EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BELCO OIL & GAS CORP.
BELCO ACQUISITION SUB, INC.
AND
CODA ENERGY, INC.
DATED AS OF OCTOBER 31, 1997
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..................................................... 1
ARTICLE II
THE MERGER ..................................................... 11
Section 2.1 The Merger..................................... 11
Section 2.2 Effective Time................................. 11
Section 2.3 Certificate of Incorporation and Bylaws
of the Surviving Corporation.................. 11
Section 2.4 Board of Directors and Officers................ 11
Section 2.5 Conversion of Company Shares................... 11
Section 2.6 Surrender of Certificates; Payment for
and Exchange of Shares........................ 12
Section 2.7 No Fractional Warrants......................... 13
Section 2.8 Adjustment Event............................... 13
Section 2.9 No Further Transfers........................... 13
Section 2.10 Dissenting Shares.............................. 14
Section 2.11 Conversion of Buyer Sub Securities............. 14
Section 2.12 Stockholders to Have No Further Rights......... 14
ARTICLE III
THE CLOSING..................................................... 14
Section 3.1 Closing........................................ 14
Section 3.2 Deliveries at Closing.......................... 14
ARTICLE IV
TAURUS DISPOSITION; PURCHASE PRICE ADJUSTMENTS.................. 15
Section 4.1 Taurus Disposition............................. 15
Section 4.2 Additional Purchase Price Adjustments.......... 16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER......................... 16
Section 5.1 Organization and Qualification................. 16
Section 5.2 Authority Relative to this Agreement........... 16
Section 5.3 Reports and Financial Statements............... 18
Section 5.4 Absence of Certain Changes or Events........... 19
Section 5.5 Sufficient Funds............................... 19
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Section 5.6 No Broker's Fees............................... 19
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................... 19
Section 6.1 Organization and Qualification................. 19
Section 6.2 Capitalization................................. 20
Section 6.3 Subsidiaries................................... 21
Section 6.4 Authority Relative to this Agreement........... 21
Section 6.5 Reports and Financial Statements............... 22
Section 6.6 Absence of Certain Changes or Events........... 23
Section 6.7 Litigation and Claims.......................... 23
Section 6.8 Information in Agreement and Company
Disclosure Schedule........................... 24
Section 6.9 Employee Benefits Plans; Labor Matters......... 24
Section 6.10 Environmental Matters.......................... 26
Section 6.11 Public Utility Holding Company Act............. 27
Section 6.12 Oil and Gas Contracts.......................... 27
Section 6.13 Takeover Provisions Inapplicable............... 27
Section 6.14 Finder's Fees.................................. 27
Section 6.15 Compliance with Applicable Laws................ 28
Section 6.16 Taxes.......................................... 28
Section 6.17 Certain Agreements............................. 29
Section 6.18 Engineering Reports............................ 29
Section 6.19 Oil and Gas Reserve Information................ 30
Section 6.20 Title to Property.............................. 31
Section 6.21 Transfer Requirements and Preference Rights.... 31
Section 6.22 Condemnation................................... 31
Section 6.23 Insurance...................................... 32
Section 6.24 Affiliate Transactions......................... 32
Section 6.25 Taurus......................................... 32
Section 6.26 Supplemental Information Regarding HSR......... 32
ARTICLE VII
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME................. 33
Section 7.1 Conduct of Business by the Company............. 33
Section 7.2 Obligations of Buyer and the Company........... 35
Section 7.3 Notice of Breach............................... 35
ARTICLE VIII
ADDITIONAL AGREEMENTS........................................... 36
Section 8.1 Access and Information......................... 36
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Section 8.2 Reasonable Efforts............................. 36
Section 8.3 No Solicitation................................ 37
Section 8.4 Employee Matters............................... 37
Section 8.5 Indemnification................................ 37
Section 8.6 Stockholder Meeting............................ 39
Section 8.7 Buyer's Obligations Regarding Buyer Sub........ 39
ARTICLE IX
CONDITIONS PRECEDENT............................................ 39
Section 9.1 Conditions to Each Party's Obligations......... 39
Section 9.2 Conditions to Obligation of the Company........ 40
Section 9.3 Conditions to Obligations of Buyer............. 40
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER............................... 42
Section 10.1 Termination.................................... 42
Section 10.2 Effect of Termination.......................... 43
Section 10.3 Amendment...................................... 43
Section 10.4 Waiver......................................... 43
ARTICLE XI
GENERAL PROVISIONS.............................................. 43
Section 11.1 Non-Survival of Representations and Warranties. 43
Section 11.2 Notices........................................ 43
Section 11.3 Expenses....................................... 45
Section 11.4 Publicity...................................... 45
Section 11.5 Interpretation................................. 45
Section 11.6 Severability................................... 45
Section 11.7 Arbitration.................................... 46
Section 11.8 Miscellaneous.................................. 46
Section 11.9 Effective Date................................. 47
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Exhibits
A - Form of Warrant Agreement
B - Form of JEDI Agreement
C - Form of Buyer Counsel Opinion (▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.)
D-1 - Form of Company Counsel Opinion (▇▇▇ ▇▇▇▇▇▇▇▇)
D-2 - Form of Company Counsel Opinion (▇▇▇▇▇▇ and ▇▇▇▇▇, LLP)
E - Form of Registration Rights Agreement
F - Form of Shareholders Agreement
G - Form of ▇▇▇▇▇▇ Employment Agreement Amendment
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of October 31, 1997 (the
"Agreement"), is by and among Belco Oil & Gas Corp., a Nevada corporation
("Buyer"), Belco Acquisition Sub, Inc., a Delaware corporation and a wholly-
owned subsidiary of Buyer ("Buyer Sub"), and Coda Energy, Inc., a Delaware
corporation (the "Company").
R E C I T A L S:
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WHEREAS, it is the intention of the parties that the Company will
become a wholly-owned subsidiary of Buyer through the merger of Buyer Sub into
the Company pursuant to the terms of this Agreement (the "Merger") and Buyer Sub
will cease to exist as a separate entity.
WHEREAS, the Board of Directors of the Company has determined it
advisable and in the best interests of the Company to enter into this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement, JEDI (as defined herein) and Buyer are executing and delivering the
JEDI Agreement (as defined herein);
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Company and each of the owners of Company Common Stock (as
defined herein), Company Preferred Stock (as defined herein) and Outstanding
Options (as defined herein), are executing and delivering the Stockholders
Allocation Agreement (as defined herein);
WHEREAS, concurrently with the execution and delivery of this
Agreement, each of the owners of Company Common Stock, Company Preferred Stock
and Outstanding Options are executing and delivering the Shareholder Agreement
(as defined herein);
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
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As used in this Agreement, the following terms shall have the
following meanings:
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding, or investigation by or before any Governmental Entity.
"Adjustment Event" shall have the meaning set forth in Section 2.8.
"Affiliate" shall mean, as to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control of such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Notwithstanding the
foregoing, "Affiliate" shall not include any wholly-owned Subsidiary of the
Company.
"Agreement" shall have the meaning set forth in the opening paragraph.
"Alternative Taurus Disposition Agreement" shall have the meaning set
forth in Section 4.1.
"Business Day" shall mean any day, other than Saturday, Sunday, or any
legal holiday recognized by banking institutions in the State of Texas.
"Buyer" shall have the meaning set forth in the opening paragraph
hereof.
"Buyer Common Stock" shall mean the Common Stock, par value $0.01 per
share, of the Company.
"Buyer Material Adverse Effect" shall have the meaning set forth in
Section 5.1.
"Buyer SEC Reports" shall have the meaning set forth in Section 5.5.
"Buyer Sub" shall have the meaning set forth in the opening paragraph
hereof.
"Cash for Company Preferred Stock Conversion Number" shall have the
meaning set forth in Section 2.5(b).
"Cash Purchase Price" shall have the meaning set forth in Section 2.5.
"CERCLA" shall mean the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended.
"Certificate of Merger" shall have the meaning set forth in Section
2.2.
"Claims" shall have the meaning set forth in Section 11.7.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Date" shall have the meaning set forth in Section 3.1.
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"Code" shall have the meaning set forth in Section 6.9(b).
"Commission" shall have the meaning set forth in Section 5.3.
"Commonly Controlled Entity" shall have the meaning set forth in
Section 6.9(b).
"Company" shall have the meaning set forth in the opening paragraph.
"Company Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company.
"Company Disclosure Schedule" shall have the meaning set forth in
Section 6.1.
"Company Indenture" shall mean the Indenture, dated as of March 18,
1996, by and among the Company, Diamond Energy Operating Company, Taurus,
Electra Resources, Inc. and Texas Commerce Bank National Association, as
Trustee, as amended by the First Supplemental Indenture, dated as of April 25,
1996, by and among said parties.
"Company Material Adverse Effect" shall have the meaning set forth in
Section 6.1.
"Company Preferred Stock" shall mean the 15% Cumulative Preferred
Stock, par value $0.01 per share, of the Company.
"Company SEC Reports" shall have the meaning set forth in Section 6.5.
"Company Voting Debt" shall have the meaning set forth in Section 6.2.
"Confidentiality Agreement" shall have the meaning set forth in
Section 8.1(b).
"Defensible Title" shall mean, subject to and except for the Permitted
Encumbrances, (i) the title of the Company and its Subsidiaries to the
Properties is free and clear of all Liens and defects of any kind whatsoever,
(ii) as to those ▇▇▇▇▇ and Leases for which a "Working Interest" and a "Net
Revenue Interest" are set forth in the LKA Reserve Report, the Company or its
Subsidiaries (other than Taurus) are entitled to receive the percentage of all
Hydrocarbons produced, saved and marketed from such ▇▇▇▇▇ and Leases in an
amount not less than the Net Revenue Interest set forth in the LKA Reserve
Report for such Well or Lease, without reduction, suspension or termination
throughout the duration of the productive life of such ▇▇▇▇▇ and Leases (except
as set forth in the LKA Reserve Report), and such party is obligated to bear the
percentage of costs and expenses related to the maintenance, development and
operation of such ▇▇▇▇▇ and Leases in an amount not greater than the Working
Interest set forth in the LKA Reserve Report, without increase throughout the
productive life of such ▇▇▇▇▇ and Leases, except for increases that also result
in a proportionate increase in the Net Revenue Interest as set forth in the LKA
Reserve Report or as otherwise specified in the LKA Reserve
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Report, and (iii) as to those ▇▇▇▇▇ and Leases that were acquired subsequent to
December 31, 1996, the Company or its Subsidiaries (other than Taurus) are
entitled to receive the percentage of all Hydrocarbons produced, saved and
marketed from such ▇▇▇▇▇ and Leases in an amount not less than the Net Revenue
Interest set forth in Schedule 6.20 of the Company Disclosure Schedule for such
Well or Lease, without reduction, suspension or termination throughout the
duration of the productive life of such ▇▇▇▇▇ and Leases (except as set forth in
such Schedule 6.20), and such party is obligated to bear the percentage of costs
and expenses related to the maintenance, development and operation of such ▇▇▇▇▇
and Leases in an amount not greater than the Working Interest set forth in such
Schedule 6.20, without increase through the productive life of such ▇▇▇▇▇ and
Leases, except for increases that also result in a proportionate increase in the
Net Revenue Interest as set forth in such Schedule 6.20 or as otherwise
specified in the LKA Reserve Report.
"DGCL" shall mean the Delaware General Corporation Law.
"Dissenting Shares" shall have the meaning set forth in Section 2.10.
"Effective Time" shall have the meaning set forth in Section 2.2.
"Employment Agreements" shall mean those employment agreements
described on Schedule 6.9(d) of the Company Disclosure Schedule between the
Company, on the one hand, and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, J.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇. ▇. ▇▇▇▇▇▇▇, III, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Environmental Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, or orders of any Governmental Entity pertaining
to health or the environment currently in effect in any or all jurisdictions in
which the Company and its Subsidiaries own property or conduct business,
including, without limitation, the Clean Air Act, as amended, CERCLA, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Safe Drinking Water Act, as amended, the
Toxic Substances Control Act, as amended, the Hazardous & Solid Waste Amendments
Act of 1984, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous Materials Transportation Act, as amended, the
Oil Pollution Act of 1990, as amended ("OPA"), any state laws implementing the
foregoing federal laws, any state laws pertaining to the handling of oil and gas
exploration and production wastes or the use, maintenance, and closure of pits
and impoundments, and all other environmental conservation or protection laws,
including laws and regulations governing NORM.
"Equipment" shall mean all equipment, fixtures, physical facilities,
tank batteries, surface and subsurface machinery, inventory, spare parts,
supplies, tools and other tangible personal property owned or leased on the date
hereof by the Company or any of its Subsidiaries, including, without limitation,
casing, tubing, tubular goods, rods, pumping units and engines, Christmas trees,
derricks, platforms, separators, compressors, gun barrels, gathering lines, flow
lines, tanks, and communication systems and equipment.
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"ERISA" shall have the meaning set forth in Section 6.9(a).
"Estimated Proved Reserves" shall have the meaning set forth in
Section 6.18(a).
"Exchange Act" shall have the meaning set forth in Section 5.2(b).
"GAAP" shall mean generally accepted accounting principles, applied on
a consistent basis.
"Governmental Entity" shall have the meaning set forth in Section
6.15.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, as amended.
"Hydrocarbons" means oil, gas, condensate, casinghead gas, natural gas
liquids, mineral and other liquid or gaseous hydrocarbons.
"JEDI" shall mean Joint Energy Development Investments Limited
Partnership, a Delaware limited partnership.
"JEDI Agreement" shall mean the JEDI Agreement, dated as of the date
hereof, by and between Buyer and JEDI in the form attached hereto as Exhibit B.
"Law" shall have the meaning specified in Section 6.15.
"Leases" shall mean fee mineral interests, oil, gas and mineral
leasehold interests and other leasehold interests, subleases, mineral
servitudes, licenses, concessions, working interests, farmout or farmin rights,
royalty, overriding royalty, net profits or other non-working or carried
interests, operating rights, participation rights and other rights and interests
under operating, pooling and unitization agreements.
"Liens" shall mean all liens, mortgages, security interests, pledges,
claims, judgments, options and other encumbrances of any kind.
"LKA Reserve Report" shall have the meaning set forth in Section
6.18(a).
"Material Company Asset" shall mean any asset or group of related
assets of the Company or any of its Subsidiaries that has a value, either as
reflected on the latest audited consolidated balance sheet of the Company or on
the LKA Reserve Report, of $500,000 or more.
"Merger" shall have the meaning set forth in the recitals hereof.
"Merger Consideration" shall have the meaning set forth in Section
2.5.
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"▇▇▇▇▇▇" shall have the meaning set forth in Section 4.2.
"▇▇▇▇▇▇ Employment Agreement Amendment" shall have the meaning set
forth in Section 4.2.
"Net Revenue Interest" means an overall interest in Hydrocarbons
produced from or attributable to the Leases and ▇▇▇▇▇, after deducting all
lessors' royalties, overriding royalties, production payments, and other
interests or burdens on Hydrocarbons produced from the Leases and ▇▇▇▇▇.
"NORM" means naturally occurring radioactive materials.
"Oil and Gas Contracts" means any contracts, commitments or agreements
for the purchase or sale of Hydrocarbons.
"Oil and Gas Interests" means, when used with respect to the Company
or its Subsidiaries (excluding Taurus), direct and indirect interests in and
rights with respect to Hydrocarbons and related properties and assets of any
kind and nature, direct or indirect, including (a) working, royalty, and
overriding royalty interests, production payments, operating rights, net profits
interests, other nonworking interests, and nonoperating interests, (b) all
revenues from the items referred to in clause (a) above, (c) all contracts in
connection with the items referred to in either clause (a) or (b) above and
claims and rights thereto (including all oil and gas leases, operating
agreements, unitization and pooling agreements and orders, divisions orders,
transfer orders, mineral deeds, royalty deeds, oil and gas sales, exchange and
processing contracts and agreements, and in each case, interests thereunder),
reversionary interests, reservations and concessions, (d) all real property,
including fee interests, fixtures, easements, rights of way, licenses, permits,
leases and other interests associated with, appurtenant to, or necessary for the
operation of any of the foregoing but excluding the corporate headquarters
office building of the Company located in Dallas, Texas; and (e) all interests
in equipment and machinery, including tanks, batteries, pipelines, and gathering
systems, pumps, water plants, electric plants, gasoline and gas processing
plants, refineries, office equipment, furniture, computers, telephones and
other tangible personal property and fixtures associated with, appurtenant to,
or necessary for the operation of any of the foregoing.
"Option Consideration" shall have the meaning set forth in Section
2.5(c).
"Other Acquisition Transaction" shall have the meaning specified in
Section 8.3.
"Outstanding Options" shall have the meaning set forth in Section 6.2.
"PBGC" shall have the meaning set forth in Section 6.9(b).
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"Permits" shall have the meaning specified in Section 6.19.
"Permitted Encumbrances" shall mean any of the following: (i) any
liens for taxes and assessments not yet delinquent or, if delinquent, that are
being contested in good faith in the ordinary course of business by appropriate
proceedings; (ii) any obligations or duties to any municipality or public
authority with respect to any franchise, grant, certificate, license or permit,
and all applicable laws (other than those arising due to default or violation);
(iii) any easements, rights-of-way, servitudes, permits and other rights in
respect of surface operations, pipelines or the like, and easements for
pipelines, power lines and other similar rights-of-way, and encroachments, on,
over or in respect of any property or lands of the Company and its Subsidiaries
or over which such party owns rights-of-way, easements, permits or licenses,
that do not materially interfere with the operation of any property or lands for
exploration and production of Hydrocarbons or related operations; (iv) all
royalties, overriding royalties, net profits interests, production payments,
carried interests, reversionary interests, calls on production and other burdens
on or deductions from the proceeds of production that do not operate to (A)
reduce the Net Revenue Interest of the Company and its Subsidiaries in any Lease
or Well below that set forth in the LKA Reserve Report, or Schedule 6.20 of the
Company Disclosure Schedule, for such Lease or Well, or (B) increase the Working
Interest of the Company and its Subsidiaries in any Lease or Well above that set
forth in the LKA Reserve Report, or Schedule 6.20 of the Company Disclosure
Schedule, without a proportionate increase in the Net Revenue Interest of such
party except as set forth in the LKA Reserve Report or Schedule 6.20 of the
Company Disclosure Schedule; (v) the terms and conditions of all leases,
production sales contracts (to the extent identified in the Company Disclosure
Schedule), division orders, contracts for refining or processing of
Hydrocarbons, unitization and pooling designations, declarations, orders and
operating agreements, agreements of development, area of mutual interest
agreements, farmout agreements, gas balancing agreements, processing agreements,
pipeline, gathering and transportation agreements, injection, repressuring and
recycling agreements, carbon dioxide purchase or sales agreements, salt water or
other disposal agreements, and seismic or geophysical permits or agreements, to
the extent that such contracts and agreements do not interfere materially with
the operation, value or use of the assets of the Company or its Subsidiaries and
do not (A) reduce the Net Revenue Interest of the Company and its Subsidiaries
in any Lease or Well below that set forth in the LKA Reserve Report, or Schedule
6.20 of the Company Disclosure Schedule, for such Lease or Well, or (B) increase
the Working Interest of the Company and its Subsidiaries in any Lease or Well
above that set forth in the LKA Reserve Report, or Schedule 6.20 of the Company
Disclosure Schedule, for such Lease or Well, without a proportionate increase in
the Net Revenue Interest of the applicable party except as set forth in the LKA
Reserve Report or Schedule 6.20 of the Company Disclosure Schedule; (vi)
conventional rights of reassignment prior to abandonment; (vii) materialmen's,
mechanics', repairmen's, employees', contractors', operators', tax and other
similar liens or charges arising in the ordinary course of business incidental
to construction, maintenance or operation of any of the assets and securing
payments not yet delinquent or, if delinquent, that are being contested in good
faith in the ordinary course of business by appropriate proceedings; (viii)
Liens created or arising under the Revolving Credit
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Facility; and (ix) any other encumbrances that do not interfere materially with
the operation, value or use of assets of the Company or its Subsidiaries.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, association, trust or other enterprise or any government or
political subdivisions or any agency, department or instrumentality thereof.
"Plan" shall have the meaning set forth in Section 6.9(a).
"Preference Rights" shall mean any right or agreement that enables or
may enable any Person to purchase, acquire, or otherwise encumber shares of
Company Common Stock or Company Preferred Stock or any Property of the Company
of its Subsidiaries, or any interest therein or in a portion thereof, as a
result of or in connection with any sale, assignment, encumbrance, or other
transfer of any interest in shares of Company Common Stock or Company Preferred
Stock or the Properties of the Company or its Subsidiaries.
"Preferred Stock Consideration" shall have the meaning set forth in
Section 2.5(b).
"Property" or "Properties" shall mean Leases, ▇▇▇▇▇, Surface
Contracts, Equipment and other assets reflected in the consolidated financial
statements of the Company included in the Company SEC Reports as being owned by
the Company, including, without limitation, those Leases and ▇▇▇▇▇ identified in
the LKA Reserve Report and in Schedule 6.20 of the Company Disclosure Schedule
but excluding Leases, ▇▇▇▇▇, Surface Contracts, Equipment and other assets sold
by the Company or its Subsidiaries since January 1, 1997.
"RCRA" shall mean the Resource Conservation and Recovery Act of 1976,
as amended.
"Redemption Value of the Company Preferred Stock" shall mean the
aggregate amount of all payments that would be required to be made by the
Company if the Company were to redeem the Company Preferred Stock effective as
of the Closing Date.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, in substantially the form attached hereto as Exhibit E, to be entered
into by and between Buyer and JEDI.
"Revolving Credit Facility" means the revolving credit facility in the
aggregate principal amount of $250,000,000 provided by NationsBank of Texas,
N.A., as agent, and other financial institutions listed in the Credit Agreement,
dated as of February 14, 1996, by and among such parties and the Company, as
amended by the First Amendment thereto dated as of August 1, 1996 by and among
such parties and the Company.
"Securities Act" shall have the meaning set forth in Section 5.2(b)
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"Shareholder Agreement" means the Shareholder Agreement, dated as of
the date hereof, by and among Buyer and each owner of Company Common Stock,
Company Preferred Stock and Outstanding Options in substantially the form
attached hereto as Exhibit F.
"Specified Parties" shall mean Henderson, Freeman, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇.
"Stockholders Agreement" shall have the meaning set forth in Section
6.2.
"Stockholders Allocation Agreement" means the Stockholders Allocation
Agreement, dated as of the date hereof, by and among the Company and each owner
of Company Common Stock, Company Preferred Stock and Outstanding Options.
"Subsidiary" means, as to any Person, (a) any corporation more than
50% of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (b) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Surface Contracts" shall mean all fee interests, leasehold
interests, estates, servitudes, easements, privileges, right-of-way agreements,
licenses, permits, or other agreements relating to the use or ownership of
surface and subsurface properties and structures which as of or after April 30,
1997 were owned by the Company and it Subsidiaries and used, or held for use, in
connection with the exploration, production or development of Hydrocarbons from
the ▇▇▇▇▇ and Leases, or lands pooled, unitized or otherwise combined therewith,
or for the gathering, transportation or the disposal of water and other
materials produced therefrom.
"Surviving Corporation" shall have the meaning set forth in Section
2.1.
"Taurus" shall mean Taurus Energy Corp., a Texas corporation and a
wholly-owned subsidiary of the Company.
"Taurus Disposition" shall have the meaning set forth in Section 4.1.
"Taurus Disposition Agreement" shall have the meaning set forth in
Section 4.1.
"Tax or "Taxes" shall mean all federal, state, local and foreign
income, profits, franchise, gross receipts, payroll, sales, employment, use,
property, withholding, excise and other taxes, duties and assessments of any
nature whatsoever together with all interest, penalties and additions imposed
with respect to such amounts.
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"Tax Return" shall mean any return, declaration, report, estimate,
claim for refund, information return, statement, request for extension, or other
similar document relating to any Tax, including any schedule or attachment
thereto, and including any amendment thereof.
"Transfer Requirement" shall mean any consent, approval,
authorization, or permit of, or filing with or notification to, any Person which
is required to be obtained, made, given, or complied with for or in connection
with any sale, assignment, transfer, delegation, or encumbrance of shares of
Company Common Stock or Company Preferred Stock of the Company or its
Subsidiaries or any interest therein.
"Warrants" shall mean warrants to purchase shares of Buyer Common
Stock as provided in the Warrant Agreement.
"Warrant Agreement" shall mean the Warrant Agreement, in substantially
the form attached hereto as Exhibit A, to be entered into by and between the
Company and JEDI.
"Warrant Certificates" shall mean certificates representing Warrants
as provided in the Warrant Agreement.
"Warrants for Company Preferred Stock Conversion Number" shall have
the meaning set forth in Section 2.5(b).
"Warrant Shares" shall have the meaning specified in Section 5.2(c).
"▇▇▇▇▇" shall mean oil, condensate, or natural gas ▇▇▇▇▇, water source
▇▇▇▇▇, and water and other types of injection or disposal ▇▇▇▇▇ and systems,
whether producing, shut-in, or temporarily abandoned.
"Working Interest" shall mean that share of all of the costs,
expenses, burdens, and obligations of any type or nature attributable to the
development, maintenance, or operation of any Lease or Well.
ARTICLE II
THE MERGER
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Section 2.1 The Merger. Upon the terms and subject to the
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satisfaction or, if permissible, waiver of the conditions of this Agreement, at
the Effective Time, Buyer Sub shall be merged with and into the Company in
accordance with the applicable provisions of the DGCL and the separate existence
of Buyer Sub shall thereupon cease, and the Company, which shall be and which is
hereinafter sometimes referred to as the "Surviving Corporation," shall continue
its corporate existence under the laws of the State of Delaware under the name
"Coda Energy, Inc." From and after the Effective Time, the Surviving Corporation
shall possess all of the rights,
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privileges, powers and franchises of a public as well as of a private nature,
and be subject to all the restrictions, disabilities and duties of each of the
constituent corporations, all as set forth in Section 259 of the DGCL.
Section 2.2 Effective Time. On the date of the closing of the
--------------
Merger referred to in Section 3.1 hereof, a Certificate of Merger ("Certificate
of Merger") in such form as required by, and executed in accordance with, the
relevant provisions of the DGCL shall be filed with the Secretary of State of
Delaware. The Merger shall become effective at the time (the "Effective Time")
of such filing or at such later time as the parties hereto shall have provided
in such certificate.
Section 2.3 Certificate of Incorporation and Bylaws of the
----------------------------------------------
Surviving Corporation. The Certificate of Incorporation and Bylaws of the
---------------------
Company, each as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation and Bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by law.
Section 2.4 Board of Directors and Officers. The persons set forth
-------------------------------
on Schedule 2.4 shall be the directors and officers of the Surviving
------------
Corporation, each of such directors and officers to hold office, subject to the
applicable provisions of the Certificate of Incorporation and Bylaws of the
Surviving Corporation, until their successors are duly elected and qualified, or
their earlier death, resignation or removal.
Section 2.5 Conversion of Company Shares. At the Effective Time,
----------------------------
by virtue of the Merger and without any action on the part of the holder
thereof:
(a) each share of Company Common Stock outstanding immediately prior
to the Effective Time (other than (i) shares of Company Common Stock held in
treasury of the Company or owned by any Subsidiary of the Company or (ii)
Dissenting Shares in respect of which appraisal rights are properly exercised
and perfected) shall be canceled and extinguished and be converted into the
right to receive cash in an amount equal to the quotient obtained by dividing
(i) One Hundred Thirty-Four Million Dollars ($134,000,000), as such amount may
be adjusted pursuant to Sections 4.1 and 4.2 (as adjusted, the "Cash Purchase
Price") by (ii) the sum of (A) the aggregate number of shares of Company Common
Stock outstanding immediately prior to the Effective Time and (B) the aggregate
number of shares of Company Common Stock subject to outstanding options
immediately prior to the Effective Time (the "Common Stock Consideration"),
without interest and less any required withholding of Taxes;
(b) each share of Company Preferred Stock outstanding immediately
prior to the Effective Time (other than (i) shares of Company Preferred Stock
held in treasury of the Company or owned by any Subsidiary of the Company or
(ii) Dissenting Shares in respect of which appraisal rights are properly
exercised and perfected) shall be canceled and extinguished and be converted
into the right to receive (i) cash in an amount equal to the quotient obtained
by dividing (A) the difference obtained by subtracting (x) Ten Million Dollars
($10,000,000) from
-11-
(y) the Redemption Value of the Company Preferred Stock by (B) the aggregate
number of shares of Company Preferred Stock outstanding immediately prior to the
Effective Time (the "Cash for Company Preferred Stock Conversion Number"), (ii
such number of Warrants equal to the quotient obtained by dividing (A) 1,666,667
by (B) the aggregate number of shares of Company Preferred Stock outstanding
immediately prior to the Effective Time (the "Warrants for Company Preferred
Stock Conversion Number") and (iii) the right to receive from the Company an
amount equal to the quotient obtained by dividing (A) the aggregate amount
received by the Company from JEDI (or its assignee) after the Effective Time
pursuant to the exercise of the Taurus Purchase Option (as such term is defined
in the JEDI Agreement), by (B) the aggregate number of shares of Company
Preferred Stock outstanding immediately prior to the Effective Time
(collectively, the "Preferred Stock Consideration"), without interest and less
any required withholding of Taxes; and
(c) each option to acquire Company Common Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive the product obtained by multiplying (i) the quotient obtained by
dividing (A) the Cash Purchase Price by (B) the sum of the aggregate number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time and the aggregate number of shares of Company Common Stock subject to
options outstanding immediately prior to the Effective Time by (ii the number of
shares of Company Common Stock subject to such option (the "Option
Consideration"), without interest and less any required withholding of Taxes.
The Common Stock Consideration, the Preferred Stock Consideration and the Option
Consideration shall be referred to herein as the "Merger Consideration."
Section 2.6 Surrender of Certificates; Payment for and Exchange of
------------------------------------------------------
Shares.
------
(a) At the Closing, upon the surrender to Buyer of certificate(s)
representing shares of Company Common Stock, Buyer shall cause to be paid to
each person surrendering certificate(s) for which they are the record owner cash
in an amount equal to the number of shares of Company Common Stock represented
by such certificate(s) multiplied by the Common Stock Consideration. At the
Closing, upon the surrender to Buyer of certificate(s) representing shares of
Company Preferred Stock, Buyer shall cause to be issued or paid to each person
surrendering certificate(s) for which they are the record owner (i) cash in an
amount equal to the product obtained by multiplying (A) the number of shares of
Company Preferred Stock represented by such certificate(s) by (B) the Cash for
Company Preferred Stock Conversion Number and (ii a Warrant Certificate
representing the number of whole Warrants equal to the product obtained by
multiplying (A) the number of shares of Company Preferred Stock represented by
such certificate(s) by (B) the Warrants for Company Preferred Stock Conversion
Number. At the Closing, Buyer shall cause to be paid to the person who held an
option to purchase shares of Company Common Stock immediately prior to the
Effective Time cash in an amount equal to the Option Consideration. Upon
surrender of certificate(s) representing shares of Company Common Stock or
shares of Company Preferred Stock, as the case may be, as provided above, Buyer
will
-12-
make the payments of cash Merger Consideration by wire transfer of immediately
available funds to accounts designated by each owner of Company Common Stock,
Company Preferred Stock and options to purchase Company Common Stock at least
two Business Days prior to such surrender or delivery, as the case may be.
(b) Until surrendered in accordance with the provisions hereof, each
certificate representing shares of the Company Common Stock outstanding
immediately prior to the Effective Time shall, except as provided in the
following sentence, be deemed for all purposes from and after the Effective Time
to solely represent the right to receive the Common Stock Consideration as
provided in Section 2.5(a). Until surrendered in accordance with the provisions
hereof, each certificate representing shares of the Company Preferred Stock
outstanding immediately prior to the Effective Time shall be deemed for all
purposes from and after the Effective Time to solely represent the right to
receive the Preferred Stock Consideration as provided in Section 2.5(b). Each
option outstanding immediately prior to the Effective Time shall be deemed for
all purposes from and after the Effective Time to solely represent the right to
receive the Option Consideration as provided in Section 2.5(c).
(c) In the event that any certificate(s) for Company Common Stock or
Company Preferred Stock shall have been lost, stolen or destroyed, Buyer shall
pay or issue in exchange for such lost, stolen or destroyed certificate(s), upon
the making of an affidavit of that fact by the holder thereof and providing a
bond or other surety reasonably satisfactory to Buyer, the Merger Consideration
as may be required pursuant to this Agreement.
Section 2.7 No Fractional Warrants. No fractions of a Warrant
----------------------
shall be issued in the Merger.
Section 2.8 Adjustment Event. In the event of any change in Buyer
----------------
Common Stock between the date of this Agreement and the Effective Time by reason
of any stock dividend, split-up, reclassification, recapitalization,
combination, exchange of shares or the like (an "Adjustment Event"), the
Warrants for Company Preferred Stock Conversion Number and the exercise price of
the Warrants shall be appropriately adjusted.
Section 2.9 No Further Transfers. After the Effective Time, there
--------------------
shall be no transfers on the stock transfer books of the Surviving Corporation
of any shares of Company Common Stock or Company Preferred Stock which were
outstanding immediately prior to the Effective Time. After the Effective Time,
there shall be no exercise of options of the Company which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates for shares of Company Common Stock or Company Preferred Stock are
presented to the Surviving Corporation for transfer, or options of the Company
are presented for exercise, they shall be canceled and exchanged for the Merger
Consideration as provided herein.
Section 2.10 Dissenting Shares. Notwithstanding anything in this
-----------------
Agreement to the contrary, shares that are issued and outstanding immediately
prior to the Effective Time and
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which are held by stockholders who have properly exercised appraisal rights with
respect thereto under Section 262 of the DGCL (the "Dissenting Shares") shall
not be converted into or represent the right to receive the Merger Consideration
as provided in Sections 2.5 and 2.6, but the holders of Dissenting Shares shall
be entitled to receive such payment of the appraised value of such shares held
by them from the Surviving Corporation as shall be determined pursuant to
Section 262 of the DGCL; provided, however, that if any such holder shall have
failed to perfect or shall withdraw or lose the right to appraisal and payment
under the DGCL, each such holder's shares shall thereupon be deemed to have been
converted as of the Effective Time into the right to receive the Merger
Consideration, without any interest thereon and less any required withholding of
taxes as provided in Section 2.5, and upon surrender of the certificate(s)
representing such shares, in the manner provided in Section 2.6, such shares
shall no longer be Dissenting Shares.
Section 2.11 Conversion of Buyer Sub Securities. At the Effective
----------------------------------
Time, each share of common stock, par value $0.01 per share, of Buyer Sub issued
and outstanding immediately prior to the Effective Time shall be converted, by
virtue of the Merger and without any action on the part of the holder thereof,
into one fully paid and nonassessable share of the common stock of the Surviving
Corporation.
Section 2.12 Stockholders to Have No Further Rights. At and after
--------------------------------------
the Effective Time, the holder of a certificate representing shares of Company
Common Stock or Company Preferred Stock (a "Certificate") shall cease to have
any rights as a stockholder of the Company, except for (i) the right to
surrender such Certificate in exchange for the Merger Consideration to which
such holder is entitled under this Agreement, or (ii) the rights available under
the DGCL for Dissenting Shares.
ARTICLE III
THE CLOSING
-----------
Section 3.1 Closing. Unless this Agreement is terminated pursuant
-------
to Section 10.1 and subject to the satisfaction or, if permissible, waiver of
the conditions set forth in Article IX, the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place (i) at the
offices of ▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P., Dallas, Texas, at 11:00 A.M. local time on
November 26, 1997 (or December 3, 1997 if either Buyer or the Company has made
the election in Section 10.1(b)) or (ii) at such other date, time and place as
Buyer and the Company shall agree upon in writing. The date on which the
Closing occurs is referred to herein as the "Closing Date."
Section 3.2 Deliveries at Closing. Subject to the provisions of
---------------------
Articles IX and X, at the Closing:
-14-
(a) There will be delivered to Buyer and the Company the certificates
and other documents and instruments the delivery of which are contemplated under
Article IX; and
(b) Buyer, Buyer Sub and the Company will cause appropriate documents
necessary to effect the Merger to be filed in accordance with Section 251 of the
DGCL and shall take any and all other lawful actions and do any and all other
lawful things necessary to cause the Merger to become effective.
