuance Date. The number and kind of securities
purchasable upon the exercise of the Warrants, and the Exercise Price, shall be
subject to adjustment from time to time upon the happening of certain events, as
follows:
(a) Mergers, Consolidations and Reclassifications. In case of
any reclassification or change of outstanding securities issuable upon exercise
of the Warrants at any time after the Issuance Date (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination to which Section 2(b) applies), or
in case of any consolidation or merger of the Company with or into any entity or
other person (other than a merger with another entity or other person in which
the Company is the surviving corporation and which does not result in any
reclassification or change in the securities issuable upon exercise of this
Warrant Certificate), the holder of the Warrants shall have, and the Company, or
such successor corporation or other entity, shall covenant in the constituent
documents effecting any of the foregoing transactions that such holder does have
the right to obtain, upon the exercise of the Warrants, in lieu of each share of
Common Stock, other securities, money or other property theretofore issuable
upon exercise of a Warrant, the kind and amount of shares of stock, other
securities, money or other property receivable upon such reclassification,
change, consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of a Warrant if the
Warrants had been exercised immediately prior to such reclassification, change,
consolidation or merger. The constituent documents effecting any such
reclassification, change, consolidation or merger shall provide for adjustments
which shall be as nearly equivalent as may be
3
43
practicable to the adjustments provided in this Section 2(a). The provisions of
this Section 2(a) shall similarly apply to successive reclassifications,
changes, consolidations or mergers.
(b) Subdivisions and Combinations. If the Company, at any time
after the Issuance Date, shall subdivide its shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and the number of shares of Common
Stock purchasable upon exercise of the Warrants shall be proportionately
increased, as at the effective date of such subdivision, or if the Company shall
take a record of holders of its Common Stock for such purpose, as at such record
date, whichever is earlier. If the Company, at any time after the Issuance Date,
shall combine its shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of shares of Common Stock purchasable
upon exercise of the Warrants shall be proportionately reduced, as at the
effective date of such combination, or if the Company shall take a record of
holders of its Common Stock for purposes of such combination, as at such record
date, whichever is earlier.
(c) Dividends and Distributions. If the Company at any time
after the Issuance Date shall declare a dividend on its Common Stock payable in
stock or other securities of the Company to the holders of its Common Stock, the
holder of this Warrant Certificate shall, without additional cost, be entitled
to receive upon any exercise of a Warrant, in addition to the Common Stock to
which such holder would otherwise be entitled upon such exercise, the number of
shares of stock or other securities which such holder would have been entitled
to receive if he had been a holder immediately prior to the record date for such
dividend (or, if no record date shall have been established, the payment date
for such dividend) of the number of shares of Common Stock purchasable on
exercise of such Warrant immediately prior to such record date or payment date,
as the case may be.
(d) Certain Issuances of Securities. Subject to Section 2(f),
if the Company at any time after the Issuance Date shall issue any additional
shares of Common Stock (otherwise than as provided in subsections (a) through
(c) of this Section 2) at a price per share less than the Average Price per
share of Common Stock for the 20 trading days immediately preceding the date of
the authorization of such issuance (the "Market Price") by the Board of
Directors or its compensation committee (as applicable), then the Exercise Price
upon each such issuance shall be adjusted to that price determined by
multiplying the Exercise Price by a fraction:
i. the numerator of which shall be the sum of (1) the number
of shares of Common Stock outstanding immediately prior to the issuance
of such additional shares of Common Stock multiplied by the Market
Price, and (2) the consideration, if any, received by the Company upon
the issuance of such additional shares of Common Stock, and
ii. the denominator of which shall be the Market Price
multiplied by the total number of shares of Common Stock outstanding
immediately after the issuance of such additional shares of Common
Stock.
No adjustments of the Exercise Price shall be made under this Section 2(d) upon
the issuance of any additional shares of Common Stock that (v) are issued
pursuant to any grant or award made prior to the Issuance Date under any thrift
plan, stock purchase plan, stock bonus plan, stock option plan, employee stock
ownership plan, incentive or profit sharing arrangement or other benefit or
compensation plan for the benefit of the Company's officers, directors and/or
employees ("Employee Benefit Plans") that has been
4
44
approved by the Board of Directors of the Company or its compensation committee
and that otherwise would cause an adjustment under this Section 2(d); (w) are
issued pursuant to any grant or award made on or after the Issuance Date under
any Employee Benefit Plan if the "Market Price" of any such issuance is not less
than the lesser of the Market Price as determined above and the "Fair Market
Value", as defined under the applicable Employee Benefit Plan, on the date of
Board or compensation committee authorization; (x) are issued pursuant to any
Common Stock Equivalent (as hereinafter defined) (i) if upon the issuance of any
such Common Stock Equivalent, any such adjustments shall previously have been
made pursuant to Section 2(e), (ii) if no adjustment was required pursuant to
Section 2(e), or (iii) if such Common Stock Equivalent was issued prior to this
Warrant Certificate; (y) are issued pursuant to a public offering by the
Company; or (z) results in an adjustment pursuant to Section 2(f).
(e) Common Stock Equivalents.
i. Subject to Section 2(f), if the Company shall, after the
Issuance Date, issue any security or evidence of indebtedness which is
convertible into or exchangeable for Common Stock ("Convertible
Security"), or any warrant, option or other right to subscribe for or
purchase Common Stock or any Convertible Security, other than pursuant
to Employee Benefit Plans (together with Convertible Securities,
"Common Stock Equivalent"), then the Exercise Price upon each such
issuance shall be adjusted as provided in Section 2(d) on the basis
that (i) the maximum number of additional shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed
to have been issued as of the date of issuance of such Common Stock
Equivalent; and (ii) the aggregate consideration for such maximum
number of additional shares of Common Stock shall be deemed to be the
minimum consideration received and receivable by the Company for the
issuance of such additional shares of Common Stock pursuant to such
Common Stock Equivalent.
ii. Notwithstanding the foregoing, no adjustment shall be made
pursuant to this Section 2(e) unless the consideration received and
receivable by the Company per share of Common Stock for the issuance of
such additional shares of Common Stock pursuant to such Common Stock
Equivalent is less than the Market Price. No adjustment of the Exercise
Price shall be made under this Section 2(e) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any
adjustment shall previously have been made in the Exercise Price then
in effect upon the issuance of such warrants or other rights pursuant
to this Section 2(e). No adjustment shall be made under this Section
2(e) if an adjustment is to be made under Section 2(f). No adjustment
shall be made as a result of adjustment in the exercise or conversion
price of Common Stock Equivalents, if those adjustments occur by the
terms of such Common Stock Equivalents.
(f) Special Adjustments of Exercise Price. Notwithstanding
anything to the contrary in Section 2(d) or Section 2(e), this Section 2(f)
shall govern adjustments to the Exercise Price for the transactions described in
this Section 2(f).
i. If the Company at any time after the Issuance Date and
prior to the second anniversary of the Issuance Date shall issue any
additional shares of Common Stock (otherwise than as provided in
subsections (a) through (c) of Section 2; pursuant to any Employee
Benefit Plan; pursuant to any Common Stock Equivalent outstanding as of
the Issuance Date) or upon the issuance of any such Common Stock, any
adjustments shall previously have been made pursuant to Section 2(e) or
Section 2(f)(ii); and the New Stock Issue Price (defined below) of such
additional shares is less than the Exercise Price then in effect, then
the Exercise Price upon each such issuance
5
45
shall be adjusted to the New Stock Issue Price of such additional
shares. The "New Stock Issuance Price" shall be determined by dividing
the total amount of consideration received by the Company for such
issue or sale by the number of shares of Common Stock issued or sold.
ii. If the Company at any time after the Issuance Date and
prior to the second anniversary of the Issuance Date, issues any Common
Stock Equivalent (which by definition excludes Employee Benefit Plan
securities) (otherwise than as provided in subsections (a) through (c)
of Section 2; or pursuant to any Common Stock Equivalent outstanding as
of the Issuance Date) and the New CSE Exercise Price (defined below) of
such Common Stock Equivalents is less than the Exercise Price then in
effect, then the Exercise Price upon each such issuance shall be
adjusted to the New CSE Exercise Price of such Common Stock
Equivalents. The "New CSE Exercise Price" shall be determined by
dividing (x) the total amount, if any, received or receivable by the
Company as consideration for the issuance of such Common Stock
Equivalents, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise, conversion or
exchange of such Common Stock Equivalents, plus, in the case of any
such Common Stock Equivalents which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange of such
Convertible Securities, by (y) the total maximum number of shares of
Common Stock issuable upon the exercise, conversion or exchange of all
such Common Stock Equivalents.
(g) Miscellaneous. The following provisions shall be
applicable to the making of adjustments in the Exercise Price hereinbefore
provided in this Section 2:
i. The consideration received by the Company shall be deemed
to be the following: (I) to the extent that any additional shares of
Common Stock or any Common Stock Equivalent shall be issued for cash
consideration, the consideration received by the Company therefor, or,
if such additional shares of Common Stock or Common Stock Equivalent
are offered by the Company for subscription, the subscription price,
or, if such additional shares of Common Stock or Common Stock
Equivalent are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any
compensation, discounts, commissions or expenses paid or incurred by
the Company for and in the underwriting of, or otherwise in connection
with, the issue thereof; (II) to the extent that such issuance shall be
for a consideration other than cash, then, except as herein otherwise
expressly provided, the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors, as
evidenced by a certified resolution of the Board of Directors delivered
to the holder of this Warrant Certificate setting forth such
determination. The consideration for any additional shares of Common
Stock issuable pursuant to any Common Stock Equivalent shall be the
consideration received by the Company for issuing such Common Stock
Equivalent, plus the additional consideration payable to the Company
upon the exercise, conversion or exchange of such Common Stock
Equivalent. In case of the issuance at any time of any additional
shares of Common Stock or Common Stock Equivalent in payment or
satisfaction of any dividend upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such additional
shares of Common Stock or Common Stock Equivalent (which shall not be
deemed to be a dividend payable in, or other distribution of, Common
Stock under Section 2(c) above) consideration equal to the amount of
such dividend so paid or satisfied. In the event additional shares of
Common Stock or Common Stock Equivalents are issued together with other
shares or securities or other assets of the Company or its subsidiaries
for consideration which covers both, the consideration for such
6
46
shares of Common Stock and Common Stock Equivalents shall be computed
based on the respective portions of such consideration so received,
computed as provided in this Section 2(g)i., as determined and
allocated in good faith by the Board of Directors of the Company.
ii. Upon the expiration of the right to convert, exchange or
exercise any Common Stock Equivalent the issuance of which effected an
adjustment in the Exercise Price, if any such Common Stock Equivalent
shall not have been converted, exercised or exchanged, the number of
shares of Common Stock deemed to be issued and outstanding because they
were issuable upon conversion, exchange or exercise of any such Common
Stock Equivalent shall no longer be computed as set forth above, and
the Exercise Price shall forthwith be readjusted and thereafter be the
price which it would have been (but reflecting any other adjustments in
the Exercise Price made pursuant to the provisions of Section 2(d)
after the issuance of such Common Stock Equivalent) had the adjustment
of the Exercise Price made upon the issuance or sale of such Common
Stock Equivalent been made on the basis of the issuance only of the
number of additional shares of Common Stock actually issued upon
exercise, conversion or exchange of such Common Stock Equivalent and
thereupon only the number of additional shares of Common Stock actually
so issued shall be deemed to have been issued and only the
consideration actually received by the Company (computed as in this
Section 2(f)(i)) shall be deemed to have been received by the Company.
iii. The number of shares of Common Stock at any time
outstanding shall not include any shares thereof then directly or
indirectly owned or held by or for the account of the Company or its
wholly owned subsidiaries.
iv. Upon each adjustment of the Exercise Price as a result of
the calculations made in Section 2(d), (e) and (f) hereof, this Warrant
shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of shares of Common Stock obtained by (i)
multiplying the number of shares covered by this Warrant immediately
prior to such adjustment of the number of shares by the Exercise Price
in effect immediately prior to such adjustment of the Exercise Price
and (ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
v. For the purpose of this Section 2, the term "shares of
Common Stock" shall mean shares of (i) the class of stock designated as
the Common Stock at the date hereof or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. If at any time, because of an
adjustment pursuant to Section 2(a), the Warrants shall entitle the
holders to purchase any securities other than shares of Common Stock,
thereafter the number of such other securities so purchasable upon
exercise of each Warrant and the Exercise Price of such securities
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in this Section 2.
(h) Calculation of Exercise Price. The Exercise Price in
effect from time to time shall be calculated to four decimal places and rounded
to the nearest thousandth.
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Section 3. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price or the
number of shares of Common Stock is required to be adjusted as provided in
Section 2, the Company shall forthwith compute the adjusted Exercise Price or
the number of shares of Common Stock issuable and shall prepare and mail to the
holder hereof a certificate setting forth such adjusted Exercise Price or such
number of shares of Common Stock, showing in reasonable detail the facts upon
which the adjustment is based.
Section 4. VOLUNTARY REDUCTION. (a) The Company may at its option, but
shall not be obligated to, at any time during the term of the Warrants, reduce
the then current Exercise Price by any amount selected by the Board of
Directors; provided that if the Company elects so to reduce the then current
Exercise Price, such reduction shall be irrevocable during its effective period
and remain in effect for a minimum of 30 days following the date of such
election, after which time the Company may, at its option, reinstate the
Exercise Price in effect prior to such reduction. Whenever the Exercise Price is
reduced, the Company shall mail to the holder a notice of the reduction at least
30 days before the date the reduced Exercise Price takes effect, stating the
reduced Exercise Price and the period for which such reduced Exercise Price will
be in effect.
(b) The Company may make such decreases in the Exercise Price,
in addition to those required or allowed by this Section 4, as shall be
determined by it, as evidenced by a certified resolution of the Board of
Directors delivered to the holders, to be advisable to avoid or diminish any
income tax to the holder resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or from any
event treated as such for income tax purposes.
Section 5. MANDATORY EXERCISE.
(a) If (i) the Price of the Common Stock is greater than 150%
of the Exercise Price (as adjusted to reflect any stock split, combination,
reclassification, recapitalization, exchange, stock dividend or other
distribution payable in Common Stock with respect to shares of Common Stock) for
sixty (60) consecutive trading days in the principal market in which the Common
Stock is traded and (ii) the Company gives written notice (the "Company Notice")
to the holder hereof of the satisfaction of the condition in clause (i), then
within fifteen (15) days after the effective date of the Company Notice, the
holder hereof shall exercise all of the Warrants. If required by this Section 5,
the holder hereof agrees to exercise the Warrants, and to purchase shares of
Common Stock pursuant to the terms of this Warrant Certificate. If the holder
has not fulfilled its obligations to exercise the Warrants pursuant to this
Section 5 within fifteen (15) days after the holder's receipt of the Company
Notice, then (without limiting the Company's available remedies) (A) the
obligations of holder under this Section 5 shall continue but the purchase
rights otherwise represented by this Warrant Certificate shall terminate, (B)
the Company may thereafter refuse, in its sole discretion, to allow holder to
exercise the Warrants (including pursuant to this Section 5), (C) all
obligations of the Company under Sections 0, 0, 0 xxx 0 xxxxx xxxxxxxxx, (X) no
further adjustments to the Exercise Price shall be made unless the Company in
its sole discretion consents in writing. Each Warrant holder's obligations under
this Section 5(a) shall be subject to the expiration or termination of all
waiting periods (and any extensions thereof) applicable to exercise of such
holder's Warrants under the HSR Act (as defined below); provided that such
holder shall have certified in writing to the Company that a filing under the
HSR Act is required and provided further that such holder shall use its best
efforts to cause the expiration or termination of such waiting period to occur
as promptly as practicable.
(b) Holder represents and warrants to the Company that holder
has full corporate power and authority to execute, deliver, and perform this
Warrant Certificate and to consummate the transactions
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48
contemplated hereby. The execution, delivery, and performance by holder of this
Warrant Certificate have been duly authorized by all necessary corporate action
of holder. This Warrant Certificate has been duly executed and delivered by
holder and constitutes a valid and legally binding obligation of holder,
enforceable against holder in accordance with its terms, except that such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally and (ii) general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) The right to require exercise of the Warrants is hereby
declared by the parties hereto to be a unique right, the loss of which is not
readily susceptible to monetary quantification. Consequently, the parties hereto
agree that an action for specific performance of the exercise and purchase
obligations created by this Section 5 is an available remedy for the breach of
the provisions of this Section 5. If the Company is forced to institute legal
proceedings to enforce its rights in accordance with the provisions of this
Section 5, it shall be entitled to recover its reasonable attorneys' fees and
court costs incurred in enforcing such rights.
(d) Holder is executing this Warrant Certificate in order to
make and agree to the covenants, representations and warranties of holder
contained in this Section 5, which shall be binding upon the holder's successors
and assigns.
Section 6. NOTICES TO WARRANT HOLDERS. In the event:
(a) the Company shall authorize any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the
Company is required, or of the conveyance or sale of all or substantially all of
the assets of the Company, or of any reclassification or change of the Common
Stock or other securities issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock (or other securities issuable upon the
exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock or any other class of its capital stock, other
than dividends on the Shares, as defined in the Securities Purchase Agreement;
or
(c) the Company shall authorize the granting to the holders of
Common Stock or any other class of its capital stock of rights or warrants to
subscribe for or purchase any shares of any class or series of capital stock or
any other securities convertible into or exchangeable for shares of stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be sent to the holder hereof, at least 30 days
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, a written notice stating (x)
the date for the determination of the holders of record of shares of Common
Stock (or other securities issuable upon the exercise of the Warrants) entitled
to receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock
(or other securities issuable upon the exercise of the Warrants), or (z) the
date on which
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49
any of the events specified in subsections (a)-(d) is expected to become
effective or consummated, and the date as of which it is expected that holders
of record of shares of Common Stock (or other securities issuable upon the
exercise of the Warrants) shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon any such event. Failure
to give such notice or any defect therein shall not affect the legality or
validity of any such event, or the vote upon any such action.
Section 7. REPORTS TO WARRANT HOLDERS. The Company will cause to be
delivered, by first-class mail, postage prepaid, to holder at such holder's
address appearing hereon, or such other address as the holder shall specify, a
copy of any reports delivered by the Company to the holders of Common Stock.
Section 8. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) of Until the Expiration Date, the Company shall at all
times reserve and keep available, out of the aggregate of its authorized but
unissued Common Stock (and other securities), for the purpose of enabling it to
satisfy any obligation to issue shares of Common Stock (and other securities)
upon the exercise of the Warrants, the number of shares of Common Stock (and
other securities) issuable upon the exercise of such Warrants.
(b) The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery of new
warrant certificates on transfer of the Warrants.
(c) All Common Stock (and other securities) which may be
issued upon exercise of the Warrants shall upon issuance be validly issued,
fully paid, non-assessable and free from all preemptive rights and all taxes,
liens and charges with respect to the issuance thereof, and will not be subject
to any restrictions on voting or transfer thereof except as set forth in the
Securities Purchase Agreement, any stockholders agreement and except for
restrictions arising under state or federal securities laws.
(d) All original issue taxes payable in respect of the
issuance of shares of Common Stock to the registered holder hereof upon the
exercise of the Warrants shall be borne by the Company; provided, that the
Company shall not be required to pay any tax or charge imposed in connection
with any transfer involved in the issuance of any certificates representing
shares of Common Stock (and other securities) in any name other than that of the
registered holder hereof, and in such case the Company shall not be required to
issue or deliver any certificate representing shares of Common Stock (and other
securities) until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or charge is due.
(e) As soon as practicable after the receipt from the holder
of this Warrant Certificate of notice of the intent to exercise of a number of
warrants sufficient to require a filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 and the rules, regulations and formal interpretations
thereunder, as amended from time to time (the "HSR Act") (and after the receipt,
if applicable, of the notice referred to in Rule 803.5 of the HSR Act), but in
any event no later than the 15th business day after receipt of such notice(s),
the Company will (i) if required by the HSR Act, prepare and file with Antitrust
Division of the Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC") the Notification and Report Form (accompanied by all
documentary attachments contemplated thereby) required by the HSR Act, (ii) upon
request of the holder, request early termination of the waiting period imposed
by the HSR Act, and (iii) coordinate and cooperate with the holder in responding
to formal and informal requests for additional information and documentary
material from the DOJ and the FTC in connection with such filing.
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50
Notwithstanding the foregoing, if the holder is required to file with the DOJ
and FTC the Notification and Report Form solely as a result of its holding
and/or purchasing shares of Common Stock issued pursuant to this Warrant (with
no regard to any other securities held by such holder or its affiliates) and the
holder certifies such fact to the Company in writing, the Company agrees to
promptly reimburse the holder for all fees and expenses for the preparation and
filing of such form, including all legal expenses and filing fees.
(f) The Company will not change the par value of the Common
Stock from par value $0.01 per share to any higher par value which exceeds the
Exercise Price then in effect, and will reduce the par value of the Common Stock
upon any event described in Section 2 that would, but for this provision, reduce
the Exercise Price below the par value of the Common Stock.
Section 9. NO RIGHTS AS STOCKHOLDER. The holder of the Warrants shall
not, by virtue of holding such Warrants, be entitled to any rights of a
stockholder of the Company either at law or in equity, and the rights of the
holder of the Warrants are limited to those expressed herein.
Section 10. NOTICES. All notices, requests, demands, and other
communications required or permitted to be given or made hereunder by any party
hereto shall be in writing and shall be deemed to have been duly given or made
if (i) delivered personally, (ii) sent by prepaid overnight courier service, or
(iii) sent by telecopy or facsimile transmission, answer back requested, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
if to the holder, to such holder at:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telefax: 000-000-0000
with a copy to:
Gardere Xxxxx Xxxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxxxxx III
Telefax: 000-000-0000
and, if to the Company:
Xxxxxxx Exploration Company
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telecopier: (000) 000-0000
Such notices, requests, demands, and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended recipient, or (ii) if sent by telecopy or facsimile transmission, when
the answer back is received.
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Section 11. GOVERNING LAW. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflict of laws.
Section 12. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate, then, in the absence of notice to the Company that such Warrant
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and deliver, in exchange for or in lieu of the lost, stolen, destroyed
or mutilated Warrant Certificate, a substitute Warrant Certificate of the same
tenor and evidencing a like number of Warrants.
Section 13. TRANSFER. Subject to Section 14 and the Securities Purchase
Agreement, transfer of Warrants, in whole or in part, shall be registered on the
books of the Company to be maintained for such purposes, upon surrender of the
Warrant Certificate representing such Warrants at the principal office of the
Company referred to in Section 10, together with a written assignment
substantially in the form of Exhibit B to this Warrant Certificate and a written
agreement, in form reasonably satisfactory to the Company, setting forth the new
Warrant holder's agreement to be bound by all of the terms of this Warrant
Certificate (including without limitation Section 14) and Section 5.5 of the
Securities Purchase Agreement, each duly executed by the holder, and funds
sufficient to pay any transfer taxes payable by such holder upon the making of
such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant Certificate or Warrant Certificates in
the name of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
Certificate or Warrant Certificates evidencing the portion of the old Warrant
Certificate not so assigned, and the old Warrant Certificate shall promptly be
canceled.
Section 14. RESTRICTIONS ON TRANSFERABILITY. The Warrant Certificate
represents Warrants referred to in the Securities Purchase Agreement. Said
Securities Purchase Agreement is hereby incorporated by reference in and made a
part of this instrument and is hereby referred to for a description of certain
limitations of rights, obligations, duties and immunities thereunder of the
Company and the holders, and in the event of any conflict between the terms of
this Warrant Certificate and the provisions of the Securities Purchase
Agreement, the provisions of the Securities Purchase Agreement shall control.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed as of __________, 2001, by the undersigned, thereunto duly
authorized.
XXXXXXX EXPLORATION COMPANY
By:
-----------------------------------------------
Xxxxx X. Xxxxx
Vice President
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[INVESTOR NAME]
By:
-----------------------------------------------
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53
EXHIBIT A
ELECTION TO EXERCISE
[To be executed on exercise of the Warrant evidenced by this Warrant
Certificate pursuant to Section 1(a)]
TO: Xxxxxxx Exploration Company
The undersigned, the holder of the Warrants evidenced by the
attached Warrant Certificate, hereby irrevocably elects to exercise
_________________ of such Warrants, and herewith makes payment
of_____________________ representing the aggregate Exercise Price thereof, and
requests that the certificate representing the securities issuable hereunder be
issued in the name of ___________________________ and delivered to
_____________________________, whose address is ______________________________.
The Exercise Price is being paid by bank draft or cashier's
check.
Dated:
-------------------
Name of Registered Holder:
------------------
Signature:
----------------------------------
Title:
--------------------------------------
Address:
------------------------------------
Notice: The above signature(s) must correspond with the name as written
on the face of the Warrant Certificate in every detail, without alteration or
enlargement or any change whatsoever.
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54
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant
Certificate hereby sells, assigns and transfers unto the assignee named below
all of the rights of the undersigned under this Warrant Certificate, with
respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee:
-------------------------------------------
No. of Shares of
Common Stock ______
and does hereby irrevocably constitute and appoint ____________________________
attorney-in-fact to register such transfer on the books of Xxxxxxx Exploration
Company maintained for that purpose, with full power of substitution in the
premises.
Dated:
-----------------------------------
Name:
------------------------------------
Signature:
-------------------------------
Witness:
---------------------------------
The assignee named above hereby agrees to purchase and take the attached Warrant
Certificate pursuant to and in accordance with the terms and conditions of the
Warrant Certificate and Section 5.5 of the Securities Purchase Agreement, dated
as of ______________, 2001, between Xxxxxxx Exploration Company and the initial
holder named therein and agrees to be bound thereby.
Dated:
-----------------------------------
Name:
------------------------------------
Signature:
-------------------------------
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EXHIBIT B TO
SECURITIES PURCHASE AGREEMENT
[filed October 31, 2000]
CERTIFICATE OF DESIGNATIONS
OF
SERIES A PREFERRED STOCK
(PAR VALUE $.01 PER SHARE)
OF
XXXXXXX EXPLORATION COMPANY
----------
PURSUANT TO SECTION 151
OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
----------
Xxxxxxx Exploration Company, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY that,
pursuant to the authority conferred on the Board of Directors of the Corporation
by the Certificate of Incorporation, as amended, of the Corporation and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware, the Board of Directors of the Corporation on October 31, 2000, duly
adopted the following preamble and resolution establishing and creating a series
of 1,500,000 shares of Preferred Stock, par value $.01 per share, of the
Corporation:
RESOLVED, that pursuant to the authority vested in the Board
of Directors of the Corporation (the "Board of Directors") in
accordance with the provisions of its Certificate of Incorporation, as
amended, a series of Preferred Stock, par value $.01 per share, of the
Corporation is hereby created, and that the designation and number of
shares thereof and the preferences, limitations and relative rights
thereof are as follows:
SECTION 1. DESIGNATION AND NUMBER OF SHARES OF SERIES A PREFERRED
STOCK. There is hereby authorized and established a series of Preferred Stock
that shall be designated as "Series A Preferred Stock" (hereinafter referred to
as "Series A Preferred"), and the number of shares constituting such series
shall be 1,500,000. Such number of shares may be increased or decreased, but not
to a number less than the number of shares of Series A Preferred then issued and
outstanding, by resolution adopted by the full Board of Directors. The "Stated
Value" per share of the Series A Preferred shall be equal to Twenty Dollars
($20.00).
SECTION 2. DEFINITIONS. In addition to the definitions set forth
elsewhere herein, the following terms shall have the meanings indicated:
56
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in New York, New York are authorized or obligated by
law or executive order to close.
"Change of Control" means (i) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation and its Subsidiaries; or (ii)
the acquisition by any Person or group of related Persons for purposes of
Section 13(d) of the Exchange Act, of the power, directly or indirectly, to
vote or direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of the Corporation or of any direct
or indirect holding company thereof; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors of the Corporation cease for any reason to constitute a
majority of the Board of Directors then in office; provided that any person
becoming a director subsequent to the beginning of such two-year period whose
election, or nomination for election by the stockholders of the Corporation, was
approved by a vote of at least a majority of the directors then comprising the
Board of Directors of the Corporation shall be, for purposes of this definition,
considered as though such person were a member of such Board at the beginning of
such two-year period.
"Common Stock" means the common stock, par value $0.01 per share, of
the Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Junior Securities" means the Common Stock or any other series of stock
issued by the Corporation ranking junior as to the Series A Preferred upon
liquidation, dissolution or winding up of the Corporation.
"Original Issue Date" means the date on which shares of the Series A
Preferred are first issued.
"Parity Security" means any class or series of stock issued by the
Corporation ranking on a parity with the Series A Preferred upon liquidation,
dissolution or winding up of the Corporation.
"Person" means any individual, corporation, association, partnership,
joint venture, limited liability company, trust, estate, or other entity or
organization, other than the Corporation, any subsidiary of the Corporation, any
employee benefit plan of the Corporation or any subsidiary of the Corporation,
or any entity holding shares of Common Stock for or pursuant to the terms of any
such plan.
"Redemption Date" means the date fixed for any redemption of the Series
A Preferred as provided in Section 6 or 7.
"Senior Securities" means any class or series of stock issued by the
Corporation ranking senior to the Series A Preferred upon liquidation,
dissolution or winding up of the Corporation.
"Warrants" means the warrants to purchase Common Stock originally
issued to DLJ MB Funding III, Inc. and DLJ ESC II, LP on or about October 31,
2000, pursuant to Warrant Certificates in the form attached hereto as Exhibit A.
"Warrant Certificates" means the Warrant Certificates representing the
Warrants.
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SECTION 3. DIVIDENDS AND DISTRIBUTIONS.
(a) The holders of shares of the Series A Preferred shall be entitled
to receive, when, as and if declared by the Board of Directors out of funds
legally available therefor, dividends at the times and at the rates provided in
this Section 3. Subject to the provisions of Section 3(c) below, dividends shall
accrue on each outstanding share of the Series A Preferred at the rate of six
percent (6%) per annum of the Stated Value (the "Dividend Rate") of such share.
Such dividends on shares of Series A Preferred shall be cumulative from the date
such shares are issued, whether or not in any period there shall be funds of the
Corporation legally available for the payment of such dividends and whether or
not such dividends are declared, and shall be payable quarterly, when, as and if
declared by the Board of Directors, on March 31, June 30, September 30 and
December 31 in each year (each a "Dividend Payment Date"), except that if such
Dividend Payment Date is not a Business Day, then such dividend shall be payable
on the first Business Day immediately thereafter to the holders of the Series A
Preferred Stock. Such dividends shall accrue whether or not there shall be (at
the time such dividend becomes payable or at any other time) profits, surplus or
other funds of the Corporation legally available for the payment of dividends.
Except as provided below, the dividends shall be payable in cash.
(b) Dividends shall be calculated on the basis of the time elapsed from
and including the date immediately following the most recent preceding Dividend
Payment Date (or, if none, the date of issuance) to and including the Dividend
Payment Date or the final distribution date relating to conversion or redemption
or to a dissolution, liquidation or winding up of the Corporation. Dividends
payable on the shares of Series A Preferred for any period that is not a full
quarter shall be calculated at the Dividend Rate on the basis of a 360-day year
of twelve 30-day months.
(c) Notwithstanding anything to the contrary in Section 3(a), on any
Dividend Payment Date occurring on or before the fifth anniversary of the
Original Issue Date, if the Corporation does not pay all or part of the cash
dividend payable on such Dividend Payment Date (or, if applicable, the first
Business Day immediately thereafter), then the Corporation shall pay such unpaid
portion of the dividend payable on such Dividend Payment Date to the holders of
Series A Preferred Stock in shares (including fractional shares) of Series A
Preferred Stock (a "Payment in Kind"). Each Payment in Kind shall be payable as
of such Dividend Payment Date, except that if such Dividend Payment Date is not
a Business Day, then such Payment in Kind shall be on the first Business Day
immediately thereafter to the holders of the Series A Preferred Stock. The
issuance of additional shares of Series A Preferred pursuant to subparagraphs
(c) and (d) of this Section 3 shall constitute full payment of any dividend paid
through Payment in Kind, and such dividends shall not accumulate.
(d) Each Payment in Kind shall be equal to that number of additional
shares of Series A Preferred Stock that is equal to A divided by B where:
"A" = 133.33% of the aggregate dollar amount of the unpaid
cash dividends payable on any such Dividend Payment Date; and
"B" = the Stated Value.
Certificates representing the shares of Series A Preferred Stock
issuable on payment of any Payment in Kind shall be delivered to each holder
entitled to receive such Payment in Kind (in appropriate denominations) on or
before the twentieth (20th) day following the Dividend Payment Date for which
such Payment in Kind is elected to be paid hereunder. Shares of Series A
Preferred Stock issued on payment of any Payment in Kind shall be duly
authorized, validly issued and nonassessable and, upon issuance, shall have
rights (including without limitation, dividend, voting and redemption rights)
and a Stated Value identical to the outstanding shares of Series A Preferred
Stock in respect of which they are issued.
(e) Except as provided in Section 8, no interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment or
payments on the Series A Preferred which are in arrears.
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(f) Dividends payable on each Dividend Payment Date shall be paid to
record holders of the shares of Series A Preferred as they appear on the books
of the Corporation at the close of business on the tenth Business Day
immediately preceding the respective Dividend Payment Date or on such other
record date as may be fixed by the Board of Directors of the Corporation in
advance of a Dividend Payment Date, provided that no such record date shall be
less than ten nor more than 60 calendar days preceding such Dividend Payment
Date.
(g) So long as any shares of Series A Preferred are outstanding, the
Corporation shall not issue any Senior Securities.
(h) No dividends (other than those payable solely in the common stock
of the Corporation) shall be paid on any common stock unless and until all
accrued and unpaid dividends on the Series A Preferred have been paid.
SECTION 4. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of the
Corporation (in connection with the bankruptcy or insolvency of the Corporation
or otherwise), whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation (whether capital or surplus) shall
be made to or set apart for the holders of shares of any Junior Securities, the
holders of the shares of Series A Preferred shall be entitled to receive an
amount per share equal to (i) the Stated Value per share held by them plus (ii)
an amount equal to the aggregate dollar amount of all accrued and unpaid
dividends through the final distribution date. To the extent the available
assets are insufficient to fully satisfy such amounts, then the holders of the
Series A Preferred shall share ratably in such distribution in the proportion
that the number of each holder's Series A Preferred Shares bears to the total
number of shares of Series A Preferred outstanding. No further payment on
account of any such liquidation, dissolution or winding up of the Corporation
shall be paid to the holders of the shares of Series A Preferred or the holders
of any Parity Securities unless there shall be paid at the same time to the
holders of the shares of Series A Preferred and the holders of any Parity
Securities proportionate amounts determined ratably in proportion to the full
amounts to which the holders of all outstanding shares of Series A Preferred and
the holders of all such outstanding Parity Securities are respectively entitled
with respect to such distribution. For purposes of this Section, neither a
consolidation or merger of the Corporation with one or more partnerships,
corporations or other entities nor a sale, lease, exchange or transfer of all or
any substantial part of the Corporation's assets for cash, securities or other
property shall be deemed to be a liquidation, dissolution or winding-up of the
Corporation, whether voluntary or involuntary.
(b) After the payment of the full amount to the holders of Series A
Preferred pursuant to the preceding subparagraph (a), and subject to the rights
of holders of Junior Securities other than the Common Stock, the holders of
Common Stock shall share ratably in the distribution of the remaining available
assets of the Corporation, in the proportion that each holder's shares of Common
Stock bears to the total number of shares of Common Stock of the Corporation
outstanding.
(c) Written notice of any liquidation, dissolution or winding up of the
Corporation, stating the payment date or dates when and the place or places
where the amounts distributable in such circumstances shall be payable, shall be
given by first class mail, postage prepaid, not less than 15 days prior to any
payment date stated therein, to the holders of record of the shares of Series A
Preferred at their respective addresses as the same shall appear in the records
of the Corporation.
SECTION 5. OPTIONAL REDEMPTION BY THE CORPORATION. The outstanding
shares of Series A Preferred are subject to redemption in accordance with the
following provisions:
(a) Subject to the terms hereof, the Corporation may at its option, so
long as it has sufficient funds legally available therefor, elect to redeem, in
whole or in part, the outstanding shares of Series A Preferred at any time after
the date of issuance of such shares.
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(b) (i) The redemption price per share for Series A Preferred
redeemed on any optional redemption date shall, subject to the provisions below
in this Section 5(b), be an amount equal to 101% of the Stated Value of such
share plus, without duplication, all accrued and unpaid dividends on such share
to and including such Redemption Date (the "Optional Redemption Price"). The
Optional Redemption Price shall be paid in cash from any source of funds legally
available therefor.