ARTICLE IV
TAURUS DISPOSITION; PURCHASE PRICE ADJUSTMENTS
----------------------------------------------
Section 4.1 Taurus Disposition. (a) The Company shall use
------------------
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things reasonably necessary, proper or advisable to
consummate a transaction, on or before November 25, 1997 (or December 2, 1997 if
the election under Section 10.1(b) has been made), providing for the sale of
Taurus, whether by merger, sale of all or substantially all of the assets of
Taurus, sale of all of the capital stock of Taurus or otherwise, to any party,
including JEDI (the "Taurus Disposition"), as soon as reasonably practicable
after the date of this Agreement on terms no less favorable to the Company than
the terms of that certain Stock Purchase Agreement, dated October 1, 1997,
between the Company and Star Acquisition Co., LLC, a Nevada limited liability
company, as such agreement may be amended with the written consent of Buyer,
which consent shall not be unreasonably withheld, and as such agreement may be
amended to extend the closing date of the Taurus Disposition provided therein to
a date not later than November 25, 1997 (which amendment shall not require the
consent of Buyer) (the "Taurus Disposition Agreement"), provided, that, with
respect to a Taurus Disposition involving a purchaser of Taurus other than Star
Acquisition Co., LLC, the agreement relating thereto shall provide for a price,
form of consideration and Tax effect with respect to Buyer and the Company as
are set forth on Schedule 6.25(b) of the Company Disclosure Schedule and such
other general terms that are no less favorable to Coda than those provided in
the Taurus Disposition Agreement, such other general terms being subject to the
consent of Buyer, which consent shall not be unreasonably withheld (any such
other agreement providing for a Taurus Disposition is referred to herein as an
"Alternative Taurus Disposition Agreement"). Except as otherwise provided in the
Taurus Disposition Agreement or any Alternative Taurus Disposition Agreement and
except for funds not in excess of $50,000 contributed to Taurus for capital
expenditures not otherwise reimbursed by Star Acquisition Co., LLC under the
Taurus Disposition Agreement or the purchaser of Taurus under any Alternative
Taurus Disposition Agreement, neither the Company nor any of its Subsidiaries
(other than Taurus) shall make any investment in or capital contribution to
Taurus, make any advance or contribution of working capital to fund capital
expenditures of Taurus (other than capital expenditures approved by the Company
prior to the date of this Agreement as listed on Schedule 6.25(a) of the Company
Disclosure Schedule), engage in any transaction with Taurus not in conformance
with past practice or which would otherwise transfer value to Taurus (including
the assumption of liabilities), unless Buyer shall otherwise consent in writing.
The
-15-
Company shall keep Buyer reasonably informed of the status of the transactions
relating to the Taurus Disposition pursuant to the Taurus Disposition Agreement
or any Alternative Taurus Disposition Agreement.
(b) In the event that, prior to or at the Closing, Coda receives cash
proceeds from a Taurus Disposition, the Cash Purchase Price shall be increased
by the amount of such cash proceeds provided that any such increase to the Cash
Purchase Price shall not exceed the amount set forth under the heading "Sales
Proceeds" on Schedule 6.25(b) of the Company Disclosure Schedule.
Section 4.2 Additional Purchase Price Adjustments. The Cash
-------------------------------------
Purchase Price shall be reduced by the aggregate amount of payments payable to
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") pursuant to that certain Amendment to Employment
Agreement, dated as of the date hereof, between the Company and ▇▇▇▇▇▇ in the
form attached hereto as Exhibit G (the "▇▇▇▇▇▇ Employment Agreement Amendment").
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. Buyer is a corporation
------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has the corporate power to carry on its business as it is
now being conducted. Buyer is duly qualified as a foreign corporation and is in
good standing in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities make such qualification
necessary, except where the failure to be so qualified or in good standing would
not, individually or in the aggregate, have a direct or indirect material
adverse effect on the business, assets, condition (financial or otherwise),
liabilities or operations of Buyer or Buyer's ability to consummate the
transactions contemplated by this Agreement (a "Buyer Material Adverse Effect").
Buyer Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the corporate power to carry on
its business as it is now being conducted.
Section 5.2 Authority Relative to this Agreement. (a) Buyer has
------------------------------------
the requisite corporate power and authority to enter into this Agreement, the
Warrant Agreement, the Registration Rights Agreement and the JEDI Agreement and
to carry out its obligations hereunder and thereunder. The execution and
delivery of this Agreement, the Warrant Agreement, the Registration Rights
Agreement and the JEDI Agreement and the consummation of the transactions
contemplated hereby and thereby by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. The execution and delivery of
this Agreement by Buyer Sub and the consummation of the transactions
contemplated hereby by Buyer Sub have
-16-
been duly authorized by all necessary corporate action on the part of Buyer Sub.
Buyer Sub has the requisite corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. This Agreement has been
duly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery of this Agreement by the Company, this Agreement
constitutes a legal, valid and binding obligation of Buyer enforceable in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The Warrant Agreement has been duly
authorized by all necessary corporate action on the part of Buyer and, when
executed and delivered by Buyer at the Closing, will be duly executed and
delivered by Buyer and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, will constitute a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought. The Registration Rights Agreement has been duly authorized by all
necessary corporate action on the part of Buyer and, when executed and delivered
by Buyer at the Closing, will be duly executed and delivered by Buyer and,
assuming the due authorization, execution and delivery thereof by JEDI, will
constitute a legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The JEDI Agreement has been duly authorized
by all necessary corporate action on the part of Buyer and, when executed and
delivered by Buyer at the Closing, will be duly executed and delivered by Buyer
and, assuming the due authorization, execution and delivery thereof by JEDI and
the Company, will constitute a legal, valid and binding obligation of Buyer,
enforceable in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought. This Agreement has
been duly executed and delivered by Buyer Sub and, assuming the due
authorization, execution and delivery of this Agreement by the Company, this
Agreement constitutes a legal, valid and binding obligation of Buyer Sub
enforceable in accordance with its terms except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally and except that the availability of equitable
remedies, including specific performance, is subject to the discretion of the
court before which any proceeding therefor may be brought.
(b) Neither the execution, delivery and performance of this Agreement,
the Warrant Agreement nor the Registration Rights Agreement by Buyer nor the
consummation of the transactions contemplated hereby and thereby by Buyer will
(i) conflict with or violate the
-17-
Articles of Incorporation or Bylaws of Buyer or (ii) result in any breach or
constitute a default with or without notice or lapse of time, or both, or give
rise in others of any rights of termination, cancellation or acceleration, under
any indenture, contract, license, franchise, permit, order, decree, concession,
lease, instrument, judgment, statute, law, ordinance, rule or regulation
applicable to Buyer or its assets, other than, in the case of clause (ii) only,
breaches, defaults, violations and losses of rights that would not have a Buyer
Material Adverse Effect. Neither the execution, delivery and performance of this
Agreement by Buyer Sub nor the consummation of the transactions contemplated
hereby and thereby by Buyer Sub will (i) conflict with or violate the
Certificate of Incorporation or Bylaws of Buyer Sub or (ii) result in any breach
or constitute a default with or without notice or lapse of time, or both, or
give rise in others of any rights of termination, cancellation or acceleration,
under any indenture, contract, license, franchise, permit, order, decree,
concession, lease, instrument, judgment, statute, law, ordinance, rule or
regulation applicable to Buyer or its assets, other than, in the case of clause
(ii) only, breaches, defaults, violations and losses of rights that would not
have a Buyer Material Adverse Effect. No filing or registration with, or
authorization, consent or approval of, any governmental or regulatory body or
authority or third party is necessary for the consummation by Buyer or Buyer Sub
of the transactions contemplated by this Agreement, the Warrant Agreement or the
Registration Rights Agreement except (i) for filings required to be made under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") after the
Closing, (ii) for the filing of a registration statement pursuant to the
Securities Act of 1933, as amended (the "Securities Act") in connection with the
registration of the Warrant Shares pursuant to the Registration Rights Agreement
and filings under state securities laws in connection therewith, (iii) the
filing of a Merger Certificate pursuant to the DGCL and (iv) where the failure
to make any such filing or registration or to obtain such authorization, consent
or approval would not have a Buyer Material Adverse Effect, provided that the
representation of Buyer and Buyer Sub in this sentence, as it relates to
compliance with the HSR Act, is subject to the accuracy of the representation of
the Company set forth in Section 6.26 hereof.
(c) The Buyer Warrants have been duly authorized by all necessary
corporate action on the part of Buyer, and, when issued at the Closing, the
Buyer Warrants will be validly issued, fully paid and nonassessable. The shares
of Buyer Common Stock issuable pursuant to the Buyer Warrants (the "Warrant
Shares") have been duly authorized and, when issued upon exercise of the Buyer
Warrants in accordance with the terms of the Warrant Agreement and payment of
the applicable exercise price therefor, will be validly issued, fully paid and
nonassessable.
Section 5.3 Reports and Financial Statements. As of their
--------------------------------
respective dates, Buyer's (i) Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, as filed with the Securities and Exchange Commission
(the "Commission"), (ii) Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1996, June 30, 1996, September 30, 1996, March 31, 1997 and June 30,
1997, as filed with the Commission, (iii) proxy statements related to all
meetings of its stockholders (whether annual or special) held since March 31,
1996 and (iv) all other reports on Form 8-K and registration statements declared
effective by the Commission
-18-
since March 31, 1996, except registration statements on Form S-8 relating to
employee benefit plans, which are all the documents (other than preliminary
material) that Buyer was required to file with the Commission since March 31,
1996 (all items in clauses (i) through (iv) being referred to herein
collectively as the "Buyer SEC Reports") complied in all material respects with
the requirements of the Securities Act, or the Exchange Act, as the case may be,
and the rules and regulations of the Commission thereunder applicable to such
Buyer SEC Reports. As of their respective dates, the Buyer SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they mere made, not misleading. As of
their respective dates, the audited consolidated financial statements and
unaudited interim financial statements of Buyer included in the Buyer SEC
Reports complied in all material respects with applicable accounting
requirements of the Securities Act and the Exchange Act, and with the published
rules and regulations of the Commission with respect thereto. The financial
statements included in the Buyer SEC Reports (i) have been prepared in
accordance with GAAP during the periods presented (except as may be indicated
therein or in the notes thereto or, in the case of the unaudited statements,
subject to normal year-end audit adjustments and except for the fact that such
unaudited statements do not contain all notes required by GAAP), (ii) present
fairly, in all material respects, the financial position of Buyer as of the
dates thereof and the consolidated results of its operations and cash flow for
the periods then ended (except as may be indicated therein or in the notes
thereto, or, in the case of the unaudited interim financial statements, subject
to normal year-end audit adjustments and any other adjustments described therein
and except for the fact that certain information and notes have been condensed
or omitted in accordance with the Securities Act and the Exchange Act and the
rules promulgated thereunder) and (iii) are, in all material respects, in
accordance with the books of account and records of Buyer. Any reports or other
material filed by Buyer with the Commission after the date hereof and prior to
the Closing Date (other than preliminary material) shall be deemed to be
included in the defined term "Buyer SEC Reports" for purposes of this Agreement
and Buyer shall be deemed to have made the representations set forth in this
Section 5.3 in respect of such reports or other material and any financial
statements set forth therein.
Section 5.4 Absence of Certain Changes or Events. Except as
------------------------------------
contemplated by this Agreement or as disclosed in any of Buyer SEC Reports filed
prior to the date of this Agreement, there have not been since June 30, 1997,
any change or condition (financial or otherwise) of any character (whether or
not in the ordinary course of business) individually or in the aggregate having,
or which could reasonably be expected to have, a Buyer Material Adverse Effect
(other than (i) changes or conditions in the oil and gas industry, including
changes in the prices realized or to be realized from the sale of oil or gas,
which have a general effect on, or which could reasonably be expected to have a
general effect on, the business, assets, condition (financial or otherwise),
liabilities or operations of companies in the oil and gas industry and (ii
changes in the price of Buyer Common Stock).
Section 5.5 Sufficient Funds. Buyer has or will have available to
----------------
it, at the time Buyer is required to pay for the shares of Company Common Stock
and Company Preferred Stock
-19-
pursuant to Article II hereof, sufficient funds to permit it to pay the cash
portion of the Merger Consideration.
Section 5.6 No Broker's Fees. Neither Buyer nor Buyer Sub has not
----------------
made any arrangements with any broker, finder or investment banker that would
require the Company to pay any fee or commission if the transactions
contemplated by this Agreement are not consummated.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Buyer and Buyer Sub as
follows:
Section 6.1 Organization and Qualification. The Company is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power to carry on its business as
it is now being conducted. The Company is duly qualified as a foreign
corporation and is in good standing in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified or in
good standing would not, individually or in the aggregate, have a direct or
indirect material adverse effect on the business, assets, condition (financial
or otherwise), liabilities or operations of the Company and its Subsidiaries,
taken as a whole, or its ability to consummate the transaction contemplated by
this Agreement (a "Company Material Adverse Effect"); provided that, for
purposes of any representation and warranty made pursuant to Article VI that is
qualified by reference to a Company Material Adverse Effect only, the phrase "a
direct or indirect material adverse effect on the business, assets, condition
(financial or otherwise), liabilities or operations of the Company and its
Subsidiaries, taken as a whole" shall be deemed to mean any such material
adverse effect that would cause Buyer and its Subsidiaries collectively to
suffer or experience claims, losses, damages, liabilities, diminution in value
of the business, assets or operations of the Company or its Subsidiaries or
other adverse economic impact from a breach of such representation and warranty
that in the aggregate would exceed $1.0 million if the Merger were to be
consummated. Complete and correct copies of the charter and bylaws or
comparable organizational documents of the Company and each of its Subsidiaries
as of the date hereof have been previously provided to Buyer, and a complete
list of each jurisdiction in which the Company is duly qualified as a foreign
corporation has been delivered to Buyer as Schedule 6.1 of a disclosure schedule
delivered by the Company to Buyer on the date of this Agreement (the "Company
Disclosure Schedule").
Section 6.2 Capitalization. The authorized capital stock of the
--------------
Company consists of 1,000,000 shares of Company Common Stock and 40,000 shares
of Company Preferred Stock. As of the date of this Agreement, 913,611 shares of
Company Common Stock were outstanding, no shares of
-20-
Company Common Stock were held in the treasury of the Company, no shares of
Company Common Stock were held by Subsidiaries of the Company and 20,000 shares
of Company Preferred Stock were outstanding. Schedule 6.2 of the Company
Disclosure Schedule sets forth a complete and accurate list of the holders of
record of the issued and outstanding shares of Company Common Stock and Company
Preferred Stock as of the date hereof, specifying the ownership thereof by each
of the Company's stockholders. All the outstanding shares of Company Common
Stock and Company Preferred Stock are validly issued, fully paid and non-
assessable and were issued free of preemptive rights. As of the date hereof,
there are no bonds, debentures, notes or other evidences of indebtedness having
the right to vote on any matters on which the Company's stockholders may vote
("Company Voting Debt") issued or outstanding. Except for options to acquire
31,989 shares of Company Common Stock at an exercise price of $0.01 per share
pursuant to the stock option agreements described on Schedule 6.2 of the Company
Disclosure Schedule (the "Outstanding Options") and except as authorized in the
Stockholders Agreement dated as of October 30, 1995, as amended by Amendment No.
1 to Stockholders Agreement dated as of January 10, 1996 (as amended, the
"Stockholders Agreement"), there are no options, warrants, calls or other
rights, agreements or commitments outstanding obligating the Company to issue,
deliver or sell shares of its capital stock or debt securities, or obligating
the Company to grant, extend or enter into any such option, warrant, call or
other such right, agreement or commitment. Except as provided in the
Stockholders Agreement and pursuant to Section 4.13 of the Company Indenture,
the Company is not obligated to make any payment of cash or property in respect
of any shares of capital stock or debt securities in connection with the
transactions contemplated by this Agreement.
Section 6.3 Subsidiaries. Schedule 6.3 of the Company Disclosure
------------
Schedule lists all Subsidiaries of the Company. Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as it is now being conducted. Each
Subsidiary is duly qualified as a foreign corporation, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified or in good standing would not, individually
or in the aggregate, have a Company Material Adverse Effect. Schedule 6.3 of
the Company Disclosure Schedule sets forth a complete list of each jurisdiction
in which each Subsidiary of the Company is duly qualified as a foreign
corporation. All the outstanding shares of capital stock of each Subsidiary are
validly issued, fully paid and nonassessable and are owned by the Company, free
and clear of any Liens, claims or encumbrances. There are no existing options,
warrants, calls or other rights, agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of any of
the Subsidiaries of the Company other than as provided in the Taurus Disposition
Agreement, any Alternative Taurus Disposition Agreement and the JEDI Agreement.
Other than the Subsidiaries of the Company or as otherwise set forth in Schedule
6.3 of the Company Disclosure Schedule, the Company does not directly or
indirectly own any interest in any other corporation, partnership, joint venture
or other business association or entity, excluding joint interest operations of
oil and gas ▇▇▇▇▇ and drilling ventures arising in the ordinary course of
business.
-21-
Section 6.4 Authority Relative to this Agreement. (a) The Company
------------------------------------
has the requisite corporate power and authority to enter into this Agreement and
the corporate power and authority to carry out its obligations hereunder. The
execution and delivery of this Agreement by the Company and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery of this Agreement by Buyer and Buyer Sub, this Agreement
constitutes a legal, valid and binding obligation of the Company enforceable in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought.
(b) Except as set forth in Schedule 6.4 of the Company Disclosure
Schedule, neither the execution, delivery and performance of this Agreement by
the Company nor the consummation of the transactions contemplated hereby by the
Company will (i) conflict with or violate the Certificate of Incorporation or
Bylaws or other charter documents of the Company or any of its Subsidiaries, or
(ii) result in any breach or constitute a default (with or without notice or
lapse of time, or both) under, or give rise in others to any rights of
termination, cancellation or acceleration under, any indenture, contract, loan
agreement, license, franchise, permit, order, decree, concession, lease,
instrument, judgment, statute, law, ordinance, rule or regulation applicable to
the Company or any of its Subsidiaries or its or their respective assets, other
than, in the case of clause (ii) only, such breaches, defaults, violations and
rights that would not, individually or in the aggregate, have a Company Material
Adverse Effect. Except (i) as disclosed in Schedule 6.4 of the Company
Disclosure Schedule, (ii) for filings required to be made pursuant to the
Exchange Act or (iii) the filing of a Certificate of Merger pursuant to the
DGCL, no filing or registration with, or authorization, consent or approval of,
any governmental or regulatory body or authority or third party is necessary for
the consummation by the Company of the transactions contemplated hereby, except
where failure to make such filing or registration or obtain such authorization,
consent or approval would not, individually or in the aggregate, prevent
consummation of the transactions contemplated by this Agreement or have a
Company Material Adverse Effect.
Section 6.5 Reports and Financial Statements. The Company has
--------------------------------
furnished Buyer with true and complete copies of the Company's (i) Annual Report
on Form 10-K for the fiscal year ended December 31, 1996, as amended by Form ▇▇-
▇/▇ ▇▇. ▇ ▇▇▇ ▇▇▇▇ ▇▇-▇/▇ ▇▇. ▇, as filed with the Commission, (ii) Quarterly
Reports on Form 10-Q for the quarters ended June 30, 1996, September 30, 1996,
March 31, 1997 and June 30, 1997, as filed with the Commission and (iii) all
other reports on Form 8-K and registration statements declared effective by the
Commission since February 16, 1996, except registration statements on Form S-8
relating to employee benefit plans, which are all the documents (other than
preliminary material) that the Company was required to file with the Commission
since February 16, 1996 (all items in clauses (i) through (iii) being referred
to herein collectively as the "Company SEC Reports"). As of their
-22-
respective dates, the Company SEC Reports complied in all material respects with
the requirements of the Securities Act, or the Exchange Act, as the case may be,
and the rules and regulations of the Commission thereunder applicable to such
Company SEC Reports. As of their respective dates, the Company SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they mere made, not misleading. As of
their respective dates, the audited consolidated financial statements and
unaudited interim financial statements of the Company included in the Company
SEC Reports complied in all material respects with applicable accounting
requirements of the Securities Act and the Exchange Act, and with the published
rules and regulations of the Commission with respect thereto. The financial
statements included in the Company SEC Reports (i) have been prepared in
accordance with GAAP during the periods presented (except as may be indicated
therein or in the notes thereto or, in the case of the unaudited statements,
subject to normal year-end audit adjustments and except for the fact that such
unaudited statements do not contain all notes required by GAAP), (ii) present
fairly, in all material respects, the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flow for the periods then ended (except as may be
indicated therein or in the notes thereto, or, in the case of the unaudited
interim financial statements, subject to normal year-end audit adjustments and
any other adjustments described therein and except for the fact that certain
information and notes have been condensed or omitted in accordance with the
Securities Act and the Exchange Act and the rules promulgated thereunder) and
(iii) are, in all material respects, in accordance with the books of account and
records of the Company. Neither the Company nor any of its Subsidiaries has any
liability or is subject to any loss contingency that could reasonably be
expected to have a Company Material Adverse Effect other than as reflected or
disclosed in the financial statements or notes thereto included in the Company
SEC Reports filed prior to the date hereof or as otherwise disclosed on Schedule
6.5 of the Company Disclosure Schedule. Any reports or other material filed by
the Company with the Commission after the date hereof and prior to the Closing
Date (other than preliminary material) shall be deemed to be included in the
defined term "Company SEC Reports" for purposes of this Agreement and the
Company shall be deemed to have made the representations set forth in this
Section 6.5 in respect of such reports or other material and any financial
statements set forth therein.
Section 6.6 Absence of Certain Changes or Events. Except as
------------------------------------
contemplated by this Agreement, as disclosed in Schedule 6.6 of the Company
Disclosure Schedule or in any of the Company SEC Reports filed prior to the date
of this Agreement, there have not been (i) since June 30, 1997, any
transactions, commitments, disputes, events, damage, destruction or losses,
whether or not covered by insurance, or any development or condition (financial
or otherwise) of any character (whether or not in the ordinary course of
business) individually or in the aggregate having, or which could reasonably be
expected to have, a Company Material Adverse Effect, (ii) since December 31,
1996 (A) any entry into any commitment or transaction material to the Company
and its Subsidiaries, taken as a whole, including, without limitation, any
borrowing or sale of assets) except in the ordinary course of business
consistent with past practice or (B) any action taken by the Company or its
Board of Directors in connection with the adoption
-23-
or implementation of any plan or arrangement or the entry into any agreement (x)
principally intended to discourage an Other Acquisition Transaction, or (y)
pursuant to which the officers, directors or employees of the Company or its
Subsidiaries have been granted any benefits payable or distributable upon
severance or upon a change of control of the Company or pursuant to which any
rights held by such persons have been accelerated to occur or vest at or prior
to a change of control, including without limitation any amendments to,
modifications of, or elections of other rights under existing benefit plans
(including the Outstanding Options) or (iii) since June 30, 1997, any change or
condition (financial or otherwise) of any character (whether or not in the
ordinary course of business) individually or in the aggregate having, or which
could reasonably be expected to have, a Company Material Adverse Effect (other
than changes or conditions in the oil and gas industry, including changes in the
prices realized or to be realized from the sale of oil or gas, which have a
general effect on, or which could reasonably be expected to have a general
effect on, the business, assets, condition (financial or otherwise), liabilities
or operations of companies in the oil and gas industry). Except as disclosed in
Schedule 6.6 of the Company Disclosure Schedule, since April 30, 1997, the
Company has not paid or declared any dividends or distributions to any holder of
shares of its capital stock or any holder of securities exercisable for, or
convertible into, any shares of its capital stock. The aggregate principal
amount of indebtedness outstanding under the Revolving Credit Facility on the
date of this Agreement is $66.0 million.
Section 6.7 Litigation and Claims. Except as disclosed in the
---------------------
Company's Annual Report on Form 10-K for the year ended December 31, 1996, in
any SEC Report filed subsequent thereto or in Schedule 6.7 of the Company
Disclosure Schedule, (a) there is no claim, action or proceeding pending or, to
the knowledge of any officer of the Company, overtly threatened, against or
affecting the Company or any of its Subsidiaries and (b) none of the officers of
the Company or its Subsidiaries is aware of any facts, conditions or
circumstances in connection with, related to, or associated with the Properties
(or the ownership, operation, development, maintenance, or use of any thereof)
that could reasonably be expected to give rise to any such claim, action or
proceeding, except with respect to those matters referred to in either clause
(a) or (b) above, to the extent such matters would not, either individually or
in the aggregate, have a Company Material Adverse Effect. As of the date of this
Agreement, there is no judgment, decree, injunction or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding specifically against the Company or any of its Subsidiaries.
Section 6.8 Information in Agreement and Company Disclosure
-----------------------------------------------
Schedule. None of the representations or warranties made by the Company
--------
contained in this Agreement, the statements in the Company Disclosure Schedule
nor statements in the Brochure dated April 1997 delivered to Buyer by the
Company or its representatives (other than statements or information related to
oil and gas reserves contained therein and except as otherwise specifically
disclosed in writing to Buyer or in Schedule 6.19 of the Company Disclosure
Schedule) contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact
-24-
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
Section 6.9 Employee Benefits Plans; Labor Matters. (a) Schedule
--------------------------------------
6.9 (a) of the Company Disclosure Schedule lists each "employee benefit plan,"
as such term is defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (including, but not limited to,
employee benefit plans, such as foreign plans, which are not subject to the
provisions of ERISA) ("Plan"), sponsored, maintained or contributed to by the
Company or any of its Subsidiaries for the benefit of the employees of the
Company or any of its Subsidiaries, or that has been so sponsored, maintained or
contributed to by Company or any of its Subsidiaries within six years prior to
the Closing.
(b) Except as otherwise set forth in Schedule 6.9(b) of the Company
Disclosure Schedule or as previously disclosed in writing to Buyer by the
Company:
(i) the Company and its Subsidiaries do not contribute to or have an
obligation to contribute to, and have not at any time within six years
prior to the Closing contributed to or had an obligation to contribute to,
a multiemployer plan within the meaning of Section 3(37) of ERISA;
(ii) all reports and disclosures relating to the Plans required to be
filed with or furnished to governmental agencies, Plan participants or Plan
beneficiaries the failure to file of which would, individually or in the
aggregate, have a Company Material Adverse Effect have been filed or
furnished in accordance with applicable law in a timely manner, and each
Plan has been administered in substantial compliance with its governing
documents and in accordance with ERISA, the Internal Revenue Code of 1986,
as amended (the "Code"), and other applicable laws, except for any failure
of compliance or violation of applicable law which would not, individually
or in the aggregate, have a Company Material Adverse Effect;
(iii) There are no actions, suits, claims, governmental (and, to the
knowledge of the Company's officers, non-governmental) investigations or
audits pending (other than routine claims for benefits) or, to the
knowledge of the Company's officers, threatened against, or with respect
to, any of the Plans or their assets which, individually or in the
aggregate, have or could reasonably be expected to have a Company Material
Adverse Effect;
(iv) no act, omission or transaction has occurred which would result
in imposition on the Company of (A) a breach of fiduciary duty liability
damages under Section 409 of ERISA, (B) a civil penalty assessed pursuant
to subsections (c), (i) or (1) of Section 502 of ERISA or (C) a tax imposed
pursuant to Chapter 43 of Subtitle D of the Code, which in the case of (A),
(B) or (C) above), individually or in the aggregate, could have a Company
Material Adverse Effect;
-25-
(v) each of the Plans intended to be qualified under Section 401 of
the Code satisfies the requirements of such Section and has received a
favorable determination letter from the Internal Revenue Service regarding
such qualified status and has not, since receipt of the most recent
favorable determination letter, been amended or, to the knowledge of the
Company, operated in a way which would adversely affect such qualified
status;
(vi) no Plan is subject to Title IV of ERISA;
(vii) as to any Plan intended to be qualified under Section 401 of the
Code, to the knowledge of the Company's officers there has been no
termination or partial termination of the Plan within the meaning of
Section 411 (d) (3) of the Code which has had or could reasonably be
expected to have a Company Material Adverse Effect; and
(viii) with respect to any Plan which is sponsored, maintained or
contributed to, or has been sponsored, maintained or contributed to within
six years prior to the Closing Date, by any corporation, trade, business or
entity under common control with the Company, within the meaning of Section
4104 (b), (c) or (m) of the Code or Section 4001 of ERISA ("Commonly
Controlled Entity"), to the knowledge of the officers of the Company, (A)
no withdrawal liability, within the meaning of Section 4201 of ERISA, has
been incurred, which withdrawal liability has not been satisfied, (B) no
liability to the Pension Benefit Guaranty Corporation ("PBGC") has been
incurred by any Commonly Controlled Entity, which liability has not been
satisfied, (C) no accumulated funding deficiency, whether or not waived,
within the meaning of Section 302 of ERISA or Section 412 of the Code has
been incurred, and (D) all contributions (including installments) to such
Plan required by Section 302 of ERISA and Section 412 of the Code have been
timely made.
(c) Neither the Company nor any of its Subsidiaries is a party to any
collective bargaining or other labor union contracts. There is no pending or
threatened labor dispute, strike or work stoppage against the Company or any of
its Subsidiaries which may materially interfere with the respective business
activities of the Company or any of its Subsidiaries.
(d) Except as set forth in Schedule 6.9(d) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a party to or is
bound by any severance agreements, programs or policies. Schedule 6.9(d) of the
Company Disclosure Schedule sets forth, and the Company has made available to
Buyer true and correct copies of, (i) all agreements with employees or
consultants of the Company or its Subsidiaries that obligate the Company or any
Subsidiary to make annual cash payments in an amount exceeding an aggregate of
$50,000, (ii) all non-competition agreements with the Company or a Subsidiary of
the Company executed by officers of the Company or a Subsidiary of the Company,
and (iii) all plans, programs, agreements and other arrangements of the Company
or its Subsidiaries with or relating to the employment and to the remuneration
and compensation of its employees.
-26-
(e) Except as provided in Schedule 6.9(e) of the Company Disclosure
Schedule, (i) no Plan provides retiree medical or retiree life insurance
benefits to any person and (ii) neither the Company nor any of its Subsidiaries
is contractually or otherwise obligated (whether or not in writing) to provide
any person with life insurance or medical benefits upon retirement or
termination of employment, other than as required by the provisions of Section
601 through 608 of ERISA and Section 4980B of the Code.
(f) Except as provided in Schedule 6.9(f) of the Company Disclosure
Schedule, the Company has not amended, terminated or taken any other actions
with respect to any of the Plans or any of the plans, programs, agreements,
policies or other arrangements described in this Section 6.9 since December 31,
1996 which, individually or in the aggregate, have or could reasonably be
expected to have a Company Material Adverse Effect.
Section 6.10 Environmental Matters. Except for matters disclosed in
---------------------
Schedule 6.10 of the Company Disclosure Schedule, the Company and its
Subsidiaries and the properties and operations of the Company and its
Subsidiaries are not subject to any existing, pending or, to the knowledge of
the Company, overtly threatened action, suit, investigation, inquiry or
proceeding by or before any Governmental Entity under any Environmental Law.
Except for matters disclosed in Schedule 6.10 of the Company Disclosure Schedule
and except for matters that would not result, individually or in the aggregate,
in a Company Material Adverse Effect, (i) the properties, operations and
activities of the Company and its Subsidiaries are in compliance with all
applicable Environmental Laws; (ii) all notices, permits, licenses, or similar
authorizations, if any, required to be obtained or filed by the Company or any
of its Subsidiaries under any Environmental Law in connection with any aspect of
the business of the Company or its Subsidiaries, including, without limitation
those relating to the treatment, storage, disposal or release of a hazardous
substance, have been duly obtained or filed, and the Company and its
Subsidiaries are in compliance with the terms and conditions of all such
notices, permits, licenses and similar authorizations; (iii) to the Company's
knowledge, there are no physical or environmental conditions, including the
presence of NORM, existing on any property of the Company or its Subsidiaries or
resulting from the Company's or such Subsidiaries' operations or activities,
past or present, at any location, that would give rise to any on-site or offsite
remedial obligations imposed on the Company or any of its Subsidiaries under any
Environmental Laws; (iv) to the Company's knowledge, since the effective date of
the relevant requirements of applicable Environmental Laws and to the extent
required by such applicable Environmental Laws, all hazardous substances
generated by the Company and its Subsidiaries have been transported only by
carriers authorized under Environmental Laws to transport such substances and
wastes, and disposed of only at treatment, storage, and disposal facilities
authorized under Environmental Laws to treat, store or dispose of such
substances and wastes; (v) there has neither been any exposure of any person or
property to hazardous substances or any pollutant or contaminant (including
NORM) released by the Company or its Subsidiaries, nor has there been any
release of hazardous substances, or any pollutant or contaminant (including
NORM) into the environment by the Company or its Subsidiaries or in connection
with their properties or operations that could reasonably be expected to give
rise to any claim against the Company or any
-27-
of its Subsidiaries for damages or compensation; and (vi) the Company and its
Subsidiaries have made available to Buyer all internal and external
environmental audits and studies and all correspondence on substantial
environmental matters in the possession of the Company or its Subsidiaries
relating to any of the current or former properties or operations of the Company
and its Subsidiaries. For purposes of this Agreement, the terms "hazardous
substance" and "release" have the meanings specified in CERCLA, and the term
"disposal" has the meaning specified in RCRA; provided, however, that to the
extent the laws of the state in which the property is located establish a
meaning for "hazardous substance," "release,"or "disposal" that is broader than
that specified in either CERCLA or RCRA, such broader meaning shall apply.
Section 6.11 Public Utility Holding Company Act. None of the
----------------------------------
Company or any of its Subsidiaries is subject to regulation under the Public
Utility Holding Company Act of 1935, as amended, and the rules and regulations
promulgated thereunder.
Section 6.12 Oil and Gas Contracts. Schedule 6.12 to the Company
---------------------
Disclosure Schedule sets forth a true and correct statement of the position, as
of the date hereof, of the Company and its Subsidiaries with respect to
obligations under Oil and Gas Contracts (including, with respect to each Oil and
Gas Contract, location of delivery and variations in the obligation to take or
deliver) and related Hydrocarbon price swaps, ▇▇▇▇▇▇, futures or similar
instruments to which the Company or any of its Subsidiaries is a party.
Section 6.13 Takeover Provisions Inapplicable. As of the date
--------------------------------
hereof and at all times on or prior to the Closing, Section 203 of the DGCL is,
and shall be, inapplicable to the transactions contemplated hereby or connected
herewith.
Section 6.14 Finder's Fees. Except for the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Fee
-------------
Agreement, since February 16, 1996, neither the Company nor any of its
Subsidiaries have made any arrangements with any broker, finder or investment
banker that would require the Company or any of its Subsidiaries to pay any fee
or commission in connection with any material transaction by the Company or any
of its Subsidiaries, and no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. A complete and correct copy of all agreements
referenced in Schedule 6.14 of the Company Disclosure Schedule has been provided
to Buyer.
Section 6.15 Compliance with Applicable Laws. Except as disclosed
-------------------------------
in the Company SEC Reports filed prior to the date of this Agreement or in
Schedule 6.15 of the Company Disclosure Schedule, neither the Company nor any of
its Subsidiaries (a) is in violation of any law, ordinance, regulation, order or
writ ("Law") of any courts, administrative agencies or commissions or other
governmental authorities or instrumentalities, domestic or foreign (each a
"Governmental Entity") applicable to the Company or any of its Subsidiaries or
by which any of them or their assets may be bound, or (b) has received any
notice from any Governmental Entity or any other Person (i) claiming any
violation, repudiation, or termination, in whole or in
-28-
part, of any of the Properties or any violation of any Law with respect to the
Properties (including any such Law concerning the conservation of natural
resources) or (ii) requiring, or calling attention to the need for, any work,
repairs, construction, alterations, installations, remediation, response,
removal or abatement actions, restoration, investigation or monitoring of, on,
in, under, in connection with, or related to the Properties or the ownership,
operation, development, maintenance, or use of any thereof, which matters, all
or in part, remain outstanding and unresolved to the satisfaction of the sender
of such notice, except with respect to those matters referred to in either
clause (a) or (b) above, to the extent such matters would not, either
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Except as disclosed in Schedule 6.15 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has
received notice of violation of any law, ordinance, regulation, order or writ,
or is in default with respect to any order, writ, judgment, award injunction or
decree of any Governmental Entity, except for such notices or defaults which
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
Section 6.16 Taxes. Each of the Company and its Subsidiaries has
-----
timely filed when due (taking into account permitted extensions) all material
federal, state and local income and franchise Tax Returns and all other material
Tax Returns required to be filed by any of them and has paid (or the Company has
paid on its behalf), or has set up in accordance with GAAP an adequate reserve
for the payment of, all Taxes required to be paid in respect of the periods
covered by such Tax Returns, and has set up in accordance with GAAP an adequate
reserve for the payment of all Taxes required to be paid in respect of all
periods or portions thereof not covered by such Tax Returns. The information
contained in such Tax Returns is true, complete and accurate in all material
respects. Except as disclosed in Schedule 6.16 of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries is delinquent in the
payment of any Tax, assessment or governmental charge in an amount exceeding
$100,000. Except as disclosed in Schedule 6.16 of the Company Disclosure
Schedule, no deficiencies for any Taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries, by delivery of a written
instrument to the Company or to the knowledge of the officers of the Company,
that have not been finally settled or paid in full, and no requests for waivers
of the time to assess any such Tax are pending. The federal income Tax Returns
of the Company and each of its Subsidiaries consolidated in such returns have
not been examined by and settled with the Internal Revenue Service except as set
forth in Schedule 6.16 of the Company Disclosure Schedule. No "excess parachute
payment" within the meaning of Section 280G of the Code will be required to be
paid by the Company or any of its Subsidiaries as a result of the consummation
of the transactions contemplated by this Agreement.
Section 6.17 Certain Agreements. Except as listed as an exhibit to
------------------
the Company SEC Reports filed prior to the date of this Agreement or as
disclosed in Schedule 6.17 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries is a party to any oral or written (i)
agreements, contracts, indentures or other instruments relating to indebtedness
for borrowed money of the Company or its Subsidiaries which, when aggregated
with all such
-29-
other agreements, contracts, indentures or instruments, exceeds an
amount of $100,000, (ii) confidentiality or standstill agreement or other
material contract or agreement which, after giving effect to the transactions
contemplated by this Agreement, purports to restrict or bind Buyer or any of its
Affiliates, (iii) collective bargaining agreement, (iv) contract, agreement or
commitment not entered into in the ordinary course of business consistent with
past practice and for which the Company could reasonably be expected to become
liable for payments in excess of $100,000 in respect of all such contracts,
agreements or commitments, collectively, (v) any contract or agreement granting
a preferential right of purchase or similar right to any person or entity with
respect to any Material Company Asset, or (vi) material contract or agreement
that is not expected to be fully performed within 30 days following the Closing
(excluding oil and gas leases, farmout agreements, oil and gas sales or purchase
contracts, joint operating agreements, unit operating agreements and unit
agreements entered into in the ordinary course of business).
Section 6.18 Engineering Reports.
-------------------
(a) The estimates of proved reserves of oil and natural gas (the
"Estimated Proved Reserves") set forth in the report of Estimated Proved
Reserves as of January 1, 1997 (the "LKA Reserve Report") were prepared by
independent petroleum engineers ▇▇▇ ▇▇▇▇▇▇▇ and Associates, Inc. as indicated
in, and with the conclusion set forth in, their report dated February 13, 1997.
(b) Except as described on Schedule 6.18(b) of the Company Disclosure
Schedule, all information and production data provided to ▇▇▇ ▇▇▇▇▇▇▇ and
Associates, Inc. for purposes of the preparation of the LKA Reserve Report were
true and correct in all material respects as of the date provided.
(c) Other than normal production of Hydrocarbons and intervening spot
market product price fluctuations, the Company is not aware of any facts or
circumstances that would result in a materially adverse change in the Company
Estimated Proved Reserves, in the aggregate, or the aggregate present value of
future net cash flows therefrom, as reflected in the LKA Reserve Report and the
present value thereof as reflected in the LKA Reserve Report. To the knowledge
of officers of the Company, the Estimated Proved Reserves were prepared in
accordance with the applicable requirements of the rules and regulations of the
Commission.
Section 6.19 Oil and Gas Reserve Information. Except as otherwise
-------------------------------
set forth in Schedule 6.19 of the Company Disclosure Schedule and except for
exceptions that would not, and could not reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect:
(a) as of October 1, 1997 and as of the Closing Date, none of the
▇▇▇▇▇ included in the Oil and Gas Interests of the Company and its Subsidiaries
has been overproduced such that it is subject or liable to make-up rights, cash
settlements or other rights and obligations under any gas balancing agreement,
any Oil and Gas Contract or at common law;
-30-
(b) as of October 1, 1997 and as of the Closing Date, there exist no
production or pipeline imbalances or penalties with respect to the Properties;
(c) as of October 1, 1997 and as of the Closing Date, neither the
Company nor any of its Subsidiaries is obligated under any contract or agreement
for the sale of gas containing a take-or-pay, advance payment, prepayment, or
similar provision to deliver Hydrocarbons at some future date without then
receiving full payment therefor;
(d) all necessary franchises, permits, licenses, approvals, consents,
certificates and other rights and authorizations of any kind or nature
("Permits") with regard to the ownership, operation, development, maintenance,
or use of the Properties, or any of them, have been obtained and maintained in
effect, and no violations exist in respect of any thereof, except to the extent
that any such violation or failure to have such Permit would not have a Company
Material Adverse Effect;
(e) there are no ▇▇▇▇▇ included in the Oil and Gas Interests of the
Company and its Subsidiaries that: (i) the Company or any of its Subsidiaries
are currently obligated by law or contract to plug and abandon; (ii) are subject
to exceptions to a requirement to plug and abandon issued by a regulatory
authority having jurisdiction over such Oil and Gas Interests; or (iii) to the
knowledge of the Company, have been plugged and abandoned but have not been
plugged or reclaimed in accordance with all applicable requirements of each
regulatory authority having jurisdiction over such Oil and Gas Interests;
(f) no person has any call on, option to purchase, or similar rights
with respect to any of the Oil and Gas Interests of the Company and its
Subsidiaries (including without limitation the production attributable thereto)
and upon consummation of the transactions contemplated by this Agreement, the
Company and its Subsidiaries will have the right to market production from the
Oil and Gas Interests of the Company and its Subsidiaries on terms no less
favorable than the terms upon which such company is currently marketing such
production;
(g) all rentals, royalties, overriding royalties, compensatory
royalties, production payments, and other payments due with respect to the Oil
and Gas Interests of the Company and its Subsidiaries (excluding those held in
suspense in accordance with past operating practices or in connection with post-
closing adjustments in respect of acquired properties) have been properly and
timely paid;
(h) neither Company, nor any of its Subsidiaries, nor, to the
knowledge of Company or any of its Subsidiaries, any other Person to or bound by
any Lease, Surface Contract, Oil and Gas Interest, or other agreement to which
any of the Properties or the Company or its Subsidiaries are bound (a) is in
breach of or default, or with the lapse of time or the giving of notice, or
both, would be in breach or default, with respect to any of its obligations
thereunder or (b) has given or, to the knowledge of Company or any of its
Subsidiaries, has threatened to give notice of any default under, or made
inquiry into any possible default under, or action to alter,
-31-
terminate, rescind or procure a judicial reformation of any Lease, Surface
Contract or other agreement, except with respect to those matters referred to in
either clause (a) or (b) above, to the extent such matters (other than with
respect to Leases), would not, individually or in the aggregate, have a Company
Material Adverse Effect; and
(i) Taurus does not own any Oil and Gas Interests included in the LKA
Reserve Report.
Section 6.20 Title to Property. The Company or its Subsidiaries,
-----------------
other than Taurus, has Defensible Title to each of the material assets reflected
on either the LKA Reserve Report or the consolidated financial statements of the
Company included in the Company SEC Reports as being owned by the Company or its
Subsidiaries (including Oil and Gas Interests of the Company and its
Subsidiaries) and each of the ▇▇▇▇▇ and Leases acquired by the Company or its
Subsidiaries since the date of the latest Company SEC Report except to the
extent that such ▇▇▇▇▇, Leases or assets have thereafter been disposed of in the
ordinary course of business consistent with past practice. Schedule 6.20 of the
Company Disclosure Schedule reflects each Well and Lease acquired by the Company
or its Subsidiaries since December 31, 1996 and the Net Revenue Interest and
Working Interest for each such Well and Lease.
Section 6.21 Transfer Requirements and Preference Rights. To the
-------------------------------------------
knowledge of the officers of the Company, with respect to the transactions
contemplated by this Agreement, all Transfer Requirements will have been made,
obtained, waived, or otherwise satisfied, and all Preference Rights will have
been waived by the lawful holder thereof or terminated or extinguished, or
expired after due notice to the holder without exercise during the time period
in which such rights were required to be exercised, except for such exceptions
that would not, or could not reasonably be expected to, have a Company Material
Adverse Effect.
Section 6.22 Condemnation. Neither the Company nor any of its
------------
Subsidiaries has any knowledge or notice of any actual or threatened taking
(whether permanent, temporary, whole or partial) of any material part of the
Properties by reason of condemnation or the threat of condemnation.
Section 6.23 Insurance. Schedule 6.23 to the Company Disclosure
---------
Schedule contains a summary of all material policies of insurance (including all
directors' and officers' liability insurance coverage) maintained by the Company
and its Subsidiaries during the past three years.
Section 6.24 Affiliate Transactions. Except for the transactions
----------------------
described in Schedule 6.24 of the Company Disclosure Schedule, all transactions
involving the Company or any of its Subsidiaries that are required to be
disclosed in the Company SEC Reports in accordance with Item 404 of Regulation
S-K have been so disclosed, and since December 31, 1996, neither the Company nor
any of its Subsidiaries has entered into any transactions that would
-32-
be required to be disclosed in future public filings under the Exchange Act
pursuant to such Item which have not already been disclosed in the Company SEC
Reports filed prior to the date hereof.
Section 6.25 Taurus. (a) Except as set forth in Schedule 6.25(a) of
------
the Company Disclosure Schedule, since December 31, 1996 neither the Company nor
any of its Subsidiaries have made any capital contribution to or investment in
Taurus, made any advance or contribution of working capital to fund capital
expenditures to Taurus (other than capital expenditures set forth on Schedule
6.25(a) of the Company Disclosure Schedule), engaged in a transaction with
Taurus not in the ordinary course of business consistent with past practice or
which otherwise transferred value to Taurus (including by way of assumption of
liabilities).
(b) Schedule 6.25(b) of the Company Disclosure Schedule fairly and
accurately reflects the full nature and extent of the Tax costs and other
consequences to the Company and Buyer relating to either (i) a Taurus
Disposition pursuant to the Taurus Disposition Agreement or any Alternative
Taurus Disposition Agreement or the sale of all of the outstanding capital stock
of Taurus as contemplated by Section 4.1 of this Agreement or (ii) any Taurus
Disposition made pursuant to the exercise of the Taurus Purchase Option pursuant
to Section 2 of the JEDI Agreement and any payment of consideration by JEDI (or
its assignee) to Coda after the Effective Time in connection therewith (the
"Indemnified Transactions") had such disposition occurred as of May 1, 1997
taking into consideration the tax deductions associated with the nonqualified
stock options, the ▇▇▇▇▇▇ Employment Agreement Amendment and the Special
Management Rights (as defined in the Stockholders Agreement). In connection
therewith, and without limiting the foregoing, the net operating loss
carryforwards and the deductions referred to in the line entitled "Clawback,
Option exercise & Other items", each as reflected on Schedule 6.25(b) of the
Company Disclosure Schedule will be available for use by the Company with
respect to the federal income tax return in which the Indemnified Transactions
are reflected in an amount sufficient to offset, without limitation, any Tax
detriment (including the gain recognized on an Indemnified Transaction) to be
incurred by the Company arising solely from the Indemnified Transactions.
Section 6.26 Supplemental Information Regarding HSR. Except for
--------------------------------------
certain assets of the Company that neither the fair market value nor the book
value of which exceed $15,000,000 and except for the stock of Taurus, all assets
of the Company consist of "reserves of oil, natural gas, shale or tar sands,
together with associated exploration or production assets" within the meaning of
16 C.F.R. (S) 802.3.
ARTICLE VII
CONDUCT OF BUSINESS PRIOR TO THE EFFECTIVE TIME
-----------------------------------------------
Section 7.1 Conduct of Business by the Company. Following the date
----------------------------------
hereof and prior to the Closing, except as otherwise contemplated by this
Agreement or unless Buyer shall otherwise consent in writing:
-33-
(a) subject to the limitations contained in or transactions
contemplated by this Agreement (including, but not limited to, the Taurus
Disposition), the Company shall, and shall cause its Subsidiaries to, carry on
their respective operations in the usual and ordinary course consistent with
past practice, and shall use its reasonable efforts, and shall cause each of its
Subsidiaries to use its reasonable efforts, to preserve substantially intact its
present business organization, keep available the services of its present
officers and employees, maintain and keep its assets in good repair and
condition in accordance with past practice, ordinary wear and tear and damage
due to casualty excepted, and preserve its relationships with customers,
suppliers and others having business dealings with it to the end that its
goodwill and on-going businesses shall be materially unimpaired at the Closing;
(b) the Company shall not, nor shall it propose to, except as required
by this Agreement, (i) sell or pledge or agree to sell or pledge any capital
stock owned by it in any of its Subsidiaries, (ii) amend its Certificate of
Incorporation or Bylaws, (iii) split, combine or reclassify its outstanding
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
capital stock, or declare, set aside or pay any dividend or other distribution
payable in cash, stock or property, or (iv) directly or indirectly redeem,
purchase or otherwise acquire or agree to redeem, purchase or otherwise acquire
any shares of its capital stock;
(c) the Company shall not, nor shall it permit any of its Subsidiaries
to, (i) except as required or contemplated by this Agreement, issue, deliver or
sell or agree to issue, deliver or sell any additional shares of, or stock
appreciation rights or rights of any kind to acquire any shares of, its capital
stock of any class, any Company Voting Debt, or any option, rights or warrants
to acquire, or securities convertible into, shares of capital stock, other than
issuances of Company Common Stock pursuant to the exercise of Outstanding
Options and except for a Taurus Disposition made in accordance with Section 4.1
hereof, (ii) amend in any respect existing agreements evidencing the Outstanding
Options (including, without limitation, the exercise or strike prices thereof)
except to permit the acceleration of the vesting or exercisability of the
Outstanding Options, (iii) acquire or lease or agree to acquire or lease any
capital asset or assets, or make or commit to make any other capital
expenditures (including in such calculation the proceeds of any sale/leaseback
transactions) in excess of $150,000, (iv) dispose or agree to dispose of capital
assets or any other assets other than in the ordinary course, with a value in
the aggregate in excess of $100,000, (v) (A) create, incur, assume or permit
additional indebtedness (including obligations in respect of capital leases),
other than periodic drawdowns under the Company's credit facilities existing as
of the date hereof, provided that (1) such drawdowns are in the ordinary course
of business consistent with past practice, (2) the amount available under such
facilities as of the date hereof is not increased and (3) the aggregate
principal amount of indebtedness outstanding thereunder does not exceed
$70,000,000, (B) assume, guarantee, endorse or otherwise become liable or
responsible for the obligations of any other person (other than a Subsidiary of
the Company, or as to a Subsidiary of the Company, another Subsidiary of the
Company) in an amount in excess of $25,000 (excluding suspense account
obligations assumed in connection with acquisitions by the Company whereby the
Company also receives the
-34-
funds held in suspense or an adjustment to the purchase price is made in an
equal amount), (C) encumber or grant a security interest in any Material Company
Asset other than for the Company's credit facilities existing as of the date
hereof, (D) make any loans or advances to any other person (excluding
intercompany transactions), enter into any agreement or instrument relating to
the borrowing of money or the extension of credit or enter into any other
transaction other than in the ordinary course of business consistent with past
practices, either individually or in the aggregate, in excess of $25,000, or (E)
pay or declare any dividend or other distribution with respect to any shares of
its capital stock or any security exercisable for or convertible into any shares
of its capital stock, (vi) acquire or agree to acquire oil or gas properties or
other material assets, or acquire or agree to acquire by merging or
consolidating with, or by purchasing the assets of or a substantial equity
interest in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, for
an aggregate purchase price in excess of $150,000, (vii) enter into or renew any
agreements, contracts or other commitments (A) exceeding $100,000 in cost of
value that are not expected to be fully performed within 30 days after the
Closing (other than (1) oil and gas marketing agreements (excluding hedging
arrangements) entered into in the ordinary course of business consistent with
past practices or (2) commitments for expenditures reflected in the LKA Reserve
Report as expenditures planned for 1997) or (B) not in the ordinary course of
business consistent with past practice, or (viii) adopt, enter into, amend or
terminate any contract, agreement, commitment or arrangement with respect to any
of the foregoing;
(d) the Company shall not, nor shall it permit any of its Subsidiaries
to, except as required to comply with applicable law and other than acceleration
of vesting permitted by this Agreement, (i) adopt, enter into, terminate or
amend any bonus, profit sharing, compensation, severance, termination, stock
option, pension, retirement, deferred compensation, employment or other Plan,
agreement, trust, fund or other arrangement for the benefit or welfare of any
current or former director, officer or employee, (ii) increase in any manner the
compensation or fringe benefits of any director, executive officer or employee;
provided, however, that the Company shall be permitted to award normal salary
increases to employees (other than executive officers) of the Company in the
ordinary course of business that are consistent with past practice (including,
without limitation, in connection with any promotion of such employee) and that,
in the aggregate, do not result in a material increase in compensation expense
to the Company and its Subsidiaries relative to the level in effect prior to
such increase), unless consented to by Buyer, (iii) pay any benefit not provided
under any existing plan or arrangement, (iv) grant any awards under any bonus,
incentive, performance or other compensation plan or arrangement or Plan
(including, without limitation, the grant of stock options, stock appreciation
rights, stock based or stock related awards, performance units or restricted
stock, or the removal of existing restrictions in any Plans or agreements or
awards made thereunder), (v) take any action to fund or in any other way secure
the payment of compensation or benefits under any employee plan, agreement,
contract or arrangement or Plan, other than in the ordinary course of business
consistent with past practice, or (vi) adopt, enter into, amend or terminate any
contract, agreement, commitment or arrangement to do any of the foregoing;
-35-
(e) the Company shall not, nor shall it permit its Subsidiaries to,
make any change in its accounting policies or procedures, except as required
under GAAP;
(f) the Company shall use its reasonable efforts to refrain from
taking, and shall use its reasonable efforts to cause its Subsidiaries to
refrain from taking, any action that would, or reasonably might be expected to,
result in any of its representations and warranties set forth in this Agreement
being or becoming untrue in any material respect as of the Closing, or in any of
the conditions to the transactions contemplated by this Agreement set forth in
Article IX not being satisfied, or (unless such action is required by applicable
law) that would adversely affect the ability of the Company to obtain any of the
regulatory approvals required to consummate the transactions contemplated by
this Agreement;
(g) the Company shall maintain in full force and effect all of its
policies of insurance (excluding any insurance policies under which Taurus is
the only named insured) in existence as of the date hereof or insurance
comparable to the coverage afforded by such policies; and
(h) the Company shall not enter into any natural gas or other future
or options trading or be a party to any price swaps, ▇▇▇▇▇▇, futures or similar
instruments without first obtaining the consent of Buyer, which consent shall
not be unreasonably withheld.
Section 7.2 Obligations of Buyer and the Company. Each of Buyer
------------------------------------
and the Company shall use its reasonable best efforts to refrain from taking any
action that would, or reasonably might be expected to, result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect as of the Closing, or in any of the conditions to
the consummation of the transactions contemplated by this Agreement set forth in
Article IX not being satisfied, or (unless such action is required by applicable
law) that would adversely affect the ability of Buyer or the Company to obtain
any of the regulatory approvals required to consummate the transactions
contemplated by this Agreement.
Section 7.3 Notice of Breach. Each party hereto shall promptly
----------------
give written notice to each other party hereto upon becoming aware of the
occurrence or, to its knowledge, impending or threatened occurrence, of any
event that would cause any of the representations and warranties which are
qualified with respect to materiality to be untrue in any respect on the Closing
Date, cause any of the representations and warranties which are not so qualified
to be untrue in any material respect on the Closing Date or cause a breach of
any covenant contained or referenced in this Agreement and the party which made
such representation, warranty or covenant will use its reasonable efforts to
prevent or promptly remedy the same. Any such notification shall not be deemed
an amendment of the Company Disclosure Schedule.
-36-
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
Section 8.1 Access and Information. (a) Upon reasonable notice,
----------------------
the Company and its Subsidiaries shall afford to Buyer and to Buyer's
affiliates, accountants, lenders, counsel and other representatives full access,
during normal business hours (and at such other times as the parties may
mutually agree) and in a manner so as not to materially interfere with the
normal business operations of the Company and its Subsidiaries throughout the
period prior to the Closing, to all of their properties (which shall include the
right to conduct an environmental assessment thereof), books, contracts,
commitments, records and personnel. During such period, the Company shall
furnish promptly to Buyer (i) a copy of each report, schedule and other document
filed or received by it pursuant to the requirements of federal or state
securities laws, and (ii) all other information concerning its business,
properties and personnel as Buyer may reasonably request. During the period
prior to the Closing, the Company shall use reasonable efforts to make its
accountants, counsel, lenders and other representatives available to Buyer and
to Buyer's affiliates, accountants, lenders, counsel and other representatives
at reasonable times.
(b) Information obtained by the Buyer and the Company hereto pursuant
to this Section 8.1 shall be subject to the provisions of the confidentiality
agreement between Buyer and the Company dated July 16, 1997 (the
"Confidentiality Agreement"), which Confidentiality Agreement remains in full
force and effect. If this Agreement is terminated, each party will (i) deliver
to the other all documents, work papers and other material (including copies)
obtained by such party or on its behalf from the other party as a result of this
Agreement or in connection herewith, and (ii) destroy all working papers
reflecting any of the confidential information contained in such documents, work
papers and other material. In addition, if this Agreement is terminated neither
party shall disclose, except as required by Law, the basis or reason for such
termination, without the consent of the other party.
Section 8.2 Reasonable Efforts. Subject to the terms and
------------------
conditions of this Agreement, each of the parties hereto agrees to cooperate
with each other and to use its reasonable efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable (i) under applicable laws and regulations to satisfy the conditions
precedent to the Closing set forth in Article IX and to consummate the
transactions contemplated by this Agreement as soon as reasonably practicable,
including to obtain all necessary waivers, consents and approvals and to effect
all necessary registrations and filings and (ii) to lift any injunction or other
legal bar to the consummation of the transactions contemplated by this Agreement
as soon as reasonably practicable; provided, however, that nothing in this
Section or elsewhere in this Agreement shall require any party hereto to incur
expenses in connection with the transactions contemplated hereby which are not
reasonable under the circumstances in relation to the size of the transaction
contemplated hereby or to require any party or any affiliate of any party to
hold separate or make any divestiture of a significant asset or otherwise agree
to any material restriction on the operations of any party in order to obtain
any
-37-
waiver, consent or approval required by this Agreement; and provided, further
that nothing in this Section or elsewhere in this Agreement shall require Buyer
or the Company to take any action that is inconsistent with the fiduciary
obligations of its Board of Directors.
Section 8.3 No Solicitation. Prior to the Closing, the Company
---------------
shall not, nor shall the Company authorize or permit any of the Subsidiaries of
the Company to, nor shall any such parties authorize or permit any of its
officers, directors or employees or affiliates, as the case may be, or any
investment banker, financial advisor, attorney, accountant or other
representative retained by the Company or any of the Subsidiaries of the Company
to, directly or indirectly, initiate, solicit, negotiate or encourage (including
by way of furnishing information), or take any other action to facilitate or
entertain, any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any proposal or offer to acquire all or
substantially all of the business of the Company and its Subsidiaries, or all or
substantially all of the capital stock of the Company, whether by merger,
purchase of assets, tender offer, exchange offer or otherwise, whether for cash,
securities or any other consideration or combination thereof (any such
transaction being referred to herein as an "Other Acquisition Transaction") or
agree to endorse or recommend any such Other Acquisition Transaction or enter
into an agreement relating to an Other Acquisition Transaction.
Section 8.4 Employee Matters.
----------------
(a) Buyer will cause service with the Company and its Subsidiaries and
their predecessors prior to the Effective Time to be taken into account for
eligibility and vesting purposes in connection with any benefit or payroll plan,
practice, policy or agreement of Buyer or any of its Affiliates in which any
employee of the Company or its Subsidiaries may become entitled to participate
on or after the Effective Time.
(b) On or before the date that is six months after the Closing Date,
the Company shall not terminate the Company's severance plan described in
Schedule 8.4(b) of the Company Disclosure Schedule.
(c) The obligations of Buyer under Section 8.4 are intended to
benefit, and be enforceable against Buyer directly by, the parties (other than
the Company) to such agreements and the participants or former participants in
such plans and their respective beneficiaries and other successors in interest,
and shall be binding on all successors of Buyer.
(d) Buyer will cause the Company to honor the Company's obligation to
pay incentive compensation to Taurus employees (as described in Schedule 6.9(d))
during the term of the Taurus Purchase Option (as defined in the JEDI
Agreement).
Section 8.5 Indemnification. (a) From and after the Closing, Buyer
---------------
shall cause the Certificate of Incorporation of the Surviving Corporation or any
successor corporation to
-38-
contain provisions that acknowledge and agree that, to the fullest extent
permitted by law, the provisions relating to limitation on liability that are
set forth in Article 10 of the Certificate of Incorporation of the Company as of
the date of this Agreement shall remain effective for a period of six years from
the Closing Date with respect to individuals who at any time from and after the
date of this Agreement and to and including the Closing Date were directors,
officers, employees, fiduciaries or agents of the Company or any of its
Subsidiaries in respect of actions or omissions occurring at or prior to the
Closing Date (including, without limitation, the matters contemplated by this
Agreement), and the Surviving Corporation shall not amend or repeal such
provisions for a period of six years from the Effective Time. If, at any time
during such period of six years and prior to an underwritten public offering of
capital stock of the Surviving Corporation, the Surviving Corporation is unable
to make any indemnification payments required by this Section 8.5, then Buyer
shall be liable for such payments, but only to the extent of all dividends or
other distributions paid in respect of capital stock of the Surviving
Corporation prior to or upon the dissolution of the Surviving Corporation that
have been made to Buyer or any of its Affiliates by the Surviving Corporation
during such period.
(b) In the event that, after the Closing, the Company or any of its
successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any Person, then, and in each such case, Buyer shall
cause the Company to make proper provision so that the successors and assigns of
the Company shall assume the obligations set forth in this Section 8.5.
(c) From and after the Closing, Buyer shall cause the Bylaws of the
Surviving Corporation or any successor corporation to contain provisions that
acknowledge and agree that, to the fullest extent permitted by law, the
provisions relating to indemnification and advancement of expenses that are set
forth in the Bylaws of the Company as of the date of this Agreement shall remain
effective for a period of six years from the Closing Date with respect to
individuals who at any time from and after the date of this Agreement and to and
including the Closing Date were directors, officers, employees, fiduciaries or
agents of the Company or any of its Subsidiaries in respect of actions or
omissions occurring at or prior to the Closing Date (including, without
limitation, the matters contemplated by this Agreement), and the Surviving
Corporation shall not amend or repeal such provisions for a period of six years
from the Effective Time.
(d) From and after the Closing, Buyer shall not permit the obligations
of the Surviving Corporation or any successor corporation under this Section 8.5
to be terminated or modified in such a manner as to adversely affect any
director, officer, employee, fiduciary and agent to whom this Section 8.5
applies without the consent of each affected director, officer, employee,
fiduciary and agent (it being expressly agreed that the directors, officers,
employees, fiduciaries and agents to whom this Section 8.5 applies shall be
third-party beneficiaries of this Section 8.5).
-39-
(e) Buyer Sub understands that the Company has entered into
contractual indemnification arrangements with certain of its current directors
and officers, forms of which have previously been delivered to Buyer Sub.
(f) Buyer shall obtain, as of the Effective Time, a "run-off"
insurance policy providing directors' and officers' liability insurance coverage
for the persons who were directors or officers of the Company at any time during
the period from, on and after February 17, 1996 to and including the Effective
Time to the same extent as the directors' and officers' liability insurance
coverage maintained by the Company as of the date of this Agreement, provided
that such insurance coverage need only cover claims made during the period of
six years immediately following the Effective Time with respect to actions taken
by any such person after February 16, 1996 to and including the Effective Time.
(g) Until December 31, 1997, the Surviving Corporation will maintain
in place the Company's current health and 401(k) plans or substantially
equivalent plans.
Section 8.6 Stockholder Meeting. The Company shall take all
-------------------
reasonable efforts to call and hold a stockholders meeting, as soon as
practicable after the date of this Agreement but in no event later than November
25, 1997, for purposes of seeking stockholder approval of the Merger unless the
stockholders of the Company have otherwise approved the Merger pursuant to
unanimous written consent on the date of this Agreement.
Section 8.7 Buyer's Obligations Regarding Buyer Sub. Buyer agrees
---------------------------------------
to take all action necessary to cause Buyer Sub to perform all obligations, and
to perform all agreements, covenants and obligations, of Buyer Sub and the
Surviving Corporation under this Agreement and to consummate the Merger on the
terms and conditions set forth in this Agreement. Buyer and Buyer Sub shall be
liable for any breach of any covenant or agreement of Buyer Sub or the Surviving
Corporation and for any breach of this covenant; provided, however, that Buyer
shall not have any responsibility for, or provide any guaranties of, any actions
of Buyer Sub or any obligation or liability otherwise hereunder after the
Effective Time, except as expressly provided in Sections 2.6 and 8.5.
ARTICLE IX
CONDITIONS PRECEDENT
--------------------
Section 9.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any one or more of which may be waived in a writing
executed by Buyer and the Company subject to and in accordance with Section 10.4
hereof:
-40-
(a) The waiting period applicable to the consummation of the
transactions contemplated by this Agreement, if any, under the HSR Act shall
have expired or been terminated.
(b) No United States or state Governmental Entity or other agency or
commission or United States or state court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any law, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal, or otherwise preventing or prohibiting, the consummation of the
transactions contemplated by this Agreement.
(c) There shall not be pending any action, proceeding or investigation
brought by any person or entity before any Governmental Entity challenging,
affecting, or seeking material damages in connection with, the transactions
contemplated by this Agreement.
Section 9.2 Conditions to Obligation of the Company. The
---------------------------------------
obligation of the Company to effect the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Closing Date of
the following additional conditions, unless waived in writing by the Company in
accordance with Section 10.4 hereof:
(a) Buyer shall have performed in all material respects its agreements
contained in this Agreement required to be performed on or prior to the Closing
Date and the representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects when made and on and at the
Closing Date as if made on the Closing Date (except to the extent they expressly
relate to the date of this Agreement or any other particular date), and the
Company shall have received a certificate of the President or Chief Executive
Officer (or comparable officer) of Buyer, dated the Closing Date, to that
effect.
(b) Buyer shall have executed and delivered to JEDI the Warrant
Agreement in substantially the form of Exhibit A attached hereto.
(c) Buyer shall have executed and delivered to JEDI the Registration
Rights Agreement in substantially the form of Exhibit B attached hereto.
(d) The Company shall have received the opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇
L.L.P., counsel to Buyer and Buyer Sub, dated the Closing Date, substantially in
the form of Exhibit C hereto.
Section 9.3 Conditions to Obligations of Buyer. The obligations of
----------------------------------
Buyer to effect the transactions contemplated by this Agreement shall be subject
to the fulfillment at or prior to the Closing Date of the following additional
conditions, unless waived in writing by Buyer in accordance with Section 10.4
hereof:
-41-
(a) The Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior to
the Closing Date and the representations and warranties of the Company contained
in this Agreement shall be true and correct, in each case when made and on and
at the Closing Date as if made at such time (except, to the extent, and only to
the extent, that (i) they expressly relate to the date of this Agreement or any
other particular date or (ii) such representations and warranties have been
amended or modified by the delivery of amendments to the Company Disclosure
Schedule at least two Business Days prior to the Closing Date, and the Buyer
shall have received a certificate signed on behalf of the Company by its
President or Chief Executive Officer, dated the Closing Date, to that effect.
(b) All permits, consents, authorizations, approvals, registrations,
qualifications, designations and declarations set forth on Schedule 6.4 of the
Company Disclosure Schedule as a result of the last sentence of Section 6.4
hereof shall have been obtained, on terms and conditions reasonably satisfactory
to Buyer, and, to the extent required to be submitted prior to the Closing Date,
all filings and notices set forth on Schedule 6.4 of the Company Disclosure
Schedule as a result of the last sentence of Section 6.4 hereof shall have been
submitted by the Company.
(c) Buyer shall have received the opinion of ▇▇▇ ▇▇▇▇▇▇▇▇, General
Counsel of the Company, substantially in the form of Exhibit D-1 attached
hereto, and Buyer shall have received the opinion of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP,
counsel to the Company, dated the Closing Date, substantially in the form of
Exhibit D-2 hereto.
(d) None of the Specified Parties subject to the Employment Agreements
shall have breached or anticipatorily breached any such agreements.
(e) The ▇▇▇▇▇▇ Employment Agreement Amendment shall have been executed
and delivered by each of the Company and ▇▇▇▇▇▇, and the Employment Agreement
between the Company and ▇▇▇▇▇▇ shall not have been otherwise amended.
(f) The Stockholders Agreement shall have been terminated by all of
the parties thereto without the payment of consideration, or any commitment or
agreement to pay any consideration, by the Company or any of its Subsidiaries to
any Person, except as provided in the Stockholders Allocation Agreement.
(g) All members of management of the Company shall have repaid all
indebtedness owed by them to the Company set forth on Schedule 9.3(g) of the
Company Disclosure Schedule.
(h) Buyer shall have reasonably determined in good faith, on or before
November 24, 1997, by written notice to the Company, that, had the
representations and warranties of the Company in this Agreement been made
without any materiality or knowledge
-42-
qualifications, Buyer would suffer or experience claims, losses, damages,
liabilities, diminution in value of the business, assets or operations of the
Company or its Subsidiaries or other adverse economic impact from one or more
breaches of such representations and warranties that in the aggregate would not
exceed $10 million if the Merger were to be consummated; provided that, in the
event that the Company has provided any amendment to the Company Disclosure
Schedule as contemplated by Section 9.3(a), (i) the date on which Buyer may make
the determination provided in this subsection (h) shall be extended to November
24, 1997 (or December 1, 1997 if the election under Section 10.1(b) has been
made) and (ii) any such amendment or amendments to the Company Disclosure
Schedule shall not be considered to have amended the Company Disclosure Schedule
for purposes of this subsection (h). The phrase "without regard to any
materiality or knowledge qualifications" shall mean that (i) references to
"material" and words of similar import shall, for purposes of this Section
9.3(h), be considered to have been deleted from the text of the representations
and warranties of the Company in this Agreement, (ii) references to exclusions
or other qualifications for items that would not, individually or in the
aggregate, have or cause, or which could reasonably be expected to have, a
Company Material Adverse Effect, or phrases of similar import, shall, for such
purposes, be considered to have been deleted from the text of the
representations and warranties of the Company in this Agreement and (iii)
references to "to the knowledge of the Company" and "to the knowledge of the
Company's officers" and words of similar import shall, for purposes of this
Section 9.3(h), be considered to have been deleted from the text of the
representations and warranties of the Company in this Agreement.
(i) Each owner of Company Common Stock, Company Preferred Stock and
Outstanding Options, other than JEDI, shall have executed and delivered to Buyer
the Shareholder Agreement.
(j) JEDI shall have executed and delivered to Buyer the JEDI
Agreement.
-43-
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 10.1 Termination. This Agreement may be terminated at any
------------
time prior to the Closing:
(a) by mutual written consent of Buyer and the Company;
(b) by either Buyer or the Company if the Closing shall not have
occurred on or before November 26, 1997 (unless (i) either party shall have,
prior to such date, given notice of its desire to extend such date to a date no
later than December 3, 1997, in which case November 26, 1997 shall be extended
to such date or (ii) such circumstance is the result of a breach of the terms
hereof by the party exercising the termination right); provided that, in the
event the Taurus Disposition has not occurred prior to November 25, 1997 (or
December 2, 1997 if either party has exercised its right to extend to December
3, 1997 the termination date under this clause (b)), the Company shall not have
the right to terminate this Agreement pursuant to this clause (b) until Buyer
has obtained all regulatory approvals from Governmental Entities necessary to
consummate the transactions contemplated by this Agreement on the basis of no
Taurus Disposition having occurred, including the expiration of all waiting
periods under the HSR Act, but in no event shall the Company's right to
terminate be suspended for more than 45 days after December 3, 1997; or
(c) by either Buyer or the Company upon written notice to the other
parties hereto if any Governmental Entity of competent jurisdiction shall have
issued (i) a final permanent order enjoining or otherwise prohibiting the
consummation of any of the transactions contemplated by this Agreement, and in
any such case the time for appeal or petition for reconsideration of such order
shall have expired without such appeal or petition being granted, or (ii) any
order or directive that does not directly enjoin or otherwise prohibit the
consummation of the transactions contemplated by this Agreement, but that would,
if Buyer or the Company were to comply with such order or directive as a
condition to consummating the transactions contemplated hereby, have a material
adverse effect on the business, operations or financial condition of Buyer or
the Company.
Section 10.2 Effect of Termination. In the event of termination of
---------------------
this Agreement pursuant to Section 10.1, no party hereto shall have any
obligation or liability to any other party hereto except (i) that this Section
10.2 and Sections 8.1(b), 11.3, 11.7 and 11.8 shall survive any such termination
and (ii) that, except as set forth herein, nothing herein and no termination
pursuant hereto will relieve any party from liability for any breach of any
covenant contained in this Agreement or willful breach of any representation or
warranty contained in this Agreement.
-44-
Section 10.3 Amendment. This Agreement may not be amended except by
---------
an instrument in writing signed on behalf of each of the parties hereto.
Section 10.4 Waiver. At any time prior to the Closing, the parties
------
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies in the
representations and warranties of any other party contained herein or in any
documents delivered pursuant hereto by any other party and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE XI
GENERAL PROVISIONS
------------------
Section 11.1 Non-Survival of Representations and Warranties. All
----------------------------------------------
representations, warranties, agreements and covenants set forth in this
Agreement shall terminate at the Effective Time or upon termination of this
Agreement pursuant to Section 10.1, as the case may be, except that (i) the
agreements set forth in Sections 8.4, 8.5 and 8.7 and Articles II and XI shall
survive the Effective Time indefinitely and (ii) the agreements set forth in
Sections 8.1(b), 10.2 and in Article XI shall survive termination indefinitely.
Section 11.2 Notices. All notices or other communications under
-------
this Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by facsimile
transmission (with a hard copy delivered by overnight delivery service) or by
overnight delivery service, or by registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
If to the Company:
Coda Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-45-
With a copy to:
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ Boeing
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
if to JEDI:
c/o Enron Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇▇▇)
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇)
and
if to Buyer:
Belco Oil & Gas Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-46-
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section 11.2.
Section 11.3 Expenses. Whether or not the transactions contemplated
--------
by this Agreement are consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated herein shall be paid by
the party incurring such expenses, provided that Buyer shall pay to ▇▇▇▇▇▇ and
▇▇▇▇▇, LLP 50% of the legal fees payable by the Company to ▇▇▇▇▇▇ and ▇▇▇▇▇,
LLP, up to a maximum amount payable by Buyer of $25,000, in connection with the
transactions contemplated by this Agreement.