(ii) In the event the holders of the Warrants exercise any or
all of such Warrants for cash consideration (otherwise than pursuant to the
mandatory exercise provisions in Section 5 of each Warrant Certificate), then
the Optional Redemption Price for a number of shares of Series A Preferred equal
to (A) the aggregate exercise price received by the Corporation pursuant to such
exercise divided by (B) the Stated Value as of the exercise date, shall
thereafter be deemed to be 100% of the Stated Value of such share plus, without
duplication, all accrued and unpaid dividends on such share to and including
such Redemption Date. If less than all of the outstanding Series A Preferred are
to be redeemed pursuant to this Section 5(b) at the price specified in the
preceding sentence, then the Corporation shall redeem a pro rata portion from
each holder of Series A Preferred according to the respective number of shares
of Series A Preferred held by such holder.
(iii) In the event the holders of the Warrants exercise any or
all of such warrants for consideration consisting of shares of Series A
Preferred, then (A) such exercise shall be deemed an optional redemption of such
Series A Preferred, (B) the notice required by Section 5(c) shall not be
required, (C) the exercise date shall be the Redemption Date, (C) the Optional
Redemption Price per share in such event shall be 100% of the Stated Value of
such share as of the Redemption Date, plus, without duplication, all accrued and
unpaid dividends on such share to and including such Redemption Date and (D) the
Optional Redemption Price shall be paid as set forth in Section 1 of the Warrant
Certificate.
(c) Not less than 30 nor more than 60 days prior to the date fixed for
any redemption of any shares of Series A Preferred, a notice specifying the
Redemption Date and place of such redemption and the number of shares to be
redeemed shall be given by first class mail, postage prepaid, to the holders of
record of the shares of Series A Preferred to be redeemed at their respective
addresses as the same shall appear on the books of the Corporation (but no
failure to mail such notice or any defect therein shall affect the validity of
the proceedings for redemption except as to the holder to whom the Corporation
has failed to mail such notice or except as to the holder whose notice was
defective), calling upon each such holder of record to surrender to the
Corporation on the Redemption Date at the place designated in such notice such
holder's certificate or certificates representing the then outstanding shares of
Series A Preferred held by such holder being redeemed by the Corporation. On or
after the Redemption Date, each holder of shares of Series A Preferred called
for redemption shall surrender such holder's certificate or certificates for
such shares to the Corporation at the place designated in the redemption notice
and shall thereupon be entitled to receive payment of the Optional Redemption
Price. Unless there shall have occurred an Event of Noncompliance (as defined
hereinafter) that is continuing, from and after the Redemption Date, dividends
on the Series A Preferred called for redemption shall cease to accumulate and
all rights of the holders of Series A Preferred designated for redemption
(except the right to receive the Optional Redemption Price without interest upon
surrender of their certificate or certificates) shall cease with respect to such
shares, and such shares shall not thereafter be transferred on the books of the
Corporation or be deemed to be outstanding for any purpose whatsoever. In the
event that less than all of the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing such unredeemed shares.
SECTION 6. MANDATORY REDEMPTION.
(a) As soon as possible following the tenth anniversary of the Original
Issue Date the Corporation shall redeem each outstanding Series A Preferred
share for cash for an amount per share equal to the Stated Value of such share
plus, without duplication, all accrued and unpaid dividends on such share to and
including such Redemption Date (the "Redemption Price").
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(b) In the event that (i) the Corporation gives a "Company Notice" (as
defined in the Warrant Certificates) and (ii) the Warrants are thereafter
exercised pursuant to the mandatory exercise provisions in Section 5 of each
Warrant Certificate for cash consideration, then the Corporation shall redeem,
for cash for an amount per share equal to the Redemption Price, a number of
shares of Series A Preferred equal to (A) the aggregate exercise price received
by the Corporation pursuant to such mandatory exercise divided by (B) the
Redemption Price as of the Redemption Date, rounded down to the nearest whole
share of Series A Preferred. Such redemption shall occur not more than ninety
days after the date on which such Warrants are exercised. If less than all of
the outstanding Series A Preferred are to be redeemed pursuant to this Section
6(b), then the Corporation shall redeem a pro rata portion from each holder of
Series A Preferred according to the respective number of shares of Series A
Preferred held by such holder.
(c) Not less than ten nor more than sixty days prior to the Redemption
Date fixed for any redemption of any shares of Series A Preferred under Section
6(a), a notice specifying the mandatory Redemption Date and place of such
redemption and the number of shares to be redeemed shall be given by first class
mail, postage prepaid, to the holders of record of the shares of Series A
Preferred at their respective addresses as the same shall appear on the books of
the Corporation, calling upon each such holder of record to surrender to the
Corporation on the mandatory Redemption Date at the place designated in such
notice the holder's certificate or certificates representing the number of
shares of Series A Preferred owned by such holder and being redeemed on such
mandatory Redemption Date. On or after the mandatory Redemption Date, each
holder of shares of Series A Preferred shall surrender his certificate or
certificates for such shares to the Corporation at the place and amount
designated in the redemption notice and shall thereupon be entitled to receive
payment of the aggregate Redemption Price for such shares. Unless there shall
have occurred an Event of Noncompliance that is continuing, from and after the
mandatory Redemption Date, dividends on the Series A Preferred called for
redemption shall cease to accumulate and all rights of the shares of Series A
Preferred being redeemed (except the right to receive the Redemption Price
without interest upon surrender of the related certificate or certificates)
shall cease, and such shares shall not thereafter be transferred on the books of
the Corporation or be deemed to be outstanding for any purpose whatsoever. In
the event that less than all of the shares represented by any such certificate
are redeemed, a new certificate shall be issued representing such unredeemed
shares.
(d) In connection with a redemption under this Section 6, if the
Corporation has insufficient funds (whether by legal or contractual prohibition
or otherwise) to initially redeem all shares required to be redeemed thereunder,
then the Corporation shall from time to time whenever possible use the maximum
amount of funds available (until all shares of Series A Preferred are redeemed),
and in each partial redemption the number of shares redeemed and the redemption
price therefor shall be allocated according to the relative number of Series A
Preferred shares owned by each holder as compared to the total number of shares
of Series A Preferred outstanding at such time.
SECTION 7. CHANGE OF CONTROL.
(a) Within 20 days of the occurrence of a Change of Control, the
Corporation shall make an offer to purchase (the "Change of Control Offer") the
outstanding Series A Preferred shares at an amount per share equal to (x) 101%
of the Stated Value of such shares plus, without duplication, (y) all accrued
and unpaid dividends on such shares to and including the Change of Control
Payment Date (such applicable purchase price being hereinafter referred to as
the "Change of Control Purchase Price") in accordance with the procedures set
forth in this Section 7.
(b) Within 20 days of the occurrence of a Change of Control, the
Corporation also shall send by first-class mail, postage prepaid, to each
holder of Series A Preferred, at the address appearing on the stock books of the
Corporation, a notice stating:
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(i) that the Change of Control Offer is being made pursuant to
this Section 7 and that all Series A Preferred tendered will be
accepted for payment, and otherwise subject to the terms and conditions
set forth herein;
(ii) the Change of Control Purchase Price and the purchase
date (which shall be a Business Day no earlier than 20 Business Days
from the date such notice is mailed (the "Change of Control Payment
Date"));
(iii) that any Series A Preferred not tendered will continue
to accumulate dividends;
(iv) that, unless the Corporation defaults in the payment of
the Change of Control Purchase Price, any Series A Preferred accepted
for payment pursuant to the Change of Control Offer shall cease to
accumulate dividends after the Change of Control Payment Date;
(v) that holders accepting the offer to have their Series A
Preferred purchased pursuant to a Change of Control Offer will be
required to surrender their certificates representing Series A
Preferred to the Corporation at the address specified in the notice
prior to the close of business on the Business Day preceding the Change
of Control Payment Date;
(vi) that holders will be entitled to withdraw their
acceptance if the Corporation receives, not later than the close of
business on the third Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the holder, the number of shares of Series A
Preferred delivered for purchase, and a statement that such holder is
withdrawing his election to have such Series A Preferred purchased;
(vii) that holders whose Series A Preferred is being purchased
only in part will be issued new certificates representing the number of
shares of Series A Preferred equal to the unpurchased portion of the
certificates surrendered; and
(viii) any other procedures that a holder must follow to
accept a Change of Control Offer or effect withdrawal of such
acceptance.
(c) In the event that a Change of Control occurs and the holders of
Series A Preferred exercise their right to require the Corporation to purchase
Series A Preferred, if such purchase constitutes a "tender offer" for purposes
of Rule 14e-1 under the Exchange Act at that time, the Corporation will comply
with the requirements of Rule 14e-1 as then in effect with respect to such
repurchase and, in the event of a conflict between the requirements of the
Exchange Act and this Certificate of Designation, the provisions of the Exchange
Act shall govern.
(d) On the Change of Control Payment Date, the Corporation shall (A)
accept for payment the shares of Series A Preferred validly tendered pursuant to
the Change of Control Offer, (B) promptly mail to the holders of shares so
accepted the Change of Control Purchase Price therefor and (C) cancel and retire
each surrendered Certificate and execute a new Series A Preferred certificate
equal to any unpurchased shares represented by a certificate surrendered. Unless
the Corporation defaults in the payment for the shares of Series A Preferred
tendered pursuant to the Change of Control Offer, dividends shall cease to
accrue with respect to the shares of Series A Preferred tendered and all rights
of holders of such tendered shares shall terminate, except for the right to
receive payment therefor, on the Change of Control Payment Date.
(e) The Corporation will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes such Change of Control
Offer contemporaneously with or upon a Change of Control in the
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manner, at the times and otherwise in compliance with the requirements of this
Section 7 and purchases all Series A Preferred validly tendered and not
withdrawn under such Change of Control Offer.
(f) Prior to the mailing of the notice referred to in Section 7(b), but
in any event within 20 days following the date on which a Change of Control
occurs, the Corporation covenants that, if the purchase of the Series A
Preferred would violate or constitute a default or be prohibited under any
instrument governing indebtedness outstanding at the time, then the Corporation
will, to the extent needed to permit such purchase of Series A Preferred, either
(i) repay in full all such indebtedness or (ii) obtain the requisite consents
under such instruments to permit the redemption of the Series A Preferred as
provided above. The Corporation will first comply with the covenant in the
preceding sentence before it will be required to redeem Series A Preferred
pursuant to the provisions described above.
SECTION 8. EVENTS OF NONCOMPLIANCE.
(a) Notwithstanding any provision to the contrary contained herein, an
"Event of Noncompliance" shall have occurred if the Corporation:
(i) fails to pay on or before twenty days after any Dividend
Payment Date the full amount of dividends then accrued on the Preferred
Stock, whether or not such payments are legally permissible; or
(ii) the Corporation fails to pay the deemed Optional
Redemption Price that is payable pursuant to Section 5(b)(iii) or the
Redemption Price payable pursuant to Section 6 on the date that the
certificates for the shares of Series A Preferred are properly
presented to the Corporation for redemption, whether or not such
payment is legally permissible; or
(iii) the Corporation fails to pay the Optional Redemption
Price payable pursuant to Sections 5(b)(i) and (ii) on the date that
the certificates for the shares of Series A Preferred are properly
presented to the Corporation for redemption, whether or not such
payment is legally permissible.
(b) Immediately upon an Event of Noncompliance pursuant to Section
8(a)(i), the Dividend Rate then in effect shall be increased to an amount equal
to the Dividend Rate then in effect plus 2.0%, until such time as the dividends
accrued but not paid on the applicable Dividend Payment Date are paid in full.
(c) Immediately upon an Event of Noncompliance pursuant to Section
8(a)(ii), the Dividend Rate then in effect shall be increased to an amount equal
to the Dividend Rate then in effect plus 1.0% and, until such time as the Option
Redemption Price, or the Redemption Price, as applicable, is paid in full, such
Dividend Rate then in effect shall be further increased by 100 basis points on
every 90th day after the date any prior adjustment is made pursuant to this
Section 8(c).
SECTION 9. REACQUIRED SHARES. Any shares of Series A Preferred
repurchased, redeemed, converted or otherwise acquired by the Corporation shall
be retired and canceled promptly after the acquisition thereof. All such shares
shall upon their cancellation become authorized but unissued shares of Preferred
Stock, without designation as to series.
SECTION 10. VOTING RIGHTS.
(a) Except as otherwise required by law and as specified in this
Section, the holders of shares of Series A Preferred shall not have any right or
power to vote on or consent with respect to any matter or in any proceeding or
to be represented at any meeting of stockholders of the Corporation. In any
action taken as a class, each holder of shares of Series A Preferred shall be
entitled to one vote for each share held.
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(b) So long as any shares of Series A Preferred remain outstanding, the
affirmative vote or consent of the holders of 75% of the shares of Series A
Preferred outstanding at the time, voting as a class, given in person or by
proxy, either in writing or at a meeting, shall be necessary to permit, effect
or validate (i) the issuance of any shares of Series A Preferred Stock, other
than as a Payment in Kind of dividends payable thereon (ii) the authorization,
creation or issuance, or any increase in the authorized or issued amount, of any
class or series of Parity Security, other than any Payment or Kind or any
increase in the number of authorized shares of Series A Preferred in connection
therewith, or (iii) the amendment, alteration or repeal of any of the provisions
of the Certificate of Incorporation, as amended, of the Corporation which would
adversely affect any right, preference, privilege or voting power of shares of
Series A Preferred or of the holders thereof. The increase in the amount of
authorized Preferred Stock of the Corporation or the creation and issuance, or
increase in amount of authorized shares of other series of Parity Security or
Junior Security shall not be deemed to affect materially and adversely such
rights, preferences, privileges or voting power.
SECTION 11. CERTAIN TAXES. So long as any shares of Series A Preferred
are outstanding the Corporation shall pay all taxes and other governmental
charges (other than any income, franchise or similar taxes) that may be imposed
with respect to the issue or delivery of shares of Common Stock upon conversion
of Series A Preferred as provided herein. The Corporation shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock in any name
other than that of the registered holder of the shares of the Series A Preferred
surrendered in connection with the conversion thereof, and in such case the
Corporation shall not be required to issue or deliver any stock certificate
until such tax or other charge has been paid, or it has been established to the
Corporation's satisfaction that no tax or other charge is due.
SECTION 12. RANKING. For purposes of the distribution of assets upon
liquidation, dissolution or winding up of the Corporation, (i) the Junior
Securities shall rank junior to the Series A Preferred and (ii) the Parity
Securities shall rank on a parity with the Series A Preferred.
SECTION 13. RECORD HOLDERS. The Corporation may deem and treat the
record holder of any shares of Series A Preferred as the true and lawful owner
thereof for all purposes, and the Corporation shall not be affected by any
notice to the contrary.
SECTION 14. NOTICE. Except as may otherwise be provided by law or
provided for herein, all notices referred to herein shall be in writing, and all
notices hereunder shall be deemed to have been given upon receipt, in the case
of a notice of conversion given to the Corporation, or, in all other cases, upon
the earlier of receipt of such notice or three Business Days after the mailing
of such notices sent by Registered Mail (unless first-class mail shall be
specifically permitted for such notice under the terms hereof) with postage
prepaid, addressed: If to the Corporation, to its principal executive offices or
to any agent of the Corporation designated as permitted hereby; or if to a
holder of the Series A Preferred, to such holder at the address of such holder
of the Series A Preferred as listed in the stock record books of the
Corporation, or to such other address as the Corporation or holder, as the case
may be, shall have designated by notice similarly given.
SECTION 15. SUCCESSORS AND TRANSFEREES. The provisions applicable to
shares of Series A Preferred shall bind and inure to the benefit of and be
enforceable by the Corporation, the respective successors to the Corporation,
and by any record holder of shares of Series A Preferred.
RESOLVED FURTHER, that the appropriate officers of the
Corporation be, and they are hereby, authorized and directed from time
to time to execute such certificates, instruments or other documents
and do all such things as may be necessary or advisable in their
discretion in order to carry out the terms hereof, including the filing
with the Secretary of State for the State of Delaware of a copy of the
foregoing resolution executed by an officer of the Corporation.
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Dated: October 31, 0000
XXXXXXX EXPLORATION COMPANY
By: /s/ Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------
Title: Vice President
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EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND
PRIVILEGES SPECIFIED IN THIS WARRANT CERTIFICATE AND IN A SECURITIES PURCHASE
AGREEMENT, DATED AS OF ____________, 2000, BETWEEN XXXXXXX EXPLORATION COMPANY
AND THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF XXXXXXX EXPLORATION COMPANY AND WILL BE FURNISHED WITHOUT
CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS
CERTIFICATE AGREES TO BE BOUND THEREBY.
WARRANT CERTIFICATE
NUMBER OF WARRANTS: WARRANT NO.
-------------- ----------
This Warrant certificate ("Warrant Certificate") certifies that, for
value received, ______________________ is the registered holder of the number of
warrants (the "Warrants") set forth above. Each Warrant entitles the holder
thereof, at any time or from time to time during the Exercise Period, to
purchase from the Company one fully paid and nonassessable share of Common Stock
at the Exercise Price, subject to adjustment as provided herein. Initially
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement.
"Common Stock" means the common stock, $.01 par value per
share, of the Company and such other class of securities as shall then
represent the common equity of the Company.
"Company" means Xxxxxxx Exploration Company, a Delaware
corporation.
"Exercise Period" means the period of time between the Closing
Date, as defined in the Securities Purchase Agreement and 5:00 p.m.
(New York City time) on the Expiration Date.
"Exercise Price," subject in all circumstances to adjustment
in accordance with Section 2, means $3.00 per share.
"Expiration Date" means the tenth anniversary of the Closing
Date.
"Issuance Date" means ______________, 2000.
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"Person" means any individual, corporation, company,
partnership, joint venture, trust, limited liability company,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.
"Preferred Stock" means shares of the Series A Preferred
Stock, par value $0.01 per share, of the Company.
"Preferred Value" per share of Preferred Stock means the
Stated Value of such Share, plus, without duplication, all accrued and
unpaid dividends on such share to and including the applicable date of
Warrant exercise.