Section 11.4 Publicity. So long as this Agreement is in effect,
---------
neither Buyer nor the Company shall issue any press release or otherwise make
any public statement with respect to the transactions contemplated by this
Agreement without the consent of the other, which consent shall not be
unreasonably withheld, unless such press release or public statement is required
by law, regulation or rules of any applicable market or exchange, in which case
such press release or public statement may be made after providing the other
parties hereto a reasonable opportunity to comment thereon.
Section 11.5 Interpretation. The headings contained in this
--------------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 11.6 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 or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate 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 hereby may be consummated to the
fullest extent possible.
Section 11.7 Arbitration. Any and all claims, demands, causes of
-----------
action, disputes, controversies and other matters in question arising out of or
relating to this Agreement, the alleged breach thereof, or in any way relating
to the subject matter of this Agreement
-47-
("Claims"), even though some or all of such Claims allegedly are
extracontractual in nature, whether such Claims sound in contract, tort or
otherwise, at law or in equity, under state or federal law, whether provided by
statute or the common law, for damages or any other relief, shall be resolved
and decided exclusively by binding arbitration pursuant to the Federal
Arbitration Act in accordance with the Commercial Arbitration Rules then in
effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Dallas, Texas. The arbitration shall be before a panel of
three arbitrators. Each party to such dispute shall select one arbitrator and
the two arbitrators selected by the parties shall select the third arbitrator.
The arbitrators are authorized to issue subpoenas for depositions and other
discovery mechanisms, as well as trial subpoenas, in accordance with the Federal
Rules of Civil Procedure. Either party may initiate a proceeding in the
appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules of governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including, without limitation, any exemplary damages, treble damages or any
other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances, the
parties hereby waiving their right, if any, to recover such damages in
connection with any Claims. The arbitrators shall be entitled to award costs of
the arbitration and attorney's fees as they deem appropriate. Prior to any
Person instituting a Claim under this Agreement, such Person shall provide to
the other party hereto a written notice specifying the nature and basis of the
Claim. The Persons who are the subject of any Claim shall be given thirty (30)
days to cure any breach before any Claim is filed. It is further agreed that
prior to such Claims being submitted to the arbitrators on such Claims, the
parties to the Claims shall attempt to resolve such Claims through non-binding
mediation of such Claims for a period not in excess of 30 days commencing after
assertion of a Claim.
Section 11.8 Miscellaneous. This Agreement (together with the
-------------
exhibits and the Company Disclosure Schedule referred to herein and the
Confidentiality Agreement) (i) constitute the entire agreement and supersede all
other prior agreements and understandings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof, (ii) except
as provided in Section 8.4, is not intended to confer upon any other person any
rights or remedies hereunder and shall be binding upon and inure to the benefit
solely of each party hereto, and their respective successors and assigns, (iii)
shall not be assigned by operation of law or otherwise, and (iv) shall be
governed in all respects, including validity, interpretation and effect, by the
laws of the State of Texas (without giving effect to the provisions thereof
relating to conflicts of law). This Agreement may be executed in any number of
counterparts which together shall constitute a single agreement.
-48-
Section 11.9 Effective Date. This Agreement shall not be effective
--------------
until such time as (i) each of the owners of the Company Common Stock, the
Company Preferred Stock and the Outstanding Options, other than JEDI, shall have
executed and delivered to the Company a Shareholder Agreement and (ii) JEDI
shall have executed and delivered to the Company the JEDI Agreement, unless
Buyer shall have waived, in writing, such requirement in full or in part, in
which case this Agreement shall be effective at the time a copy of such waiver
is delivered to the Company.
-49-
IN WITNESS WHEREOF, Buyer, Buyer Sub and the Company have caused this
Agreement to be signed by their respective officers thereunder duly authorized,
all as of the date first written above.
BELCO OIL & GAS CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
BELCO ACQUISITION SUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
CODA ENERGY, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice Chairman of the Board and Chief
Operating Officer
-50-
EXHIBIT A
---------
================================================================================
WARRANT AGREEMENT
BETWEEN
BELCO OIL & GAS CORP.
AND
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
-----------------------------------
DATED AS OF NOVEMBER _____, 1997
-----------------------------------
Warrants to Purchase 1,666,667 Common Shares
================================================================================
TABLE OF CONTENTS
RECITALS................................................................... 1
AGREEMENT.................................................................. 1
1. DEFINITIONS............................................................ 1
2. WARRANT CERTIFICATES................................................... 6
2.1 Issuance of Warrant............................................... 6
2.2 Form, Denomination and Date of Warrants........................... 6
2.3 Execution and Delivery of Warrant Certificates.................... 7
2.4 Transfer and Exchange............................................. 7
3. EXERCISE AND EXPIRATION OF WARRANTS.................................... 8
3.1 Right to Acquire Warrant Shares Upon Exercise..................... 8
3.2 Exercise and Expiration of Warrants............................... 8
(a) Exercise of Warrants......................................... 8
(b) Expiration of Warrants....................................... 9
(c) Method of Exercise........................................... 9
(d) Partial Exercise............................................. 9
(e) Issuance of Warrant Shares................................... 9
(f) Time of Exercise............................................. 10
3.3 Payment of Taxes.................................................. 10
3.4 Surrender of Certificates......................................... 11
3.5 Shares Issuable................................................... 11
4. DISSOLUTION, LIQUIDATION OR WINDING UP................................. 11
5. ADJUSTMENTS............................................................ 12
5.1 Adjustments....................................................... 12
(a) Stock Dividends, Subdivisions and Combinations............... 12
(b) Certain Other Dividends and Distributions.................... 12
(c) Reclassifications............................................ 13
(d) Distribution of Warrants or Other Rights
to Holders of Common Shares.................................. 13
(e) Superseding Adjustment of Number of Warrant
Shares into Which Each Warrant is Exercisable................ 14
(f) Other Provisions Applicable to Adjustments under
this Section................................................. 14
(g) Warrant Price Adjustment..................................... 15
(h) Merger, Consolidation or Combination......................... 15
(i) Compliance with Governmental Requirements.................... 16
(j) Optional Tax Adjustment...................................... 16
(k) Warrants Deemed Exercisable.................................. 16
(l) Limitations on Certain Non-Stock Dividends................... 16
5.2 Notice of Adjustment............................................. 16
5.3 Statement on Warrant Certificates................................ 16
5.4 Fractional Interest.............................................. 17
6. LOSS OR MUTILATION.................................................... 17
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES....................... 18
8. WARRANT TRANSFER BOOKS................................................ 18
9. WARRANT HOLDERS....................................................... 19
9.1 Voting or Dividend Rights........................................ 19
9.2 Rights of Action................................................. 19
9.3 Treatment of Holders of Warrant Certificates..................... 20
9.4 Communications to Holders........................................ 20
10. NOTICES............................................................... 20
10.1 Notices Generally................................................ 20
10.2 Required Notices to Holders...................................... 21
11. APPLICABLE LAW........................................................ 22
12. PERSONS BENEFITING.................................................... 22
13. COUNTERPARTS.......................................................... 22
14. AMENDMENTS............................................................ 22
15. INSPECTION............................................................ 23
16. SUCCESSOR TO THE COMPANY.............................................. 23
17. ENTIRE AGREEMENT...................................................... 23
18. HEADINGS.............................................................. 23
EXHIBITS
A. List of Warrant Certificates To Be Issued............................. A-1
B. Form of Warrant Certificate........................................... B-1
WARRANT AGREEMENT
This WARRANT AGREEMENT, dated as of November __________, 1997 (the "Issue
Date"), is entered into between BELCO OIL & GAS CORP., a Nevada corporation (the
"Company"), and JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP, a
Delaware limited partnership ("JEDI").
RECITALS
A. This Agreement is entered into in connection with the Agreement and Plan
of Merger, dated as of October 31, 1997, by and among the Company, Belco
Acquisition Sub, Inc., a Delaware corporation, and Coda Energy, Inc., a Delaware
corporation (the "Merger Agreement").
B. Pursuant to the Merger Agreement, the Company proposes to issue to JEDI
1,666,667 Warrants, as hereinafter described, each to purchase from time to time
at the Warrant Exercise Price (as defined below) one Common Share (as defined
below) of the Company after the Trigger Date (as defined below) and on or prior
to the Expiration Date (as defined below).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. DEFINITIONS
"Additional Common Shares" shall mean all Common Shares issued or issuable
by the Company after the date of this Agreement, other than the Warrant Shares.
"Affiliate" shall mean, as to any Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control of such Person. For purposes of this definition, "control" when used
with respect to any Person means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. Notwithstanding the
foregoing, "Affiliate" shall not include any wholly-owned Subsidiary of the
Company.
"Agreement" shall mean this Warrant Agreement, as the same may be amended,
modified or supplemented from time to time.
"Business Day" shall mean a day which in New York, New York is neither a
legal holiday nor a day on which banking institutions are authorized by law or
regulation to close.
"Capital Stock" of any Person shall mean any and all shares, interests,
participations, or other equivalents (however designated) of such Person's
capital stock, and any warrants, options or similar rights to acquire such
capital stock.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act) other than any one or more Principals or their Affiliates, (ii) the
adoption of a plan relating to the liquidation or dissolution of the Company,
(iii) the consummation of any transaction (including, without limitation, any
purchase, sale, acquisition, disposition, merger or consolidation) the result of
which is that any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act), other than one or more Principals or their Affiliates, becomes
the "beneficial owner" (as such term is described in Rule 13d-3 and Rule 13d-5
under the Exchange Act) of more than 50% of the aggregate voting power of all
classes of Capital Stock of the Company having the right to elect directors
under ordinary circumstances, (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors or
(vi) a "Rule 13e-3 transaction" (as such term is defined in Rule 13e-3 under the
Exchange Act). For purposes of this definition, "Principals" means (i) ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, (ii) the spouse of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (iii) ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (iv)
the spouse of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, (v) the lineal descendants of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, and (vi) trusts in which ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the spouse of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the spouse of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or a lineal
descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is a beneficiary, and "Continuing Directors"
means, as of any date of determination, any member of the Board of Directors of
the Company who (i) was a member of such Board of Directors on the date of this
Agreement or (ii) was nominated for election or elected to such Board of
Directors with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Common Equity Securities" shall mean any class or series of Common Shares
of the Company.
"Common Shares" shall mean (i) the common stock, par value $.01 per share,
of the Company, as constituted on the original issuance of the Warrants, (ii)
any Capital Stock into which such Common Shares may thereafter be changed and
(iii) any share of the Company of any other class issued to holders of such
Common Shares upon any reclassification thereof.
"Company" shall mean the company identified in the preamble hereof and its
successors and assigns.
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"Corporate Office" shall mean the executive offices of the Company located
at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such other place as
the Company shall locate its executive offices.
"Current Market Price" shall mean, with respect to any security on any
date:
(1) if the Company does not have a class of equity securities
registered under the Exchange Act, the value of such security (a) most
recently determined as of a date within the one month preceding such date
by an Independent Financial Expert using one or more valuation methods that
such Independent Financial Expert, in its best professional judgment,
determines to be most appropriate but without giving effect to the discount
for any lack of liquidity of the security or to the fact that the Company
may not have any class of equity securities registered under the Exchange
Act and assuming that the Warrants are currently exercisable (in the event
of more than one such determination, the determination for the later date
shall be used) or (b) if no such determination shall have been made within
such one month period, determined as of such date by an Independent
Financial Expert as described in (a) above, or
(2) if the Company does have a class of equity securities registered
under the Exchange Act, the average of the daily Market Prices of such
security for each Business Day during the period commencing thirty (30)
Business Days before such date and ending on the date one day prior to such
date or, if the Company has had a class of equity securities registered
under the Exchange Act for less than thirty (30) consecutive Business Days
before such date, then the average of the daily Market Price for all of the
Business Days before such date for which daily Market Prices are available
provided, however, that in the event that the Current Market Price per
share of a security is determined during a period following the
announcement by the Company of (A) a dividend or distribution on such a
security payable in shares of such a security or securities convertible
into shares of such a security, or (B) any subdivision, combination or
reclassification of such security, and prior to the expiration of such
thirty (30) Business Day period before such date (or, if applicable, such
lesser number of Business Days before such date for which daily Market
Prices are available) after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then in each such case, Current Market Price shall be
properly adjusted to take into account ex-dividend trading.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Expiration Date" shall mean November __________, 2000 or such earlier date
as determined in accordance with Section 4.
-3-
"Holder" or "Warrantholder" shall mean any Person in whose name at the time
any Warrant Certificate is registered upon the Warrant Register.
"Independent" shall mean a nationally recognized investment banking firm or
Person (as the case may be) (i) that does not then have, and for the ten years
immediately preceding such time has not had (and, in the case of a nationally
recognized investment banking firm, whose directors, officers, employees and
Affiliates do not then have, and for the ten years immediately preceding such
time have not had) a direct or indirect interest in the Company or any of its
Subsidiaries or Affiliates or any successor to any of them and (ii) that is not
then, and for the ten years immediately preceding such time was not (and, in the
case of a nationally recognized investment banking firm, whose directors,
officers, employees or Affiliates are not then, and for the ten years
immediately preceding such time were not) an employee, consultant, advisor,
director, officer or Affiliate (it being understood that the term "Independent"
when applied to a director of the Company, means a non-employee director of the
Company whose only relationship with the Company during the relevant period has
been as a director of the Company) of the Company, any of its Subsidiaries or
Affiliates or any successor to any of them.
"Independent Financial Expert" shall mean an Independent nationally
recognized investment banking firm with assets in excess of $1.0 billion
selected by a majority of the members of the Board of Directors (and by a
majority of the Independent members of the board, if any) of the Company.
"JEDI" shall mean the limited partnership identified in the preamble hereof
and its successors.
"Market Price" shall mean (A) in the case of a security listed or admitted
to trading on any securities exchange, the closing price, regular way, on such
day, or if no sale takes place on such day, the average of the closing bid and
asked prices on such day, (B) in the case of a security not then listed or
admitted to trading on any securities exchange, the last reported sale price on
such day, or if no sale takes place on such day, the average of the closing bid
and asked prices on such day, as reported by a reputable quotation source
designated by the Company, (C) in the case of a security not then listed or
admitted to trading on any securities exchange and as to which no such reported
sale price or bid and asked prices are available, the average of the reported
high bid and low asked prices on such day, as reported by a reputable quotation
service, or The Wall Street Journal, Eastern Edition, or if such newspaper is no
longer published then in a newspaper of general circulation in the Borough of
Manhattan, City and State of New York, customarily published on each Business
Day, designated by the Company or if there shall be no bid and asked prices on
such day, the average of the high bid and low asked prices, as so reported, on
the most recent day (not more than ten (10) days prior to the date in question)
for which prices have been so reported, and (D) if there are no bid and asked
prices reported during the ten (10) days prior to the date in question, the
Current Market Value of the security shall be determined as if the Company did
not have a class of equity securities registered under the Exchange Act.
-4-
"Non-Stock Dividend" shall mean any payment by the Company to all holders
of its Common Shares of any dividend, or any other distribution by the Company
to such holders, of any shares of Capital Stock of the Company, evidences of
indebtedness of the Company, cash or other assets (including rights, warrants or
other securities (of the Company or any other Person)), other than any dividend
or distribution (i) upon a merger or consolidation or sale to which Section
5.1(h) applies, (ii) of any Common Shares referred to in Section 5.1(a) or (iii)
of cash not in liquidation of the Company.
"Non-Surviving Combination" shall mean any merger, consolidation or other
business combination by the Company with one or more other entities in a
transaction in which the Company is not the surviving entity or becomes a
wholly-owned subsidiary of another entity.
"outstanding" shall mean, as of the time of determination, when used with
respect of any Warrants, all Warrants originally issued under this Agreement
except (i) Warrants that have been exercised pursuant to Section 3.2(a), (ii)
Warrants that have expired pursuant to Sections 3.2(b), 4 or 6 and (iii)
Warrants that have otherwise been acquired by the Company; provided, however,
that in determining whether the Holders of the requisite amount of the
outstanding Warrants have given any request, demand, authorization, direction,
notice, consent or waiver under the provisions of this Agreement, Warrants owned
by the Company or any Subsidiary or Affiliate of the Company or any Person that
is at such time a party to a merger or acquisition agreement with the Company
shall be disregarded and deemed not to be outstanding.
"Person" shall mean any individual, corporation (including a business
trust), partnership, joint venture, association, joint-stock company, trust,
estate, limited liability company, unincorporated association, unincorporated
organization, government or agency or political subdivision thereof or any other
entity.
"Recipient" shall have the meaning given such term in Section 3.2(e).
"Restricted Warrants" shall have the meaning given such term in Section
2.2(b).
"Restricted Warrant Legend" shall mean the legend so designated on the
Warrant Certificate attached hereto as Exhibit A.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors,
-5-
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of such
Person or a combination thereof.
"Trigger Date" shall mean the earliest of (i) November __________, 1998,
(ii) the date of a Change of Control or (iii) the date of any notice given
pursuant to Section 3.2(g).
"Warrant Certificates" shall mean those certain warrant certificates
evidencing the Warrants, substantially in the form of Exhibit A attached hereto.
"Warrant Price" shall mean the exercise price per Warrant Share, initially
set at $27.50, subject to adjustment as provided in Section 5.1(g).
"Warrant Register" shall have the meaning given such term in Section 8.
"Warrant Shares" shall mean the Common Shares issuable upon exercise of the
Warrants, the number of which is subject to adjustment from time to time in
accordance with Section 5.
"Warrants" shall mean those warrants issued hereunder to purchase initially
up to an aggregate of 1,666,667 Warrant Shares at the Warrant Price, subject to
adjustment pursuant to Section 5.
2. WARRANT CERTIFICATES
2.1 Issuance of Warrant. An aggregate of 1,666,667 Warrants shall be
issued on the date of this Agreement to JEDI. The Company shall issue to JEDI
Warrant Certificates evidencing such Warrants. Each Warrant Certificate issued
pursuant to this Section 2.1 shall evidence the number of Warrants specified
therein and each Warrant evidenced thereby shall represent the right, subject to
the provisions contained herein and therein, to purchase one Warrant Share,
subject to adjustment as provided in Section 5.
2.2 Form, Denomination and Date of Warrants.
(a) Warrant Certificates shall be substantially in the form of Exhibit
A hereto. The Warrants shall be numbered, lettered or otherwise distinguished in
such manner or in accordance with such plans as the officers of the Company
executing the same may determine. Each Warrant shall be dated the date of its
authentication. Any of the Warrants may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Agreement, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Warrants are admitted to trading, or to conform to general usage. All
Warrants shall be otherwise substantially identical except as to denomination
and as provided herein.
-6-
(b) Each Warrant Certificate issued pursuant to this Agreement
("Restricted Warrants") will bear the Restricted Warrant Legend unless removed
in accordance with Section 2.4.
2.3 Execution and Delivery of Warrant Certificates.
(a) Warrant Certificates evidencing the Warrants which may be delivered
under this Agreement are limited to Warrant Certificates evidencing 1,666,667
Warrants, except for Warrant Certificates delivered pursuant to Sections 2.4,
3.2(d), 6 and 8 upon registration of transfer of, or in exchange for, or in lieu
of, one or more previously issued Warrant Certificates.
(b) At any time and from time to time on or after the date of this
Agreement, Warrant Certificates evidencing the Warrants may be executed and
delivered by the Company for issuance.
(c) The Warrant Certificates shall be executed in the corporate name
and on behalf of the Company by the Chairman (or any Co-Chairman) of the Board,
the Chief Executive Officer, the President or any one of the Vice Presidents of
the Company under corporate seal reproduced thereon and attested to by the
Secretary or one of the Assistant Secretaries of the Company, either manually or
by facsimile signature printed thereon. In case any officer of the Company whose
signature shall have been placed upon any of the Warrant Certificates shall
cease to be such officer of the Company before and delivery thereof, such
Warrant Certificates may, nevertheless, be issued and delivered with the same
force and effect as though such person had not ceased to be such officer of the
Company, and any Warrant Certificate may be signed on behalf of the Company by
such person as, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company, although at the date of the execution
of this Agreement any such person was not such an officer.
2.4 Transfer and Exchange.
(a) If a holder of a Restricted Warrant wishes at any time to transfer
such Restricted Warrant to a Person who wishes to take delivery thereof in the
form of a Restricted Warrant, such holder may, subject to the restrictions on
transfer set forth herein and in such Restricted Warrant, cause the exchange of
such Restricted Warrants for one or more Restricted Warrants of any authorized
denomination or denominations and exercisable for the same aggregate number of
Warrant Shares. Upon receipt by the Company at its Corporate Office of (1) such
Restricted Warrant, duly endorsed as provided herein, (2) instructions from such
holder directing the Company to authenticate and deliver one or more Restricted
Warrants exercisable for the same aggregate number of Warrant Shares as the
Restricted Warrant to be exchanged, such instructions to contain the name or
names of the designated transferee or transferees, the authorized denomination
or denominations of the Restricted Warrants to be so issued and appropriate
delivery instructions, and (3) an opinion of counsel, reasonably satisfactory to
the Company, to the transferor of such
-7-
Restricted Warrant to the effect that the transfer of such Restricted Warrant
has been registered under the Securities Act or is exempt from registration
thereunder pursuant to an applicable exemption therefrom, then the Company shall
cancel or cause to be canceled such Restricted Warrant and, concurrently
therewith, the Company shall execute and deliver, one or more Restricted
Warrants to the effect set forth therein, in accordance with the instructions
referred to above.
(b) If Warrants are issued upon the transfer, exchange or replacement
of Warrants bearing the Restricted Warrant Legend, or if a request is made to
remove such Restricted Warrant Legend, the Warrants so issued shall bear the
Restricted Warrant Legend, or the Restricted Warrant Legend shall not be
removed, as the case may be, unless there is delivered to the Company
satisfactory evidence, which may include an opinion of counsel as may be
reasonably required by the Company to the effect that neither the Restricted
Warrant Legend nor the restrictions on transfer set forth therein are required
to ensure that transfers thereof comply with the provisions of the Securities
Act or, with respect to Restricted Warrants, that such Warrants are not
"restricted" within the meaning of Rule 144 under the Securities Act. Upon
provision of such satisfactory evidence the Company shall authenticate and
deliver Warrant Certificates that do not bear the Restricted Warrant Legend.
(c) No service charge shall be made to a Warrantholder for any
registration of transfer or exchange; provided, however, that the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Warrant Certificates.
3. EXERCISE AND EXPIRATION OF WARRANTS
3.1 Right to Acquire Warrant Shares Upon Exercise.
Each Warrant Certificate shall entitle the Holder thereof, subject to the
provisions thereof and of this Agreement, to acquire from the Company, for each
Warrant evidenced thereby, one Warrant Share at the Warrant Price, subject to
adjustment as provided in this Agreement. The Warrant Price shall be adjusted
from time to time as required by Section 5.1. The Warrants are exercisable at
any time on and after the Trigger Date and on or prior to the Expiration Date.
3.2 Exercise and Expiration of Warrants.
(a) Exercise of Warrants. Subject to the terms and conditions set forth
herein, including, without limitation, the exercise procedure described in
Section 3.2(c), a Holder of a Warrant Certificate may exercise all or any whole
number of the Warrants evidenced thereby, on any Business Day on and after the
Trigger Date until 5:00 p.m., New York City time, on the
-8-
Expiration Date (subject to earlier expiration pursuant to Section 4) for the
Warrant Shares purchasable thereunder.
(b) Expiration of Warrants. The Warrants shall terminate and become
void as of 5:00 p.m., New York City time, on the Expiration Date, subject to
earlier expiration in accordance with Section 4. In the event that the Warrants
are to expire by reason of Section 4, the term "Expiration Date" shall mean such
earlier date for all purposes of this Agreement.
(c) Method of Exercise. The Holder may exercise all or any of the
Warrants by either of the following methods:
(i) The Holder may deliver to the Company at the Corporate Office
(A) a written notice of such Holder's election to exercise Warrants,
duly executed by such Holder in the form set forth on the reverse of,
or attached to, such Warrant Certificate, which notice shall specify
the number of Warrant Shares to be purchased, (B) the Warrant
Certificate evidencing such Warrants and (C) a sum equal to the
aggregate Warrant Price for the Warrant Shares into which such Warrants
are being exercised, which sum shall be paid in any combination elected
by such Holder of (x) a company or personal check payable to the order
of the Company and delivered to the Company at the Corporate Office, or
(y) wire transfers in immediately available funds to the account of the
Company at such banking institution as the Company shall have given
notice to the Holders in accordance with Section 10.1(b); or
(ii) The Holder may also exercise all or any of the Warrants in a
"cashless" or "net-issue" exercise by delivering to the Company at the
Corporate Office (A) a written notice of such Holder's election to
exercise Warrants, duly executed by such Holder in the form set forth
on the reverse of, or attached to, such Warrant Certificate, which
notice shall specify the number of Warrant Shares to be delivered to
such Holder and the number of Warrant Shares with respect to which such
Warrants are being surrendered in payment of the aggregate Warrant
Price for the Warrant Shares to be delivered to the Holder, and (B) the
Warrant Certificate evidencing such Warrants. For purposes of this
subparagraph (ii), each Warrant Share as to which such Warrants are
surrendered in payment of the aggregate Warrant Price will be
attributed a value equal to (x) the Current Market Price per share of
Common Shares minus (y) the then-current Warrant Price.
(d) Partial Exercise. If fewer than all the Warrants represented by a
Warrant Certificate are exercised, such Warrant Certificate shall be surrendered
and a new Warrant Certificate of the same tenor and for the number of Warrants
which were not exercised shall be executed by the Company. The Company, subject
to the provisions of Section 8, as may be directed in writing by the Holder,
shall deliver the new Warrant Certificate to the Person or Persons in whose name
such new Warrant Certificate is so registered.
-9-
(e) Issuance of Warrant Shares. Upon surrender of a Warrant Certificate
evidencing Warrants in conformity with the foregoing provisions and payment of
the Warrant Price in respect of the exercise of one or more Warrants evidenced
thereby, when such payment is received, the Company shall thereupon, as promptly
as practicable, and in any event within five Business Days after receipt by the
Company of such notice of exercise, execute or cause to be executed and deliver
or cause to be delivered to the Recipient (as defined below) a certificate or
certificates representing the aggregate number of Warrant Shares issuable upon
such exercise (based upon the aggregate number of Warrants so exercised),
determined in accordance with Section 3.5, together with an amount in cash in
lieu of any fractional share(s) determined in accordance with Section 5.4. The
certificate or certificates so delivered shall be, to the extent possible, in
such denomination or denominations as such Holder shall request in such notice
of exercise and shall be registered or otherwise placed in the name of, and
delivered to, the Holder or, subject to Section 2.2 and Section 3.3, such other
Person as shall be designated by the Holder in such notice (the Holder or such
other Person being referred to herein as the "Recipient").
(f) Time of Exercise. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the date on which all requirements
set forth in Section 3.2(c) applicable to such exercise have been satisfied.
Subject to Section 5.1(f)(iv), certificate(s) evidencing the Warrant Shares
issued upon the exercise of such Warrant shall be deemed to have been issued
and, for all purposes of this Agreement, the Recipient shall, as between such
Person and the Company, be deemed to be and entitled to all rights of the holder
of record of such Warrant Shares as of such time.
(g) In the event that the Company shall propose any transaction which
would result in a Change of Control, the Company shall send a written notice to
each holder of Warrant Certificates not less than 20 days prior to the
consummation of the transaction that would result in such Change of Control.
3.3 Payment of Taxes.
The Company shall pay any and all taxes (other than income taxes) and other
charges that may be payable in respect of the issue or delivery of Warrant
Shares on exercise of Warrants pursuant hereto. The Company shall not be
required, however, to pay any tax or other charge imposed in respect of any
transfer involved in the issue and delivery of any certificates for Warrant
Shares or payment of cash to any Recipient other than the Holder of the Warrant
Certificate surrendered upon the exercise of a Warrant, and in case of such
transfer or payment, the Company shall not be required to issue or deliver any
certificate or pay any cash until (a) such tax or charge has been paid or an
amount sufficient for the payment thereof has been delivered to the Company or
(b) it has been established to the Company's satisfaction that any such tax or
other charge that is or may become due has been paid.
-10-
3.4 Surrender of Certificates.
Any Warrant Certificate surrendered for exercise shall be promptly canceled
by the Company and shall not be reissued by the Company.
3.5 Shares Issuable.
The number of Warrant Shares "issuable upon exercise" of Warrants at any
time shall be the number of Warrant Shares into which such Warrants are then
exercisable. The number of Warrant Shares "into which each Warrant is
exercisable" initially shall be one share, subject to adjustment as provided in
Section 5.1.
4. DISSOLUTION, LIQUIDATION OR WINDING UP
If, on or prior to the Expiration Date, the Company (or any other Person
controlling the Company) shall propose a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, the Company shall give
written notice thereof to all Holders of Warrant Certificates in the manner
provided in Section 10 prior to the date on which such transaction is expected
to become effective or, if earlier, the record date for such transaction. Such
notice shall also specify the date as of which the holders of record of the
Common Shares shall be entitled to exchange their shares for moneys, securities
or other property deliverable upon such dissolution, liquidation or winding up,
as the case may be, the date on which each Holder of Warrant Certificates shall
be entitled to receive the moneys, securities or other property which such
Holder would have been entitled to receive had such Holder been the holder of
record of the Warrant Shares into which the Warrants were exercisable
immediately prior to such dissolution, liquidation or winding up (net of the
then applicable Warrant Price) and the date on which the rights to exercise the
Warrants shall terminate.
In case of any such voluntary or involuntary dissolution, liquidation or
winding up of the Company, the Company shall retain any moneys, securities or
other property which the Holders are entitled to receive under this Agreement.
After any Holder has surrendered a Warrant Certificate to the Company, the
Company shall make payment in the appropriate amount to such Person or Persons
as it may be directed in writing by the Holder surrendering such Warrant
Certificate. The Company shall not be required to pay interest on any money
deposited pursuant to the provisions of this Section 4.
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5. ADJUSTMENTS
5.1 Adjustments.
The number of Warrant Shares into which each Warrant is exercisable and the
Warrant Price shall be subject to adjustment from time to time after the Issue
Date in accordance (and only in accordance) with the provisions of this Section
5:
(a) Stock Dividends, Subdivisions and Combinations. In case at any time
or from time to time after the date hereof the Company shall:
(i) pay to the holders of its Common Shares a dividend payable in,
or make any other distribution on any class of its capital stock in, Common
Shares (other than a dividend or distribution upon a merger or
consolidation or sale to which Section 5.1(h) applies);
(ii) subdivide its outstanding Common Shares into a larger number
of Common Shares (other than a subdivision upon a merger or consolidation
or sale to which Section 5.1(h) applies); or
(iii) combine its outstanding Common Shares into a smaller number
of Common Shares (other than a combination upon a merger or consolidation
or sale to which Section 5.1(h) applies);
then, (x) in the case of any such dividend or distribution, effective
immediately after the opening of business on the day after the date for the
determination of the holders of Common Shares entitled to receive such dividend
or distribution or (y) in the case of any subdivision or combination, effective
immediately after the opening of business on the day after the day upon which
such subdivision or combination becomes effective, the number of Warrant Shares
into which each Warrant is exercisable shall be adjusted to that number of
Warrant Shares determined by (A) in the case of any such dividend or
distribution, multiplying the number of Warrant Shares into which each Warrant
is exercisable at the opening of business on the day after the day for
determination by a fraction (not to be less than one), (1) the numerator of
which shall be equal to the sum of the number of Common Shares outstanding at
the close of business on such date for determination and the total number of
shares constituting such dividend or distribution and (2) the denominator of
which shall be equal to the number of Common Shares outstanding at the close of
business on such date for determination, or (B) in the case of any such
combination, by proportionately reducing, or, in the case of any such
subdivision, by proportionately increasing, the number of Warrant Shares into
which each Warrant is exercisable at the opening of business on the day after
the day upon which such subdivision or combination becomes effective.
(b) Certain Other Dividends and Distributions. In case at any time or
from time to time after the date hereof the Company shall effect a Non-Stock
Dividend (other than any
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dividend or distribution of any warrants, options or rights referred to in
Section 5.1(d)), then, and in each such case, effective immediately after the
opening of business on the day after the date for the determination of the
holders of Common Shares entitled to receive such distribution, the number of
Warrant Shares into which each Warrant is exercisable shall be adjusted to that
number determined by multiplying the number of Warrant Shares into which each
Warrant is exercisable immediately prior to the close of business on the date of
determination by a fraction, (i) the numerator of which shall be the Current
Market Price per Common Share on such date of determination and (ii) the
denominator of which shall be such Current Market Price per Common Share minus
the portion applicable to one Common Share of the fair market value (as
determined in good faith by the Board of Directors of the Company) of such
securities or other assets so distributed pursuant to such Non-Stock Dividend.
(c) Reclassifications. A reclassification of the Common Shares (other
than any such reclassification in connection with a merger or consolidation or
sale to which Section 5.1(h) applies) into Common Shares and shares of any other
class of stock shall be deemed a distribution by the Company to the holders of
its Common Shares of such shares of such other class of stock for the purposes
and within the meaning of Section 5.1(b) (and the effective date of such
reclassification shall be deemed to be "the date for the determination of the
holders of Common Shares entitled to receive such distribution" for the purposes
and within the meaning of Section 5.1(b)) and, if the outstanding number of
Common Shares shall be changed into a larger or smaller number of Common Shares
as a part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding Common Shares for the
purposes and within the meaning of Section 5.1(a) (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
or combination becomes effective" for the purposes and within the meaning of
Section 5.1(a)).
(d) Distribution of Warrants or Other Rights to Holders of Common
Shares. In case at any time or from time to time after the Effective Date the
Company shall make a distribution to all holders of outstanding Common Shares of
any warrants, options or other rights to subscribe for or purchase any
Additional Common Shares or securities convertible into or exchangeable for
Additional Common Shares (other than a distribution of such warrants, options or
rights upon a merger or consolidation or sale to which Section 5.1(h) applies),
whether or not the rights to subscribe or purchase thereunder are immediately
exercisable, and the consideration per share for which Additional Common Shares
may at any time thereafter be issuable pursuant to such warrants or other rights
shall be less than the Current Market Price per Common Share on the date fixed
for determination of the holders of Common Shares entitled to receive such
distribution, then, and for each such case, effective immediately after the
opening of business on the day after the date for determination, the number of
Warrant Shares into which each Warrant is exercisable shall be adjusted to that
number determined by multiplying the number of Warrant Shares into which each
Warrant is exercisable at the opening of business on the day after such date for
determination by a fraction (not less than one), (i) the numerator of which
shall be the number of Common Shares outstanding at the close of business on
such date for determination plus the maximum number of Additional Common Shares
issuable pursuant to all such warrants
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or other rights and (ii) the denominator of which shall be the number of Common
Shares outstanding at the close of business on such date for determination plus
the number of Common Shares that the minimum consideration received and
receivable by the Company for the issuance of such maximum number of Additional
Common Shares pursuant to the terms of such warrants or other rights would
purchase at such Current Market Price.
(e) Superseding Adjustment of Number of Warrant Shares into Which Each
Warrant is Exercisable. In case at any time after any adjustment of the number
of Warrant Shares into which each Warrant is exercisable shall have been made
pursuant to Section 5.1(d) on the basis of the distribution of warrants or other
rights or after any new adjustment of the number of Warrant Shares into which
each Warrant is exercisable shall have been made pursuant to this Section
5.1(e), such warrants or rights shall expire, and all or a portion of such
warrants or rights shall not have been exercised, then, and in each such case,
upon the election of the Company such previous adjustment in respect of such
warrants or rights which have expired without exercise shall be rescinded and
annulled as to any then outstanding Warrants, and the Additional Common Shares
that were deemed for purposes of the computations set forth in Section 5.1(d) to
have been issued or sold by virtue of such adjustment in respect of such
warrants or rights shall no longer be deemed to have been distributed.
(f) Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of Warrant Shares into which each Warrant is exercisable and to the
Warrant Price under this Section 5.1:
(i) Treasury Stock. The sale or other disposition of any issued
Common Shares owned or held by or for the account of the Company shall be
deemed an issuance or sale of Additional Common Shares for purposes of this
Section 5. The Company shall not pay any dividend on or make any
distribution on Common Shares held in the treasury of the Company. For the
purposes of this Section 5.1, the number of Common Shares at any time
outstanding shall not include shares held in the treasury of the Company
but shall include shares issuable in respect of scrip certificates issued
in lieu of fractions of Common Shares.
(ii) When Adjustments Are to be Made. The adjustments required by
Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(d) shall be made whenever and as
often as any specified event requiring an adjustment shall occur, except
that no adjustment of the Warrant Shares into which each Warrant is
exercisable that would otherwise be required shall be made unless and until
such adjustment either by itself or with other adjustments not previously
made increases or decreases the Warrant Shares into which each Warrant is
exercisable immediately prior to the making of such adjustment by at least
1%. Any adjustment representing a change of less than such minimum amount
(except as aforesaid) shall be carried forward and made as soon as such
adjustment, together with other adjustments required by Sections 5.1(a),
5.1(b), 5.1(c) and 5.1(d) and not previously made, would result in such
minimum adjustment.
-14-
(iii) Fractional Interests. In computing adjustments under this
Section 5, fractional interests in Common Shares shall be taken into
account to the nearest one-thousandth of a share.
(iv) Deferral of Issuance upon Exercise. In any case in which this
Section 5 shall require that an adjustment to the Warrant Shares into which
each Warrant is exercisable be made effective pursuant to Section
5.1(a)(i), 5.1(b) or 5.1(d) prior to the occurrence of a specified event
and any Warrant is exercised after the time at which the adjustment became
effective but prior to the occurrence of such specified event, the Company
may elect to defer until the occurrence of such specified event the issuing
to the Holder of the Warrant Certificate evidencing such Warrant (or other
Person entitled thereto) of, and may delay registering such Holder or other
Person as the recordholder of, the Warrant Shares over and above the
Warrant Shares issuable upon such exercise determined in accordance with
Section 3.5 on the basis of the Warrant Shares into which each Warrant is
exercisable prior to such adjustment determined in accordance with Section
3.5; provided, however, that the Company shall deliver to such Holder or
other person a due ▇▇▇▇ or other appropriate instrument evidencing the
right of such Holder or other Person to receive, and to become the record
holder of, such Additional Common Shares, upon the occurrence of the event
requiring such adjustment.
(g) Warrant Price Adjustment. Whenever the number of Warrant Shares
into which a Warrant is exercisable is adjusted as provided in this Section 5.1,
the Warrant Price payable upon exercise of the Warrant shall simultaneously be
adjusted by multiplying such Warrant Price immediately prior to such adjustment
by a fraction, the numerator of which shall be the number of Warrant Shares into
which such Warrant was exercisable immediately prior to such adjustment, and the
denominator of which shall be the number of Warrant Shares into which such
Warrant was exercisable immediately thereafter.
(h) Merger, Consolidation or Combination. In the event the Company
merges, consolidates or otherwise combines with or into any Person, then, as a
condition of such merger, consolidation or combination, lawful and adequate
provisions shall be made whereby Warrantholders shall, in addition to their
other rights hereunder, thereafter have the right to purchase and receive upon
the basis and upon the terms and conditions specified in this Agreement upon
exercise of the Warrants and in lieu of the Warrant Shares immediately
theretofore purchasable and receivable upon the exercise of the rights
represented hereby, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for a number of outstanding Common
Shares equal to the number of Warrant Shares immediately theretofore purchasable
and receivable upon the exercise of the rights represented hereby, and in any
such case appropriate provision shall be made with respect to the rights and
interests of the Warrantholders to the end that the provisions hereof
(including, without limitation, provisions for adjustments of the number of
Warrant Shares) shall thereafter be applicable, as nearly as may be practicable,
in relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise hereof.
-15-
(i) Compliance with Governmental Requirements. Before taking any action
that would cause an adjustment reducing the Warrant Price below the then par
value of any of the Warrant Shares into which the Warrants are exercisable, the
Company will take any corporate action that may be necessary in order that the
Company may validly and legally issue fully paid and non assessable Warrant
Shares at such adjusted Warrant Price.
(j) Optional Tax Adjustment. The Company may at its option, at any time
during the term of the Warrants, increase the number of Warrant Shares into
which each Warrant is exercisable, or decrease the Warrant Price, in addition to
those changes required by Section 5.1(a), 5.1(b), 5.1(c), 5.1(d) or 5.1(g), as
deemed advisable by the Board of Directors of the Company, in order that any
event treated for Federal income tax purposes as a dividend of stock or stock
rights shall not be taxable to the Recipients.
(k) Warrants Deemed Exercisable. For purposes solely of this Section 5,
the number of Warrant Shares which the holder of any Warrant would have been
entitled to receive had such Warrant been exercised in full at any time or into
which any Warrant was exercisable at any time shall be determined assuming such
Warrant was exercisable in full at such time, although such Warrant may not be
exercisable in full at such time pursuant to Section 3.2(a).
(l) Limitations on Certain Non-Stock Dividends. The Company agrees that
it will not declare or pay any Non-Stock Dividend subject to Section 5.1(b)
hereof to the extent that the fair market value of the property or other assets
to be distributed in respect of one Common Share equals or exceeds the Current
Market Price per Common Share at the date of determination.
5.2 Notice of Adjustment.
Whenever the number of Warrant Shares into which a Warrant is exercisable
is to be adjusted, or the Warrant Price is to be adjusted, in either case as
herein provided, the Company shall compute the adjustment in accordance with
Section 5.1, and shall, promptly after such adjustment becomes effective, cause
a notice of such adjustment or adjustments to be given to all Holders in
accordance with Section 10.1(b).
5.3 Statement on Warrant Certificates.
Irrespective of any adjustment in the number or kind of shares into which
the Warrants are exercisable, Warrant Certificates theretofore or thereafter
issued may continue to express the same price and number and kind of shares
initially issuable pursuant to this Agreement.
-16-
5.4 Fractional Interest.
The Company shall not issue fractional Warrant Shares on the exercise of
Warrants. If Warrant Certificates evidencing more than one Warrant shall be
presented for exercise at the same time by the same Holder, the number of full
Warrant Shares which shall be issuable upon such exercise thereof shall be
computed on the basis of the aggregate number of Warrants so to be exercised.
If any fraction of a Warrant Share would, except for the provisions of this
Section 5.4, be issuable on the exercise of any Warrant (or specified portion
thereof), the Company shall, in lieu of issuing any fractional Warrant Shares,
pay an amount in cash calculated by it to be equal to the then Current Market
Price per Common Share on the date of such exercise multiplied by such fraction
computed to the nearest whole cent. The Holders, by their acceptance of the
Warrant Certificates, expressly waive their right to receive any fraction of a
Warrant Share or a stock certificate representing a fraction of a Warrant Share.
6. LOSS OR MUTILATION
Upon (i) receipt by the Company of evidence reasonably satisfactory to the
Company of the ownership of and the loss, theft, destruction or mutilation of
any Warrant Certificate and such reasonable and customary security or indemnity
as may be required by the Company to save the Company harmless and (ii)
surrender, in the case of mutilation, of the mutilated Warrant Certificate to
the Company and cancellation thereof, then, in the absence of notice to the
Company that the Warrants evidenced thereby have been acquired by a bona fide
purchaser, the Company shall execute and deliver to the registered Holder of the
lost, stolen, destroyed or mutilated Warrant Certificate, in exchange therefor
or in lieu thereof, a new Warrant Certificate of the same tenor and for a like
aggregate number of Warrants. At the written request of such registered Holder,
the new Warrant Certificate so issued shall be retained by the Company as having
been surrendered for exercise, in lieu of delivery thereof to such Holder, and
shall be deemed for purposes of Section 3.2 to have been surrendered for
exercise on the date the conditions specified in clauses (i) and (ii) of the
preceding sentence were first satisfied.
Upon the issuance of any new Warrant Certificate under this Section 6, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto.
Every new Warrant Certificate executed and delivered pursuant to this
Section 6 in lieu of any lost, stolen or destroyed Warrant Certificate shall
constitute an additional contractual obligation of the Company, whether or not
the allegedly lost, stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of this Agreement
equally and proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder.
-17-
The provisions of this Section 6 are exclusive and shall preclude (to the
extent lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen, or destroyed Warrant Certificates.
7. RESERVATION AND AUTHORIZATION OF WARRANT SHARES
The Company shall at all times reserve and keep available, free from
preemptive rights, solely for issue upon the exercise of Warrants as herein
provided, such number of its authorized but unissued Warrant Shares deliverable
upon the exercise of Warrants as will be sufficient to permit the exercise in
full of all outstanding Warrants. The Company covenants that all Warrant Shares
will, at all times that Warrants are exercisable, be duly approved for listing
subject to official notice of issuance on each securities exchange, if any, on
which the Common Shares are then listed. The Company covenants that (i) all
Warrant Shares that may be issued upon exercise of Warrants shall upon issuance
be duly and validly authorized, issued and fully paid and nonassessable and free
of preemptive or similar rights and (ii) the stock certificates issued to
evidence any such Warrant Shares will comply with Section 78 of the Nevada
Revised Statutes (or its successor) and any other applicable law.
The Company hereby authorizes and directs its current and future transfer
agents for the Common Shares at all times to reserve stock certificates for such
number of authorized shares as shall be requisite for such purpose. The Company
will supply such transfer agents with duly executed stock certificates for such
purposes.
8. WARRANT TRANSFER BOOKS
The Company will maintain at the Corporate Office where Warrant
Certificates may be surrendered for registration of transfer or exchange and
where Warrant Certificates may be surrendered for exercise of Warrants evidenced
thereby. The Company will give prompt written notice to all Holders of Warrant
Certificates of any change in the location of Corporate Office.
The Warrant Certificates evidencing the Warrants shall be issued in
registered form only. The Company shall cause to be kept at the Corporate Office
a warrant register (the "Warrant Register") in which, subject to such reasonable
regulations as the Company may prescribe and such regulations as may be
prescribed by law, the Company shall provide for the registration of Warrant
Certificates and of transfers or exchanges of Warrant Certificates as herein
provided.
Subject to Section 2.4, upon surrender for registration of transfer of any
Warrant Certificate at the Corporate Office, the Company shall execute and
deliver, in the name of the designated transferee or transferees, one or more
new Warrant Certificates evidencing a like aggregate number of Warrants.
Subject to Section 2.4, (i) at the option of the Holder, Warrant
Certificates may be exchanged at the Corporate Office upon payment of the
charges herein provided for other Warrant
-18-
Certificates evidencing a like aggregate number of Warrants and (ii) whenever
any Warrant Certificates are so surrendered for exchange, the Company shall
execute and deliver the Warrant Certificates of the same tenor and evidencing
the same number of Warrants as evidenced by the Warrant Certificates surrendered
by the Holder making the exchange.
All Warrant Certificates issued upon any registration of transfer or
exchange of Warrant Certificates shall be the valid obligations of the Company,
evidencing the same obligations, and entitled to the same benefits under this
Agreement, as the Warrant Certificates surrendered for such registration of
transfer or exchange.
Subject to Section 2.4, every Warrant Certificate surrendered for
registration of transfer or exchange shall (if so required by the Company) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company, duly executed by the Holder thereof or his attorney
duly authorized in writing.
9. WARRANT HOLDERS
9.1 Voting or Dividend Rights.
Prior to the exercise of the Warrants, except as may be specifically
provided for herein, (i) no Holder of a Warrant Certificate, as such, shall be
entitled to any of the rights of a holder of Common Shares, including, without
limitation, the right to vote at or to receive any notice of any meetings of
stockholders; (ii) the consent of any Holder shall not be required with respect
to any action or proceeding of the Company; (iii) except as provided in Section
4, no Holder, by reason of the ownership or possession of a Warrant or the
Warrant Certificate representing the same, shall have any right to receive any
stock dividends, allotments or rights or other distributions paid, allotted or
distributed or distributable to the stockholders of the Company prior to, or for
which the relevant record date preceded, the date of the exercise of such
Warrant; and (iv) no Holder shall have any right not expressly conferred by this
Agreement or Warrant Certificate held by such Holder.
9.2 Rights of Action.
All rights of action against the Company in respect of this Agreement are
vested in the Holders of the Warrant Certificates, and any Holder of any Warrant
Certificate, without the consent of the Holder of any other Warrant Certificate,
may, in such Holder's own behalf and for such Holder's own benefit, enforce and
may institute and maintain any suit, action or proceeding against the Company
suitable to enforce, or otherwise in respect of, such Holder's right to
exercise, exchange or tender for purchase such Holder's Warrants in the manner
provided in this Agreement.
-19-
9.3 Treatment of Holders of Warrant Certificates.
Every Holder of a Warrant Certificate, by accepting the same, consents and
agrees with the Company and with every subsequent holder of such Warrant
Certificate that, prior to due presentment of such Warrant Certificate for
registration of transfer, the Company may treat the Person in whose name the
Warrant Certificate is registered as the owner thereof for all purposes and as
the Person entitled to exercise the rights granted under the Warrants, and
neither the Company nor any agent of the Company shall be affected by any notice
to the contrary.
9.4 Communications to Holders.
(a) If any Holder of a Warrant Certificate applies in writing to the
Company and such application states that the applicant desires to communicate
with other Holders with respect to its rights under this Agreement or under the
Warrants, then the Company shall, within five (5) Business Days after the
receipt of such application, and upon payment to the Company by such applicant
of the reasonable expenses of preparing such list, provide to such applicant a
list of the names and addresses of all Holders of Warrant Certificates as of the
most recent practicable date.
(b) Every Holder of Warrant Certificates, by receiving and holding the
same, agrees with the Company that neither the Company nor any agent of either
of the Company shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with
Section 9.4(a).
10. NOTICES
10.1 Notices Generally.
(a) Any request, notice, direction, authorization, consent, waiver,
demand or other communication permitted or authorized by this Agreement to be
made upon, given or furnished to or filed with the Company by the other party
hereto or by any Holder shall be sufficient for every purpose hereunder if in
writing (including telecopy communication) and telecopied or delivered by hand
(including by courier service) as follows:
If to the Company, to it at:
Belco Oil & Gas Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-20-
If to a Holder, to it at:
to the address provided
to Company upon issuance
of the Warrants
or, in either case, such other address as shall have been set forth in a notice
delivered in accordance with this Section 10.1(a).
All such communications shall, when so telecopied or delivered by hand, be
effective when telecopied with confirmation of receipt or received by the
addressee, respectively.
Any Person that telecopies any communication hereunder to any Person shall,
on the same date as such telecopy is transmitted, also send, by first class
mail, postage prepaid and addressed to such Person as specified above, an
original copy of the communication so transmitted.
(b) Where this Agreement provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at the address of such Holder as it appears in the
Warrant Register, not later than the latest date, and not earlier than the
earliest date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail such notice, nor
any defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Where this Agreement
provides for notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made by a method reasonably approved in good faith by
the Company as one which would be most reliable under the circumstances for
successfully delivering the notice to the addressees shall constitute a
sufficient notification for every purpose hereunder.
10.2 Required Notices to Holders.
In case the Company shall propose (i) to pay any dividend payable in stock
of any class to the holders of its Common Shares or to make any other
distribution to the holders of its Common Shares for which an adjustment is
required to be made pursuant to Section 5, (ii) to distribute to the holders of
its Common Shares rights to subscribe for or to purchase any Additional Common
Shares or shares of stock of any class or any other securities, rights or
options, (iii) to effect any reclassification of its Common Shares, (iv) to
effect any transaction described in Section 5.1(h) or (v) to effect the
liquidation, dissolution or winding up of the Company, then, and in each such
case, the Company shall give to each Holder of a Warrant
-21-
Certificate, in accordance with Section 10.1(b), a notice of such proposed
action or event. Such notice shall specify (x) the date on which a record is to
be taken for the purposes of such dividend or distribution; and (y) the date on
which such reclassification, transaction, event, liquidation, dissolution or
winding up is expected to become effective and the date as of which it is
expected that holders of Common Shares of record shall be entitled to exchange
their Common Shares for securities, cash or other property deliverable upon such
reclassification, transaction, event, liquidation, dissolution or winding up.
Such notice shall be given, in the case of any action covered by clause (i) or
(ii) above, at least ten (10) days prior to the record date for determining
holders of the Common Shares for purposes of such action or, in the case of any
action covered by clauses (iii) through (v), at least twenty (20) days prior to
the applicable effective or expiration date specified above or, in any such
case, prior to such earlier time as notice thereof shall be required to be given
pursuant to Rule 10b-17 under the Exchange Act, if applicable.
If at any time the Company shall cancel any of the proposed transactions
for which notice has been given under this Section 10.2 prior to the
consummation thereof, the Company shall give each Holder prompt notice of such
cancellation in accordance with Section 10.1(b) hereof.
11. APPLICABLE LAW
THIS AGREEMENT, EACH WARRANT CERTIFICATE ISSUED HEREUNDER, EACH WARRANT
EVIDENCED THEREBY AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT THE APPLICATION OF THE
LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
12. PERSONS BENEFITING
This Agreement shall be binding upon and inure to the benefit of the
Company and JEDI, and their respective successors and assigns and the Holders
from time to time of the Warrant Certificates. Nothing in this Agreement is
intended or shall be construed to confer upon any Person, other than the
Company, JEDI and the Holders of the Warrant Certificates, any right, remedy or
claim under or by reason of this Agreement or any part hereof. Each Holder, by
acceptance of a Warrant Certificate, agrees to all of the terms and provisions
of this Agreement applicable thereto.
13. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.
14. AMENDMENTS
-22-
This Agreement may be amended by the Company only with the consent of the
Holders of a majority of the then outstanding Warrants. Notwithstanding the
foregoing, the consent of each Holder of a Warrant affected shall be required
for any amendment pursuant to which the Warrant Price would be increased or the
number of Warrant Shares purchasable upon exercise of Warrants would be
decreased (other than pursuant to adjustments provided herein).
Upon execution and delivery of any amendment pursuant to this Section 14,
such amendment shall be considered a part of this Agreement for all purposes and
every Holder of a Warrant Certificate theretofore or thereafter delivered
hereunder shall be bound thereby.
Promptly after the execution by the Company of any such amendment, the
Company shall give notice to the Holders of Warrant Certificates, setting forth
in general terms the substance of such amendment, in accordance with the
provisions of Section 10.1(b). Any failure of the Company to mail such notice
or any defect therein, shall not, however, in any way impair or affect the
validity of any such amendment.
15. INSPECTION
The Company may require such Holder to submit his Warrant Certificate for
inspection by it.
16. SUCCESSOR TO THE COMPANY
So long as Warrants remain outstanding, the Company will not enter into any
Non-Surviving Combination unless the acquirer (or its parent company under any
triangular acquisition) shall expressly assume by a supplemental agreement,
executed and delivered to the Company, in form reasonably satisfactory to the
Company, the due and punctual performance of every covenant of this Agreement on
the part of the Company to be performed and observed and shall have provided for
exercise rights in accordance with Section 5.1(h). Upon the consummation of
such Non-Surviving Combination, the acquirer (or its parent company under any
triangular acquisition) shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Agreement with the
same effect as if such acquirer (or its parent company under any triangular
acquisition) had been named as the Company herein.
17. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement of the parties hereto as to
the subject matter hereof and supersedes all previous agreements among all or
some of the parties hereto with respect thereto, whether written, oral or
otherwise.
18. HEADINGS
-23-
The descriptive headings of the several Sections of this Agreement are
inserted for convenience and shall not control or affect the meaning or
construction of any of the provisions hereof.
-24-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
BELCO OIL & GAS CORP.
By:
------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board and
Chief Executive Officer
JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED
PARTNERSHIP
By: Enron Capital Management Limited Partnership,
its general partner
By: Enron Capital Corp., its general partner
By:
------------------------------------------------
Name:
----------------------------------------------
Title:
---------------------------------------------
EXHIBIT A
FORM OF FACE OF WARRANT CERTIFICATE
-----------------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
SUCH LAWS.
BELCO OIL & GAS CORP.
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
No. ________________ _____________ Warrants
THIS CERTIFIES THAT, for value received, _______________________
___________________________, or registered assigns, is the registered owner of
______________________ Warrants to Purchase Common Shares of Belco Oil & Gas
Corp., a Nevada corporation (the "Company," which term includes any successor
thereto under the Warrant Agreement), and is entitled, subject to and upon
compliance with the provisions hereof and of the Warrant Agreement, at such
Holder's option, at any time when the Warrants evidenced hereby are exercisable,
to purchase from the Company one Warrant Share for each Warrant evidenced
hereby, at the purchase price of $27.50 per share (as adjusted from time to
time, the "Warrant Price"), payable in full at the time of purchase, the number
of Warrant Shares into which and the Warrant Price at which each Warrant shall
be exercisable, each being subject to adjustment as provided in Section 5 of the
Warrant Agreement.
The Holder of this Warrant Certificate may exercise all or any whole number
of the Warrants evidenced hereby, on any Business Day on and after the Trigger
Date until 5:00 p.m., New York City time, on November __________, 2000 (subject
to earlier expiration pursuant to Section 4 of the Warrant Agreement, the
"Expiration Date") for the Warrant Shares purchasable hereunder.
A-1
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
A-2
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed under its corporate seal.
BELCO OIL & GAS CORP.
[SEAL] By:
---------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman of the Board
and Chief Executive Officer
ATTEST:
--------------------------
Dated:
A-3
[REVERSE OF WARRANT CERTIFICATE]
BELCO OIL & GAS CORP.
WARRANT CERTIFICATE
EVIDENCING
WARRANTS TO PURCHASE COMMON SHARES
1. General.
The Warrants evidenced hereby are one of a duly authorized issue of
Warrants of the Company designated as its Warrants to Purchase Common Shares
("Warrants"), limited in aggregate number to ____________________ Warrants
issued under and in accordance with the Warrant Agreement, dated as of November
__________, 1997 (the "Warrant Agreement"), between the Company and Joint Energy
Development Investments Limited Partnership, a Delaware limited partnership
("JEDI"), to which Warrant Agreement and all amendments thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, JEDI, the Holders of Warrant
Certificates and the owners of the Warrants evidenced thereby and of the terms
upon which the Warrant Certificates are, and are to be, delivered. A copy of the
Warrant Agreement shall be available at all reasonable times at the Corporate
Office for inspection by the Holder hereof.
In the event of the exercise of less than all of the Warrants evidenced
hereby, a new Warrant Certificate of the same tenor and for the number of
Warrants which are not exercised shall be issued by the Company in the name or
upon the written order of the Holder of this Warrant Certificate upon the
cancellation hereof.
All Warrant Shares issuable by the Company upon the exercise of Warrants
shall, upon such issuance, be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive or similar rights. The Company shall pay
any and all taxes (other than income taxes) that may be payable in respect of
the issue or delivery of Warrant Shares on exercise of Warrants. The Company
shall not be required, however, to pay any tax or other charge imposed in
respect of any transfer involved in the issue and delivery of any certificates
for Warrant Shares or payment of cash to any Person other than the Holder of the
Warrant Certificate surrendered upon the exercise of a Warrant, and in case of
such transfer or payment, the Company shall not be required to issue or deliver
any certificate or pay any cash until (a) such tax or charge has been paid or an
amount sufficient for the payment thereof has been delivered to the Company or
(b) it has been established to the Company's satisfaction that any such tax or
other charge that is or may become due has been paid.
The Warrant Certificates are issuable only in registered form in
denominations of whole numbers of Warrants. Upon surrender at the Corporate
Office and payment of the charges specified herein and in the Warrant Agreement,
this Warrant Certificate may be exchanged for
A-4
Warrant Certificates in other authorized denominations or the transfer hereof
may be registered in whole or in part in authorized denominations to one or more
designated transferees, subject to the restrictions on transfer set forth herein
and in the Warrant Agreement; provided, however, that such other Warrant
Certificates issued upon exchange or registration of transfer shall evidence the
same aggregate number of Warrants as this Warrant Certificate. The Company shall
cause to be kept at the Corporate Office the Warrant Register in which, subject
to such reasonable regulations as the Company may prescribe and such regulations
as may be prescribed by law, the Company shall provide for the registration of
Warrant Certificates and of transfers or exchanges of Warrant Certificates.
2. Expiration.
Except as provided in the Warrant Agreement, all outstanding Warrants shall
expire and all rights of the Holders of Warrant Certificates evidencing such
Warrants shall terminate and cease to exist, as of 5:00 p.m., New York time, on
the Expiration Date. "Expiration Date" shall mean November __________, 2000, or
such earlier date as determined in accordance with the Warrant Agreement.
3. Liquidation of the Company.
If, on or prior to the Expiration Date, the Company (or any other Person
controlling the Company) shall propose a voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Company, each Warrantholder
shall receive the securities, money or other property which such Warrantholder
would have been entitled to receive had such Warrantholder been the holder of
record of the Warrant Shares into which the Warrants were exercisable
immediately prior to such dissolution, liquidation or winding up (net of the
then applicable Warrant Price), and the rights to exercise such Warrants shall
terminate.
4. Anti-Dilution Adjustments.
The number of Warrant Shares issuable upon exercise of a Warrant shall be
adjusted on occurrence of certain events, including, without limitation, the
payment of certain dividends on, or the making of certain distributions in
respect of, the Common Shares, including the distribution of rights to purchase
Common Shares (or securities convertible into or exchangeable for Common Shares)
at a price below the Current Market Price. An adjustment shall also be made in
the event of a combination, subdivision or reclassification of the Common
Shares. Adjustments will be made whenever and as often as any specified event
requires an adjustment to occur.
5. Procedure for Exercising Warrant.
Subject to the provisions hereof and of the Warrant Agreement, the Holder
of this Warrant Certificate may exercise all or any whole number of the Warrants
evidenced hereby by either of the following methods:
A-5
(A) The Holder may deliver to the Corporate Office (i) a written
notice of such Holder's election to exercise all or a portion of the
Warrants evidenced hereby, duly executed by such Holder in the form set
forth below, which notice shall specify the number of Warrant Shares to be
purchased, (ii) this Warrant Certificate and (iii) a sum equal to the
aggregate Warrant Price for the Warrant Shares into which the Warrants
represented by this Warrant Certificate are being exercised, which sum
shall be paid in any combination elected by such Holder of (x) certified or
official bank checks in New York Clearing House funds payable to the order
of the Company and delivered to the Corporate Office, or (y) wire transfers
in immediately available funds to the account of the Company at such
banking institution as the Company shall have given notice to the Holders
in accordance with the Warrant Agreement; or
(B) The Holder may also exercise all or any of the Warrants in a
"cashless" or "net-issue" exercise by delivering to the Company at the
Corporate Agency Office (i) a written notice of such Holder's election to
exercise all or a portion of the Warrants evidenced hereby, duly executed
by such Holder in the form set forth below, which notice shall specify the
number of Warrant Shares to be delivered to such Holder and the number of
Warrant Shares with respect to which Warrants represented by this Warrant
Certificate are being surrendered in payment of the aggregate Warrant Price
for the Warrant Shares to be delivered to the Holder, and (ii) this Warrant
Certificate. For purposes of this subparagraph (B), each Warrant Share as
to which such Warrants are surrendered in payment of the aggregate Warrant
Price will be attributed a value equal to (x) the Current Market Price per
share of Common Shares minus (y) the then-current Warrant Price.
6. Registered Holder.
Prior to due presentment of this Warrant Certificate for registration of
transfer, the Company and any agent of the Company may treat the Person in whose
name this Warrant Certificate is registered as the owner hereof for all
purposes, and neither the Company nor any agent of the Company shall be affected
by notice to the contrary.
7. Amendment.
The Warrant Agreement permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of Warrant Certificates under the Warrant
Agreement at any time by the Company with the consent of the Holders of Warrant
Certificates evidencing a majority of the then outstanding Warrants.
A-6
8. Status as Warrantholder.
Prior to the exercise of the Warrants, except as may be specifically
provided for in the Warrant Agreement, (i) no Holder of a Warrant Certificate,
as such, shall be entitled to any of the rights of a holder of Common Shares of
the Company, including, without limitation, the right to vote at, or to receive
any notice of, any meetings of stockholders of the Company; (ii) the consent of
any Holder shall not be required with respect to any action or proceeding of the
Company; (iii) except as provided with respect to the dissolution, liquidation
or winding up of the Company, no Holder, by reason of the ownership or
possession of a Warrant or the Warrant Certificate representing the same, shall
have any right to receive any stock dividends, allotments or rights or other
distributions (except as specifically provided in the Warrant Agreement), paid,
allotted or distributed or distributable to the stockholders of the Company
prior to or for which the relevant record date preceded the date of the exercise
of such Warrant; and (iv) no Holder shall have any right not expressly conferred
by the Warrant Agreement or Warrant Certificate held by such Holder.
Notwithstanding anything herein to the contrary, if the Company declares and
pays any cash dividend or makes any distribution in cash in respect of its
Common Shares, it shall pay each Holder of Warrants an amount in cash equal to
the amount that such Holder would have received had it been a holder of record
of the Warrant Shares issuable upon exercise of its Warrants immediately prior
to the record date for such dividend or distribution.
9. Governing Law.
THIS WARRANT CERTIFICATE, EACH WARRANT EVIDENCED THEREBY AND THE WARRANT
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS TO
THE EXTENT THAT APPLICATION OF THE LAW OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
10. Definitions.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
A-7
FORM OF EXERCISE
----------------
In accordance with and subject to the terms and conditions hereof and of
the Warrant Agreement, the undersigned registered Holder of this Warrant
Certificate hereby irrevocably elects to exercise ____________________ Warrants
evidenced by this Warrant Certificate or represents that such Holder has
tendered the Warrant Price for each of the Warrants evidenced hereby being
exercised in the aggregate amount of $_________ in the indicated combination of:
(i) cash ($____________);
(ii) certified bank check payable to the order of the Company
($________);
(iii) official bank check in New York Clearing House funds payable
to the order of the Company ($_________);
(iv) or wire transfer in immediately available funds to the
account designated by the Company for such purpose ($________); or
(v) "cashless" or "net-issue" exercise with respect to ________
Warrants pursuant to Section 3.2(c)(ii) of the Warrant Agreement and
Section 5(A) of this Warrant Certificate.
The undersigned requests that the Warrant Shares issuable upon exercise be
in fully registered form in such denominations and registered in such names and
delivered, together with any other property receivable upon exercise, in such
manner as is specified in the instructions set forth below.
If the number of Warrants exercised is less than all of the Warrants
evidenced hereby, the undersigned requests that a new Warrant Certificate
representing the remaining Warrants evidenced hereby be issued and delivered to
the undersigned unless otherwise specified in the instructions below.
Dated:__________________________ Name:______________________________
(Please Print)
________________________________
(Insert Social Security or Other Address:___________________________
Identifying Number of Holder) ___________________________________
___________________________________
Signature
A-8
Signature Guaranteed:
_____________________________
Instructions (i) as to denominations and names of Warrant Shares issuable
upon exercise and as to delivery of such securities and any other property
issuable upon exercise and (ii) if applicable, as to Warrant Certificates
evidencing unexercised Warrants:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
A-9
Assignment
----------
(Form of Assignment To Be Executed If Holder Desires To Transfer
Warrant Certificate)
FOR VALUE RECEIVED _________________________ hereby sells, assigns and
transfers unto
Please insert social security
or other identifying number
____________________________
_________________________________________________
(Please print name and address including zip code)
_________________________________________________
the Warrants represented by the within Warrant Certificate and does hereby
irrevocably constitute and appoint _________________ Attorney, to transfer said
Warrant Certificate on the books of the within-named Company with full power of
substitution in the premises.
Dated:
______________________________
Signature
Signature Guaranteed:
_______________________________
A-10
EXHIBIT B
---------
JEDI AGREEMENT
THIS JEDI AGREEMENT (together with all attached appendices hereto,
this "Agreement") is effective as of the Effective Date (as hereinafter defined)
by and among Coda Energy, Inc., a Delaware corporation ("Coda"), Joint Energy
Development Investments Limited Partnership, a Delaware limited partnership
("JEDI"), and Belco Oil & Gas Corp., a Nevada corporation ("Belco").
A. Belco, Belco Acquisition Sub, Inc., a Delaware corporation
("Belco Sub"), and Coda are contemporaneously entering into an Agreement and
Plan of Merger dated as of October 31, 1997 (the "Acquisition Agreement")
providing for the acquisition of Coda by Belco through a merger of Belco Sub
with and into Coda, with Coda as the surviving corporation (the "Merger").
B. JEDI is the majority shareholder of Coda.
C. This Agreement is intended to be executed and delivered
simultaneously with the execution and delivery of the Acquisition Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Representations, Warranties and Covenants of JEDI. JEDI hereby
-------------------------------------------------
represents, warrants and covenants to Buyer as follows:
(a) JEDI is a limited partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware and has the
partnership power to carry on its business as it is now being conducted.
Appendix B-1 attached hereto sets forth as of the date hereof the names of
the general partner and the limited partner of JEDI and their respective
percentages of ownership.
(b) JEDI has the requisite partnership power and authority to enter
into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by JEDI and the consummation of
the transactions contemplated hereby by JEDI have been duly authorized by
all necessary partnership action on the part of JEDI. This Agreement has
been duly executed and delivered by JEDI and, assuming the due
authorization, execution and delivery of this Agreement by Belco, this
Agreement constitutes a legal, valid and binding obligation of JEDI
enforceable in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability
of equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be
brought.
(c) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby by JEDI will
(i) conflict with or violate the partnership agreement of JEDI or (ii)
result in any breach or constitute a default (with or without notice or
lapse of time, or both) under, or give rise in others to any rights of
termination, cancellation or acceleration under, any indenture, contract,
instrument, or loan agreement pursuant to which JEDI is a borrower, or any
license, franchise, permit, order, decree, concession, lease, judgment,
statute, law, ordinance, rule or regulation applicable to JEDI or its
assets, other than, in the case of clause (ii) only, such breaches,
defaults, violations and rights that would not have a JEDI Material Adverse
Effect (as defined below). No filing or registration with, or
authorization, consent or approval of, any governmental or regulatory body
or authority is necessary for the consummation by JEDI of the transactions
contemplated by this Agreement, except where failure to make such filing or
registration or obtain such authorization, consent or approval would,
individually or in the aggregate, not result in a direct or indirect
material adverse effect on the business, assets, conditions (financial or
otherwise), liabilities or operations of JEDI or JEDI's ability to
consummate the transactions contemplated by this Agreement (a "JEDI
Material Adverse Effect").
(d) JEDI holds of record and owns beneficially the number of shares of
Common Stock, par value $.01 per share, of the Company ("Company Common
Stock") and the number of shares of 15% Cumulative Preferred Stock, par
value $0.1 per share of the Company ("Company Preferred Stock") specified
in Appendix B-2 attached hereto, free and clear of any lien, mortgage,
security interest, pledge, claim, judgment, option, warrant, purchase
right or other encumbrance of any kind except as set forth in the
Stockholders Agreement dated October 30, 1995, as amended January 10, 1996,
among Coda and the shareholders and optionholders of Company Common Stock
and Company Preferred Stock (as amended, the "Stockholders Agreement") and
except for encumbrances created by this Agreement and restrictions on sales
of securities under applicable securities laws. Except for the
Stockholders Agreement, the Stockholders Allocation Agreement attached
hereto as Appendix B-3 (the "Stockholders Allocation Agreement") and this
Agreement, JEDI is not a party to any option, warrant, purchase right, or
other contract or commitment that could require JEDI to sell, transfer, or
otherwise dispose of any shares of Company Common Stock or Company
Preferred Stock. Except for this Agreement and the Stockholders Allocation
Agreement, JEDI is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any shares of
Company Common Stock or Company Preferred Stock.
(e) The Warrants (the "Warrants") to acquire shares of Common Stock,
par value $.01 per share, of Belco (the "Warrant Shares") pursuant to the
Acquisition Agreement are being acquired by JEDI for its own account for
the purpose of investment and not with a view to or for sale in connection
with any distribution thereof, and JEDI
-2-
has no present intention or plan to effect any distribution of the Warrants
or the Warrant Shares not in compliance with the Securities Act of 1933, as
amended.
(f) At the Closing (as defined in the Acquisition Agreement), JEDI
shall pay all fees and expenses payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. by Coda
pursuant to the letter agreement dated March 21, 1997 between ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. and Coda, as supplemented by that certain letter from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. to Coda dated October 24, 1997 (the "▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Agreement"). Other than the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Agreement, JEDI has not made
any arrangements with any broker, finder or investment banker that would
require Belco or Coda to pay any fee or commission if the transactions
contemplated by the Acquisition Agreement are consummated.
(g) The representations and warranties of Coda set forth in Section
6.25 of the Acquisition Agreement are true and correct.
(h) JEDI hereby (i) covenants and agrees to vote all shares of Coda
Stock held by JEDI for the Merger at any meeting of shareholders of Coda
held for purposes of acting upon the Merger and (ii) grants Belco an
irrevocable proxy, coupled with an interest, to vote all shares of Coda
Stock held by JEDI in favor of the Merger at any meeting of shareholders of
Coda held for purposes of acting upon the Merger; provided that nothing in
this subsection (h) shall invalidate any action taken by written consent of
stockholders pursuant to the Stockholders Allocation Agreement.
(i) JEDI hereby relinquishes, waives and releases forever, effective
as of the Closing, any and all rights under Delaware law or otherwise to
dissent to the Merger, including without limitation any and all rights to
seek appraisal of the shares of Coda Stock or to seek consideration for
shares of Coda Stock in the Merger other than as provided in the
Acquisition Agreement; provided, however, nothing contained in this
Agreement shall prevent JEDI from asserting any and all rights JEDI may
have under the Stockholders Allocation Agreement.
(j) JEDI represents and warrants that the Stockholders Agreement shall
terminate in accordance with the terms of the Stockholders Allocation
Agreement.
(k) JEDI hereby relinquishes, waives and releases forever, effective
as of the Closing, any and all claims of any kind whatsoever that JEDI may
have against Coda or against any Affiliate (as defined in the Acquisition
Agreement) of Coda, except for (i) claims arising out of rights and
obligations expressly granted or continued pursuant to the Acquisition
Agreement or the Stockholders Allocation Agreement, (ii) rights granted
pursuant to this Agreement and (iii) such other rights and claims that JEDI
may have under any agreement entered into by JEDI in connection with the
transactions contemplated by Section 2.