"Price" means the average of the "high" and "low" prices as
reported in The Wall Street Journal's listing for such day (corrected
for obvious typographical errors) or if such shares are not reported in
such listing, the average of the reported sales prices on the largest
national securities exchange (based on the aggregate dollar value of
securities listed) on which such shares are listed or traded, or if
such shares are not listed or traded on any national securities
exchange, then the average of the reported sales prices for such shares
in the over-the-counter market, as reported on the National Association
of Securities Dealers Automated Quotations System, or, if such prices
shall not be reported thereon, the average of the closing bid and asked
prices so reported, or, if such prices shall not be reported, then the
average of the closing bid and asked prices reported by the National
Quotations Bureau Incorporated. The "Average" Price per share for any
period shall be determined by dividing the sum of the Prices determined
for the individual trading days in such period by the number of trading
days in such period.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of ___________, 2000, between the Company, DLJ MB
Funding III, Inc. and DLJ ESC II, LP.
"Stated Value" means the stated value per share of Preferred
Stock, which is $20.00 per share.
Section 1. EXERCISE OF WARRANTS. (a) The Warrants may be exercised in
whole or in part, at any time or from time to time, during the Exercise Period,
by (i) presentation and surrender to the Company at its address set forth in
Section 10 of this Warrant Certificate with the Election To Exercise, attached
hereto as Exhibit A, duly completed and executed, and (ii) payment of the
Exercise Price, for the number of Warrants being exercised by either: (1) bank
draft or cashiers check, or (2) provided that the Company receives at least 5
days prior notice and subject to Section 1(d), delivery to the Company of
certificate(s) representing a number of shares of Preferred Stock having an
aggregate Preferred Value equal to the aggregate Exercise Price for the number
of Warrants being exercised. If the aggregate Preferred Value of the Preferred
Stock delivered in payment of the aggregate Exercise Price exceeds (because of
fractional shares) the aggregate Exercise Price for the number of Warrants being
exercised; then (subject to Section 1(d)) the Company will promptly pay to the
holder of the Warrants in cash such excess amount; provided that such excess
amount shall in no event be more than the Preferred Value of one share of
Preferred Stock. If the holder of this Warrant Certificate at any time exercises
less than all the Warrants, the Company shall issue to such a holder a warrant
certificate identical in form to this Warrant Certificate, but evidencing a
number of Warrants equal to the number of Warrants originally represented by
this Warrant Certificate less the number of Warrants previously exercised.
Likewise, upon the presentation and surrender of this Warrant
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Certificate to the Company at its address set forth in Section 10 and at the
request of the holder, the Company will, without expense, at the option of the
holder, issue to the holder in substitution for this Warrant Certificate one or
more warrant certificates in identical form and for an aggregate number of
Warrants equal to the number of Warrants evidenced by this Warrant Certificate.
(b) To the extent that the Warrants have not been exercised at
or prior to the Expiration Date, such Warrants shall expire and the rights of
the holder shall become void and of no effect.
(c) Upon surrender of this Warrant Certificate in conformity
with the foregoing provisions, the Company shall transfer to the holder of this
Warrant Certificate appropriate evidence of ownership of the shares of Common
Stock or other securities or property (including any money) to which the holder
is entitled, registered or otherwise placed in, or payable to the order of, the
name or names of the holder or such transferee as may be directed in writing by
the holder, and shall deliver such evidence of ownership and any other
securities or property (including any money) to the Person or Persons entitled
to receive the same, together with an amount in cash in lieu of any fraction of
a share.
(d) In connection with payment of the Exercise Price with
shares of Preferred Stock, the Company may require that at the time of such
exercise it receive representations and warranties from the applicable holder of
the Warrants regarding such holder's title to the Preferred Stock and the lack
of encumbrances thereon. If the Company is unable to consummate an exercise of
Warrants through payment of the Exercise Price with shares of Preferred Stock
because of any limitations contained or construed in the Delaware General
Corporation Law, the Company shall use its best efforts to take all such action
as may be necessary to place the Company in a position to do so. In the event
the Company, after the taking of any action by it as contemplated above, is
unable to consummate such exercise, the Company shall accept such number of
shares of Preferred Stock in payment as it shall then be authorized to do so
under the Delaware General Corporation Law.
(e) The Company shall not be required to issue a fractional
share of Common Stock upon the exercise of Warrants. As to any fraction of a
share which the Warrant holder would otherwise be entitled to purchase upon such
exercise, the Company may pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the Price per share of Common Stock on
the date of exercise.
Section 2. ANTIDILUTION ADJUSTMENTS. The shares of Common Stock
purchasable on exercise of the Warrants are shares of Common Stock as
constituted as of the Issuance Date. The number and kind of securities
purchasable upon the exercise of the Warrants, and the Exercise Price, shall be
subject to adjustment from time to time upon the happening of certain events, as
follows:
(a) Mergers, Consolidations and Reclassifications. In case of
any reclassification or change of outstanding securities issuable upon exercise
of the Warrants at any time after the Issuance Date (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination to which Section 2(b) applies), or
in case of any consolidation or merger of the Company with or into any entity or
other person (other than a merger with another entity or other person in which
the Company is the surviving corporation and which does not result in any
reclassification or change in the securities issuable upon exercise of this
Warrant Certificate), the holder of the Warrants shall have, and the Company, or
such successor corporation or other entity, shall covenant in the constituent
documents effecting any of the foregoing transactions that such holder does have
the right
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to obtain, upon the exercise of the Warrants, in lieu of each share of Common
Stock, other securities, money or other property theretofore issuable upon
exercise of a Warrant, the kind and amount of shares of stock, other securities,
money or other property receivable upon such reclassification, change,
consolidation or merger by a holder of the shares of Common Stock, other
securities, money or other property issuable upon exercise of a Warrant if the
Warrants had been exercised immediately prior to such reclassification, change,
consolidation or merger. The constituent documents effecting any such
reclassification, change, consolidation or merger shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided in this Section 2(a). The provisions of this Section 2(a) shall
similarly apply to successive reclassifications, changes, consolidations or
mergers.
(b) Subdivisions and Combinations. If the Company, at any time
after the Issuance Date, shall subdivide its shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and the number of shares of Common
Stock purchasable upon exercise of the Warrants shall be proportionately
increased, as at the effective date of such subdivision, or if the Company shall
take a record of holders of its Common Stock for such purpose, as at such record
date, whichever is earlier. If the Company, at any time after the Issuance Date,
shall combine its shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of shares of Common Stock purchasable
upon exercise of the Warrants shall be proportionately reduced, as at the
effective date of such combination, or if the Company shall take a record of
holders of its Common Stock for purposes of such combination, as at such record
date, whichever is earlier.
(c) Dividends and Distributions. If the Company at any time
after the Issuance Date shall declare a dividend on its Common Stock payable in
stock or other securities of the Company to the holders of its Common Stock, the
holder of this Warrant Certificate shall, without additional cost, be entitled
to receive upon any exercise of a Warrant, in addition to the Common Stock to
which such holder would otherwise be entitled upon such exercise, the number of
shares of stock or other securities which such holder would have been entitled
to receive if he had been a holder immediately prior to the record date for such
dividend (or, if no record date shall have been established, the payment date
for such dividend) of the number of shares of Common Stock purchasable on
exercise of such Warrant immediately prior to such record date or payment date,
as the case may be.
(d) Certain Issuances of Securities. Subject to Section 2(f),
if the Company at any time after the Issuance Date shall issue any additional
shares of Common Stock (otherwise than as provided in subsections (a) through
(c) of this Section 2) at a price per share less than the Average Price per
share of Common Stock for the 20 trading days immediately preceding the date of
the authorization of such issuance (the "Market Price") by the Board of
Directors or its compensation committee (as applicable), then the Exercise Price
upon each such issuance shall be adjusted to that price determined by
multiplying the Exercise Price by a fraction:
i. the numerator of which shall be the sum of (1) the number
of shares of Common Stock outstanding immediately prior to the issuance
of such additional shares of Common Stock multiplied by the Market
Price, and (2) the consideration, if any, received by the Company upon
the issuance of such additional shares of Common Stock, and
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ii. the denominator of which shall be the Market Price
multiplied by the total number of shares of Common Stock outstanding
immediately after the issuance of such additional shares of Common
Stock.
No adjustments of the Exercise Price shall be made under this Section 2(d) upon
the issuance of any additional shares of Common Stock that (v) are issued
pursuant to any grant or award made prior to the Issuance Date under any thrift
plan, stock purchase plan, stock bonus plan, stock option plan, employee stock
ownership plan, incentive or profit sharing arrangement or other benefit or
compensation plan for the benefit of the Company's officers, directors and/or
employees ("Employee Benefit Plans") that has been approved by the Board of
Directors of the Company or its compensation committee and that otherwise would
cause an adjustment under this Section 2(d); (w) are issued pursuant to any
grant or award made on or after the Issuance Date under any Employee Benefit
Plan if the "Market Price" of any such issuance is not less than the greater of
the Market Price as determined above and the "Fair Market Value", as defined
under the applicable Employee Benefit Plan, on the date of Board or compensation
committee authorization); (x) are issued pursuant to any Common Stock Equivalent
(as hereinafter defined) (i) if upon the issuance of any such Common Stock
Equivalent, any such adjustments shall previously have been made pursuant to
Section 2(e), (ii) if no adjustment was required pursuant to Section 2(e), or
(iii) if such Common Stock Equivalent was issued prior to this Warrant
Certificate; (y) are issued pursuant to a public offering by the Company; or (z)
results in an adjustment pursuant to Section 2(f).
(e) Common Stock Equivalents.
i. Subject to Section 2(f), if the Company shall, after the
Issuance Date, issue any security or evidence of indebtedness which is
convertible into or exchangeable for Common Stock ("Convertible
Security"), or any warrant, option or other right to subscribe for or
purchase Common Stock or any Convertible Security, other than pursuant
to Employee Benefit Plans (together with Convertible Securities,
"Common Stock Equivalent"), then the Exercise Price upon each such
issuance shall be adjusted as provided in Section 2(d) on the basis
that (i) the maximum number of additional shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed
to have been issued as of the date of issuance of such Common Stock
Equivalent; and (ii) the aggregate consideration for such maximum
number of additional shares of Common Stock shall be deemed to be the
minimum consideration received and receivable by the Company for the
issuance of such additional shares of Common Stock pursuant to such
Common Stock Equivalent.
ii. Notwithstanding the foregoing, no adjustment shall be made
pursuant to this Section 2(e) unless the consideration received and
receivable by the Company per share of Common Stock for the issuance of
such additional shares of Common Stock pursuant to such Common Stock
Equivalent is less than the Market Price. No adjustment of the Exercise
Price shall be made under this Section 2(e) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any
adjustment shall previously have been made in the Exercise Price then
in effect upon the issuance of such warrants or other rights pursuant
to this Section 2(e). No adjustment shall be made under this Section
2(e) if an adjustment is to be made under Section 2(f). No adjustment
shall be made as a result of adjustment in the exercise or conversion
price of Common Stock Equivalents, if those adjustments occur by the
terms of such Common Stock Equivalents.
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(f) Special Adjustments of Exercise Price. Notwithstanding
anything to the contrary in Section 2(d) or Section 2(e), this Section 2(f)
shall govern adjustments to the Exercise Price for the transactions described in
this Section 2(f).
i. If the Company at any time after the Issuance Date and
prior to the second anniversary of the Issuance Date shall issue any
additional shares of Common Stock (otherwise than as provided in
subsections (a) through (c) of Section 2; pursuant to any Employee
Benefit Plan; pursuant to any Common Stock Equivalent outstanding as of
the Issuance Date) or upon the issuance of any such Common Stock, any
adjustments shall previously have been made pursuant to Section 2(e) or
Section 2(f)(ii); and the New Stock Issue Price (defined below) of such
additional shares is less than the Exercise Price then in effect, then
the Exercise Price upon each such issuance shall be adjusted to the New
Stock Issue Price of such additional shares. The "New Stock Issuance
Price" shall be determined by dividing the total amount of
consideration received by the Company for such issue or sale by the
number of shares of Common Stock issued or sold.
ii. If the Company at any time after the Issuance Date and
prior to the second anniversary of the Issuance Date, issues any Common
Stock Equivalent (which by definition excludes Employee Benefit Plan
securities) (otherwise than as provided in subsections (a) through (c)
of Section 2; or pursuant to any Common Stock Equivalent outstanding as
of the Issuance Date) and the New CSE Exercise Price (defined below) of
such Common Stock Equivalents is less than the Exercise Price then in
effect, then the Exercise Price upon each such issuance shall be
adjusted to the New CSE Exercise Price of such Common Stock
Equivalents. The "New CSE Exercise Price" shall be determined by
dividing (x) the total amount, if any, received or receivable by the
Company as consideration for the issuance of such Common Stock
Equivalents, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise, conversion or
exchange of such Common Stock Equivalents, plus, in the case of any
such Common Stock Equivalents which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange of such
Convertible Securities, by (y) the total maximum number of shares of
Common Stock issuable upon the exercise, conversion or exchange of all
such Common Stock Equivalents.
(g) Miscellaneous. The following provisions shall be applicable to the
making of adjustments in the Exercise Price hereinbefore provided in this
Section 2:
i. The consideration received by the Company shall be deemed
to be the following: (I) to the extent that any additional shares of
Common Stock or any Common Stock Equivalent shall be issued for cash
consideration, the consideration received by the Company therefor, or,
if such additional shares of Common Stock or Common Stock Equivalent
are offered by the Company for subscription, the subscription price,
or, if such additional shares of Common Stock or Common Stock
Equivalent are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any
compensation, discounts, commissions or expenses paid or incurred by
the Company for and in the underwriting of , or otherwise in connection
with, the issue thereof; (II) to the extent that such issuance shall be
for a consideration other than cash, then, except as herein otherwise
expressly provided, the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of
Directors, as evidenced by a certified resolution of the Board of
Directors delivered to the holder
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of this Warrant Certificate setting forth such determination. The
consideration for any additional shares of Common Stock issuable
pursuant to any Common Stock Equivalent shall be the consideration
received by the Company for issuing such Common Stock Equivalent, plus
the additional consideration payable to the Company upon the exercise,
conversion or exchange of such Common Stock Equivalent. In case of the
issuance at any time of any additional shares of Common Stock or Common
Stock Equivalent in payment or satisfaction of any dividend upon any
class of stock other than Common Stock, the Company shall be deemed to
have received for such additional shares of Common Stock or Common
Stock Equivalent (which shall not be deemed to be a dividend payable
in, or other distribution of, Common Stock under Section 2(c) above)
consideration equal to the amount of such dividend so paid or
satisfied. In the event additional shares of Common Stock or Common
Stock Equivalents are issued together with other shares or securities
or other assets of the Company or its subsidiaries for consideration
which covers both, the consideration for such shares of Common Stock
and Common Stock Equivalents shall be computed based on the respective
portions of such consideration so received, computed as provided in
this Section 2(g)i., as determined and allocated in good faith by the
Board of Directors of the Company.
ii. Upon the expiration of the right to convert, exchange or
exercise any Common Stock Equivalent the issuance of which effected an
adjustment in the Exercise Price, if any such Common Stock Equivalent
shall not have been converted, exercised or exchanged, the number of
shares of Common Stock deemed to be issued and outstanding because they
were issuable upon conversion, exchange or exercise of any such Common
Stock Equivalent shall no longer be computed as set forth above, and
the Exercise Price shall forthwith be readjusted and thereafter be the
price which it would have been (but reflecting any other adjustments in
the Exercise Price made pursuant to the provisions of Section 2(d)
after the issuance of such Common Stock Equivalent) had the adjustment
of the Exercise Price made upon the issuance or sale of such Common
Stock Equivalent been made on the basis of the issuance only of the
number of additional shares of Common Stock actually issued upon
exercise, conversion or exchange of such Common Stock Equivalent and
thereupon only the number of additional shares of Common Stock actually
so issued shall be deemed to have been issued and only the
consideration actually received by the Company (computed as in this
Section 2(f)(i)) shall be deemed to have been received by the Company.
iii. The number of shares of Common Stock at any time
outstanding shall not include any shares thereof then directly or
indirectly owned or held by or for the account of the Company or its
wholly owned subsidiaries.
iv. Upon each adjustment of the Exercise Price as a result of
the calculations made in Section 2(d), (e) and (f) hereof, this Warrant
shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of shares of Common Stock obtained by (i)
multiplying the number of shares covered by this Warrant immediately
prior to such adjustment of the number of shares by the Exercise Price
in effect immediately prior to such adjustment of the Exercise Price
and (ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
v. For the purpose of this Section 2, the term "shares of
Common Stock" shall mean shares of (i) the class of stock designated as
the Common Stock at the date hereof or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. If at
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any time, because of an adjustment pursuant to Section 2(a), the
Warrants shall entitle the holders to purchase any securities other
than shares of Common Stock, thereafter the number of such other
securities so purchasable upon exercise of each Warrant and the
Exercise Price of such securities shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in this Section 2.
(h) Calculation of Exercise Price. The Exercise Price in
effect from time to time shall be calculated to four decimal places and rounded
to the nearest thousandth.
Section 3. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price or the
number of shares of Common Stock is required to be adjusted as provided in
Section 2, the Company shall forthwith compute the adjusted Exercise Price or
the number of shares of Common Stock issuable and shall prepare and mail to the
holder hereof a certificate setting forth such adjusted Exercise Price or such
number of shares of Common Stock, showing in reasonable detail the facts upon
which the adjustment is based.
Section 4. VOLUNTARY REDUCTION. (a) The Company may at its option, but
shall not be obligated to, at any time during the term of the Warrants, reduce
the then current Exercise Price by any amount selected by the Board of
Directors; provided that if the Company elects so to reduce the then current
Exercise Price, such reduction shall be irrevocable during its effective period
and remain in effect for a minimum of 30 days following the date of such
election, after which time the Company may, at its option, reinstate the
Exercise Price in effect prior to such reduction. Whenever the Exercise Price is
reduced, the Company shall mail to the holder a notice of the reduction at least
30 days before the date the reduced Exercise Price takes effect, stating the
reduced Exercise Price and the period for which such reduced Exercise Price will
be in effect.
(b) The Company may make such decreases in the Exercise Price,
in addition to those required or allowed by this Section 4, as shall be
determined by it, as evidenced by a certified resolution of the Board of
Directors delivered to the holders, to be advisable to avoid or diminish any
income tax to the holder resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or from any
event treated as such for income tax purposes.
Section 5. MANDATORY EXERCISE.