-3-
(l) At the Closing, JEDI shall deliver to Belco an opinion of counsel
to JEDI, which counsel shall be reasonably satisfactory to Belco,
substantially in the form of Appendix B-4 attached hereto.
(m) JEDI understands and agrees that (i) Belco would not enter into
the Acquisition Agreement unless this Agreement was fully executed and
delivered, (ii) the actions to be taken by Belco pursuant to the
Acquisition Agreement materially benefit JEDI and (iii) no additional
consideration shall be payable to JEDI other than Belco executing,
delivering and performing the Acquisition Agreement.
2. Purchase and Sale of Taurus Stock. (a) In the event that the
---------------------------------
transaction contemplated by the Stock Purchase Agreement dated October 1, 1997
(the "Taurus Disposition Agreement") between Coda and Star Acquisition Co., LLC,
a Nevada limited liability company ("Star"), providing for the acquisition of
Taurus Energy Corp., a Texas corporation ("Taurus"), by Star through the
acquisition of all of the stock of Taurus (the "Taurus Stock"), or the
acquisition by another buyer on the same or better terms, has not been
consummated on or before November 24, 1997 (or December 1, 1997 if either Belco
or Coda has exercised its option to extend pursuant to Section 10.1(b) of the
Acquisition Agreement), JEDI shall purchase from Coda, on or prior to November
25, 1997 (or December 2, 1997 if either Belco or Coda has exercised its option
to extend pursuant to Section 10.1(b) of the Acquisition Agreement), the Taurus
Stock on terms set forth on Schedule A attached to this Agreement and having Tax
effects not less detrimental to Coda than set forth on Schedule 6.25(b) of the
Company Disclosure Schedule relating to the Acquisition Agreement, provided that
such terms shall not provide for any representations, warranties, covenants or
other agreements from, or liability to, Coda or Belco with respect to any matter
that survives, or continues after, the closing of such sale of the Taurus Stock
except as provided on Schedule A; provided, further, that in the event that (i)
JEDI is required pursuant to this Section 2 to purchase the Taurus Stock but
JEDI is precluded from purchasing the Taurus Stock on or before the date
specified above in this Section 2 due to a conflict with applicable law, any
injunction or court order or the failure of JEDI to receive all necessary
regulatory approvals from governmental entities necessary to permit the transfer
of the Taurus Stock from Coda to JEDI, including the expiration of any
applicable waiting period under the HSR Act, and (ii) the transactions
contemplated by the Acquisition Agreement are consummated without any transfer
of the Taurus Stock to JEDI or any other party prior to the consummation of such
transactions, then JEDI shall pay to Coda, by wire transfer of immediately
available funds to an account designated by Coda, One Thousand Dollars ($1,000)
on the date of the consummation of the transactions contemplated by the
Acquisition Agreement (the "Acquisition Closing Date"), and, upon the payment of
such amount, JEDI shall have the right to purchase the Taurus Stock from Coda
(the "Taurus Purchase Option"), for a period of six months following the
Acquisition Closing Date, on the terms set forth on Schedule A attached hereto
(except that the purchase price shall be determined by JEDI, in its sole
discretion, at not less than fair market value as determined by Coda's Board of
Directors (but not more than Forty Five Million Dollars ($45,000,000)), payable
by wire transfer of immediately available funds to an account designated by
Coda, and having Tax effects not less detrimental to Coda than set forth on
Schedule 6.25(b) of the Company Disclosure Schedule relating to the Acquisition
Agreement,
-4-
provided that such terms shall not provide for any representations,
warranties, covenants or other agreements from, or any liability to, Coda or
Belco with respect to any matter that survives, or continues after, the closing
of such sale of the Taurus Stock. After the Acquisition Closing Date, the Taurus
Purchase Option may be assigned, in whole but not in part, by JEDI to any person
or entity, provided that any such assignment shall not relieve JEDI of any of
its obligations, or any breach thereof, under this Agreement. In connection with
any sale of the Taurus Stock pursuant to the exercise of the Taurus Purchase
Option, Coda shall join with JEDI or JEDI's assignee in making an election under
Section 338(h)(10) of the Internal Revenue Code of 1986, as amended, with
respect to the purchase of Taurus and neither JEDI nor any assignee of the
Taurus Purchase Option shall take any position contrary thereto for purpose of
the federal income tax returns of JEDI or such assignee, as the case may be.
(b) Until the earlier of the consummation of the sale of the Taurus
Stock to JEDI or its assignee pursuant to subsection (a) above or the expiration
of the six month period following the Acquisition Closing Date, Coda shall (i)
use its reasonable efforts to consummate the sale of the Taurus Stock to JEDI or
its assignee pursuant to paragraph (a) above, (ii) not take any action that
would prevent the sale of the Taurus Stock to JEDI or its assignee pursuant to
paragraph (a) above and (iii) operate the business of Taurus in the ordinary
course of business consistent with past practices (except that Coda shall not
have any obligation to provide funds for capital expenditures or any other
purpose, provide working capital management or provide other services other than
as specified in Schedule A attached to this Agreement).
3. Survival. All representations, warranties, covenants, agreements
--------
and indemnities of JEDI contained in this Agreement, or in any certificate,
document or other instrument delivered in connection herewith, shall survive the
Closing (as defined in the Acquisition Agreement) and, except as they relate to
claims for indemnification made during the Survival Period, shall terminate and
cease to be of further force and effect (a) with respect to all matters other
than the matters in subparagraphs (b), (g), (j) and (k) of Paragraph 1 of this
Agreement, two (2) years following the Closing Date (as defined in the
Acquisition Agreement), (b) with respect to the matters in subparagraph (g) of
Paragraph 1 of this Agreement, upon the expiration of the last to expire of all
applicable statutes of limitations (and any extensions thereof) covering the
Indemnified Transactions referred to in Section 6.25(b) of the Acquisition
Agreement, and (c) with respect to matters in subparagraphs (b), (j) and (k) of
Paragraph 1 of this Agreement, indefinitely (such period prior to termination,
the "Survival Period"); provided that claims first asserted in writing within
the Survival Period (whether or not judicial action has commenced or the amount
of any such claim has become ascertainable within such period) shall not be
barred.
4. Indemnification by JEDI. Subject to the provisions of this
-----------------------
Agreement, from and after the Closing Date and with respect to claims asserted
in writing within the Survival Period only, JEDI hereby agrees to indemnify and
hold harmless Belco, its Affiliates (as defined in the Acquisition Agreement)
and each of their respective present and former directors, officers, employees,
agents, and representatives (collectively, the "Belco Indemnified Parties") from
and against any and all Covered Liabilities (as hereinafter defined) arising out
of, resulting from, or
-5-
in any way related to (i) the breach of, or the failure to perform or satisfy
any of, the representations, warranties, covenants and agreements made by JEDI
in this Agreement, (ii) any claims against Belco or Coda by Star (or any
successor or assign of Star) in respect of the transactions contemplated by the
Taurus Disposition Agreement, (iii) any claims against Belco or Coda by any
purchaser of Taurus (or any successor or assign of such purchaser) pursuant to
any Alternative Taurus Disposition Agreement or (iv) in the event the
transactions contemplated by the Taurus Disposition Agreement are not
consummated, any claims against Belco or Coda by any purchaser of Taurus by
means of a purchase of stock of Taurus, a purchase of all or substantially all
of the assets of Taurus, a merger or otherwise (or any successor or assign
thereof). Where used in this Agreement, the term "Covered Liabilities" shall
mean all direct or indirect demands, claims, notices of violation, notices of
probable violation, filings, investigations, administrative proceedings,
actions, causes of action, suits, other legal proceedings, judgments,
assessments, damages, deficiencies, Taxes (as defined in the Acquisition
Agreement), penalties, fines, obligations, responsibilities, liabilities,
payments, charges, costs, and expenses of any kind or character (whether or not
asserted prior to the Closing Date), and whether known or unknown, fixed or
unfixed, conditional or unconditional, based on negligence, strict liability or
otherwise, ▇▇▇▇▇▇ or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent, or otherwise, including penalties and interest on
any amount payable as a result of any of the foregoing, any legal or other
expenses reasonably incurred in connection with investigating or defending any
claim, demand, or legal proceeding, and all amounts paid in settlement of
claims, demands, or legal proceedings pursuant to Paragraph 5 of this Agreement,
but only to the extent that the foregoing are valid and subsisting.
5. Claims.
------
(a) All claims for indemnification under this Agreement shall be
asserted and resolved as follows:
(i) A party claiming indemnification under this Agreement (an
"Indemnified Party") shall promptly (A) notify the party from whom
indemnification is sought (the "Indemnifying Party") of any third-
party claim asserted against the Indemnified Party (a "Third Party
Claim") which could give rise to a right of indemnification under this
Agreement and (B) transmit to the Indemnifying Party a written notice
(a "Claim Notice") describing in reasonable detail (1) the nature of
the Third Party Claim, (2) a copy of all papers served with respect to
a Third Party Claim, if any, (3) a reasonable estimate of the amount
of damages attributable to the Third Party Claim, (4) the basis of the
Indemnified Party's request for indemnification under this Agreement
and shall make reasonably available all information relating to the
claim and personnel having knowledge relating to the substance of the
claim. Within 30 days after receipt of any Claim Notice (the "Election
Period"), the Indemnifying Party shall notify the Indemnified Party
whether the Indemnifying Party disputes its potential liability to the
Indemnified Party under this Agreement and, with respect to any Third
Party Claim, whether the Indemnifying Party desires, at the sole cost
and expense of the
-6-
Indemnifying Party, to defend the Indemnified Party against such
Third Party Claims.
(ii) If the Indemnifying Party notifies the Indemnified Party within
the Election Period that the Indemnifying Party does not dispute its
potential liability to the Indemnified Party under this Agreement and that
the Indemnifying Party elects to assume the defense of any Third Party
Claim, then the Indemnifying Party shall have the right to defend, at its
sole cost and expense, with counsel approved by the Indemnified Party,
which approval shall not be unreasonably withheld, such Third Party Claim
by all appropriate proceedings, which proceedings shall be prosecuted
diligently by the Indemnifying Party to a final conclusion or settled at
the discretion of the Indemnifying Party in accordance with this
subparagraph (a)(ii) of this Paragraph 5. The Indemnifying Party shall have
full control of such defense and proceedings, including any compromise or
settlement thereof; provided, however, that if any proceeding involves both
indemnified and non-indemnified claims, the Indemnified and Indemnifying
Parties shall cooperate with each other in good faith and with due regard
of the merits of each such claim in the defense of such proceeding, and
neither party shall compromise or settle such proceeding without the
consent of the other, which consent shall not be unreasonably withheld.
The Indemnified Party is hereby authorized, at the sole cost and expense of
the Indemnifying Party (but only if the Indemnified Party is actually
entitled to indemnification hereunder, or if the Indemnifying Party assumes
the defense with respect to the Third Party Claim) to file, during the
Election Period, any motion, answer or other pleadings which the
Indemnified Party shall deem necessary or appropriate to protect its
interests or those of the Indemnifying Party and not prejudicial to the
Indemnifying Party (it being understood and agreed that if an Indemnified
Party takes any such action which is prejudicial and conclusively causes a
final adjudication which is adverse to the Indemnifying Party, the
Indemnifying Party shall be relieved of its obligations hereunder with
respect to such Third Party Claim). If requested by the Indemnifying
Party, the Indemnified Party agrees, at the sole cost and expense of the
Indemnifying Party, to cooperate with the Indemnifying Party and its
counsel in contesting any Third Party Claim which the Indemnifying Party
elects to contest, including, without limitation, the making of any related
counterclaim against the Person asserting the Third Party Claim or any
cross-complaint against any Person. The Indemnified Party may participate
in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this subparagraph (a) of
this Paragraph 5 and shall bear its own costs and expenses with respect to
such participation.
(iii) If the Indemnifying Party fails to notify the Indemnified Party
within the Election Period that the Indemnifying Party elects to defend the
Indemnified Party pursuant to subparagraph (a)(ii) of this Paragraph 5,
then the Indemnified Party shall have the right to defend, at the sole
cost and expense of the
-7-
Indemnifying Party, the Third Party Claim by all appropriate proceedings,
which proceedings shall be promptly and vigorously prosecuted by the
Indemnified Party in good faith to a final conclusion or settled. The
Indemnified Party shall have full control of such defense and proceedings;
provided, however, that the Indemnified Party may not enter into, without
the Indemnifying Party's prior written consent, which shall not be
unreasonably withheld, any compromise or settlement of such Third Party
Claim. Notwithstanding the foregoing, if the Indemnifying Party has
delivered a written notice to the Indemnified Party to the effect that the
Indemnifying Party disputes its potential liability to the Indemnified
Party under this Agreement, and if such dispute is resolved in favor of the
Indemnifying Party by final, nonappealable order of a court of competent
jurisdiction, the Indemnifying Party shall not be required to bear the
costs and expenses of the Indemnified Party's defense pursuant hereto, or
of the Indemnifying Party's participation therein at the Indemnified
Party's request, and the Indemnified Party shall reimburse the Indemnifying
Party in full for all such costs and expenses of such litigation. The
Indemnifying Party may participate in, but not control, any defense or
settlement controlled by the Indemnified Party pursuant to this Paragraph
5, and the Indemnifying Party shall bear its own costs and expenses with
respect to such participation.
(iv) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder which does not involve a Third Party
Claim, the Indemnified Party shall transmit to the Indemnifying Party a
written notice (the "Indemnity Notice") describing in reasonable detail the
nature of the claim, an estimate of the amount of damages attributable to
such claim, and the basis of the Indemnified Party's request for
indemnification under this Agreement. If the Indemnifying Party does not
notify the Indemnified Party within 60 days from its receipt of the
Indemnity Notice that the Indemnifying Party disputes such claim, the claim
specified by the Indemnified Party in the Indemnity Notice shall be deemed
a liability of the Indemnifying Party hereunder. If the Indemnifying Party
timely disputes such claim as provided above, such dispute shall be
resolved by arbitration pursuant to Section 13 of this Agreement.
(v) If, with respect to any alleged claim, an Indemnified Party shall
fail to deliver to the Indemnifying Party a Claim Notice or Indemnity
Notice, as the case may be, in the manner herein provided and prior to
expiration of the Survival Period, thereafter such Indemnified Party shall
no longer have any right to seek, and hereby waives and releases any claim
and right to, indemnification with respect to any such claim.
(vi) Payments of all amounts owing by the Indemnifying Party pursuant
to subparagraphs (a)(i), (ii), and (iii) of this Paragraph 5 shall be made
within 60 days after the latest of (A) the settlement of the Third Party
Claim, (B) the expiration of the period for appeal of a final adjudication
of such Third Party
-8-
Claim, or (c) the expiration of the period for appeal of a final
adjudication of the Indemnifying Party's liability to the Indemnified Party
under this Agreement. Payments of all amounts owing by the Indemnifying
Party pursuant to subparagraph (a)(iv) of this Paragraph 5 shall be made
within 60 days after the later of (x) the expiration of the 60-day
Indemnity Notice period or (y) the expiration of the period for appeal of a
final determination of the Indemnifying Party's liability to the
Indemnified Party under this Agreement.
(b) In determining the amount of any loss, liability, or expense for
which any party is entitled to indemnification under this Agreement, the
gross amount thereof will be reduced by any correlative tax benefit or
insurance proceeds realized or to be realized by such party (or, in the
case of Buyer, by the Company and its Subsidiaries), and such correlative
insurance benefit shall be net of any insurance premium which becomes due
as a result of such claim.
6. Damages. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, JEDI
-------
AND BELCO AGREE THAT THE RECOVERY BY ANY PARTY HERETO OF ANY DAMAGES SUFFERED OR
INCURRED BY IT AS A RESULT OF ANY BREACH BY THE OTHER PARTY OF ANY OF ITS
REPRESENTATIONS, WARRANTIES, OR OBLIGATIONS UNDER THIS AGREEMENT SHALL BE
LIMITED TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE NON-BREACHING PARTY AS
A RESULT OF THE BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS,
WARRANTIES, OR OBLIGATIONS HEREUNDER, AND IN NO EVENT SHALL THE BREACHING PARTY
BE LIABLE TO THE NON-BREACHING PARTY FOR ANY CONSEQUENTIAL, SPECIAL, EXEMPLARY
OR PUNITIVE DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY DAMAGES ON ACCOUNT OF
LOST PROFITS OR OPPORTUNITIES OR LOST OR DELAYED PRODUCTION, AS SUCH TERMS ARE
CUSTOMARILY USED IN THE OIL AND GAS INDUSTRY) SUFFERED OR INCURRED BY THE NON-
BREACHING PARTY AS A RESULT OF THE BREACH BY THE BREACHING PARTY OF ANY OF ITS
REPRESENTATIONS, WARRANTIES, OR OBLIGATIONS HEREUNDER. This Paragraph 6 shall
operate only to limit a party's liability and shall not operate to increase or
expand any contractual obligation of a party hereunder or cause any contractual
obligation of a party hereunder to survive longer than provided in Paragraphs 2,
3, 4 and 5.
7. Express Negligence Rule. THE RELEASE AND INDEMNIFICATION
-----------------------
PROVISIONS SET FORTH IN THIS AGREEMENT, INCLUDING WITHOUT LIMITATION THOSE
ARISING UNDER ▇▇▇▇▇▇▇▇▇▇ ▇, ▇ ▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ APPLICABLE TO AND INCLUDE
A RELEASE AND INDEMNIFICATION OF THE OTHER PARTY FROM AND AGAINST ALL
LIABILITIES DESCRIBED THEREIN, WHICH LIABILITIES INCLUDE LIABILITIES ARISING
FROM THE SOLE, JOINT, AND/OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY, OR FAULT
OF THE OTHER PARTY, IF ANY. JEDI ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT
AND THIS PROVISION
-9-
COMPLY IN ALL RESPECTS WITH THE EXPRESS NEGLIGENCE RULE, AND THIS PROVISION IS
CONSPICUOUS.
8. Exclusive Remedy. The sole and exclusive remedy of each of the
----------------
Indemnified Parties from and after the Closing with respect to the matters
specified in Paragraph 4 shall only be pursuant to and as provided in this
Agreement.
9. Notices. All notices or other communications under this
-------
Agreement shall be in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by facsimile transmission
(with a hard copy delivered by overnight delivery service) or by overnight
delivery service, or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to JEDI:
c/o Enron Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇▇▇)
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇)
and
if to Belco:
Belco Oil & Gas Corp.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-10-
with a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
if to Coda:
Coda Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ and ▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ Boeing
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Paragraph 9.
10. Interpretation. The headings contained in this Agreement are for
--------------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11. 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 or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate 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 hereby may be consummated to the fullest extent
possible.
-11-
12. Effective Date. The Effective Date shall be the date Belco and
--------------
Coda execute and deliver the Acquisition Agreement. This Agreement shall
terminate (i) upon the termination of the Acquisition Agreement in accordance
with its terms or (ii) upon written agreement of all the parties to this
Agreement.
13. Arbitration. Any and all claims, demands, causes of action,
-----------
disputes, controversies and other matters in question arising out of or relating
to this Agreement, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement ("Claims"), even though some or all of such
Claims allegedly are extra contractual in nature, whether such Claims sound in
contract, tort or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
shall be resolved and decided exclusively by binding arbitration pursuant to the
Federal Arbitration Act in accordance with the Commercial Arbitration Rules then
in effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Houston, Texas. The arbitration shall be before a panel
of three arbitrators. Each party to such dispute shall select one arbitrator,
and the two arbitrators selected by the parties shall select the third
arbitrator. The arbitrators are authorized to issue subpoenas for depositions
and other discovery mechanisms, as well as trial subpoenas, in accordance with
the Federal Rules of Civil Procedure. Either party may initiate a proceeding in
the appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules of governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including, without limitation, any exemplary damages, treble damages or any
other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances, the
parties hereto hereby waiving their right, if any, to recover such damages in
connection with any Claims. The arbitrators shall be entitled to award costs of
the arbitration and attorney's fees as they deem appropriate. Prior to any
party instituting a Claim under this Agreement, such party shall provide to the
other party hereto a written notice specifying the nature and basis of the
Claim. The party that is the subject of any Claim shall be given 30 days to
cure any breach before any Claim is filed. It is further agreed that prior to
such Claims being submitted to the arbitrators on such Claims, the parties to
the Claims shall attempt to resolve such Claims through non-binding mediation of
such Claims for a period not in excess of 30 days commencing after assertion of
a Claim.
14. Miscellaneous. This Agreement (i) constitutes the entire
-------------
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties. or any of them, with respect to the subject
matter hereof, (ii) shall be binding upon and inure to the benefit solely of
each party hereto, and their respective successors and assigns, (iii) shall not
be assigned, and (iv) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Texas (without giving
effect to the provisions thereof
-12-
relating to conflicts of law). This Agreement may be executed in any number of
counterparts which together shall constitute a single agreement.
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
By: Enron Capital Management Limited Partnership,
its general partner
By: Enron Capital Corp., its general partner
By:
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Agent and Attorney-in-Fact
BELCO OIL & GAS CORP.
By:
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board and
Chief Executive Officer
CODA ENERGY, INC.
By:
-----------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice Chairman of the Board and
Chief Operating Officer
-13-
APPENDIX B-1
PARTNERS OF JEDI
General Partner: Enron Capital Management Limited Partnership; 50% interest in
JEDI
Limited Partner: California Public Employees' Retirement System; 50% interest
in JEDI
APPENDIX B-2
900,000 shares of Common Stock, par value $0.01 per share
20,000 shares of 15% Cumulative Preferred Stock, par value $0.01 per share
APPENDIX B-3
STOCKHOLDERS ALLOCATION AGREEMENT
DATED OCTOBER 31, 1997
TABLE OF CONTENTS
ARTICLE I CERTAIN TERMS; REPRESENTATIONS AND WARRANTIES............. 1
1.1 Certain Terms............................................. 1
1.2 Representation and Warranties............................. 2
ARTICLE II Allocations, Settlements, Waivers and Terminations........ 3
2.1 Employee Benefit Plan Settlement.......................... 3
2.2 Waiver of Stock Purchase Rights........................... 3
2.3 Waiver of Preferential Purchase Rights.................... 4
2.4 Settlement of Special Management Rights................... 4
2.5 Termination of Agreements................................. 4
2.6 Mutual Releases........................................... 4
2.7 Tax Withholding on Option Consideration................... 4
2.9 Repayment of Indebtedness................................. 4
2.10 Payments Potentially Subject to Parachute Rules........... 4
2.11 Written Consent of the Stockholder........................ 5
2.12 Attorneys Fees............................................ 5
2.13 JEDI Waiver............................................... 6
ARTICLE III MISCELLANEOUS............................................. 6
3.1 Amendment; Waivers........................................ 6
3.2 Assignment................................................ 6
3.3 Notices................................................... 6
3.4 Counterparts.............................................. 7
3.5 Headings.................................................. 7
3.6 Choice of Law............................................. 7
3.7 Entire Agreement.......................................... 7
3.8 Cumulative Rights......................................... 7
3.9 No Partnership............................................ 7
3.10 Number; Gender; Without Limitation; Interpretation
of Certain Defined Terms................................ 7
3.11 Severability.............................................. 7
3.12 Third Person.............................................. 7
3.13 U.S. Currency............................................. 7
3.14 Indemnification........................................... 8
3.15 Arbitration............................................... 8
3.16 Termination............................................... 8
(i)
STOCKHOLDERS ALLOCATION AGREEMENT
THIS STOCKHOLDERS ALLOCATION AGREEMENT (this "AGREEMENT") is entered into
as of October 31, 1997, among Coda Energy, Inc., a Delaware corporation (the
"CORPORATION"), and the Investors (as defined herein) listed on Schedule 1.1
------------
hereto.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Corporation, Belco Oil & Gas Corp., a Nevada corporation ("BELCO"), and
Belco Acquisition Sub, Inc., a Delaware corporation ("SUB"), are entering into
an Agreement and Plan of Merger (the "MERGER AGREEMENT") providing for the
merger of Sub with and into the Corporation (the "MERGER");
WHEREAS, the Corporation and the Investors have previously entered into
that certain Stockholders Agreement, originally entered into as of October 30,
1995, and amended by that certain Amendment No. 1 to Stockholders Agreement,
entered into as of January 10, 1996 (as amended, the "STOCKHOLDERS AGREEMENT");
WHEREAS, in conjunction with the Merger, the parties to this Agreement
desire to agree upon various amounts to be paid or allocated pursuant to the
Stockholders Agreement, waive certain rights afforded under the Stockholders
Agreement and release claims they may have against one another.
NOW, THEREFORE, in consideration of the mutual covenants, payments,
releases and obligations hereinafter set forth, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
CERTAIN TERMS;
REPRESENTATIONS AND WARRANTIES
------------------------------
1.1 CERTAIN TERMS. When used herein the following terms shall have the
-------------
meanings indicated:
"AFFILIATE" of a Person means any Person controlling, controlled by, or
under common control with such Person. For purposes of this Agreement only,
Enron Corp., a Delaware corporation, and each of its subsidiaries shall be
deemed to be Affiliates of JEDI.
"AGREEMENT" shall have the meaning set forth in the opening paragraph.
"CAPITAL STOCK" means any and all shares, interests, participations, or
other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation), and
any and all warrants, options, or other rights to purchase or acquire any of the
foregoing.
"CLAIMS" shall have the meaning set forth in Section 3.16.
"COMMON STOCK" means shares of the common stock, par value $.01 per share,
of the Corporation.
"COMMON STOCK EQUIVALENTS" means any and all rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible into or exchangeable for, directly or
indirectly, Common Stock, whether at the time of issuance or upon the passage of
time or the occurrence of some future event, but does not include Common Stock
or the Special Management Rights.
1
"CORPORATION" shall have the meaning set forth in the opening paragraph.
"EMPLOYEE BENEFIT PLAN" shall have the meaning set forth in Section 2.1.
"INDEMNITEES" shall have the meaning set forth in Section 3.14.
"INDEMNITOR" shall have the meaning set forth in Section 3.14.
"INVESTORS" means JEDI and the Management Investors listed on Schedule 1.1.
------------
"JEDI" shall mean Joint Energy Development Investments Limited Partnership,
a Delaware limited partnership.
"MANAGEMENT GROUP" means all of the Management Investors.
"MANAGEMENT INVESTOR" means each of the Persons identified as a Management
Investor on Schedule 1.1 hereto, but excluding any such Person who ceases to be
------------
a Party.
"MERGER" shall have the meaning set forth in the recitals.
"MERGER AGREEMENT" shall have the meaning set forth in the recitals.
"NOTICE" shall have the meaning set forth in Section 3.3.
"PARTY" means each Investor and the Corporation.
"PERSON" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, or other organization, whether or not a legal entity, and any government
or agency of political subdivision thereof.
"PREFERRED STOCK" means shares of 15% Cumulative Preferred Stock, par value
$0.01 per share, of the Corporation.
"SPECIAL MANAGEMENT RIGHTS" shall have the meaning set forth in Section
2.4.
"SUB" shall have the meaning set forth in the recitals.
1.2 REPRESENTATION AND WARRANTIES. (a) Each of the Investors (as to itself
-----------------------------
or himself only) represents and warrants to the Corporation and other Investors
that as of the date hereof and at the Effective Time (as defined in the Merger
Agreement):
(i) such Investor has full power and authority to execute and deliver
this Agreement and the execution and delivery by such Investor of this
Agreement have been duly authorized by all necessary action;
(ii) this Agreement has been duly and validly executed and delivered
by such Investor and constitutes the binding obligation of such Investor,
enforceable against such Investor in accordance with its terms;
2
(iii) such Investor owns of record and beneficially as of the date of
this Agreement the number of shares of Preferred Stock, Common Stock and
such Common Stock Equivalents as are set forth on Schedule 1.1, and such
------------
Preferred Stock, Common Stock and Common Stock Equivalents are owned by
such Investor free and clear of all liens and other encumbrances arising
by, through or under such Investor except for this Agreement, the
Stockholders Agreement, a Security Agreement, if any, executed by such
Investor in favor of the Corporation (as to each Investor, a "SECURITY
AGREEMENT") and the agreements creating such Common Stock Equivalents; and
(iv) The amounts set forth in this Agreement (including the
attachments hereto) and in Article II of the Merger Agreement with respect
to the Investor represent the total consideration of any kind to be
received by such Investor or any Affiliate thereof pursuant to or in
respect of the Merger.
(b) The Corporation hereby represents and warrants to each Investor that:
(i) it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, it has full corporate
power and authority to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby, and the execution,
delivery, and performance by it of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary action; and
(ii) this Agreement has been duly and validly executed and delivered
by the Corporation and constitutes the binding obligation thereof,
enforceable against the Corporation in accordance with its terms.
ARTICLE II
ALLOCATIONS, SETTLEMENTS, WAIVERS AND TERMINATIONS
--------------------------------------------------
2.1 EMPLOYEE BENEFIT PLAN SETTLEMENT. Sections 2.4 and 6.6 of the
--------------------------------
Stockholders Agreement provide that there shall be contributed to the EMPLOYEE
BENEFIT PLAN (as defined in the Stockholders Agreement) shares of Common Stock,
SPECIAL MANAGEMENT SHARES (as defined in the Stockholders Agreement) or cash
paid in lieu thereof. In lieu of the implementation of the Employee Benefit
Plan, the Corporation and the Investors hereby agree that there shall be paid by
JEDI to the Corporation, as a capital contribution immediately prior to the
Merger, $1,070,942.01 to be distributed as a performance bonus by the
Corporation (less applicable tax withholding) to those persons to be determined
by the Management Group prior to the Merger and identified in writing to the
Corporation. This payment will be made by wire transfer of immediately
available funds on the Effective Date. The Corporation shall immediately
distribute such funds to those persons and in the amounts set forth in the
notice from the Management Group referenced in the immediately preceding
sentence. The cash payment provided for in this Section 2.1 shall constitute a
complete settlement of the obligations set forth in Sections 2.4 and 6.6 of the
Stockholders Agreement.
2.2 WAIVER OF STOCK PURCHASE RIGHTS. Section 3.1 of the Stockholders
-------------------------------
Agreement provides for certain share purchase rights in the event of an issuance
of Capital Stock by the Corporation. The Investors hereby waive any and all
rights they may have under said Section 3.1 to acquire any Capital Stock issued
or issuable in connection with the Merger.
2.3 WAIVER OF PREFERENTIAL PURCHASE RIGHTS. Section 4.3 of the
--------------------------------------
Stockholders Agreement provides for certain preferential rights on the part of
the Investors. The Investors hereby waive any and all rights they may have
under said Section 4.3 in connection with the Merger.
3
2.4 SETTLEMENT OF SPECIAL MANAGEMENT RIGHTS. The Investors acknowledge
---------------------------------------
that the Merger constitutes a Trigger Event (as defined in the Stockholders
Agreement) under Article VI of the Stockholders Agreement. Accordingly, each
Management Investor would be entitled to a cash payout on his Special Management
Rights (as defined in the Stockholders Agreement) as set forth in Article VI of
the Stockholders Agreement. In full and complete payment of any amounts owed to
the Management Investors under Article VI of the Stockholders Agreement, and
notwithstanding any term or calculation set forth in said Article VI to the
contrary, each Management Investor agrees to accept, and JEDI promises to pay to
the Corporation (for the benefit of and distribution to each Management
Investor), as a capital contribution immediately prior to the Merger, the cash
payout on his Special Management Rights set forth opposite his name on Schedule
--------
1.1 hereto under the column headed "Special Management Rights Payment" found
---
under either the heading "Assuming Taurus is Sold for $45 Million" or the
heading "Assuming Taurus is Not Sold," as applicable; provided, however, that if
Taurus is sold prior to the Effective Time for less than $45.0 million, the
Special Management Rights Payment to be made by JEDI hereunder shall equal
$25,702,607, in the aggregate, less the aggregate Common Stock Consideration and
aggregate Option Consideration (as such terms are defined in the Merger
Agreement) received by the Management Group pursuant to the Merger Agreement to
be allocated among the Management Group proportionately in the same manner as
reflected on Schedule 1.1. This payment shall be made by wire transfer of
------------
immediately available funds on the Effective Time. The Corporation shall
immediately distribute such funds by wire transfer of immediately available
funds to those persons and in the amounts described on Schedule 1.1 hereto as it
------------
may be adjusted by the Corporation prior to the Effective Time to reflect the
sale of Taurus for less than $45 million. The Investors further agree that,
conditioned upon consummation of the Merger, the daily accrual provided in
Section 6.4 of the Stockholders Agreement shall end on the earlier of the date
of the Effective Time or November 30, 1997. Upon receipt of the Special
Management Rights, each Management Investor shall pay to the Corporation all
applicable tax withholding in accordance with the Corporation's written
notification delivered prior to the Effective Time.
2.5 TERMINATION OF AGREEMENTS. Effective as of the Effective Time, the
-------------------------
Stockholders Agreement and the Business Opportunity Agreement, entered into as
of October 30, 1995, among the Investors and certain other parties thereto shall
be terminated without any further effect.
2.6 MUTUAL RELEASES. Each party hereto shall execute and deliver at the
---------------
Merger closing a release in the form of Exhibit A attached to this Agreement.
---------
2.7 TAX WITHHOLDING ON OPTION CONSIDERATION. Upon receipt of the Option
---------------------------------------
Consideration (as defined in the Merger Agreement) each Management Investor
shall pay to the Corporation all applicable tax withholding thereon in
accordance with the Corporation's written notification delivered prior to the
Effective Time.
2.8. NO AMENDMENT, MODIFICATION OR WAIVER. Other than as expressly set
------------------------------------
forth in this Agreement, this Agreement does not in any way modify, amend or
waive any provision of the Stockholders Agreement, and all other provisions of
the Stockholders Agreement shall remain in full force and effect until
terminated in accordance with Section 2.5 hereof.
-----------
2.9 REPAYMENT OF INDEBTEDNESS. All indebtedness of an Investor owed to
-------------------------
the Corporation (as set forth on Schedule 2.9 hereto) shall be repaid in full at
------------
the Effective Time.
2.10 PAYMENTS POTENTIALLY SUBJECT TO PARACHUTE RULES. Simultaneously with
-----------------------------------------------
this Agreement, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and the Corporation are executing
and entering into that certain Amendment to Executive Employment Agreement, to
be effective as of the Effective Time. Pursuant to such Amendment, the
Corporation will make payment to ▇▇▇▇▇▇ at the Effective Time in the amount of
$1,123,875.57. All or a portion of the payments described in Sections 2.1, 2.4,
2.7 and 2.10 and the schedules attached hereto, when
4
combined with other payments occurring in connection with the change in the
ownership or control of the Corporation, could be considered an "EXCESS
PARACHUTE PAYMENT" under Internal Revenue Code ("IRC") section 280G. If any of
these payments are considered to be excess parachute payments, then the
Corporation will lose the corporate tax deduction related to any payments in
excess of the "BASE AMOUNT" under the IRC. In addition, any individual receiving
payments considered to be an excess parachute payment, must pay a 20% excise tax
under IRS section 4999(a) on any amounts deemed excess parachute payments.
Payments will not constitute parachute payments, if the payments are approved by
the stockholders of the Corporation who before the change in ownership or
control owned 75% or more of the Corporation's stock, and this Agreement is
intended, among other things, to evidence such approval.
2.11 WRITTEN CONSENT OF THE STOCKHOLDER. The undersigned, if a holder of
----------------------------------
the issued and outstanding shares of Common Stock or Preferred Stock, does
hereby, pursuant to the authority contained in Section 228 of the Delaware
General Corporation Law and the Corporation's Bylaws, consent to, authorize and
adopt the following actions with the same force and effect as if taken at a
meeting of the stockholders of the Corporation, duly convened and held on this
date pursuant to valid notice (notice being waived hereby):
(i) the execution and delivery by any authorized officer of the
Corporation for and on behalf of the Corporation of the Merger Agreement is
hereby ratified, confirmed and approved as the valid, binding and
enforceable action of the Corporation and all terms, provisions and
conditions of the Merger Agreement are hereby approved and adopted;
(ii) the merger of the Corporation with Belco Acquisition Sub, Inc.,
upon and subject to the terms and conditions of the Merger Agreement, all
as more fully set forth therein, is hereby approved and adopted;
(iii) the Merger Agreement constitutes an agreement of merger as
contemplated by Section 251 of the Delaware General Corporation Law;
(iv) the Corporation shall carry out the terms and provisions of the
Merger Agreement and to enter into, execute, perform and carry out all
other agreements, instruments, documents and certificates to be executed
and delivered by the Corporation pursuant to or required or contemplated by
the Merger Agreement; and
(v) the payments described in Sections 2.1, 2.4, 2.7 and 2.10 and the
schedules attached hereto are hereby ratified, confirmed and approved in
all respects, including, but not limited to, those approvals contemplated
under the IRC section 280G.
The undersigned acknowledges and agrees that by virtue of his or its
execution of this Agreement in connection with the merger of the Corporation
authorized above, the undersigned's rights to an appraisal by a court of the
fair value of his or its stock in the Corporation pursuant to Section 262 of the
Delaware General Corporation Law are hereby irrevocably waived.
2.12 ATTORNEYS FEES. JEDI shall pay at Closing of the Merger Agreement
--------------
the fees and expenses of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP (billed or incurred in its
capacity as counsel to the Corporation in respect of the Merger Agreement) in
excess of the amount to be reimbursed by Belco pursuant to Section 11.3 of the
Merger Agreement.