(a) If (i) the Price of the Common Stock is greater than $5.00
per share (as adjusted to reflect any stock split, combination,
reclassification, recapitalization, exchange, stock dividend or other
distribution payable in Common Stock with respect to shares of Common Stock) for
sixty (60) consecutive trading days in the principal market in which the Common
Stock is traded and (ii) the Company gives written notice (the "Company Notice")
to the holder hereof of the satisfaction of the condition in clause (i), then
within fifteen (15) days after the effective date of the Company Notice, the
holder hereof shall exercise all of the Warrants. If required by this Section 5,
the holder hereof agrees to exercise the Warrants, and to purchase shares of
Common Stock pursuant to the terms of this Warrant Certificate. If the holder
has not fulfilled its obligations to exercise the Warrants pursuant to this
Section 5 within fifteen (15) days after the holder's receipt of the Company
Notice, then (without limiting the Company's available remedies) (A) the
obligations of holder under this Section 5 shall continue but the purchase
rights otherwise represented by this Warrant Certificate shall terminate, (B)
the Company may thereafter refuse, in its sole discretion, to allow holder to
exercise the Warrants (including pursuant to this Section 5), (C) all
obligations of the
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Company under Sections 0, 0, 0 xxx 0 xxxxx xxxxxxxxx, (X) no further adjustments
to the Exercise Price shall be made unless the Company in its sole discretion
consents in writing. Each Warrant holder's obligations under this Section 5(a)
shall be subject to the expiration or termination of all waiting periods (and
any extensions thereof) applicable to exercise of such holder's Warrants under
the HSR Act (as defined below); provided that such holder shall have certified
in writing to the Company that a filing under the HSR Act is required and
provided further that such holder shall use its best efforts to cause the
expiration or termination of such waiting period to occur as promptly as
practicable.
(b) Holder represents and warrants to the Company that holder
has full corporate power and authority to execute, deliver, and perform this
Warrant Certificate and to consummate the transactions contemplated hereby. The
execution, delivery, and performance by holder of this Warrant Certificate have
been duly authorized by all necessary corporate action of holder. This Warrant
Certificate has been duly executed and delivered by holder and constitutes a
valid and legally binding obligation of holder, enforceable against holder in
accordance with its terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and (ii) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) The right to require exercise of the Warrants is hereby
declared by the parties hereto to be a unique right, the loss of which is not
readily susceptible to monetary quantification. Consequently, the parties hereto
agree that an action for specific performance of the exercise and purchase
obligations created by this Section 5 is an available remedy for the breach of
the provisions of this Section 5. If the Company is forced to institute legal
proceedings to enforce its rights in accordance with the provisions of this
Section 5, it shall be entitled to recover its reasonable attorneys' fees and
court costs incurred in enforcing such rights.
(d) Holder is executing this Warrant Certificate in order to
make and agree to the covenants, representations and warranties of holder
contained in this Section 5, which shall be binding upon the holder's successors
and assigns.
Section 6. NOTICES TO WARRANT HOLDERS. In the event:
(a) the Company shall authorize any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the
Company is required, or of the conveyance or sale of all or substantially all of
the assets of the Company, or of any reclassification or change of the Common
Stock or other securities issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock (or other securities issuable upon the
exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock or any other class of its capital stock, other
than dividends on the Shares, as defined in the Securities Purchase Agreement;
or
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(c) the Company shall authorize the granting to the holders of
Common Stock or any other class of its capital stock of rights or warrants to
subscribe for or purchase any shares of any class or series of capital stock or
any other securities convertible into or exchangeable for shares of stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be sent to the holder hereof, at least 30 days
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, a written notice stating (x)
the date for the determination of the holders of record of shares of Common
Stock (or other securities issuable upon the exercise of the Warrants) entitled
to receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock
(or other securities issuable upon the exercise of the Warrants), or (z) the
date on which any of the events specified in subsections (a)-(d) is expected to
become effective or consummated, and the date as of which it is expected that
holders of record of shares of Common Stock (or other securities issuable upon
the exercise of the Warrants) shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon any such event. Failure
to give such notice or any defect therein shall not affect the legality or
validity of any such event, or the vote upon any such action.
Section 7. REPORTS TO WARRANT HOLDERS. The Company will cause to be
delivered, by first-class mail, postage prepaid, to holder at such holder's
address appearing hereon, or such other address as the holder shall specify, a
copy of any reports delivered by the Company to the holders of Common Stock.
Section 8. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) Until the Expiration Date, the Company shall at all times
reserve and keep available, out of the aggregate of its authorized but unissued
Common Stock (and other securities), for the purpose of enabling it to satisfy
any obligation to issue shares of Common Stock (and other securities) upon the
exercise of the Warrants, the number of shares of Common Stock (and other
securities) issuable upon the exercise of such Warrants.
(b) The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery of new
warrant certificates on transfer of the Warrants.
(c) All Common Stock (and other securities) which may be
issued upon exercise of the Warrants shall upon issuance be validly issued,
fully paid, non-assessable and free from all preemptive rights and all taxes,
liens and charges with respect to the issuance thereof, and will not be subject
to any restrictions on voting or transfer thereof except as set forth in the
Securities Purchase Agreement, any stockholders agreement and except for
restrictions arising under state or federal securities laws.
(d) All original issue taxes payable in respect of the
issuance of shares of Common Stock to the registered holder hereof upon the
exercise of the Warrants shall be borne by the Company; provided, that the
Company shall not be required to pay any tax or charge imposed in connection
with any transfer involved in the issuance of any certificates representing
shares of Common Stock (and other securities) in any name other than that of the
registered holder hereof, and in such case the Company shall not be required
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to issue or deliver any certificate representing shares of Common Stock (and
other securities) until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or charge is due.
(e) As soon as practicable after the receipt from the holder
of this Warrant Certificate of notice of the intent to exercise of a number of
warrants sufficient to require a filing under the Xxxx-Xxxxx- Xxxxxx Antitrust
Improvements Act of 1976 and the rules, regulations and formal interpretations
thereunder, as amended from time to time (the "HSR Act") (and after the receipt,
if applicable, of the notice referred to in Rule 803.5 of the HSR Act), but in
any event no later than the 15th business day after receipt of such notice(s),
the Company will (i) if required by the HSR Act, prepare and file with Antitrust
Division of the Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC") the Notification and Report Form (accompanied by all
documentary attachments contemplated thereby) required by the HSR Act, (ii) upon
request of the holder, request early termination of the waiting period imposed
by the HSR Act, and (iii) coordinate and cooperate with the holder in responding
to formal and informal requests for additional information and documentary
material from the DOJ and the FTC in connection with such filing.
Notwithstanding the foregoing, if the holder is required to file with the DOJ
and FTC the Notification and Report Form solely as a result of its holding
and/or purchasing shares of Common Stock issued pursuant to this Warrant (with
no regard to any other securities held by such holder or its affiliates) and the
holder certifies such fact to the Company in writing, the Company agrees to
promptly reimburse the holder for all fees and expenses for the preparation and
filing of such form, including all legal expenses and filing fees.
(f) The Company will not change the par value of the Common
Stock from par value $0.01 per share to any higher par value which exceeds the
Exercise Price then in effect, and will reduce the par value of the Common Stock
upon any event described in Section 2 that would, but for this provision, reduce
the Exercise Price below the par value of the Common Stock.
Section 9. NO RIGHTS AS STOCKHOLDER. The holder of the Warrants shall
not, by virtue of holding such Warrants, be entitled to any rights of a
stockholder of the Company either at law or in equity, and the rights of the
holder of the Warrants are limited to those expressed herein.
Section 10. NOTICES. All notices, requests, demands, and other
communications required or permitted to be given or made hereunder by any party
hereto shall be in writing and shall be deemed to have been duly given or made
if (i) delivered personally, (ii) sent by prepaid overnight courier service, or
(iii) sent by telecopy or facsimile transmission, answer back requested, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
if to the holder:
Xxxxxxxxx Lufkin & Xxxxxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telefax: 000-000-0000
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with a copy to:
Gardere Xxxxx Xxxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxxxxx III
Telefax: 000-000-0000
and, if to the Company:
Xxxxxxx Exploration Company
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telecopier: (000) 000-0000
Such notices, requests, demands, and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended recipient, or (ii) if sent by telecopy or facsimile transmission, when
the answer back is received.
Section 11. GOVERNING LAW. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflict of laws.
Section 12. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate, then, in the absence of notice to the Company that such Warrant
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and deliver, in exchange for or in lieu of the lost, stolen, destroyed
or mutilated Warrant Certificate, a substitute Warrant Certificate of the same
tenor and evidencing a like number of Warrants.
Section 13. TRANSFER. Subject to Section 14 and the Securities Purchase
Agreement, transfer of Warrants, in whole or in part, shall be registered on the
books of the Company to be maintained for such purposes, upon surrender of the
Warrant Certificate representing such Warrants at the principal office of the
Company referred to in Section 10, together with a written assignment
substantially in the form of Exhibit B to this Warrant Certificate and a written
agreement, in form reasonably satisfactory to the Company, setting forth the new
Warrant holder's agreement to be bound by all of the terms of this Warrant
Certificate (including without limitation Section 14) and Section 5.5 of the
Securities Purchase Agreement, each duly executed by the holder, and funds
sufficient to pay any transfer taxes payable by such holder upon the making of
such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant Certificate or Warrant Certificates in
the name of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
Certificate or Warrant Certificates evidencing the portion of the old Warrant
Certificate not so assigned, and the old Warrant Certificate shall promptly be
canceled.
Section 14. RESTRICTIONS ON TRANSFERABILITY. The Warrant Certificate
represents Warrants referred to in the Securities Purchase Agreement. Said
Securities Purchase Agreement is hereby incorporated by reference in and made a
part of this instrument and is hereby referred to for a description
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of certain limitations of rights, obligations, duties and immunities thereunder
of the Company and the holders, and in the event of any conflict between the
terms of this Warrant Certificate and the provisions of the Securities Purchase
Agreement, the provisions of the Securities Purchase Agreement shall control.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed as of _______________, by the undersigned, thereunto duly
authorized.
XXXXXXX EXPLORATION COMPANY
By:
---------------------------------------
Xxxxx X. Xxxxx
Vice President
[DLJ MB FUNDING III, INC. / DLJ ESC II, LP]
By:
---------------------------------------
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EXHIBIT A
ELECTION TO EXERCISE
[To be executed on exercise of the Warrant evidenced by this Warrant
Certificate pursuant to Section 1(a)]
TO: Xxxxxxx Exploration Company
The undersigned, the holder of the Warrants evidenced by the
attached Warrant Certificate, hereby irrevocably elects to exercise
_________________ of such Warrants, and herewith makes payment
of_____________________ representing the aggregate Exercise Price thereof, and
requests that the certificate representing the securities issuable hereunder be
issued in the name of ___________________________ and delivered to
__________________, whose address is
_________________________________________________.
The Exercise Price is being paid by bank draft or cashier's
check.
Dated:
----------------
Name of Registered Holder:
------------------
Signature:
----------------------------------
Title:
--------------------------------------
Address:
------------------------------------
Notice: The above signature(s) must correspond with the name as written
on the face of the Warrant Certificate in every detail, without alteration or
enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant
Certificate hereby sells, assigns and transfers unto the assignee named below
all of the rights of the undersigned under this Warrant Certificate, with
respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee:
--------------------------------------------
No. of Shares of
Common Stock ______
and does hereby irrevocably constitute and appoint ____________________________
attorney-in-fact to register such transfer on the books of Xxxxxxx Exploration
Company maintained for that purpose, with full power of substitution in the
premises.
Dated:
----------------------------------
Name:
-----------------------------------
Signature:
------------------------------
Witness:
--------------------------------
The assignee named above hereby agrees to purchase and take the attached Warrant
Certificate pursuant to and in accordance with the terms and conditions of the
Warrant Certificate and Section 5.5 of the Securities Purchase Agreement, dated
as of ______________, 2000, between Xxxxxxx Exploration Company and the initial
holder named therein and agrees to be bound thereby.
Dated:
----------------------------------
Name:
-----------------------------------
Signature:
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EXHIBIT C TO
SECURITIES PURCHASE AGREEMENT
CERTIFICATE OF AMENDMENT
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A PREFERRED STOCK
(Par Value $.01 Per Share)
of
XXXXXXX EXPLORATION COMPANY
----------
Pursuant to Section 151
of the General Corporation Law of the State of Delaware
----------
Xxxxxxx Exploration Company, a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), DOES HEREBY CERTIFY as
follows:
FIRST: That the Board of Directors of the Corporation, by a unanimous
written consent in lieu of special meeting dated March 1, 2001, duly adopted
resolutions approving and adopting the amendments set forth below to the
Certificate of Designations of Series A Preferred Stock of the Corporation (the
"Certificate of Designations"), and that such amendments have been approved and
adopted by all existing holders of the Series A Preferred Stock of the
Corporation.
SECOND: That the amendments set forth below have been duly adopted in
accordance with the applicable provisions of Section 242 of the General
Corporation Law of the State of Delaware.
THIRD: That the Certificate of Designations is hereby amended as
follows:
A. Section 1 of the Certificate of Designations is hereby replaced in
its entirety with the following:
"SECTION 1. DESIGNATION AND NUMBER OF SHARES OF SERIES A
PREFERRED STOCK. There is hereby authorized and established a series of
Preferred Stock that shall be designated as "Series A Preferred Stock"
(hereinafter referred to as "Series A Preferred"), and the number of
shares constituting such series shall be 2,250,000. Such number of
shares may be increased or decreased, but not to a number less than the
number of shares of Series A Preferred then issued and outstanding, by
resolution adopted by the full Board of Directors. The "Stated Value"
per share of the Series A Preferred shall be equal to Twenty Dollars
($20.00)."
B. The definition of "Warrants" contained in Section 2 of the
Certificate of Designations is hereby replaced in its entirety with the
following:
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"Warrants" means (i) the warrants to purchase Common Stock
originally issued to DLJ MB Funding III, Inc. and DLJ ESC II, LP on
November 1, 2000, pursuant to warrant certificates in the form attached
hereto as Exhibit A and/or (ii) the warrants to purchase Common Stock
originally issued to DLJ Merchant Banking Partners III, L.P., DLJ
Offshore Partners III, C.V., DLJ MB Funding III, Inc. and DLJ ESC II,
LP on or about March 5, 2001, pursuant to warrant certificates in the
form attached hereto as Exhibit B."
C. An Exhibit B to the Certificate of Designations is hereby added
thereto, in the form attached hereto as Exhibit B.
IN WITNESS WHEREOF, this Certificate of Amendment has been duly
executed on behalf of the Corporation by its authorized officer, this ___ day of
March, 2001.
XXXXXXX EXPLORATION COMPANY
By:
------------------------
Name: Xxxxx X. Xxxxx
----------------------
Title: Vice President
---------------------
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EXHIBIT B
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM. SUCH SECURITIES ARE SUBJECT TO THE RESTRICTIONS AND
PRIVILEGES SPECIFIED IN THIS WARRANT CERTIFICATE AND IN A SECURITIES PURCHASE
AGREEMENT, DATED AS OF MARCH 5, 2001, BETWEEN XXXXXXX EXPLORATION COMPANY AND
THE INITIAL HOLDER OF SECURITIES NAMED THEREIN, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF XXXXXXX EXPLORATION COMPANY AND WILL BE FURNISHED WITHOUT
CHARGE TO THE HOLDER HEREOF UPON WRITTEN REQUEST, AND THE HOLDER OF THIS
CERTIFICATE AGREES TO BE BOUND THEREBY.
WARRANT CERTIFICATE
NUMBER OF WARRANTS: ______________ WARRANT NO. __________
This Warrant certificate ("Warrant Certificate") certifies
that, for value received, ______________________ is the registered holder of the
number of warrants (the "Warrants") set forth above. Each Warrant entitles the
holder thereof, at any time or from time to time during the Exercise Period, to
purchase from the Company one fully paid and nonassessable share of Common Stock
at the Exercise Price, subject to adjustment as provided herein. Initially
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement.
"Common Stock" means the common stock, $.01 par value per
share, of the Company and such other class of securities as shall then
represent the common equity of the Company.
"Company" means Xxxxxxx Exploration Company, a Delaware
corporation.
"Exercise Period" means the period of time between the day
immediately following the date that Stockholder Approval, as defined in
the Securities Purchase Agreement, is obtained and 5:00 p.m. (New York
City time) on the Expiration Date.
"Exercise Price," subject in all circumstances to adjustment
in accordance with Section 2, means $4.75 per share.
"Expiration Date" means the tenth anniversary of the Closing
Date.
"Issuance Date" means the Closing Date.
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"Person" means any individual, corporation, company,
partnership, joint venture, trust, limited liability company,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form of
entity.
"Preferred Stock" means shares of the Series A Preferred
Stock, par value $0.01 per share, of the Company.
"Preferred Value" per share of Preferred Stock means the
Stated Value of such Share, plus, without duplication, all accrued and
unpaid dividends on such share to and including the applicable date of
Warrant exercise.
"Price" means the average of the "high" and "low" prices as
reported in The Wall Street Journal's listing for such day (corrected
for obvious typographical errors) or if such shares are not reported in
such listing, the average of the reported sales prices on the largest
national securities exchange (based on the aggregate dollar value of
securities listed) on which such shares are listed or traded, or if
such shares are not listed or traded on any national securities
exchange, then the average of the reported sales prices for such shares
in the over-the-counter market, as reported on the National Association
of Securities Dealers Automated Quotations System, or, if such prices
shall not be reported thereon, the average of the closing bid and asked
prices so reported, or, if such prices shall not be reported, then the
average of the closing bid and asked prices reported by the National
Quotations Bureau Incorporated. The "Average" Price per share for any
period shall be determined by dividing the sum of the Prices determined
for the individual trading days in such period by the number of trading
days in such period.
"Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of March 5, 2001, between the Company and the
Investors.
"Stated Value" means the stated value per share of Preferred
Stock, which is $20.00 per share.
Section 1. EXERCISE OF WARRANTS. (a) The Warrants may be exercised in
whole or in part, at any time or from time to time, during the Exercise Period,
by (i) presentation and surrender to the Company at its address set forth in
Section 10 of this Warrant Certificate with the Election To Exercise, attached
hereto as Exhibit A, duly completed and executed, and (ii) payment of the
Exercise Price, for the number of Warrants being exercised by either: (1) bank
draft or cashiers check, or (2) provided that the Company receives at least 5
days prior notice and subject to Section 1(d), delivery to the Company of
certificate(s) representing a number of shares of Preferred Stock having an
aggregate Preferred Value equal to the aggregate Exercise Price for the number
of Warrants being exercised. If the aggregate Preferred Value of the Preferred
Stock delivered in payment of the aggregate Exercise Price exceeds (because of
fractional shares) the aggregate Exercise Price for the number of Warrants being
exercised; then (subject to Section 1(d)) the Company will promptly pay to the
holder of the Warrants in cash such excess amount; provided that such excess
amount shall in no event be more than the Preferred Value of one share of
Preferred Stock. If the holder of this Warrant Certificate at any time exercises
less than all the Warrants, the Company shall issue to such a holder a warrant
certificate identical in form to this Warrant Certificate, but evidencing a
number of Warrants equal to the number of Warrants originally represented by
this Warrant Certificate less the number of Warrants previously exercised.
Likewise, upon the presentation and surrender of this Warrant Certificate to the
Company at its address set forth in Section 10 and at the request of the holder,
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the Company will, without expense, at the option of the holder, issue to the
holder in substitution for this Warrant Certificate one or more warrant
certificates in identical form and for an aggregate number of Warrants equal to
the number of Warrants evidenced by this Warrant Certificate.
(b) To the extent that the Warrants have not been exercised at
or prior to the Expiration Date, such Warrants shall expire and the rights of
the holder shall become void and of no effect.
(c) Upon surrender of this Warrant Certificate in conformity
with the foregoing provisions, the Company shall transfer to the holder of this
Warrant Certificate appropriate evidence of ownership of the shares of Common
Stock or other securities or property (including any money) to which the holder
is entitled, registered or otherwise placed in, or payable to the order of, the
name or names of the holder or such transferee as may be directed in writing by
the holder, and shall deliver such evidence of ownership and any other
securities or property (including any money) to the Person or Persons entitled
to receive the same, together with an amount in cash in lieu of any fraction of
a share.
(d) In connection with payment of the Exercise Price with
shares of Preferred Stock, the Company may require that at the time of such
exercise it receive representations and warranties from the applicable holder of
the Warrants regarding such holder's title to the Preferred Stock and the lack
of encumbrances thereon. If the Company is unable to consummate an exercise of
Warrants through payment of the Exercise Price with shares of Preferred Stock
because of any limitations contained or construed in the Delaware General
Corporation Law, the Company shall use its best efforts to take all such action
as may be necessary to place the Company in a position to do so. In the event
the Company, after the taking of any action by it as contemplated above, is
unable to consummate such exercise, the Company shall accept such number of
shares of Preferred Stock in payment as it shall then be authorized to do so
under the Delaware General Corporation Law.
(e) The Company shall not be required to issue a fractional
share of Common Stock upon the exercise of Warrants. As to any fraction of a
share which the Warrant holder would otherwise be entitled to purchase upon such
exercise, the Company may pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the Price per share of Common Stock on
the date of exercise.
Section 2. ANTIDILUTION ADJUSTMENTS. The shares of Common Stock
purchasable on exercise of the Warrants are shares of Common Stock as
constituted as of the Issuance Date. The number and kind of securities
purchasable upon the exercise of the Warrants, and the Exercise Price, shall be
subject to adjustment from time to time upon the happening of certain events, as
follows:
(a) Mergers, Consolidations and Reclassifications. In case of any
reclassification or change of outstanding securities issuable upon exercise of
the Warrants at any time after the Issuance Date (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination to which Section 2(b) applies), or
in case of any consolidation or merger of the Company with or into any entity or
other person (other than a merger with another entity or other person in which
the Company is the surviving corporation and which does not result in any
reclassification or change in the securities issuable upon exercise of this
Warrant Certificate), the holder of the Warrants shall have, and the Company, or
such successor corporation or other entity, shall covenant in the constituent
documents effecting any of the foregoing transactions that such holder does have
the right to obtain, upon the exercise of the Warrants, in lieu of each share of
Common Stock, other securities, money or other property theretofore issuable
upon exercise of a Warrant, the kind and amount of shares of stock, other
securities, money or other property receivable upon such reclassification,
change, consolidation or
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merger by a holder of the shares of Common Stock, other securities, money or
other property issuable upon exercise of a Warrant if the Warrants had been
exercised immediately prior to such reclassification, change, consolidation or
merger. The constituent documents effecting any such reclassification, change,
consolidation or merger shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided in this Section
2(a). The provisions of this Section 2(a) shall similarly apply to successive
reclassifications, changes, consolidations or mergers.
(b) Subdivisions and Combinations. If the Company, at any time
after the Issuance Date, shall subdivide its shares of Common Stock into a
greater number of shares, the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced, and the number of shares of Common
Stock purchasable upon exercise of the Warrants shall be proportionately
increased, as at the effective date of such subdivision, or if the Company shall
take a record of holders of its Common Stock for such purpose, as at such record
date, whichever is earlier. If the Company, at any time after the Issuance Date,
shall combine its shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior to such combination shall be
proportionately increased, and the number of shares of Common Stock purchasable
upon exercise of the Warrants shall be proportionately reduced, as at the
effective date of such combination, or if the Company shall take a record of
holders of its Common Stock for purposes of such combination, as at such record
date, whichever is earlier.
(c) Dividends and Distributions. If the Company at any time
after the Issuance Date shall declare a dividend on its Common Stock payable in
stock or other securities of the Company to the holders of its Common Stock, the
holder of this Warrant Certificate shall, without additional cost, be entitled
to receive upon any exercise of a Warrant, in addition to the Common Stock to
which such holder would otherwise be entitled upon such exercise, the number of
shares of stock or other securities which such holder would have been entitled
to receive if he had been a holder immediately prior to the record date for such
dividend (or, if no record date shall have been established, the payment date
for such dividend) of the number of shares of Common Stock purchasable on
exercise of such Warrant immediately prior to such record date or payment date,
as the case may be.
(d) Certain Issuances of Securities. Subject to Section 2(f),
if the Company at any time after the Issuance Date shall issue any additional
shares of Common Stock (otherwise than as provided in subsections (a) through
(c) of this Section 2) at a price per share less than the Average Price per
share of Common Stock for the 20 trading days immediately preceding the date of
the authorization of such issuance (the "Market Price") by the Board of
Directors or its compensation committee (as applicable), then the Exercise Price
upon each such issuance shall be adjusted to that price determined by
multiplying the Exercise Price by a fraction:
i. the numerator of which shall be the sum of (1) the number
of shares of Common Stock outstanding immediately prior to the issuance
of such additional shares of Common Stock multiplied by the Market
Price, and (2) the consideration, if any, received by the Company upon
the issuance of such additional shares of Common Stock, and
ii. the denominator of which shall be the Market Price
multiplied by the total number of shares of Common Stock outstanding
immediately after the issuance of such additional shares of Common
Stock.
No adjustments of the Exercise Price shall be made under this Section 2(d) upon
the issuance of any additional shares of Common Stock that (v) are issued
pursuant to any grant or award made prior to the
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Issuance Date under any thrift plan, stock purchase plan, stock bonus plan,
stock option plan, employee stock ownership plan, incentive or profit sharing
arrangement or other benefit or compensation plan for the benefit of the
Company's officers, directors and/or employees ("Employee Benefit Plans") that
has been approved by the Board of Directors of the Company or its compensation
committee and that otherwise would cause an adjustment under this Section 2(d);
(w) are issued pursuant to any grant or award made on or after the Issuance Date
under any Employee Benefit Plan if the "Market Price" of any such issuance is
not less than the lesser of the Market Price as determined above and the "Fair
Market Value", as defined under the applicable Employee Benefit Plan, on the
date of Board or compensation committee authorization; (x) are issued pursuant
to any Common Stock Equivalent (as hereinafter defined) (i) if upon the issuance
of any such Common Stock Equivalent, any such adjustments shall previously have
been made pursuant to Section 2(e), (ii) if no adjustment was required pursuant
to Section 2(e), or (iii) if such Common Stock Equivalent was issued prior to
this Warrant Certificate; (y) are issued pursuant to a public offering by the
Company; or (z) results in an adjustment pursuant to Section 2(f).
(e) Common Stock Equivalents.
i. Subject to Section 2(f), if the Company shall, after the
Issuance Date, issue any security or evidence of indebtedness which is
convertible into or exchangeable for Common Stock ("Convertible
Security"), or any warrant, option or other right to subscribe for or
purchase Common Stock or any Convertible Security, other than pursuant
to Employee Benefit Plans (together with Convertible Securities,
"Common Stock Equivalent"), then the Exercise Price upon each such
issuance shall be adjusted as provided in Section 2(d) on the basis
that (i) the maximum number of additional shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed
to have been issued as of the date of issuance of such Common Stock
Equivalent; and (ii) the aggregate consideration for such maximum
number of additional shares of Common Stock shall be deemed to be the
minimum consideration received and receivable by the Company for the
issuance of such additional shares of Common Stock pursuant to such
Common Stock Equivalent.
ii. Notwithstanding the foregoing, no adjustment shall be made
pursuant to this Section 2(e) unless the consideration received and
receivable by the Company per share of Common Stock for the issuance of
such additional shares of Common Stock pursuant to such Common Stock
Equivalent is less than the Market Price. No adjustment of the Exercise
Price shall be made under this Section 2(e) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any
warrants or other subscription or purchase rights therefor, if any
adjustment shall previously have been made in the Exercise Price then
in effect upon the issuance of such warrants or other rights pursuant
to this Section 2(e). No adjustment shall be made under this Section
2(e) if an adjustment is to be made under Section 2(f). No adjustment
shall be made as a result of adjustment in the exercise or conversion
price of Common Stock Equivalents, if those adjustments occur by the
terms of such Common Stock Equivalents.
(f) Special Adjustments of Exercise Price. Notwithstanding
anything to the contrary in Section 2(d) or Section 2(e), this Section 2(f)
shall govern adjustments to the Exercise Price for the transactions described in
this Section 2(f).
i. If the Company at any time after the Issuance Date and
prior to the second anniversary of the Issuance Date shall issue any
additional shares of Common Stock (otherwise than as provided in
subsections (a) through (c) of Section 2; pursuant to any Employee
Benefit Plan; pursuant to any Common Stock Equivalent outstanding as of
the Issuance Date) or upon the
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issuance of any such Common Stock, any adjustments shall previously
have been made pursuant to Section 2(e) or Section 2(f)(ii); and the
New Stock Issue Price (defined below) of such additional shares is less
than the Exercise Price then in effect, then the Exercise Price upon
each such issuance shall be adjusted to the New Stock Issue Price of
such additional shares. The "New Stock Issuance Price" shall be
determined by dividing the total amount of consideration received by
the Company for such issue or sale by the number of shares of Common
Stock issued or sold.
ii. If the Company at any time after the Issuance Date and
prior to the second anniversary of the Issuance Date, issues any Common
Stock Equivalent (which by definition excludes Employee Benefit Plan
securities) (otherwise than as provided in subsections (a) through (c)
of Section 2; or pursuant to any Common Stock Equivalent outstanding as
of the Issuance Date) and the New CSE Exercise Price (defined below) of
such Common Stock Equivalents is less than the Exercise Price then in
effect, then the Exercise Price upon each such issuance shall be
adjusted to the New CSE Exercise Price of such Common Stock
Equivalents. The "New CSE Exercise Price" shall be determined by
dividing (x) the total amount, if any, received or receivable by the
Company as consideration for the issuance of such Common Stock
Equivalents, plus the minimum aggregate amount of additional
consideration payable to the Company upon the exercise, conversion or
exchange of such Common Stock Equivalents, plus, in the case of any
such Common Stock Equivalents which relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange of such
Convertible Securities, by (y) the total maximum number of shares of
Common Stock issuable upon the exercise, conversion or exchange of all
such Common Stock Equivalents.
(g) Miscellaneous. The following provisions shall be applicable to the
making of adjustments in the Exercise Price hereinbefore provided in this
Section 2:
i. The consideration received by the Company shall be deemed
to be the following: (I) to the extent that any additional shares of
Common Stock or any Common Stock Equivalent shall be issued for cash
consideration, the consideration received by the Company therefor, or,
if such additional shares of Common Stock or Common Stock Equivalent
are offered by the Company for subscription, the subscription price,
or, if such additional shares of Common Stock or Common Stock
Equivalent are sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price, in
any such case excluding any amounts paid or receivable for accrued
interest or accrued dividends and without deduction of any
compensation, discounts, commissions or expenses paid or incurred by
the Company for and in the underwriting of , or otherwise in connection
with, the issue thereof; (II) to the extent that such issuance shall be
for a consideration other than cash, then, except as herein otherwise
expressly provided, the fair value of such consideration at the time of
such issuance as determined in good faith by the Board of Directors, as
evidenced by a certified resolution of the Board of Directors delivered
to the holder of this Warrant Certificate setting forth such
determination. The consideration for any additional shares of Common
Stock issuable pursuant to any Common Stock Equivalent shall be the
consideration received by the Company for issuing such Common Stock
Equivalent, plus the additional consideration payable to the Company
upon the exercise, conversion or exchange of such Common Stock
Equivalent. In case of the issuance at any time of any additional
shares of Common Stock or Common Stock Equivalent in payment or
satisfaction of any dividend upon any class of stock other than Common
Stock, the Company shall be deemed to have received for such additional
shares of Common Stock or Common Stock Equivalent (which shall not be
deemed to be a dividend payable in, or other distribution of, Common
Stock under Section 2(c) above) consideration equal
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to the amount of such dividend so paid or satisfied. In the event
additional shares of Common Stock or Common Stock Equivalents are
issued together with other shares or securities or other assets of the
Company or its subsidiaries for consideration which covers both, the
consideration for such shares of Common Stock and Common Stock
Equivalents shall be computed based on the respective portions of such
consideration so received, computed as provided in this Section 2(g)i.,
as determined and allocated in good faith by the Board of Directors of
the Company.
ii. Upon the expiration of the right to convert, exchange or
exercise any Common Stock Equivalent the issuance of which effected an
adjustment in the Exercise Price, if any such Common Stock Equivalent
shall not have been converted, exercised or exchanged, the number of
shares of Common Stock deemed to be issued and outstanding because they
were issuable upon conversion, exchange or exercise of any such Common
Stock Equivalent shall no longer be computed as set forth above, and
the Exercise Price shall forthwith be readjusted and thereafter be the
price which it would have been (but reflecting any other adjustments in
the Exercise Price made pursuant to the provisions of Section 2(d)
after the issuance of such Common Stock Equivalent) had the adjustment
of the Exercise Price made upon the issuance or sale of such Common
Stock Equivalent been made on the basis of the issuance only of the
number of additional shares of Common Stock actually issued upon
exercise, conversion or exchange of such Common Stock Equivalent and
thereupon only the number of additional shares of Common Stock actually
so issued shall be deemed to have been issued and only the
consideration actually received by the Company (computed as in this
Section 2(f)(i)) shall be deemed to have been received by the Company.
iii. The number of shares of Common Stock at any time
outstanding shall not include any shares thereof then directly or
indirectly owned or held by or for the account of the Company or its
wholly owned subsidiaries.
iv. Upon each adjustment of the Exercise Price as a result of
the calculations made in Section 2(d), (e) and (f) hereof, this Warrant
shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of shares of Common Stock obtained by (i)
multiplying the number of shares covered by this Warrant immediately
prior to such adjustment of the number of shares by the Exercise Price
in effect immediately prior to such adjustment of the Exercise Price
and (ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
v. For the purpose of this Section 2, the term "shares of
Common Stock" shall mean shares of (i) the class of stock designated as
the Common Stock at the date hereof or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from par value to no par
value, or from no par value to par value. If at any time, because of an
adjustment pursuant to Section 2(a), the Warrants shall entitle the
holders to purchase any securities other than shares of Common Stock,
thereafter the number of such other securities so purchasable upon
exercise of each Warrant and the Exercise Price of such securities
shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in this Section 2.
(h) Calculation of Exercise Price. The Exercise Price in
effect from time to time shall be calculated to four decimal places and rounded
to the nearest thousandth.
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Section 3. NOTICE OF ADJUSTMENTS. Whenever the Exercise Price or the
number of shares of Common Stock is required to be adjusted as provided in
Section 2, the Company shall forthwith compute the adjusted Exercise Price or
the number of shares of Common Stock issuable and shall prepare and mail to the
holder hereof a certificate setting forth such adjusted Exercise Price or such
number of shares of Common Stock, showing in reasonable detail the facts upon
which the adjustment is based.
Section 4. VOLUNTARY REDUCTION. (a) The Company may at its option, but
shall not be obligated to, at any time during the term of the Warrants, reduce
the then current Exercise Price by any amount selected by the Board of
Directors; provided that if the Company elects so to reduce the then current
Exercise Price, such reduction shall be irrevocable during its effective period
and remain in effect for a minimum of 30 days following the date of such
election, after which time the Company may, at its option, reinstate the
Exercise Price in effect prior to such reduction. Whenever the Exercise Price is
reduced, the Company shall mail to the holder a notice of the reduction at least
30 days before the date the reduced Exercise Price takes effect, stating the
reduced Exercise Price and the period for which such reduced Exercise Price will
be in effect.
(b) The Company may make such decreases in the Exercise Price,
in addition to those required or allowed by this Section 4, as shall be
determined by it, as evidenced by a certified resolution of the Board of
Directors delivered to the holders, to be advisable to avoid or diminish any
income tax to the holder resulting from any dividend or distribution of stock or
issuance of rights or warrants to purchase or subscribe for stock or from any
event treated as such for income tax purposes.
Section 5. MANDATORY EXERCISE.
(a) If (i) the Price of the Common Stock is greater than 150%
of the Exercise Price (as adjusted to reflect any stock split, combination,
reclassification, recapitalization, exchange, stock dividend or other
distribution payable in Common Stock with respect to shares of Common Stock) for
sixty (60) consecutive trading days in the principal market in which the Common
Stock is traded and (ii) the Company gives written notice (the "Company Notice")
to the holder hereof of the satisfaction of the condition in clause (i), then
within fifteen (15) days after the effective date of the Company Notice, the
holder hereof shall exercise all of the Warrants. If required by this Section 5,
the holder hereof agrees to exercise the Warrants, and to purchase shares of
Common Stock pursuant to the terms of this Warrant Certificate. If the holder
has not fulfilled its obligations to exercise the Warrants pursuant to this
Section 5 within fifteen (15) days after the holder's receipt of the Company
Notice, then (without limiting the Company's available remedies) (A) the
obligations of holder under this Section 5 shall continue but the purchase
rights otherwise represented by this Warrant Certificate shall terminate, (B)
the Company may thereafter refuse, in its sole discretion, to allow holder to
exercise the Warrants (including pursuant to this Section 5), (C) all
obligations of the Company under Sections 0, 0, 0 xxx 0 xxxxx xxxxxxxxx, (X) no
further adjustments to the Exercise Price shall be made unless the Company in
its sole discretion consents in writing. Each Warrant holder's obligations under
this Section 5(a) shall be subject to the expiration or termination of all
waiting periods (and any extensions thereof) applicable to exercise of such
holder's Warrants under the HSR Act (as defined below); provided that such
holder shall have certified in writing to the Company that a filing under the
HSR Act is required and provided further that such holder shall use its best
efforts to cause the expiration or termination of such waiting period to occur
as promptly as practicable.