2.13 JEDI WAIVER. Conditioned upon consummation of the Merger, JEDI and
-----------
the Corporation hereby waive compliance with the redemption obligations set
forth in Article IV, Section 2(a)(3) of the Corporation's Restated Certificate
of Incorporation.
5
ARTICLE III
MISCELLANEOUS
-------------
3.1 AMENDMENT; WAIVERS. This Agreement may only be altered, supplemented,
------------------
amended or waived by the written consent of each party to this Agreement;
provided, however, (i) any Party may (without the consent of any other Person)
waive, in writing, any obligation owed to it hereunder by any other Party or the
Corporation, and (ii) any Party may (without the consent of any other Person)
waive, in writing, any right it has hereunder. Any waiver permitted hereunder
may be made prospectively or retroactively.
3.2 ASSIGNMENT. This Agreement is not assignable.
----------
3.3 NOTICES. Any and all notices, designations, consents, offers,
-------
acceptances, or other communications provided for herein (each a "NOTICE") shall
be given in writing by personal delivery, overnight courier, or telecopy which
shall be addressed, or sent, to the respective addresses or telecopy numbers as
follows (or such other address or telecopy number as the Corporation or any
Party may specify for itself to the Corporation and all other Parties by
Notice):
The Corporation: Coda Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
Telephone No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Enron Corp.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
Telephone No. ▇▇▇-▇▇▇-▇▇▇▇
and:
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇▇▇)
▇▇▇-▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇)
Each Party: To such address or telecopy number of such Party as is set
forth on Schedule 1.1 hereto.
------------
All Notices shall be deemed effective, delivered and received (a) if given by
personal delivery, when such Notice is personally delivered at the address
specified above; (b) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified above and receipt thereof is confirmed; or (c) if
given by overnight courier, on the business day immediately following the day on
which such Notice is delivered to a reputable overnight courier service.
6
3.4 COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts and each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of the parties
hereto.
3.5 HEADINGS. Headings contained in this Agreement are inserted only as a
--------
matter of convenience and in no way define, limit, or extend the scope or intent
of this Agreement or any provisions hereof.
3.6 CHOICE OF LAW. This Agreement shall be governed by the internal laws
-------------
of the State of Texas without regard to the principles of conflicts of laws
thereof.
3.7 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
----------------
the parties hereto respecting the subject matter hereof and supersedes all prior
agreements, discussions and understandings with respect thereto.
3.8 CUMULATIVE RIGHTS. The rights of the Parties and the Corporation
-----------------
under this Agreement are cumulative and in addition to all similar and other
rights of the Parties and the Corporation under other agreements.
3.9 NO PARTNERSHIP. No term of provision of this Agreement shall be
--------------
construed to establish any relationship of partnership, agency or joint venture
between the Parties hereto.
3.10 NUMBER; GENDER; WITHOUT LIMITATION; INTERPRETATION OF CERTAIN
-------------------------------------------------------------
DEFINED TERMS. Pronouns, wherever used in this Agreement, and of whatever
-------------
gender, shall include Persons of every kind and character, and the singular
shall include the plural whenever and as often as may be appropriate. Any
reference herein to "including" and words of similar import refer to "including
without limitation." When reference is made herein to specified Parties or
Persons, the determination as to which Persons are thereby referenced shall be
made as of the time in question. Unless the context otherwise requires, any
reference herein to "or" shall also include "and," so that "A or B" shall
include the possibilities of A, B, and A and B.
3.11 SEVERABILITY. In the event any one or more of the provisions
------------
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which approximates as nearly as possible that of the
invalid, illegal or unenforceable provisions.
3.12 THIRD PERSON. Nothing herein expressed or implied is intended or
------------
shall be construed to confer upon or to give any Person not a party hereto any
rights or remedies under or by reason of this Agreement.
3.13 U.S. CURRENCY. All payments required or permitted hereunder shall
-------------
be paid in U.S. dollars or other lawful currency constituting legal tender of
the United States of America.
3.14 INDEMNIFICATION. Each Party and the Corporation (the "INDEMNITOR")
---------------
hereby agrees to protect, defend, indemnify and hold harmless all other Parties
and their respective successors, heirs and assigns (the "INDEMNITEES") against
any and all claims, lawsuits, damages and other liabilities and expenses
(including reasonable attorneys' fees) suffered or incurred by any of the
Indemnitees and which arise out of any breach by the Indemnitor of its
representations, warranties, covenants or other obligations hereunder.
7
3.15 ARBITRATION. Any and all claims, demands, causes of action,
-----------
disputes, controversies and other matters in question arising out of or relating
to this Agreement, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement ("CLAIMS"), even though some or all of such
Claims allegedly are extracontractual in nature, whether such Claims sound in
contract, tort or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
shall be resolved and decided exclusively by binding arbitration pursuant to the
Federal Arbitration Act in accordance with the Commercial Arbitration Rules then
in effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Dallas, Texas. The arbitration shall be before a panel of
three arbitrators. Each party to such dispute shall select one arbitrator (with
all Management Investors parties to the dispute considered to be one party) and
the two arbitrators selected by the parties shall select the third arbitrator.
The arbitrators are authorized to issue subpoenas for depositions and other
discovery mechanisms, as well as trial subpoenas, in accordance with the Federal
Rules of Civil Procedure. Either party may initiate a proceeding in the
appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including without limitation any exemplary damages, treble damages, or any
other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances. The
parties hereto hereby waive their right, if any, to recover such damages in
connection with any Claims. The arbitrators shall be entitled to award costs of
the arbitration and attorney's fees as they deem appropriate. Prior to the
institution of a Claim under this Agreement by any Person, such Person shall
provide to the Corporation and all other Parties to this Agreement a written
notice specifying the nature and basis of the Claim. The Persons who are the
subject of any Claim shall be given thirty (30) days to cure any breach before
any Claim is filed. It is further agreed that prior to such Claims being
submitted to the arbitrators on such Claims, the parties to the Claims shall
attempt to resolve such Claims through non-binding mediation of such Claims
provided that such mediation period shall not exceed 30 days from the date such
Claim is asserted.
3.16 TERMINATION. This Agreement shall terminate (i) upon termination of
-----------
the Merger Agreement in accordance with its terms or (ii) upon written agreement
of all the Parties to this Agreement.
* * * * *
8
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the date first above written.
CODA ENERGY, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Management Limited
Partnership, its general partner
By: Enron Capital Corp.,
its general partner
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Agent and Attorney-in-Fact
MANAGEMENT INVESTORS:
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇.▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
9
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇. ▇. ▇▇▇▇▇▇▇, III
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
10
EXHIBIT A
---------
RELEASE
--------
In consideration of the actions to be taken pursuant to that certain
Agreement and Plan of Merger dated as of October 31, 1997 (the "AGREEMENT") by
and among Belco Oil & Gas Corp., Belco Acquisition Sub, Inc. and Coda Energy,
Inc. (the "COMPANY"), and the Stockholders Allocation Agreement, dated as of
October 31, 1997, among the parties referenced therein, each of the individuals
and entities listed on the signature pages of this Release (each such individual
and entity, the "RELEASOR"), on behalf of the Releasor and the heirs,
beneficiaries, personal representatives, successors and assigns of the Releasor
(collectively, the "RELEASOR PARTIES"), for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, hereby releases and
discharges (i) the Company and the parents, subsidiaries and affiliated
corporations, past and present, of the Company (the "COMPANY AFFILIATES") with
respect to periods prior to the Closing (as defined in the Agreement), (ii) the
directors, officers, partners, agents and employees, past and present, of the
Company and the Company Affiliates in their capacities as directors, officers,
partners, agents and employees, and (iii) each other Releasor and the heirs,
beneficiaries, personal representatives, successors and assigns of each such
other Releasor, including with respect to Joint Energy Development Investments
Limited Partnership ("JEDI"), the parents, subsidiaries and affiliated
corporations, past and present, of JEDI (the "JEDI AFFILIATES") with respect to
periods prior to the Closing, and the directors, officers, partners, agents and
employees of JEDI and the JEDI Affiliates (all such released individuals and
entities referenced in clauses (i), (ii) and (iii), the "RELEASED PARTIES") from
any and all actions, causes of actions, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, whether known or unknown,
in law, admiralty, equity or otherwise, that any one or more of the Releasor
Parties ever had, now has or hereafter can, shall or may have against any one
EXHIBIT A
---------
or more of the Released Parties, for, upon or by reason of any matter, cause or
thing whatsoever occurring on or prior to the date of this Release relating to
the Company or any of the Company Affiliates (such actions, causes of actions,
suits, etc. collectively, "CLAIMS"), except for Claims arising out of
obligations expressly granted or continued pursuant to the terms of (i) the
Agreement and (ii) the documents listed on Exhibit A.
---------
Each Releasor represents and warrants that it has made no assignment or
other transfer of any interest in any of the Claims released hereby to any other
party or person and that it shall file no legal action or other proceeding nor
shall it take any other action that causes any other party or person to assert
said released Claims against any other party to this Release.
Each Releasor hereby acknowledges that (i) such Releasor (other than the
Company) has not been represented by ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP or any other counsel
or advisors engaged by the Company in connection with this Release or any other
agreements or issues related to the transactions contemplated in the Agreement,
(ii) such Releasor has had sufficient time and opportunity to review this
Release and all other agreements related to the transactions contemplated in the
Agreement and (iii) such Releasor has had the opportunity to engage and consult
with separate counsel and advisors in connection with this Release and all other
agreements or issues related to the transactions contemplated in the Agreement.
Whenever the text hereof requires, the use of singular number shall
include the appropriate plural number.
This RELEASE may not be changed orally.
This RELEASE may be executed in several counterparts, each of which when
fully executed shall constitute but one and the same instrument.
* * * * *
-2-
EXHIBIT A
---------
IN WITNESS WHEREOF, each Releasor has caused this Release to be executed
and delivered on this, the ____________ day of ______________, 1997.
RELEASORS:
Joint Energy Development Investments
Limited Partnership
By: Enron Capital Management Limited
Partnership, its general partner
By: Enron Capital Corp.,
its general partner
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Agent and Attorney-in-Fact
Coda Energy, Inc.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-3-
EXHIBIT A
---------
--------------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇. ▇. ▇▇▇▇▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-4-
EXHIBIT A
---------
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇. ▇. ▇▇▇▇▇▇▇, III
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-5-
EXHIBIT A
---------
EXHIBIT A TO RELEASE
1. Stockholders Allocation Agreement, dated October 31, 1997
2. Shareholders Agreement, dated October 31, 1997
3. Each individual Releasor's Employment Agreement, if any, with the Company,
as it may have been amended
4. Director or Officer Indemnity Agreements between Coda Energy, Inc. and
certain Officers and Directors of Coda Energy, Inc.
5. Written employment plans of Coda Energy, Inc.
6. JEDI Agreement, dated October 31, 1997.
7. Such definitive agreements as may be entered into pursuant to Section 2 of
the JEDI Agreement.
-6-
APPENDIX B-4
(a) JEDI is a limited partnership duly formed, validly existing and in
good standing under the laws of the State of Delaware and has the
partnership power to carry on its business as it is now being conducted.
(b) JEDI has the requisite partnership power and authority to enter
into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by JEDI have been duly authorized
by all necessary partnership action on the part of JEDI. This Agreement
has been duly executed and delivered by JEDI and, assuming the due
authorization, execution and delivery of this Agreement by the Company,
this Agreement constitutes a legal, valid and binding obligation of JEDI
enforceable in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally and except that the availability
of equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding therefor may be
brought.
(c) Neither the execution, delivery and performance of this Agreement
nor the consummation of the transactions contemplated hereby will (i)
conflict with or violate the partnership agreement of JEDI, or (ii) result
in any breach or constitute a default with or without notice or lapse of
time, or both, under, or give rise in others to any rights of termination,
cancellation or acceleration under, any indenture, contract, instrument, or
loan agreement pursuant to which JEDI is a borrower, or any license,
franchise, permit, order, decree, concession, lease, judgment, statute,
law, ordinance, rule or regulation applicable to JEDI or its assets, other
than, in the case of clause (ii) only, such breaches, defaults, violations
and losses of rights that would not have a JEDI Material Adverse Effect (as
defined below). No filing or registration with, or authorization, consent
or approval of, any governmental or regulatory body or authority is
necessary for the consummation by JEDI of the transactions contemplated by
this Agreement, except where failure to make such filing or registration or
obtain such authorization, consent or approval would not, individually or
in the aggregate, have a direct or indirect material adverse effect on the
business, assets, conditions (financial or otherwise), liabilities or
operations of JEDI or JEDI's ability to consummate the transactions
contemplated by this Agreement ("JEDI Material Adverse Effect").
EXHIBIT C
---------
For purposes of this opinion, all capitalized terms used herein but
not defined herein shall have the meanings ascribed thereto in the Agreement and
Plan of Merger to which this Exhibit C is a part.
(a) Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Nevada and has the corporate power
to carry on its business as it is now being conducted.
(b) Buyer has the requisite corporate power and authority to enter
into the Agreement, the Warrant Agreement and the Registration Rights Agreement
and to carry out its obligations hereunder and thereunder. The execution and
delivery of the Agreement, the Warrant Agreement and the Registration Rights
Agreement by Buyer and the consummation of the transactions contemplated hereby
and thereby by Buyer have been duly authorized by all necessary corporate action
on the part of Buyer. The Agreement has been duly executed and delivered by
Buyer and, assuming the due authorization, execution and delivery of this
Agreement by the Company, the Agreement constitutes a legal, valid and binding
obligation of Buyer enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought. The Warrant Agreement has been duly authorized by all necessary
corporate action on the part of Buyer and has been duly executed and delivered
by Buyer and, assuming the due authorization, execution and delivery thereof by
JEDI, constitutes a legal, valid and binding obligation of Buyer, enforceable in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought. The Registration Rights Agreement has been
duly authorized by all necessary corporate action on the part of Buyer and has
been duly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery thereof by JEDI, constitutes a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally and except that the
availability of equitable remedies, including specific performance, is subject
to the discretion of the court before which any proceeding therefor may be
brought.
(c) Neither the execution, delivery and performance of the Agreement,
the Warrant Agreement nor the Registration Rights Agreement by Buyer nor the
consummation of the transactions contemplated hereby or thereby by Buyer will
(i) conflict with or violate the Articles of Incorporation or Bylaws of Buyer or
(ii) result in any breach or constitute a default with or without notice or
lapse of time, or both, or give rise in others of any rights of termination,
C-1
cancellation or acceleration under any indenture, contract, license, franchise,
permit, order, decree, concession, lease, instrument, judgment, statute, law,
ordinance, rule or regulation applicable to Buyer or its assets, other than, in
the case of clause (ii) only, breaches, defaults, violations and losses of
rights that would not have a Buyer Material Adverse Effect and that would not
prevent the performance by Buyer of Buyer's obligations under the Warrant
Agreement or the Registration Rights Agreement. No filing or registration with,
or authorization, consent or approval of, any governmental or regulatory body or
authority or third party is necessary for the consummation by Buyer of the
transactions contemplated by the Agreement, the Warrant Agreement or the
Registration Rights Agreement, except (A) for filings required to be made under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") after the
Closing, (B) for the filing of a registration statement pursuant to the
Securities Act of 1933, as amended (the "Securities Act") pursuant to the
Registration Rights Agreement and under state securities laws in connection with
the registration of the Warrant Shares, (C) the filing of a Certificate of
Merger pursuant to the DGCL and (D) except where the failure to make any such
filing or registration or to obtain such authorization, consent or approval
would not have a Buyer Material Adverse Effect and that would not prevent the
performance by Buyer of Buyer's obligations under the Warrant Agreement or the
Registration Rights Agreement.
(d) The Buyer Warrants have been duly authorized by all necessary
corporate action on the part of Buyer, and, when issued at the Closing, the
Buyer Warrants will be validly issued. The shares of Buyer Common Stock
issuable pursuant to the Buyer Warrants (the "Warrant Shares") have been duly
authorized and, when issued upon exercise of the Buyer Warrants in accordance
with the terms of the Warrant Agreement and payment of the applicable exercise
price therefor, will be validly issued, fully paid and nonassessable and will
not have been issued in violation of any preemptive rights known to such
counsel.
(e) There is no action, suit, notice of violation, proceeding or
investigation pending or contemplated or threatened against or affecting Buyer
or its properties or assets before or by any Governmental Entity which relates
to or challenges the legality, validity or enforceability of the Agreement, the
Warrant Agreement or the Registration Rights Agreement.
(f) Buyer Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power to carry on its business as it is now being conducted.
(g) Buyer Sub has the requisite corporate power and authority to enter
into the Agreement and to carry out its obligations thereunder. The execution
and delivery of the Agreement by Buyer Sub and the consummation of the
transactions contemplated thereby by Buyer Sub have been duly authorized by all
necessary corporate action on the part of Buyer Sub. The Agreement has been
duly executed and delivered by Buyer and, assuming the due authorization,
execution and delivery of the Agreement by the Company, the Agreement
constitutes a legal, valid and binding obligation of Buyer Sub enforceable in
accordance with its
C-2
terms except as enforcement may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally and except
that the availability of equitable remedies, including specific performance, is
subject to the discretion of the court before which any proceeding therefor may
be brought.
(h) Neither the execution, delivery and performance of the Agreement
by Buyer Sub nor the consummation of the transactions contemplated thereby by
Buyer Sub will (i) conflict with or violate the Certificate of Incorporation or
Bylaws of Buyer Sub or (ii) result in any breach or constitute a default with or
without notice or lapse of time, or both, or give rise in others of any rights
of termination, cancellation or acceleration under any indenture, contract,
license, franchise, permit, order, decree, concession, lease, instrument,
judgment, statute, law, ordinance, rule or regulation applicable to Buyer Sub or
its assets. No filing or registration with, or authorization, consent or
approval of, any governmental or regulatory body or authority or third party is
necessary for the consummation by Buyer Sub of the transactions contemplated by
the Agreement, except for the filing of a Certificate of Merger pursuant to the
DGCL.
C-3
EXHIBIT D-1
-----------
For purposes of this opinion, all capitalized terms used herein
but not defined herein shall have the meanings ascribed thereto in the Agreement
and Plan of Merger to which this Exhibit D-1 is a part.
(a) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and has the
corporate power to carry on its business as it is now being conducted. The
Company is duly qualified as a foreign corporation and is in good standing in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
where the failure to be so qualified or in good standing would not, individually
or in the aggregate, have a direct or indirect material adverse effect on the
business, assets, condition financial or otherwise), liabilities or operations
of the Company and its Subsidiaries, taken as a whole, or its ability to
consummate the transactions contemplated by this Agreement (a "Company Material
Adverse Effect").
(b) The authorized capital stock of the Company consists of 1,000,000
shares of Company Common Stock and 40,000 shares of Company Preferred Stock. As
of the Closing Date, 913,611 shares of Company Common Stock were outstanding, no
shares of Company Common Stock were held in the treasury of the Company, no
shares of Company Common Stock were held by Subsidiaries of the Company and
20,000 shares of Company Preferred Stock were outstanding. All the outstanding
shares of Company Common Stock and Company Preferred Stock are validly issued,
fully paid and non-assessable and were issued free of preemptive rights pursuant
to the Company's Certificate of Incorporation or Bylaws or, to the knowledge of
such counsel after due inquiry, any other instrument. As of the Closing Date,
there are no bonds, debentures, notes or other evidences of indebtedness having
the right to vote on any matters on which the Company's stockholders may vote
issued or outstanding. As of the Closing Date, there are no options, warrants,
calls or other rights, agreements or commitments outstanding obligating the
Company to issue, deliver or sell shares of its capital stock or debt
securities, or obligating the Company to grant, extend or enter into any such
option, warrant, call or other such right, agreement or commitment other than
the Outstanding Options. The Company is not obligated to make any payment of
cash or property in respect of any shares of capital stock or debt securities in
connection with the transactions contemplated by the Agreement except pursuant
to Section 4.13 of the Company Indenture.
(c) Each Subsidiary (excluding Taurus) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to carry on its business as it is now being conducted. Each
Subsidiary is duly qualified as a foreign corporation, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its
D-1-1
activities makes such qualification necessary, except where the failure to be so
qualified or in good standing would not, individually or in the aggregate, have
a Company Material Adverse Effect. To the knowledge of such counsel after due
inquiry, all the outstanding shares of capital stock of each Subsidiary are
validly issued, fully paid and nonassessable and are owned by the Company, free
and clear of any Liens, claims or encumbrances. To the knowledge of such counsel
after due inquiry, there are no existing options, warrants, calls or other
rights, agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of any of the Subsidiaries of the
Company (other than Taurus).
(d) Except as set forth in Schedule 5.4 of the Company Disclosure
Schedule, neither the execution, delivery and performance of the Agreement nor
the consummation of the transactions contemplated thereby will (i) conflict with
or violate the Certificate of Incorporation or Bylaws or other charter documents
of the Company or any of its Subsidiaries, or (ii) result in any breach or
constitute a default (with or without notice or lapse of time, or both) under,
or give rise in others to any rights of termination, cancellation or
acceleration under, any indenture, contract, loan agreement, license, franchise,
permit, order, decree, concession, lease, instrument, judgment, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries or its or their respective assets, other than, in the case of
clause (ii) only, such breaches, defaults, violations and losses of rights that
would not, individually or in the aggregate, have a Company Material Adverse
Effect. Except (i) as disclosed in Schedule 5.4 of the Company Disclosure
Schedule, (ii) in connection with the Exchange Act and (iii) the filing of a
Certificate of Merger pursuant to the DGCL, no filing or registration with, or
authorization, consent or approval of, any governmental or regulatory body or
authority or third party is necessary for the consummation by the Company of the
transactions contemplated by the Agreement, except where failure to make such
filing or registration or obtain such authorization, consent or approval would
not, individually or in the aggregate, prevent consummation of the transactions
contemplated by the Agreement or have a Company Material Adverse Effect.
D-1-2
EXHIBIT D-2
-----------
For purposes of this opinion, all capitalized terms used herein
but not defined herein shall have the meanings ascribed thereto in the Agreement
and Plan of Merger to which this Exhibit D-2 is a part.
(a) The authorized capital stock of the Company consists of 1,000,000
shares of Company Common Stock and 40,000 shares of Company Preferred Stock. As
of the Closing Date, 913,611 shares of Company Common Stock were outstanding, no
shares of Company Common Stock were held in the treasury of the Company, no
shares of Company Common Stock were held by Subsidiaries of the Company and
20,000 shares of Company Preferred Stock were outstanding. All the outstanding
shares of Company Common Stock and Company Preferred Stock are validly issued,
fully paid and non-assessable and were issued free of preemptive rights pursuant
to the Company's Certificate of Incorporation or Bylaws or, to the knowledge of
such counsel after due inquiry, any other instrument. As of the Closing Date,
to such counsel's actual knowledge after due inquiry there are no bonds,
debentures, notes or other evidences of indebtedness having the right to vote on
any matters on which the Company's stockholders may vote issued or outstanding.
As of the Closing Date, to such counsel's actual knowledge after due inquiry
there are no options, warrants, calls or other rights, agreements or commitments
outstanding obligating the Company to issue, deliver or sell shares of its
capital stock or debt securities, or obligating the Company to grant, extend or
enter into any such option, warrant, call or other such right, agreement or
commitment other than the Outstanding Options. To such counsel's actual
knowledge after due inquiry, the Company is not obligated to make any payment of
cash or property in respect of any shares of capital stock or debt securities in
connection with the transactions contemplated by this Agreement except pursuant
to Section 4.13 of the Company Indenture and the Revolving Credit Facility.
(b) To the actual knowledge of such counsel after due inquiry, all the
outstanding shares of capital stock of each Subsidiary are validly issued, fully
paid and nonassessable and are owned by the Company, free and clear of any
Liens, claims or encumbrances. To the actual knowledge of such counsel after
due inquiry, there are no existing options, warrants, calls or other rights,
agreements or commitments of any character relating to the issued or unissued
capital stock or other securities of any of the Subsidiaries of the Company
(other than Taurus).
(c) The Company has the requisite corporate power and authority to
enter into the Agreement and the corporate power and authority to carry out its
obligations thereunder. The execution and delivery of the Agreement by the
Company and the consummation of the transactions contemplated thereby have been
duly authorized by all necessary corporate action on the part of the Company.
The Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery of the Agreement by Buyer
D-2-1
and Buyer Sub, the Agreement constitutes a legal, valid and binding obligation
of the Company enforceable in accordance with its terms except as enforcement
way be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors, rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought.
(d) Except (i) as disclosed in Schedule 5.4 of the Company Disclosure
Schedule, (ii) in connection with the Exchange Act and (iii) the filing of a
Certificate of Merger pursuant to the DGCL, no filing or registration with, or
authorization, consent or approval of, any governmental or regulatory body or
authority or third party is necessary for the consummation by the Company of the
transactions contemplated by the Agreement, except where failure to make such
filing or registration or obtain such authorization, consent or approval would
not, individually or in the aggregate, prevent consummation of the transactions
contemplated by the Agreement or have a Company Material Adverse Effect.
D-2-2
EXHIBIT E
---------
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of November
__, 1997, is between Belco Oil & Gas Corp., a Nevada corporation (the
"Company"), and Joint Energy Development Investments Limited Partnership, a
Delaware limited partnership (the "Shareholder").
R E C I T A L S:
----------------
WHEREAS, the Company and the Shareholder are simultaneously consummating
the transactions contemplated by the Agreement and Plan of Merger, dated October
31, 1997, by and among the Company, Belco Acquisition Sub, Inc., a Delaware
corporation, and Coda Energy, Inc., a Delaware corporation (the "Merger
Agreement");
WHEREAS, pursuant to the Merger Agreement, the Shareholder is receiving
unregistered warrants (the "Warrants") to purchase shares of Common Stock, par
value $0.01 per share, of the Company (the "Common Stock") in a private offering
transaction (the "Transaction"); and
WHEREAS, under the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), and the General Rules and Regulations promulgated by the
Securities and Exchange Commission ("SEC") thereunder, the Shareholder will be
limited in the manner of the sale of the shares of Common Stock received upon
exercise of the Warrants, absent registration under the Securities Act of the
sale of such shares of Common Stock or the availability of exemption from the
registration requirements of the Securities Act.
A G R E E M E N T:
-----------------
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein, the parties hereby agree as follows:
1. Definitions. The following terms have the meaning ascribed to them
-----------
hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means the Shareholder or any assignee or transferee of one or
more shares of Restricted Stock.
"Restricted Stock" means the shares of Common Stock issued or issuable
to the Shareholder pursuant to the Warrants and any shares of Common Stock
issued as a dividend or
other distribution with respect to or in exchange for or in replacement of the
shares of Common Stock issued pursuant to the Warrants. Any Restricted Stock
will cease to be Restricted Stock when (i) a registration statement covering
such Restricted Stock has been declared effective by the Commission and the
Restricted Stock has been disposed of pursuant to such effective registration
statement, (ii) the Restricted Stock is sold under circumstances in which all of
the applicable conditions of Rule 144 (or any similar provisions then in force)
under the Securities Act are met or (iii) the Restricted Stock has been
otherwise transferred, the Company has delivered a new certificate or other
evidence of ownership for the Restricted Stock not bearing a legend restricting
further transfer, and the Restricted Stock may be resold without subsequent
registration under the Securities Act.
"Registration Statement" means the registration statement contemplated
by this Agreement.
"Selling Holder" means a Holder who is selling Restricted Stock
pursuant to the Registration Statement.
2. Shelf Registration. Subject to the provisions of Section 3, the
------------------
Company agrees that it shall prepare and file with the SEC, no later than the
date that is 10 months after the closing of the Transaction, a registration
statement (the "Pre-Exercise Registration Statement") on any form for which the
Company then qualifies and the Company considers appropriate and which is
available for resales of the Restricted Stock pursuant to Rule 415 of the
General Rules and Regulations of the SEC promulgated under the Securities Act
or, in the event that the SEC does not permit the Company to register the
Restricted Stock pursuant to the Registration Statement prior to the exercise of
the Warrants, the Company agrees that, upon written notice from JEDI, it shall
prepare and file a registration statement (the "Post-Exercise Registration
Statement") on any form for which the Company then qualifies and the Company
considers appropriate and which is available for resales of the Restricted Stock
pursuant to Rule 415 of the General Rules and Regulations of the SEC promulgated
under the Securities Act (the Pre-Exercise Registration Statement and the Post-
Exercise Registration Statement are collectively referred to as the
"Registration Statement"). Subject to the provisions of Section 3, the Company
further agrees to use its reasonable efforts to cause the Registration Statement
to be declared effective as soon as practicable thereafter and to use its
reasonable efforts to cause the Registration Statement to continue to be
effective until the earlier of (i) the date that is the third anniversary of the
closing of the Transaction and (ii) the first date on which there are not
remaining any shares of Restricted Stock. Prior to the filing of either the
Pre-Exercise Registration Statement or the Post-Exercise Registration Statement,
the Company shall request from each Holder the number of shares of Restricted
Stock desired to be included in such Registration Statement by such Holder;
provided that the Company shall only be required to include in the Post-Exercise
Registration Statement shares of Restricted Stock that have been issued by the
Company pursuant to the exercise of Warrants prior to the filing of the Post-
Exercise Registration Statement. Subject to the provisions of this Section 2
and of Section 3 below, the Company will include in the Registration Statement
all shares of Restricted Stock with respect to which the Company has received
written requests
-2-
for inclusion therein within twenty (20) days after the receipt by the
applicable Holder of the Company's notice. Each such request from a Holder will
specify the number of shares of Restricted Stock to be registered. Unless the
Holder or Holders of a majority of the Restricted Stock to be registered in the
Registration Statement shall consent in writing, the Company shall not include
any other securities under the Registration Statement.
3. Registration Procedures. Whenever, pursuant to Section 2, the Holders
-----------------------
of Restricted Stock have requested that any Restricted Stock be included for
registration pursuant to the Registration Statement, the Company will, subject
to the provisions of Section 5, use all reasonable efforts to effect the
registration of such Restricted Stock in accordance with the intended method of
disposition thereof as promptly as practicable, and in connection with any such
request, the Company shall:
(A) prepare and file with the SEC the Registration Statement on any
form for which the Company then qualifies and which counsel for the Company
shall deem appropriate and which form shall be available for the sale or
distribution of such Restricted Stock in accordance with the intended
method of distribution thereof, and use its reasonable efforts to cause the
Registration Statement to become effective as soon as practicable after
filing; provided, (i) that before filing the Registration Statement or
prospectus or any amendments or supplements thereto, the Company will
furnish to one counsel selected by the Holders of a majority in number of
shares of the Restricted Stock covered by the Registration Statement copies
of all such documents proposed to be filed, which documents will be subject
to the review and comment of such counsel, and (ii) that after the filing
of the Registration Statement, the Company will promptly notify each
selling Holder of Restricted Stock of any stop order issued or, to the
knowledge of the Company, threatened by the SEC and take all reasonable
actions to prevent the entry of such stop order or to remove it if entered;
(B) prepare and file with the SEC such amendments and supplements to
the Registration Statement and the prospectus used in connection therewith
as may be necessary to keep the Registration Statement effective for the
period referred to in Section 2, and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
the Registration Statement during such period in accordance with the
intended methods of disposition by the selling Holders thereof set forth in
the Registration Statement;
(C) as soon as reasonably practicable, furnish to such selling Holder,
prior to filing the Registration Statement, copies of the Registration
Statement as proposed to be filed, and thereafter furnish to such selling
Holder such number of copies of the Registration Statement, each amendment
and supplement thereto (in each case, if specified by such Holder,
including all exhibits thereto), the prospectus included in the
Registration Statement (including each preliminary prospectus) and such
other documents
-3-
as such selling Holder may reasonably request in order to facilitate the
disposition of the Restricted Stock owned by such selling Holder;
(D) with reasonable promptness, use its reasonable efforts to register
or qualify such Restricted Stock under such other securities or blue sky
laws of such jurisdictions within the United States as any selling Holder
reasonably (in light of such selling Holder's intended plan of
distribution) requests and do any and all other acts and things which may
be reasonably necessary or advisable to enable such selling Holder to
consummate the disposition in such jurisdictions of the Restricted Stock
owned by such selling Holder; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this subsection (D),
or (ii) subject itself to taxation in any such jurisdiction.
(E) with reasonable promptness, use reasonable efforts to cause the
Restricted Stock covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may
be necessary by virtue of the business and operations of the Company to
enable the selling Holder or Holders thereto to consummate the disposition
of such Restricted Stock;
(F) promptly notify each selling Holder of such Restricted Stock, at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the occurrence of any event known to the
Company (or made known to the Company pursuant to the last sentence of the
last paragraph of this Section 3) requiring the preparation of a supplement
or amendment to such prospectus so that, as thereafter delivered to the
purchasers or recipients of such Restricted Stock, such prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, promptly prepare and file (and if
applicable, take all reasonable actions to have any amendment declared
effective) any required supplement or amendment, and promptly make
available to each selling Holder any such supplement or amendment;
(G) with reasonable promptness make available for inspection by any
selling Holder and any attorney, accountant or other agent retained by any
such selling Holder (collectively, the "Inspectors"), all financial and
other records, pertinent corporate documents and the properties of the
Company (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, if any, and
cause the Company's officers and employees to supply all information
reasonably requested for such purpose by any such Inspector in connection
with such registration statement. Each Inspector that actually reviews
Records supplied by the Company that include information that the Company
identifies, in good faith, to be confidential ("Confidential Information")
shall be required, prior to any such review, to execute an agreement with
the Company providing that such Inspector shall not publicly disclose any
Confidential Information unless such disclosure is required by applicable
law or legal
-4-
process. Each selling Holder of Restricted Stock agrees that material
Confidential Information obtained by it as a result of such inspections
shall not be used by it as the basis for any transactions in securities of
the Company unless and until such information is made generally available
to the public. Each selling Holder of Restricted Stock further agrees that
it will, upon learning that disclosure of Confidential Information is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of the Confidential Information. Each selling Holder
also agrees that the due diligence investigation made by the Inspectors
shall be conducted in a manner which shall not unreasonably disrupt the
operations of the Company or the work performed by the Company's officers
and employees;
(H) otherwise use its reasonable efforts to comply with all applicable
rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
a period of twelve months, beginning within three months after the
effective date of the Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act; and
(I) with reasonable promptness, use its reasonable efforts to cause
all such Restricted Stock to be listed on each securities exchange on which
the Common Stock of the Company is then listed.
Each selling Holder of Restricted Stock agrees that, upon receipt of any
notice from the Company of the happening of any event of the kind described in
subsection (F) hereof, such selling Holder will forthwith discontinue
disposition of Restricted Stock pursuant to the Registration Statement covering
such Restricted Stock until such selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection (F) hereof. Each
selling Holder also agrees to notify the Company if any event relating to such
selling Holder occurs which would require the preparation of a supplement or
amendment to the prospectus so that such prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
4. Conditions and Limitations. The Company's obligations under Section 2
--------------------------
with respect to any selling Holder shall be subject to the limitation that the
Company shall have received the information and documents specified in Section 5
and such selling Holder shall have observed or performed in all material
respects its other covenants and conditions contained in such Section and
Section 7.
5. Information From and Certain Covenants of Holders of Restricted Stock.
---------------------------------------------------------------------
Notices and requests delivered to the Company by Holders from whom Restricted
Stock is to be registered pursuant to this Agreement shall contain such
information regarding the Restricted Stock to be so registered, the Holder and
the intended method of disposition of such Restricted Stock as shall
-5-
reasonably be required in connection with the action to be taken under the
Securities Act. Any Holder whose Restricted Stock is included in the
Registration Statement pursuant to this Agreement shall execute all consents,
powers of attorney and other documents reasonably required to be signed by it in
order to cause the Registration Statement to become effective. Each selling
Holder covenants that, in disposing of such Holder's shares, such Holder shall
comply with Regulation M of the SEC adopted pursuant to the Exchange Act.
6. Registration Expenses. All Registration Expenses (as defined herein)
---------------------
will be borne by the Company. Underwriting discounts and commissions applicable
to the sale of Restricted Stock shall be borne by the Holder of the Restricted
Stock to which such discount or commission relates, and each selling Holder
shall be responsible for the fees and expenses of any legal counsel, accountants
or other agents retained by such selling Holder and all other out-of-pocket
expenses incurred by such selling Holder in connection with any registration
under this Agreement.
As used herein, the term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement
(whether or not the registration in connection with which such expenses are
incurred ultimately becomes effective), including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Restricted Stock), printing
expenses, messenger and delivery expenses incurred by the Company, internal
expenses incurred by the Company (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, NASD fees (including filing
fees and reasonable fees and disbursements of counsel in connection with
compliance with NASD rules and regulations), and fees and disbursements of
counsel for the Company and its independent certified public accountants
(including the expenses of any special audit or comfort letters required by or
incident to such performance), fees and expenses of its independent petroleum
engineers, securities act liability insurance (if the Company elects to obtain
such insurance), the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration and the fees and
expenses of other persons retained by the Company in connection with such
registration.