(b) Holder represents and warrants to the Company that holder
has full corporate power and authority to execute, deliver, and perform this
Warrant Certificate and to consummate the transactions contemplated hereby. The
execution, delivery, and performance by holder of this Warrant Certificate have
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been duly authorized by all necessary corporate action of holder. This Warrant
Certificate has been duly executed and delivered by holder and constitutes a
valid and legally binding obligation of holder, enforceable against holder in
accordance with its terms, except that such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws
affecting creditors' rights generally and (ii) general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) The right to require exercise of the Warrants is hereby
declared by the parties hereto to be a unique right, the loss of which is not
readily susceptible to monetary quantification. Consequently, the parties hereto
agree that an action for specific performance of the exercise and purchase
obligations created by this Section 5 is an available remedy for the breach of
the provisions of this Section 5. If the Company is forced to institute legal
proceedings to enforce its rights in accordance with the provisions of this
Section 5, it shall be entitled to recover its reasonable attorneys' fees and
court costs incurred in enforcing such rights.
(d) Holder is executing this Warrant Certificate in order to
make and agree to the covenants, representations and warranties of holder
contained in this Section 5, which shall be binding upon the holder's successors
and assigns.
Section 6. NOTICES TO WARRANT HOLDERS. In the event:
(a) the Company shall authorize any consolidation or merger to
which the Company is a party and for which approval of any stockholders of the
Company is required, or of the conveyance or sale of all or substantially all of
the assets of the Company, or of any reclassification or change of the Common
Stock or other securities issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock (or other securities issuable upon the
exercise of the Warrants); or
(b) the Company shall declare any dividend (or any other
distribution) on the Common Stock or any other class of its capital stock, other
than dividends on the Shares, as defined in the Securities Purchase Agreement;
or
(c) the Company shall authorize the granting to the holders of
Common Stock or any other class of its capital stock of rights or warrants to
subscribe for or purchase any shares of any class or series of capital stock or
any other securities convertible into or exchangeable for shares of stock; or
(d) of the voluntary or involuntary dissolution, liquidation
or winding up of the Company;
then the Company shall cause to be sent to the holder hereof, at least 30 days
prior to the applicable record date hereinafter specified, or promptly in the
case of events for which there is no record date, a written notice stating (x)
the date for the determination of the holders of record of shares of Common
Stock (or other securities issuable upon the exercise of the Warrants) entitled
to receive any such dividends or other distribution, (y) the initial expiration
date set forth in any tender offer or exchange offer for shares of Common Stock
(or other securities issuable upon the exercise of the Warrants), or (z) the
date on which
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any of the events specified in subsections (a)-(d) is expected to become
effective or consummated, and the date as of which it is expected that holders
of record of shares of Common Stock (or other securities issuable upon the
exercise of the Warrants) shall be entitled to exchange such shares for
securities or other property, if any, deliverable upon any such event. Failure
to give such notice or any defect therein shall not affect the legality or
validity of any such event, or the vote upon any such action.
Section 7. REPORTS TO WARRANT HOLDERS. The Company will cause to be
delivered, by first- class mail, postage prepaid, to holder at such holder's
address appearing hereon, or such other address as the holder shall specify, a
copy of any reports delivered by the Company to the holders of Common Stock.
Section 8. COVENANTS OF THE COMPANY. The Company covenants and agrees
that:
(a) Until the Expiration Date, the Company shall at all times
reserve and keep available, out of the aggregate of its authorized but unissued
Common Stock (and other securities), for the purpose of enabling it to satisfy
any obligation to issue shares of Common Stock (and other securities) upon the
exercise of the Warrants, the number of shares of Common Stock (and other
securities) issuable upon the exercise of such Warrants.
(b) The Company shall pay all expenses, taxes and other
charges payable in connection with the preparation, issuance and delivery of new
warrant certificates on transfer of the Warrants.
(c) All Common Stock (and other securities) which may be
issued upon exercise of the Warrants shall upon issuance be validly issued,
fully paid, non-assessable and free from all preemptive rights and all taxes,
liens and charges with respect to the issuance thereof, and will not be subject
to any restrictions on voting or transfer thereof except as set forth in the
Securities Purchase Agreement, any stockholders agreement and except for
restrictions arising under state or federal securities laws.
(d) All original issue taxes payable in respect of the
issuance of shares of Common Stock to the registered holder hereof upon the
exercise of the Warrants shall be borne by the Company; provided, that the
Company shall not be required to pay any tax or charge imposed in connection
with any transfer involved in the issuance of any certificates representing
shares of Common Stock (and other securities) in any name other than that of the
registered holder hereof, and in such case the Company shall not be required to
issue or deliver any certificate representing shares of Common Stock (and other
securities) until such tax or other charge has been paid or it has been
established to the Company's satisfaction that no such tax or charge is due.
(e) As soon as practicable after the receipt from the holder
of this Warrant Certificate of notice of the intent to exercise of a number of
warrants sufficient to require a filing under the Xxxx-Xxxxx- Xxxxxx Antitrust
Improvements Act of 1976 and the rules, regulations and formal interpretations
thereunder, as amended from time to time (the "HSR Act") (and after the receipt,
if applicable, of the notice referred to in Rule 803.5 of the HSR Act), but in
any event no later than the 15th business day after receipt of such notice(s),
the Company will (i) if required by the HSR Act, prepare and file with Antitrust
Division of the Department of Justice (the "DOJ") and the Federal Trade
Commission (the "FTC") the Notification and Report Form (accompanied by all
documentary attachments contemplated thereby) required by the HSR Act, (ii) upon
request of the holder, request early termination of the waiting period imposed
by the HSR Act, and (iii) coordinate and cooperate with the holder in responding
to formal and informal requests for additional information and documentary
material from the DOJ and the FTC in connection with such filing.
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Notwithstanding the foregoing, if the holder is required to file with the DOJ
and FTC the Notification and Report Form solely as a result of its holding
and/or purchasing shares of Common Stock issued pursuant to this Warrant (with
no regard to any other securities held by such holder or its affiliates) and the
holder certifies such fact to the Company in writing, the Company agrees to
promptly reimburse the holder for all fees and expenses for the preparation and
filing of such form, including all legal expenses and filing fees.
(f) The Company will not change the par value of the Common
Stock from par value $0.01 per share to any higher par value which exceeds the
Exercise Price then in effect, and will reduce the par value of the Common Stock
upon any event described in Section 2 that would, but for this provision, reduce
the Exercise Price below the par value of the Common Stock.
Section 9. NO RIGHTS AS STOCKHOLDER. The holder of the Warrants shall
not, by virtue of holding such Warrants, be entitled to any rights of a
stockholder of the Company either at law or in equity, and the rights of the
holder of the Warrants are limited to those expressed herein.
Section 10. NOTICES. All notices, requests, demands, and other
communications required or permitted to be given or made hereunder by any party
hereto shall be in writing and shall be deemed to have been duly given or made
if (i) delivered personally, (ii) sent by prepaid overnight courier service, or
(iii) sent by telecopy or facsimile transmission, answer back requested, to the
parties at the following addresses (or at such other addresses as shall be
specified by the parties by like notice):
if to the holder, to such holder at:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxx
Telefax: 000-000-0000
with a copy to:
Gardere Xxxxx Xxxxxx, LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: X.X. Xxxxxxx III
Telefax: 000-000-0000
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and, if to the Company:
Xxxxxxx Exploration Company
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
Telecopier: (000) 000-0000
Such notices, requests, demands, and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended recipient, or (ii) if sent by telecopy or facsimile transmission, when
the answer back is received.
Section 11. GOVERNING LAW. This Warrant Certificate shall be governed
by and construed in accordance with the laws of the State of New York without
regard to principles of conflict of laws.
Section 12. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT CERTIFICATES.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Warrant
Certificate, then, in the absence of notice to the Company that such Warrant
Certificate has been acquired by a bona fide purchaser, the Company shall
execute and deliver, in exchange for or in lieu of the lost, stolen, destroyed
or mutilated Warrant Certificate, a substitute Warrant Certificate of the same
tenor and evidencing a like number of Warrants.
Section 13. TRANSFER. Subject to Section 14 and the Securities Purchase
Agreement, transfer of Warrants, in whole or in part, shall be registered on the
books of the Company to be maintained for such purposes, upon surrender of the
Warrant Certificate representing such Warrants at the principal office of the
Company referred to in Section 10, together with a written assignment
substantially in the form of Exhibit B to this Warrant Certificate and a written
agreement, in form reasonably satisfactory to the Company, setting forth the new
Warrant holder's agreement to be bound by all of the terms of this Warrant
Certificate (including without limitation Section 14) and Section 5.5 of the
Securities Purchase Agreement, each duly executed by the holder, and funds
sufficient to pay any transfer taxes payable by such holder upon the making of
such transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant Certificate or Warrant Certificates in
the name of the assignee or assignees and in the denomination specified in such
instrument of assignment, and shall issue to the assignor a new Warrant
Certificate or Warrant Certificates evidencing the portion of the old Warrant
Certificate not so assigned, and the old Warrant Certificate shall promptly be
canceled.
Section 14. RESTRICTIONS ON TRANSFERABILITY. The Warrant Certificate
represents Warrants referred to in the Securities Purchase Agreement. Said
Securities Purchase Agreement is hereby incorporated by reference in and made a
part of this instrument and is hereby referred to for a description of certain
limitations of rights, obligations, duties and immunities thereunder of the
Company and the holders, and in the event of any conflict between the terms of
this Warrant Certificate and the provisions of the Securities Purchase
Agreement, the provisions of the Securities Purchase Agreement shall control.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed as of __________, 2001, by the undersigned, thereunto duly
authorized.
XXXXXXX EXPLORATION COMPANY
By:
-------------------------------------------
Xxxxx X. Xxxxx
Vice President
[INVESTOR NAME]
By:
-------------------------------------------
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EXHIBIT A
ELECTION TO EXERCISE
[To be executed on exercise of the Warrant evidenced by this Warrant
Certificate pursuant to Section 1(a)]
TO: Xxxxxxx Exploration Company
The undersigned, the holder of the Warrants evidenced by the
attached Warrant Certificate, hereby irrevocably elects to exercise
_________________ of such Warrants, and herewith makes payment
of_____________________ representing the aggregate Exercise Price thereof, and
requests that the certificate representing the securities issuable hereunder be
issued in the name of ___________________________ and delivered to
________________, whose address is ___________________________________________.
The Exercise Price is being paid by bank draft or cashier's
check.
Dated:
-----------------
Name of Registered Holder:
-------------------------
Signature:
-----------------------------------------
Title:
---------------------------------------------
Address:
-------------------------------------------
Notice: The above signature(s) must correspond with the name as written
on the face of the Warrant Certificate in every detail, without alteration or
enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of the attached Warrant
Certificate hereby sells, assigns and transfers unto the assignee named below
all of the rights of the undersigned under this Warrant Certificate, with
respect to the number of shares of Common Stock set forth below:
Name and Address of Assignee:
-------------------------------------------
No. of Shares of
Common Stock ______
and does hereby irrevocably constitute and appoint ____________________________
attorney-in-fact to register such transfer on the books of Xxxxxxx Exploration
Company maintained for that purpose, with full power of substitution in the
premises.
Dated:
---------------------------------
Name:
----------------------------------
Signature:
-----------------------------
Witness:
-------------------------------
The assignee named above hereby agrees to purchase and take the attached Warrant
Certificate pursuant to and in accordance with the terms and conditions of the
Warrant Certificate and Section 5.5 of the Securities Purchase Agreement, dated
as of ______________, 2001, between Xxxxxxx Exploration Company and the initial
holder named therein and agrees to be bound thereby.
Dated:
---------------------------------
Name:
----------------------------------
Signature:
-----------------------------
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EXHIBIT D TO
SECURITIES PURCHASE AGREEMENT
ESCROW AGREEMENT
THE ESCROW AGREEMENT, dated as of March 5, 2001 (the "Agreement"),
among Xxxxxxx Exploration Company, a Delaware corporation ("Xxxxxxx"), XXX
Merchant Banking Partners III, LP, a Delaware limited partnership ("MBP"), DLJ
Offshore Partners III, CV, a Netherlands Antilles limited partnership
("Offshore"), DLJMB Funding III, Inc., a Delaware corporation ("MB"), and DLJ
ESC II, LP, a Delaware limited partnership ("ESC,") and collectively with MBP,
Offshore and MB (the "Investors") and The Chase Manhattan Bank, a New York State
Bank, corporation (the "Escrow Agent").
WITNESSETH:
WHEREAS, Xxxxxxx and the Investors have entered into a Securities
Purchase Agreement of even date herewith (the "Securities Purchase Agreement")
pursuant to which Xxxxxxx is issuing and selling to the Investors and the
Investors are purchasing from Xxxxxxx an aggregate of 500,000 shares of
Brigham's Series A Preferred Stock (the "Shares") and warrants to acquire
2,105,263 shares of Brigham's Common Stock (the "Warrants");
WHEREAS, under Nasdaq rules, the Warrants may not be exercisable until
after approval of the Warrants and the issuance of the Warrants to the Investors
has been obtained from Brigham's stockholders;
WHEREAS, pursuant to the Securities Purchase Agreement, Xxxxxxx has
covenanted and agreed to submit for stockholder approval at its annual
stockholders' meeting, to be held on or before May 31, 2001, the Warrants and
the issuance of the Warrants to the Investors;
WHEREAS, certain stockholders of Xxxxxxx have entered into a
Stockholders Voting Agreement dated March 1, 2001 (the "Stockholders Voting
Agreement"), pursuant to which they have agreed to vote all of the shares of
Xxxxxxx Common Stock held by them on the record date for Brigham's annual
stockholders' meeting to approve the Warrants and the issuance of the Warrants
and the terms thereof;
WHEREAS, the stockholders that are parties to the Stockholders Voting
Agreement currently hold a majority of the outstanding shares of Xxxxxxx Common
Stock, but if a sufficient number of currently exercisable options, warrants or
other convertible securities were exercised or converted into Xxxxxxx Common
Stock on or before the record date for the Xxxxxxx annual stockholders' meeting,
such stockholders could hold less than a majority of the shares of Xxxxxxx
Common Stock outstanding on the record date for such meeting;
WHEREAS, in order to avoid the release of the purchase price for the
Shares and Warrants to Xxxxxxx and of the Shares and the Warrants to the
Investors prior to ensuring that such stockholder approval will be obtained,
Xxxxxxx and the Investors have agreed pursuant to the Securities Purchase
Agreement to escrow the purchase price, the Shares and the Warrants pursuant to
the terms hereof;
98
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein and in the Securities Purchase Agreement and
intending to be legally bound hereby, the parties hereby agree as follows:
1. Appointment and Agreement of Escrow Agent. Xxxxxxx and the Investors
hereby appoint the Escrow Agent to serve as, and the Escrow Agent
hereby agrees to act as, escrow agent upon the terms and conditions of
this Agreement.
2. Establishment of the Escrow Fund. The Investors shall deliver to the
Escrow Agent the amounts reflected opposite their names below and such
amounts are referred to herein collectively as the "Escrow Amount":
PERCENTAGE
OWNERSHIP
----------
MBP $7,181,440.00 72.54
Offshore 303,079.00 3.06
MB 667,141.00 6.74
ESC $1,748,340.00 17.66
============= =====
TOTAL $9,900,000.00 100%
The Escrow Agent shall hold the Escrow Amount and all interest and
other amounts earned thereon (the "Escrow Fund") in escrow pursuant to
this Agreement in account no. 0000000 21451-00 at The Chase Manhattan
Bank -- Houston, Texas, ABA No. 000000000, Trust Clearing Account No.
00101606270 (the "Escrow Account").
3. Deposit of Shares and Warrants. Xxxxxxx shall deliver to Escrow Agent
on the date hereof certificates representing the shares of Xxxxxxx
Preferred Stock (collectively referred to as the "Shares") and Warrant
Certificates to purchase shares of Xxxxxxx Common Stock (collectively
referred to as the "Warrants") issued in the names of the Investors in
amounts reflected opposite their names below:
PREFERRED
INVESTOR STOCK WARRANTS
-------- --------- ---------
MBP 362,699 1,527,154
Offshore 15,307 64,451
MB 33,694 141,869
ESC 88,300 371,789
========= =========
TOTAL 500,000 2,105,263
The Shares and Warrants are referred to herein collectively with the
Escrow Fund as the "Escrow Property." The Escrow Agent shall hold the
Shares and Warrants, together with the Escrow Fund, in the Escrow
Account.
4. Distributions of the Escrow Property. The Escrow Agent shall distribute
the Escrow Property in accordance with the following provisions:
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99
(a) The Escrow Agent shall release the Shares and Warrants to the
Investors, and shall release the Escrow Fund to Xxxxxxx, upon
receipt of a certificate executed by the Investors and Xxxxxxx
stating either of the following:
(i) That
(A) Xxxxxxx filed preliminary proxy materials with
the Securities and Exchange Commission (the "SEC") in
accordance with applicable rules under the Exchange
Act seeking stockholder approval at Brigham's annual
stockholders meeting to be held on or before May 31,
2001 (the "Annual Meeting") of the matters described
in the Stockholders' Voting Agreement dated as of
March 1, 2001 by and among Xxxxxxx and certain of its
stockholders (the "Stockholders' Voting Agreement"),
as more fully described in Section 5.7 of the
Securities Purchase Agreement,
(B) either (1) the SEC has notified Xxxxxxx (whether
orally or in writing) that it will not review such
proxy materials (which notice, if telephonic, shall
be certified to the Investors by Xxxxxxx in writing),
(2) the SEC has notified Xxxxxxx that it will review
such proxy materials, the SEC has completed such
review and Xxxxxxx has responded to all comments from
the SEC to the SEC's satisfaction, or (3) as of the
date of mailing of the proxy materials to
stockholders of Xxxxxxx, Xxxxxxx has not received any
notice, written or otherwise, from the SEC that the
SEC intends to review such proxy materials and upon
the occurrence of any of the events described in
subsection (1), (2) or (3) above, Xxxxxxx shall
promptly certify the occurrence of such event in
writing to the Investors; and
(C) as of the record date for the annual meeting to
be held in accordance with Section 5.7 of the
Securities Purchase Agreement, the parties to the
Stockholders' Voting Agreement held at least a
majority of the outstanding shares of Common Stock of
Xxxxxxx; or
(ii) That holders of a majority of the outstanding shares
of Common Stock have voted in favor of the matters
described in the Stockholders' Voting Agreement at
the Annual Meeting.
(b) The Escrow Agent shall release the certificates representing
all of the Shares and Warrants to Xxxxxxx, and shall release
the Escrow Fund to the Investors in the amounts reflected in
Section 2 hereof, upon receipt of a certificate executed by
the Investors and Xxxxxxx stating that holders of a majority
of the outstanding shares of Common Stock have failed to vote
in favor of the matters described in the Stockholders' Voting
Agreement at the Annual Meeting.
(c) The Escrow Agent shall release the certificates representing
the applicable Shares and Warrants, and shall release the
Escrow Fund, as set forth in either paragraph
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100
(a) or (b) above upon receipt of a certificate as set
forth in paragraph (a) or (b), respectively, signed
by only Xxxxxxx or the Investors, if (i) the party
signing such certificate also certifies that they
have provided a copy of such certificate to the other
parties to this Agreement in accordance with the
notice provisions hereof and (ii) ten (10) calendar
days shall have elapsed between the date on which the
Escrow Agent shall have received the certificate
required by paragraph (a) or (b) and the Escrow Agent
shall not have received any notice in accordance with
the notice provisions hereof from another party to
this Agreement protesting or otherwise disputing,
challenging or disagreeing with any assertion
contained in the certificate.
(d) In the event of any dispute under paragraph (c) above, Xxxxxxx
and the Investors have agreed to resolve such dispute by
binding arbitration pursuant to Section 10.8 of the Securities
Purchase Agreement. Upon receipt of a certificate from the
prevailing party directing the Escrow Agent to make a
distribution of the Shares, Warrants, and Escrow Fund, all as
specified in such certificate, which certificate is
accompanied by an arbitral order or award which states on its
face that it is rendered pursuant to the Securities Purchase
Agreement and provides for such distribution as set forth in
the certificate, the Escrow Agent shall distribute such
Shares, Warrants, and Escrow Fund as directed by such
certificate and final arbitral order or award. Any such
certificate and final arbitral order or award shall override
any notice or other document received by the Escrow Agent
pursuant to paragraph (c) above, except to the extent that
Escrow Agent has previously acted in accordance with the terms
of paragraphs (a) or (b) above.
(e) In the event that the Escrow Agent has not received a
certificate under paragraph (a), (b), (c) or (d) on or before
June 15, 2001 (the "Expiration Date"), the Escrow Agent shall
release the certificates representing the applicable Shares
and Warrants to Xxxxxxx, and shall release the Escrow Fund to
the Investors in the amounts reflected in Section 2 hereof,
upon receipt of a certificate on or after June 15, 2001
executed by the Investors requesting such distribution.
(f) Xxxxxxx and the Investors agree to deliver to the Escrow Agent
the certificates and such other instructions as may be
required hereunder in order to implement the provisions of
this Section 3.
5. Liquidation of the Escrow Fund. Whenever the Escrow Agent shall be
required to make payment from the Escrow Fund, the Escrow Agent shall
pay such amounts by liquidating the investments of the Escrow Fund, as
the case may be, to the extent necessary to pay such amounts in full
and in cash.
6. Maintenance of the Escrow Property: Termination of the Escrow Account.
(a) The Escrow Agent shall continue to maintain the Shares and
Warrants in the Escrow Account until the earlier of (i) the
time at which there shall be no funds in such Escrow Account;
and (ii) the termination of this Agreement.
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101
(b) Notwithstanding any other provision of this Agreement to the
contrary, at any time prior to the termination of the Escrow
Account, the Escrow Agent shall, if so instructed in a writing
signed by Xxxxxxx and the Investors, distribute the Escrow
Property and pay from the Escrow Fund, as instructed, to
Xxxxxxx and the Investors, as directed in such writing, the
amount of Shares, Warrants and cash so instructed (and if such
cash is not available, shall liquidate such investments of the
Escrow Fund as are necessary to make such payment).
7. Investment of Escrow Fund.
(a) The Escrow Agent shall invest and reinvest moneys on deposit
in the Escrow Fund, unless joint written notice to the
contrary is received from Xxxxxxx and the Investors, in any
combination of the following:
(i) readily marketable direct obligations of the
Government of the United States or any agency or
instrumentality thereof or readily marketable
obligations unconditionally guaranteed by the full
faith and credit of the Government of the United
States;
(ii) insured certificates of deposit of, or time deposits
with, any commercial bank that is a member of the
Federal Reserve System and which issues (or the
parent of which issues) commercial paper rated as
described in clause (c), is organized under the laws
of the United States or any State thereof and has
combined capital ad surplus of at least USD
1,000,000,000; or
(iii) commercial paper in an aggregate amount of no more
than USD 1,000,000 per issuer outstanding at any
time, issued by any corporation organized under the
laws of any State of the United States, rated at
least "Prime- I" (or the then equivalent grade) by
Xxxxx'x Investors Services, Inc. or "A- I" (or the
then equivalent grade) by Standard & Poors, Inc., or
(d) a mutual fund whose underlying investments are
represented by investments described in (i), (ii),
(iii) or a mutual fund rated "AAA."
(b) Initially the Escrow Agent shall invest and reinvest the
Escrow Fund in the FIDELITY PRIME NO. 76 MONEY MARKET FUND,
unless otherwise instructed in writing by Xxxxxxx and
Investors. Such written instructions, if any, referred to in
the foregoing sentence shall specify the type and identity of
the investments to be purchased and/or sold and shall also
include the name of the broker-dealer, if any, which Xxxxxxx
and the Investors direct the Escrow Agent to use in respect of
such investment, any particular settlement procedures
required, if any (which settlement procedures shall be
consistent with industry standards and practices), and such
other information as the Escrow Agent may require. The Escrow
Agent shall not be liable for failure to invest or reinvest
funds absent sufficient written direction. Unless the Escrow
Agent is otherwise directed in such written instructions, the
Escrow Agent may use a broker-dealer of its own selection,
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102
including a broker-dealer owned by or affiliated with the
Escrow Agent or any of its affiliates. The Escrow Agent or any
of its affiliates may receive compensation with respect to any
investment directed hereunder. It is expressly agreed and
understood by the parties hereto that the Escrow Agent shall
not in any way whatsoever be liable for losses on any
investments, including, but not limited to, losses from market
risks due to premature liquidation or resulting from other
actions taken pursuant to this Agreement.
(c) Receipt, investment and reinvestment of the Escrow Fund shall
be confirmed by the Escrow Agent as soon as practicable by an
account statement, and any discrepancies in any such account
statement shall be noted by Xxxxxxx and the Investors to the
Escrow Agent within 60 calendar days after receipt thereof.
Failure to inform the Escrow Agent in writing or any other
discrepancies in any such account statement within said 60-day
period shall conclusively be deemed confirmation of such
account statement in its entirety. For purposes of this
Section 7(c) each account statement shall be deemed to have
been received by the party to whom directed on the earlier to
occur of (i) actual receipt thereof and (ii) three business
days after the deposit thereof in the United States Mail,
postage prepaid.
8. Tax Matters. Xxxxxxx and the Investors shall provide the Escrow Agent
with their respective taxpayer identification numbers documented by a
Form W8 or Form W9 (or, in the case of Offshore such other form as may
be appropriate for a foreign company which is not a tax paying company
in the United States) upon execution of this Agreement. Failure to so
provide such forms may prevent or delay disbursements from the Escrow
Fund and may also result in the assessment of a penalty and the Escrow
Agent's being required to withhold tax on any interest or other income
earned on the Escrow Fund. Any payments of income shall be subject to
applicable withholding regulations then in force in the United States
or any other jurisdiction, as applicable.
9. Assignment of Rights to the Escrow Fund; Assignment of Obligations;
Successors. This Agreement may not be assigned by operation of law or
otherwise without the express written consent of the other parties
hereto (which consent, may be granted or withheld in the sole
discretion of such other parties). This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their
permitted assigns.
10. Escrow Agent.
(a) Except as expressly contemplated by this Agreement or by joint
written instructions from Xxxxxxx and the Investors, the
Escrow Agent shall not sell, transfer or otherwise dispose of
in any manner any portion of the Escrow Fund, except pursuant
to an order of a court of competent jurisdiction.
(b) The duties and obligations of the Escrow Agent shall be
determined solely by this Agreement, and the Escrow Agent
shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this
Agreement.
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(c) In the performance of its duties hereunder, the Escrow Agent
shall be entitled to rely upon any document, instrument or
signature believed by it in good faith to be genuine and
signed by any party hereto or an authorized officer or agent
thereof, and shall not be required to investigate the truth or
accuracy of any statement contained in any such document or
instrument. The Escrow Agent may assume that any person
purporting to give any notice in accordance with the
provisions of this Agreement has been duly authorized to do
so.
(d) The Escrow Agent shall not be liable for any error of
judgment, or any action taken, suffered or omitted to be
taken, hereunder except in the case of its gross negligence,
bad faith or willful misconduct. The Escrow Agent may consult
with counsel of its own choice and shall have full and
complete authorization and protection for any action taken or
suffered by it hereunder in good faith and in accordance with
the opinion of such counsel.
(e) The Escrow Agent shall have no duty as to the collection or
protection of the Escrow Fund or income thereon, nor as to the
preservation of any rights pertaining thereto, beyond the safe
custody of any such funds actually in its possession.
(f) As compensation for its services to be rendered under this
Agreement, the parties hereby agrees to pay Escrow Agent for
its services hereunder in accordance with Escrow Agent's fee
schedule as set forth in Exhibit A, as in effect from time to
time and to pay all expenses incurred by Escrow Agent in
connection with the performance of its duties and enforcement
of its rights hereunder and otherwise in connection with the
preparation, operation, administration and enforcement of this
Escrow Agreement, including, without limitation, attorneys'
fees, brokerage costs and related expenses incurred by Escrow
Agent. In addition the Escrow Agent shall be reimbursed upon
request for all expenses, disbursements and advances,
including reasonable fees of outside counsel, if any, incurred
or made by it in connection with the preparation of this
Agreement and the carrying out of its duties under this
Agreement. All such fees and expenses shall be charged to the
Escrow Account.
(g) Xxxxxxx and the Investors hereby jointly and severally
indemnify the Escrow Agent, its officers, directors, partners,
employees and agents (each herein called an "Indemnified
Party") against, and holds each Indemnified Party harmless
from, any and all expenses, including, without limitation,
attorneys' fees and court costs, losses, costs, damages and
claims, including, but not limited to, costs of investigation,
litigation and arbitration, tax liability and loss on
investments suffered or incurred by any Indemnified Party in
connection with or arising from or out of this Agreement,
except such acts or omissions as may result from the willful
misconduct or negligence of such Indemnified Party.
(h) The Escrow Agent may at any time resign by giving twenty
business days' prior written notice of resignation to Xxxxxxx
and the Investors. Xxxxxxx and the
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Investors may at any time jointly remove the Escrow Agent by
giving ten (10) business days' written notice signed by each
of them to the Escrow Agent. If the Escrow Agent shall resign
or be removed, a successor Escrow Agent, which shall be a bank
or trust company having its principal executive offices in
Houston, Texas, and which shall be appointed by Xxxxxxx and
the Investors by written instrument executed by Xxxxxxx and
the Investors and delivered to the Escrow Agent and to such
successor Escrow Agent and, thereupon, the resignation or
removal of the predecessor Escrow Agent shall become effective
and such successor Escrow Agent, without any further act, deed
or conveyance, shall become vested with all right, title and
interest to all cash and property held hereunder of such
predecessor Escrow Agent, and such predecessor Escrow Agent
shall, on the written request of Xxxxxxx, the Investors or the
successor Escrow Agent, execute and deliver to such successor
Escrow Agent all the right, title and interest hereunder in
and to the Escrow Fund of such predecessor Escrow Agent and
all other rights hereunder of such predecessor Escrow Agent.
If no successor Escrow Agent shall have been appointed within
twenty (20) Business Days of a notice of resignation by the
Escrow Agent, the Escrow Agent's sole responsibility shall
thereafter be to hold the Escrow Fund until the earlier of its
receipt of designation of a successor Escrow Agent, a joint
written instruction by Xxxxxxx and the Investors and
termination of this Agreement in accordance with its terms.
(i) Should any dispute arise involving the parties hereto or any
of them or any other person, firm or entity with respect to
this Escrow Agreement or the Escrow Fund, or should a
successor Escrow Agent fail to be designated as provided in
Section 10 hereof, or if Escrow Agent should be in reasonable
doubt as to what action to take, Escrow Agent shall have the
right, but not the obligation, either to (a) withhold delivery
of the Escrow Fund until the dispute is resolved, the
conflicting demands are withdrawn or its doubt is resolved or
(b) institute a petition for interpleader in any court of
competent jurisdiction to determine the rights of the parties
hereto. Should a petition for interpleader be instituted, or
should Escrow Agent be threatened with litigation or become
involved in litigation or binding arbitration in any manner
whatsoever in connection with this Agreement or the Escrow
Property, Xxxxxxx and the Investors hereby jointly and
severally agree to reimburse Escrow Agent for its attorneys'
fees and any and all other expenses, losses, costs and damages
incurred by Escrow Agent in connection with or resulting from
such threatened or actual litigation or arbitration prior to
any disbursement hereunder. In the event Escrow Agent is a
party to any dispute, Escrow Agent shall have the additional
right to refer such controversy to binding arbitration in
Houston, Xxxxxx County, Texas.
(j) In the event funds transfer instructions are given (other than
in writing at the time of execution of the Agreement), whether
in writing, by telefax, or otherwise, the Escrow Agent is
authorized to seek confirmation of such instructions by
telephone call-back to the person or persons designated on
Schedule A hereto, and the Escrow Agent may rely upon the
confirmations of anyone purporting to be the person or persons
so designated. The persons and telephone numbers for
call-
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backs may be changed only in writing actually received and
acknowledged by the Escrow Agent. The parties to this
Agreement acknowledge that such security procedure is
commercially reasonable. It is understood that the Escrow
Agent and the beneficiary's bank in any funds transfer may
rely solely upon any account numbers or similar identifying
number provided by either of the other parties hereto to
identify (i) the beneficiary, (ii) the beneficiary's bank, or
(iii) an intermediary bank. The Escrow Agent may apply any of
the escrowed funds for any payment order it executes using any
such identifying number, even where its use may result in a
person other than the beneficiary being paid, or the transfer
of funds to a bank other than the beneficiary's bank or an
intermediary bank, designated.
11. Termination. This Escrow Agreement shall terminate on the earlier of:
(a) the time on which there are no funds remaining in the Escrow
Account and (b) the date after the Expiration Date on which all claims
made in certificates described in Section 4 hereof delivered to the
Escrow Agent pursuant prior to the Expiration Date shall have been
resolved. The provisions in Sections 10(f) and 10(g) will survive
termination hereof.
12. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made
(and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by
telegram, by telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified
in a notice given in accordance with this Section 12):
(a) if to Xxxxxxx:
Xxxxxxx Exploration Company
0000 Xxxxxx Xxxxx Xxxxxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Chief Financial Officer
(b) Xxxxxxxx & Knight
0000 Xxxxxxx Xxx, Xxxxx 0000
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx Xxxx
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(c) if to either Investor:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxx
(d) Gardere Xxxxx Xxxxxx LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: X. X. Xxxxxxx III
(e) if to the Escrow Agent:
The Chase Manhattan Bank
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxx Xx
13. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Texas applicable to contracts
executed and to be performed entirely within that State.
14. Amendments. This Agreement may not be amended or modified except (a) by
an instrument in writing signed by, or on behalf of, Xxxxxxx, the
Investors and the Escrow Agent or (b) by a waiver in accordance with
Section 14 of this Agreement.
15. Waiver. Any party hereto may (i) extend the time for the performance of
any obligation or other act of any other party hereto or (ii) waive
compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument
in writing signed by the party or parties to be bound thereby. Any
waiver of any term or condition shall not be construed as a waiver of
any subsequent breach or a subsequent waiver of a same term or
condition, or a wavier of any other term or condition, of this
Agreement. The failure of any party to assert any of its rights
hereunder shall not constitute a waiver of any of such rights.
16. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic and legal substance of the transactions contemplated by this
Agreement is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties
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hereto shall renegotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in
a mutually acceptable manner in order that the transactions
contemplated by this Agreement be consummated as originally
contemplated to the fullest extent possible.
17. Entire Agreement. This Agreement and the Securities Purchase Agreement
constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, among Xxxxxxx, the Investors and
the Escrow Agent with respect to the subject matter hereof.
18. No Third Party Beneficiaries. This Agreement is for the sole benefit of
the parties hereto and their permitted assigns and nothing herein,
express or implied, is intended to or shall confer upon any other
person or entity any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
19. Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.
20. Counterparts. This Agreement may be executed in one or more
counterparts, and by different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all
of which when taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective officers
hereunto duly authorized.
XXXXXXX EXPLORATION COMPANY
--------------------------------------
By:
-----------------------------------
Its:
----------------------------------
DLJ MERCHANT BANKING PARTNERS III, LP
By: DLJ MERCHANT BANKING III, INC.
Its: Managing General Partner
--------------------------------------
Name:
---------------------------------
Title:
-------------------------------
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DLJ OFFSHORE PARTNERS III, CV
By: DLJ MERCHANT BANKING III, INC.
Its: Managing General Partner
--------------------------------------
Name:
---------------------------------
Title:
-------------------------------
DLJMB FUNDING III, INC.
--------------------------------------
By:
-----------------------------------
Its:
----------------------------------
DLJ ESC II LP
By: DLJ LBO PLANS MANAGEMENT
CORPORATION
Its: General Partner
--------------------------------------
Name:
---------------------------------
Title:
-------------------------------
THE CHASE MANHATTAN BANK
--------------------------------------
By:
-----------------------------------
Its:
----------------------------------
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SCHEDULE "A"
Telephone Number(s) for Call-backs and Person(s)
Designated to Confirm Funds Transfer Instructions
IF TO INVESTORS:
NAME TELEPHONE NUMBER
---- ----------------
Xxxxxx X. Xxxxxxx (000) 000-0000
IF TO XXXXXXX:
NAME TELEPHONE NUMBER
---- ----------------
Xxxxxx Xxxxxxx (000) 000-0000
13