7. Indemnification; Contribution.
-----------------------------
(A) Indemnification by the Company. The Company agrees to indemnify
------------------------------
and hold harmless each selling Holder of Restricted Stock, its officers,
directors and agents and each person, if any, who controls such selling Holder
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable cost of investigation and
including reasonable costs of counsel) (i) arising out of or based upon (1) any
untrue statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating
-6-
to the Restricted Stock or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Restricted Stock, or (2) any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages, liabilities or expenses arise out of, or are based
upon, any such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such selling Holder
specifically for use in the Registration Statement or prospectus, or (ii)
arising out of or based upon any violation of any Federal or state securities
laws or rules or regulations thereunder, or any other laws or regulations
(including common law claims), committed by the Company in connection with the
performance of its obligations hereunder. The Company also agrees to include in
any underwriting agreement with any underwriters of the Restricted Stock
provisions indemnifying and providing for contribution to such underwriters and
their officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 7 indemnifying
and providing for contribution to the selling Holders.
(B) Indemnification by Holders of Restricted Stock. Each selling
----------------------------------------------
Holder severally and not jointly agrees to indemnify and hold harmless the
Company, its officers, directors and agents and each person (other than a
selling Holder), if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of counsel) (i) arising out of or based upon (1) any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement or prospectus relating to the Restricted Stock or in any
amendment or supplement thereto or in any preliminary prospectus relating to the
Restricted Stock, or (2) any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or (ii) arising out of or based upon any violation of
any Federal or state securities laws or rules or regulations thereunder
committed by such Holder in connection with the disposition of such Holder's
Restricted Stock, provided (x) that such losses, claims, damages, liabilities or
expenses arise out of or are based upon any such untrue statement or omission or
allegation thereof based upon information furnished in writing to the Company by
such selling Holder or upon such selling Holder's behalf expressly for use
therein, and (y) that no selling Holder shall be liable for any indemnification
under this Section 7 in an aggregate amount which exceeds the total net proceeds
received by such selling Holder from the offering. Each selling Holder also
agrees to include in any underwriting agreement with underwriters of the
Restricted Stock provisions indemnifying and providing for contribution to such
underwriters, their officers and directors and each person who controls such
underwriters on substantially the same basis as the provisions of this Section 7
indemnifying and providing for contribution to the Company.
(C) Conduct of Indemnification Proceedings. If any action or
--------------------------------------
proceeding (including any governmental investigation) shall be brought or any
claim shall be asserted against any indemnified party in respect of which
indemnity may be sought from an indemnifying party, the indemnifying party shall
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such indemnified party, and shall assume the payment of all
expenses
-7-
incurred in connection with the defense thereof; provided, that the indemnifying
party may require such indemnified party to undertake to reimburse all such fees
and expenses if it is ultimately determined that such indemnified party is not
entitled to indemnification or advancement of expenses hereunder. Such
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, (ii) the
indemnifying party shall have failed to promptly assume the defense of such
action, claim or proceeding and to employ counsel reasonably satisfactory to
such indemnified party, or (iii) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such indemnified party
and such indemnifying party, and such indemnified party shall have been advised
in writing by counsel that there may be one or more legal defenses available to
such indemnified party which are different from or additional to those available
to the indemnifying party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or proceeding or
separate but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys (together with appropriate local counsel, subject to the indemnifying
party's approval of counsel, which approval shall not be unreasonably withheld)
at any time for such indemnified party. The indemnifying party shall not be
liable for any settlement of any such action, claim or proceeding effected
without its written consent (such consent which shall not be unreasonably
withheld), but if settled with its written consent, or if there is a final
judgment for the plaintiff in any such action or proceeding, the indemnifying
party agrees to indemnify and hold harmless such indemnified party from and
against all loss or liability (to the extent stated above) by reason of such
settlement or judgment.
(D) Contribution. If the indemnification provided for in this Section
------------
7 is unavailable to the Company or the selling Holders in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each such
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments, in such proportion
as is appropriate to reflect the relative fault of each such party in connection
with such statements or omissions, as well as any other relevant equitable
considerations. The relative fault of each such party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been taken or made by, or relates to
information supplied by, such indemnifying or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission.
-8-
The Company and the selling Holders agree that it would not be just and
equitable if contribution pursuant to this Section 7(D) were determined by pro
rata allocation or by any other method of allocation which does not take account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any reasonable legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claims. Notwithstanding the provisions of this Section 7(D), no selling
Holder shall be required to contribute an amount in excess of the amount by
which the total net price at which the Restricted Stock of such selling Holder
was offered to the public exceeds the amount of any damages which such selling
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
8. Amendments. This Agreement may be amended or modified upon the
----------
written consent thereto of the Company and the Holders of a majority in number
of shares of Restricted Stock.
9. Assignments. This Agreement shall be binding on and inure to the
-----------
benefit of the respective successors and assigns of the parties hereto. Without
the written consent of the Company, a Holder may not assign any rights hereunder
except to a transferee of such Holder of Restricted Stock aggregating 10% or
more of the Restricted Stock then outstanding, provided that the foregoing will
not prevent any successor by merger, consolidation or transfer of substantially
all the assets of such Holder from succeeding to a Holder's rights hereunder.
10. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
PARTIES HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS, WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.
11. Notices. Any notice, request, instruction, correspondence or other
-------
documents to be given hereunder by any party to the other (herein collectively
called "Notice") shall be in writing and delivered personally or mailed, postage
prepaid, or by telecopier, if to a Holder, to the address specified for such
person on the signature pages hereof (or such other address as a Holder may
subsequently provide to the Company in writing), and if to the Company, to ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel,
Telecopier No.: (▇▇▇)▇▇▇-▇▇▇▇. Notice given by personal delivery or mail shall
be effective upon actual receipt. Notice given by telecopier shall be effective
upon actual receipt if received during the recipient's normal business hours, or
at the beginning of the recipient's next business day after receipt if not
received during the recipient's normal business hours. Any party may change any
address to which Notice is to be given to it by giving Notice as provided above
of such change of address.
-9-
12. Severability. In case any provision in or obligation under this
------------
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
13. Arbitration. Any and all claims, demands, causes of action, disputes,
-----------
controversies and other matters in question arising out of or relating to this
Agreement, the alleged breach thereof, or in any way relating to the subject
matter of this Agreement ("Claims"), even though some or all of such Claims
allegedly are extracontractual in nature, whether such Claims sound in contract,
tort or otherwise, at law or in equity, under state or federal law, whether
provided by statute or the common law, for damages or any other relief, shall be
resolved and decided exclusively by binding arbitration pursuant to the Federal
Arbitration Act in accordance with the Commercial Arbitration Rules then in
effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Houston, Texas. The arbitration shall be before a panel
of three arbitrators. Each party to such dispute shall select one arbitrator,
and the two arbitrators selected by the parties shall select the third
arbitrator. The arbitrators are authorized to issue subpoenas for depositions
and other discovery mechanisms, as well as trial subpoenas, in accordance with
the Federal Rules of Civil Procedure. Either party may initiate a proceeding in
the appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules of governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including, without limitation, any exemplary damages, treble damages or any
other penalty or punitive type of damages, consequential, incidental or indirect
damages (in tort, contract or otherwise) under any circumstances, the parties
hereby waiving their right, if any, to recover such damages in connection with
any Claims. The arbitrators shall be entitled to award costs of the arbitration
and attorney's fees as they deem appropriate. Prior to any party instituting a
Claim under this Agreement, such party shall provide to the other party hereto a
written notice specifying the nature and basis of the Claim. The party that is
the subject of any Claim shall be given thirty (30) days to cure any breach
before any Claim is filed. It is further agreed that prior to such Claims being
submitted to the arbitrators on such Claims, the parties to the Claims shall
attempt to resolve such Claims through non-binding mediation of such Claims for
a period of not in excess of 30 days commencing after assertion of a Claim.
14. Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein. This
-10-
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
15. Attorneys' Fees. In any action or proceeding brought to enforce any
---------------
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the prevailing party, as determined by arbitration or by the
court, as the case may be, shall be entitled to recover reasonable attorneys'
fees in addition to its costs and expenses and any other available remedy.
-11-
IN WITNESS WHEREOF, the Company and the Shareholder have caused this
Agreement to be signed by their respective officers or agents thereunto duly
authorized.
BELCO OIL & GAS CORP.
By:
-----------------------------------
Name:
Title:
Telecopy No.:
SHAREHOLDER:
JOINT ENERGY DEVELOPMENT INVESTMENTS
LIMITED PARTNERSHIP
By: Enron Capital Management Limited
Partnership, its General Partner
By: Enron Capital Corp., its General Partner
By:
-----------------------------------
Name:
Title:
Address:
Telecopier No.:
-12-
EXHIBIT F
---------
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT (together with all appendices attached
hereto, this "Agreement") effective as of the Effective Date (as hereinafter
defined) by and among Belco Oil & Gas Corp., a Nevada corporation ("Belco"),
Coda Energy, Inc., a Delaware corporation ("Coda"), and ________________________
(the "Shareholder").
A. Belco and Coda contemplate entering into an Agreement and Plan of
Merger dated as of October 30, 1997 (the "Acquisition Agreement") providing for
the acquisition of Coda by Belco through a merger of a subsidiary of Belco with
and into Coda, with Coda as the surviving corporation (the "Merger").
B. The Shareholder is a holder of stock of Coda ("Coda Stock"), a
holder of options to acquire Coda Stock or both.
C. This Agreement is intended to be executed and delivered
simultaneously with the execution and delivery of the Acquisition Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
parties have agreed as follows:
1. The Shareholder hereby represents and warrants to Belco that the
Shareholder (a) is a holder of Coda Stock, holding record and beneficial title
to the outstanding shares of the Coda Stock set forth opposite the Shareholder's
name on Appendix F-1 attached hereto, and/or (b) is the holder of options to
acquire shares of Coda Stock holding record and beneficial title to options to
acquire shares of Coda Stock (the "Coda Option") set forth opposite the
Shareholder's name on Appendix F-1.
2. The Shareholder hereby (i) covenants and agrees to vote all
shares of Coda Stock held by the Shareholder for the Merger at any meeting of
stockholders of Coda held for purposes of acting upon the Merger and (ii) grants
Belco an irrevocable proxy, coupled with an interest, to vote all shares of Coda
Stock held by the Shareholder in favor of the Merger at any meeting of
stockholders of Coda held for purposes of acting upon the Merger; provided that
nothing in this Section 2 shall invalidate any action taken by written consent
of stockholders pursuant to the Stockholders Allocation Agreement attached
hereto as Appendix F-2 (the "Stockholders Allocation Agreement").
3. The Shareholder hereby relinquishes, waives and releases forever,
effective as of the Closing (as defined in the Acquisition Agreement), any and
all rights under Delaware law or otherwise to dissent to the Merger, including
without limitation any and all rights to seek appraisal of the shares of Coda
Stock or to seek consideration for shares of Coda Stock in the
-1-
Merger other than as provided in the Acquisition Agreement and the Stockholders
Allocation Agreement; provided, however, nothing contained in this Agreement
shall prevent the Shareholder from asserting any and all rights the Shareholder
may have under the Acquisition Agreement and the Stockholders Allocation
Agreement.
4. If the Shareholder holds a Coda Option, the Shareholder hereby
(i) agrees not to exercise any option to acquire Coda Stock pursuant to any Coda
Option the Shareholder may hold, (ii) relinquishes, waives and releases forever,
effective as of the Closing, any and all rights, titles and interests to acquire
shares of Coda Stock, including without limitation any and all rights under any
agreement between Coda and the Shareholder evidencing such option and any and
all rights under the Stockholders Agreement (as hereinafter defined) to acquire
shares of Coda Stock and (iii) agrees to accept the Option Consideration (as
defined and provided for in the Acquisition Agreement) in exchange for the
Shareholder's agreements in clauses (i) and (ii) above in this Paragraph 4;
provided, however, nothing contained in this Agreement shall prevent the
Shareholder from (x) receiving the Option Consideration in exchange for such
options or (y) asserting any and all rights the Shareholder may have under the
Stockholders Allocation Agreement.
5. Coda and the Shareholder, severally and not jointly, represent
and warrant to Belco that each entered into a Stockholders Agreement dated
October 30, 1995, as amended January 10, 1996, among Coda and the shareholders
and optionholders of Coda Stock (as amended, the "Stockholders Agreement").
Coda and the Shareholder hereby covenant and agree that the Stockholders
Agreement shall terminate in accordance with terms of the Stockholders
Allocation Agreement; provided, however, nothing contained in this Agreement
shall prevent the Shareholder from asserting rights under the Stockholders
Allocation Agreement.
6. The Shareholder hereby relinquishes, waives and releases forever,
effective as of the Closing, any and all claims of any kind whatsoever that the
Shareholder may have against Coda or against any Affiliate (as defined in the
Acquisition Agreement) of Coda, except as specifically provided in the
Acquisition Agreement, the Stockholders Allocation Agreement and any
Indemnification Agreement between Coda and the Shareholder, and except for any
written employment agreement between the Shareholder and Coda and written
employee benefit plans of Coda.
7. The Shareholder hereby represents and warrants to Belco that the
Shareholder understands and agrees that (i) Belco would not enter into the
Acquisition Agreement unless this Agreement was fully executed and delivered,
(ii) the actions to be taken by Belco pursuant to the Acquisition Agreement
materially benefit the Shareholder and (iii) no additional consideration shall
be payable to the Shareholder other than Belco executing, delivering and
performing the Acquisition Agreement.
8. The representations, warranties, covenants and agreements made by
the parties hereto shall survive the Closing.
9. The Effective Date shall be the date Belco and Coda execute and
deliver the Acquisition Agreement. This Agreement shall terminate (i) upon the
termination of the
-2-
Acquisition Agreement in accordance with its terms or (ii) upon written
agreement of all parties to this Agreement.
10. Arbitration. Any and all claims, demands, causes of action,
-----------
disputes, controversies and other matters in question arising out of or relating
to this Agreement, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement ("Claims"), even though some or all of such
Claims allegedly are extra contractual in nature, whether such Claims sound in
contract, tort or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
shall be resolved and decided exclusively by binding arbitration pursuant to the
Federal Arbitration Act in accordance with the Commercial Arbitration Rules then
in effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Dallas, Texas. The arbitration shall be before a panel of
three arbitrators. The party or parties asserting any claim shall select one
arbitrator, the party or parties against whom such claim is asserted shall
select one arbitrator, and the two arbitrators selected by the parties shall
select the third arbitrator. The arbitrators are authorized to issue subpoenas
for depositions and other discovery mechanisms, as well as trial subpoenas, in
accordance with the Federal Rules of Civil Procedure. Either party may initiate
a proceeding in the appropriate United States District Court to enforce this
provision. This agreement to arbitrate shall be enforceable in either federal
or state court. Judgment upon any award rendered in any such arbitration
proceeding may be entered by any federal or state court having jurisdiction.
The enforcement of this agreement to arbitrate and all procedural aspects of
this agreement to arbitrate, including the construction and interpretation of
this agreement to arbitrate, the scope of the arbitrable issues, allegations of
waiver, delay or defenses to arbitrability, and the rules of governing the
conduct of the arbitration, shall be governed by and construed pursuant to the
Federal Arbitration Act. The arbitrators shall have no authority to award
punitive (including, without limitation, any exemplary damages, treble damages
or any other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances, the
parties hereto hereby waiving their right, if any, to recover such damages in
connection with any Claims. The arbitrators shall be entitled to award costs of
the arbitration and attorney's fees as they deem appropriate. Prior to any
party instituting a Claim under this Agreement, such party shall provide to the
other parties hereto a written notice specifying the nature and basis of the
Claim. The party that is the subject of any Claim shall be given 30 days to
cure any breach before any Claim is filed. It is further agreed that prior to
such Claims being submitted to the arbitrators on such Claims, the parties to
the Claims shall attempt to resolve such Claims through non-binding mediation of
such Claims for a period not in excess of 30 days commencing after assertion of
a Claim.
11. This Agreement (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof,
(ii) is not intended to confer upon any other person any rights or remedies
hereunder and shall be binding upon and inure to the benefit solely of each
party hereto, and their respective heirs, beneficiaries, personal
representatives, successors and assigns, and (iii) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Texas (without giving effect to the provisions thereof relating to
conflicts of law).
-3-
This Agreement may be executed in any number of counterparts which together
shall constitute a single agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the Effective Date.
BELCO OIL & GAS CORP.
By:
--------------------------------------------
Name:
Title:
CODA ENERGY, INC.
By:
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice Chairman of the Board and
Chief Operating Officer
SHAREHOLDER:
-----------------------------------------------
[Name of Shareholder]
-4-
APPENDIX F-1
------------
-5-
APPENDIX F-2
------------
-6-
STOCKHOLDERS ALLOCATION AGREEMENT
DATED OCTOBER 31, 1997
TABLE OF CONTENTS
ARTICLE I CERTAIN TERMS; REPRESENTATIONS AND WARRANTIES............. 1
1.1 Certain Terms............................................. 1
1.2 Representation and Warranties............................. 2
ARTICLE II Allocations, Settlements, Waivers and Terminations........ 3
2.1 Employee Benefit Plan Settlement.......................... 3
2.2 Waiver of Stock Purchase Rights........................... 3
2.3 Waiver of Preferential Purchase Rights.................... 4
2.4 Settlement of Special Management Rights................... 4
2.5 Termination of Agreements................................. 4
2.6 Mutual Releases........................................... 4
2.7 Tax Withholding on Option Consideration................... 4
2.9 Repayment of Indebtedness................................. 4
2.10 Payments Potentially Subject to Parachute Rules........... 4
2.11 Written Consent of the Stockholder........................ 5
2.12 Attorneys Fees............................................ 5
2.13 JEDI Waiver............................................... 6
ARTICLE III MISCELLANEOUS............................................. 6
3.1 Amendment; Waivers........................................ 6
3.2 Assignment................................................ 6
3.3 Notices................................................... 6
3.4 Counterparts.............................................. 7
3.5 Headings.................................................. 7
3.6 Choice of Law............................................. 7
3.7 Entire Agreement.......................................... 7
3.8 Cumulative Rights......................................... 7
3.9 No Partnership............................................ 7
3.10 Number; Gender; Without Limitation; Interpretation of
Certain Defined Terms.................................... 7
3.11 Severability.............................................. 7
3.12 Third Person.............................................. 7
3.13 U.S. Currency............................................. 7
3.14 Indemnification........................................... 8
3.15 Arbitration............................................... 8
3.16 Termination............................................... 8
(i)
STOCKHOLDERS ALLOCATION AGREEMENT
THIS STOCKHOLDERS ALLOCATION AGREEMENT (this "AGREEMENT") is entered into
as of October 31, 1997, among Coda Energy, Inc., a Delaware corporation (the
"CORPORATION"), and the Investors (as defined herein) listed on Schedule 1.1
------------
hereto.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, concurrently with the execution and delivery of this Agreement,
the Corporation, Belco Oil & Gas Corp., a Nevada corporation ("BELCO"), and
Belco Acquisition Sub, Inc., a Delaware corporation ("SUB"), are entering into
an Agreement and Plan of Merger (the "MERGER AGREEMENT") providing for the
merger of Sub with and into the Corporation (the "MERGER");
WHEREAS, the Corporation and the Investors have previously entered into
that certain Stockholders Agreement, originally entered into as of October 30,
1995, and amended by that certain Amendment No. 1 to Stockholders Agreement,
entered into as of January 10, 1996 (as amended, the "STOCKHOLDERS AGREEMENT");
WHEREAS, in conjunction with the Merger, the parties to this Agreement
desire to agree upon various amounts to be paid or allocated pursuant to the
Stockholders Agreement, waive certain rights afforded under the Stockholders
Agreement and release claims they may have against one another.
NOW, THEREFORE, in consideration of the mutual covenants, payments,
releases and obligations hereinafter set forth, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
CERTAIN TERMS;
REPRESENTATIONS AND WARRANTIES
------------------------------
1.1 CERTAIN TERMS. When used herein the following terms shall have the
-------------
meanings indicated:
"AFFILIATE" of a Person means any Person controlling, controlled by, or
under common control with such Person. For purposes of this Agreement only,
Enron Corp., a Delaware corporation, and each of its subsidiaries shall be
deemed to be Affiliates of JEDI.
"AGREEMENT" shall have the meaning set forth in the opening paragraph.
"CAPITAL STOCK" means any and all shares, interests, participations, or
other equivalents (however designated) of capital stock of a corporation, any
and all similar ownership interests in a Person (other than a corporation), and
any and all warrants, options, or other rights to purchase or acquire any of the
foregoing.
"CLAIMS" shall have the meaning set forth in Section 3.16.
"COMMON STOCK" means shares of the common stock, par value $.01 per share,
of the Corporation.
"COMMON STOCK EQUIVALENTS" means any and all rights, warrants, options,
convertible securities, or exchangeable securities or indebtedness, or other
rights, exercisable for or convertible into or exchangeable for, directly or
indirectly, Common Stock, whether at the time of issuance or upon the passage of
time or the occurrence of some future event, but does not include Common Stock
or the Special Management Rights.
1
"CORPORATION" shall have the meaning set forth in the opening paragraph.
"EMPLOYEE BENEFIT PLAN" shall have the meaning set forth in Section 2.1.
"INDEMNITEES" shall have the meaning set forth in Section 3.14.
"INDEMNITOR" shall have the meaning set forth in Section 3.14.
"INVESTORS" means JEDI and the Management Investors listed on Schedule 1.1.
------------
"JEDI" shall mean Joint Energy Development Investments Limited Partnership,
a Delaware limited partnership.
"MANAGEMENT GROUP" means all of the Management Investors.
"MANAGEMENT INVESTOR" means each of the Persons identified as a Management
Investor on Schedule 1.1 hereto, but excluding any such Person who ceases to be
------------
a Party.
"MERGER" shall have the meaning set forth in the recitals.
"MERGER AGREEMENT" shall have the meaning set forth in the recitals.
"NOTICE" shall have the meaning set forth in Section 3.3.
"PARTY" means each Investor and the Corporation.
"PERSON" means any natural person, corporation, limited partnership,
limited liability company, general partnership, joint stock company, joint
venture, association, company, trust, bank, trust company, land trust, business
trust, or other organization, whether or not a legal entity, and any government
or agency of political subdivision thereof.
"PREFERRED STOCK" means shares of 15% Cumulative Preferred Stock, par value
$0.01 per share, of the Corporation.
"SPECIAL MANAGEMENT RIGHTS" shall have the meaning set forth in Section
2.4.
"SUB" shall have the meaning set forth in the recitals.
1.2 REPRESENTATION AND WARRANTIES. (a) Each of the Investors (as to itself
-----------------------------
or himself only) represents and warrants to the Corporation and other Investors
that as of the date hereof and at the Effective Time (as defined in the Merger
Agreement):
(i) such Investor has full power and authority to execute and deliver
this Agreement and the execution and delivery by such Investor of this
Agreement have been duly authorized by all necessary action;
(ii) this Agreement has been duly and validly executed and delivered
by such Investor and constitutes the binding obligation of such Investor,
enforceable against such Investor in accordance with its terms;
2
(iii) such Investor owns of record and beneficially as of the date of
this Agreement the number of shares of Preferred Stock, Common Stock and
such Common Stock Equivalents as are set forth on Schedule 1.1, and such
------------
Preferred Stock, Common Stock and Common Stock Equivalents are owned by
such Investor free and clear of all liens and other encumbrances arising
by, through or under such Investor except for this Agreement, the
Stockholders Agreement, a Security Agreement, if any, executed by such
Investor in favor of the Corporation (as to each Investor, a "SECURITY
AGREEMENT") and the agreements creating such Common Stock Equivalents; and
(iv) The amounts set forth in this Agreement (including the
attachments hereto) and in Article II of the Merger Agreement with respect
to the Investor represent the total consideration of any kind to be
received by such Investor or any Affiliate thereof pursuant to or in
respect of the Merger.
(b) The Corporation hereby represents and warrants to each Investor that:
(i) it is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, it has full corporate
power and authority to execute, deliver, and perform this Agreement and to
consummate the transactions contemplated hereby, and the execution,
delivery, and performance by it of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all
necessary action; and
(ii) this Agreement has been duly and validly executed and delivered
by the Corporation and constitutes the binding obligation thereof,
enforceable against the Corporation in accordance with its terms.
ARTICLE II
ALLOCATIONS, SETTLEMENTS, WAIVERS AND TERMINATIONS
--------------------------------------------------
2.1 EMPLOYEE BENEFIT PLAN SETTLEMENT. Sections 2.4 and 6.6 of the
--------------------------------
Stockholders Agreement provide that there shall be contributed to the EMPLOYEE
BENEFIT PLAN (as defined in the Stockholders Agreement) shares of Common Stock,
SPECIAL MANAGEMENT SHARES (as defined in the Stockholders Agreement) or cash
paid in lieu thereof. In lieu of the implementation of the Employee Benefit
Plan, the Corporation and the Investors hereby agree that there shall be paid by
JEDI to the Corporation, as a capital contribution immediately prior to the
Merger, $1,070,942.01 to be distributed as a performance bonus by the
Corporation (less applicable tax withholding) to those persons to be determined
by the Management Group prior to the Merger and identified in writing to the
Corporation. This payment will be made by wire transfer of immediately
available funds on the Effective Date. The Corporation shall immediately
distribute such funds to those persons and in the amounts set forth in the
notice from the Management Group referenced in the immediately preceding
sentence. The cash payment provided for in this Section 2.1 shall constitute a
complete settlement of the obligations set forth in Sections 2.4 and 6.6 of the
Stockholders Agreement.
2.2 WAIVER OF STOCK PURCHASE RIGHTS. Section 3.1 of the Stockholders
-------------------------------
Agreement provides for certain share purchase rights in the event of an issuance
of Capital Stock by the Corporation. The Investors hereby waive any and all
rights they may have under said Section 3.1 to acquire any Capital Stock issued
or issuable in connection with the Merger.
2.3 WAIVER OF PREFERENTIAL PURCHASE RIGHTS. Section 4.3 of the
--------------------------------------
Stockholders Agreement provides for certain preferential rights on the part of
the Investors. The Investors hereby waive any and all rights they may have
under said Section 4.3 in connection with the Merger.
3
2.4 SETTLEMENT OF SPECIAL MANAGEMENT RIGHTS. The Investors acknowledge
---------------------------------------
that the Merger constitutes a Trigger Event (as defined in the Stockholders
Agreement) under Article VI of the Stockholders Agreement. Accordingly, each
Management Investor would be entitled to a cash payout on his Special Management
Rights (as defined in the Stockholders Agreement) as set forth in Article VI of
the Stockholders Agreement. In full and complete payment of any amounts owed to
the Management Investors under Article VI of the Stockholders Agreement, and
notwithstanding any term or calculation set forth in said Article VI to the
contrary, each Management Investor agrees to accept, and JEDI promises to pay to
the Corporation (for the benefit of and distribution to each Management
Investor), as a capital contribution immediately prior to the Merger, the cash
payout on his Special Management Rights set forth opposite his name on Schedule
--------
1.1 hereto under the column headed "Special Management Rights Payment" found
---
under either the heading "Assuming Taurus is Sold for $45 Million" or the
heading "Assuming Taurus is Not Sold," as applicable; provided, however, that if
Taurus is sold prior to the Effective Time for less than $45.0 million, the
Special Management Rights Payment to be made by JEDI hereunder shall equal
$25,702,607, in the aggregate, less the aggregate Common Stock Consideration and
aggregate Option Consideration (as such terms are defined in the Merger
Agreement) received by the Management Group pursuant to the Merger Agreement to
be allocated among the Management Group proportionately in the same manner as
reflected on Schedule 1.1. This payment shall be made by wire transfer of
------------
immediately available funds on the Effective Time. The Corporation shall
immediately distribute such funds by wire transfer of immediately available
funds to those persons and in the amounts described on Schedule 1.1 hereto as it
------------
may be adjusted by the Corporation prior to the Effective Time to reflect the
sale of Taurus for less than $45 million. The Investors further agree that,
conditioned upon consummation of the Merger, the daily accrual provided in
Section 6.4 of the Stockholders Agreement shall end on the earlier of the date
of the Effective Time or November 30, 1997. Upon receipt of the Special
Management Rights, each Management Investor shall pay to the Corporation all
applicable tax withholding in accordance with the Corporation's written
notification delivered prior to the Effective Time.
2.5 TERMINATION OF AGREEMENTS. Effective as of the Effective Time, the
-------------------------
Stockholders Agreement and the Business Opportunity Agreement, entered into as
of October 30, 1995, among the Investors and certain other parties thereto shall
be terminated without any further effect.
2.6 MUTUAL RELEASES. Each party hereto shall execute and deliver at the
---------------
Merger closing a release in the form of Exhibit A attached to this Agreement.
---------
2.7 TAX WITHHOLDING ON OPTION CONSIDERATION. Upon receipt of the Option
---------------------------------------
Consideration (as defined in the Merger Agreement) each Management Investor
shall pay to the Corporation all applicable tax withholding thereon in
accordance with the Corporation's written notification delivered prior to the
Effective Time.
2.8 NO AMENDMENT, MODIFICATION OR WAIVER. Other than as expressly set
------------------------------------
forth in this Agreement, this Agreement does not in any way modify, amend or
waive any provision of the Stockholders Agreement, and all other provisions of
the Stockholders Agreement shall remain in full force and effect until
terminated in accordance with Section 2.5 hereof.
-----------
2.9 REPAYMENT OF INDEBTEDNESS. All indebtedness of an Investor owed to
-------------------------
the Corporation (as set forth on Schedule 2.9 hereto) shall be repaid in full at
------------
the Effective Time.
2.10 PAYMENTS POTENTIALLY SUBJECT TO PARACHUTE RULES. Simultaneously with
-----------------------------------------------
this Agreement, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") and the Corporation are executing
and entering into that certain Amendment to Executive Employment Agreement, to
be effective as of the Effective Time. Pursuant to such Amendment, the
Corporation will make payment to ▇▇▇▇▇▇ at the Effective Time in the amount of
$1,123,875.57. All or a portion of the payments described in Sections 2.1, 2.4,
2.7 and 2.10 and the schedules attached hereto, when
4
combined with other payments occurring in connection with the change in the
ownership or control of the Corporation, could be considered an "EXCESS
PARACHUTE PAYMENT" under Internal Revenue Code ("IRC") section 280G. If any of
these payments are considered to be excess parachute payments, then the
Corporation will lose the corporate tax deduction related to any payments in
excess of the "BASE AMOUNT" under the IRC. In addition, any individual receiving
payments considered to be an excess parachute payment, must pay a 20% excise tax
under IRS section 4999(a) on any amounts deemed excess parachute payments.
Payments will not constitute parachute payments, if the payments are approved by
the stockholders of the Corporation who before the change in ownership or
control owned 75% or more of the Corporation's stock, and this Agreement is
intended, among other things, to evidence such approval.
2.11 WRITTEN CONSENT OF THE STOCKHOLDER. The undersigned, if a holder of
----------------------------------
the issued and outstanding shares of Common Stock or Preferred Stock, does
hereby, pursuant to the authority contained in Section 228 of the Delaware
General Corporation Law and the Corporation's Bylaws, consent to, authorize and
adopt the following actions with the same force and effect as if taken at a
meeting of the stockholders of the Corporation, duly convened and held on this
date pursuant to valid notice (notice being waived hereby):
(i) the execution and delivery by any authorized officer of the
Corporation for and on behalf of the Corporation of the Merger Agreement is
hereby ratified, confirmed and approved as the valid, binding and
enforceable action of the Corporation and all terms, provisions and
conditions of the Merger Agreement are hereby approved and adopted;
(ii) the merger of the Corporation with Belco Acquisition Sub, Inc.,
upon and subject to the terms and conditions of the Merger Agreement, all
as more fully set forth therein, is hereby approved and adopted;
(iii) the Merger Agreement constitutes an agreement of merger as
contemplated by Section 251 of the Delaware General Corporation Law;
(iv) the Corporation shall carry out the terms and provisions of the
Merger Agreement and to enter into, execute, perform and carry out all
other agreements, instruments, documents and certificates to be executed
and delivered by the Corporation pursuant to or required or contemplated by
the Merger Agreement; and
(v) the payments described in Sections 2.1, 2.4, 2.7 and 2.10 and the
schedules attached hereto are hereby ratified, confirmed and approved in
all respects, including, but not limited to, those approvals contemplated
under the IRC section 280G.
The undersigned acknowledges and agrees that by virtue of his or its
execution of this Agreement in connection with the merger of the Corporation
authorized above, the undersigned's rights to an appraisal by a court of the
fair value of his or its stock in the Corporation pursuant to Section 262 of the
Delaware General Corporation Law are hereby irrevocably waived.
2.12 ATTORNEYS FEES. JEDI shall pay at Closing of the Merger Agreement
--------------
the fees and expenses of ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP (billed or incurred in its
capacity as counsel to the Corporation in respect of the Merger Agreement) in
excess of the amount to be reimbursed by Belco pursuant to Section 11.3 of the
Merger Agreement.
2.13 JEDI WAIVER. Conditioned upon consummation of the Merger, JEDI and
-----------
the Corporation hereby waive compliance with the redemption obligations set
forth in Article IV, Section 2(a)(3) of the Corporation's Restated Certificate
of Incorporation.
5
ARTICLE III
MISCELLANEOUS
-------------
3.1 AMENDMENT; WAIVERS. This Agreement may only be altered, supplemented,
------------------
amended or waived by the written consent of each party to this Agreement;
provided, however, (i) any Party may (without the consent of any other Person)
waive, in writing, any obligation owed to it hereunder by any other Party or the
Corporation, and (ii) any Party may (without the consent of any other Person)
waive, in writing, any right it has hereunder. Any waiver permitted hereunder
may be made prospectively or retroactively.
3.2 ASSIGNMENT. This Agreement is not assignable.
----------
3.3 NOTICES. Any and all notices, designations, consents, offers,
-------
acceptances, or other communications provided for herein (each a "NOTICE") shall
be given in writing by personal delivery, overnight courier, or telecopy which
shall be addressed, or sent, to the respective addresses or telecopy numbers as
follows (or such other address or telecopy number as the Corporation or any
Party may specify for itself to the Corporation and all other Parties by
Notice):
The Corporation: Coda Energy, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
Telephone No. ▇▇▇-▇▇▇-▇▇▇▇
With a copy to: Enron Corp.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
Telephone No. ▇▇▇-▇▇▇-▇▇▇▇
and:
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇▇▇)
▇▇▇-▇▇▇-▇▇▇▇ (▇▇▇▇▇▇▇)
Each Party: To such address or telecopy number of such Party as is set
forth on Schedule 1.1 hereto.
------------
All Notices shall be deemed effective, delivered and received (a) if given by
personal delivery, when such Notice is personally delivered at the address
specified above; (b) if given by telecopy, when such telecopy is transmitted to
the telecopy number specified above and receipt thereof is confirmed; or (c) if
given by overnight courier, on the business day immediately following the day on
which such Notice is delivered to a reputable overnight courier service.
6
3.4 COUNTERPARTS. This Agreement may be executed in two or more
------------
counterparts and each counterpart shall be deemed to be an original and which
counterparts together shall constitute one and the same agreement of the parties
hereto.
3.5 HEADINGS. Headings contained in this Agreement are inserted only as a
--------
matter of convenience and in no way define, limit, or extend the scope or intent
of this Agreement or any provisions hereof.
3.6 CHOICE OF LAW. This Agreement shall be governed by the internal laws
-------------
of the State of Texas without regard to the principles of conflicts of laws
thereof.
3.7 ENTIRE AGREEMENT. This Agreement contains the entire understanding of
----------------
the parties hereto respecting the subject matter hereof and supersedes all prior
agreements, discussions and understandings with respect thereto.
3.8 CUMULATIVE RIGHTS. The rights of the Parties and the Corporation
-----------------
under this Agreement are cumulative and in addition to all similar and other
rights of the Parties and the Corporation under other agreements.
3.9 NO PARTNERSHIP. No term of provision of this Agreement shall be
--------------
construed to establish any relationship of partnership, agency or joint venture
between the Parties hereto.
3.10 NUMBER; GENDER; WITHOUT LIMITATION; INTERPRETATION OF CERTAIN
-------------------------------------------------------------
DEFINED TERMS. Pronouns, wherever used in this Agreement, and of whatever
-------------
gender, shall include Persons of every kind and character, and the singular
shall include the plural whenever and as often as may be appropriate. Any
reference herein to "including" and words of similar import refer to "including
without limitation." When reference is made herein to specified Parties or
Persons, the determination as to which Persons are thereby referenced shall be
made as of the time in question. Unless the context otherwise requires, any
reference herein to "or" shall also include "and," so that "A or B" shall
include the possibilities of A, B, and A and B.
3.11 SEVERABILITY. In the event any one or more of the provisions
------------
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. The parties hereto shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which approximates as nearly as possible that of the
invalid, illegal or unenforceable provisions.
3.12 THIRD PERSON. Nothing herein expressed or implied is intended or
------------
shall be construed to confer upon or to give any Person not a party hereto any
rights or remedies under or by reason of this Agreement.
3.13 U.S. CURRENCY. All payments required or permitted hereunder shall
-------------
be paid in U.S. dollars or other lawful currency constituting legal tender of
the United States of America.
3.14 INDEMNIFICATION. Each Party and the Corporation (the "INDEMNITOR")
---------------
hereby agrees to protect, defend, indemnify and hold harmless all other Parties
and their respective successors, heirs and assigns (the "INDEMNITEES") against
any and all claims, lawsuits, damages and other liabilities and expenses
(including reasonable attorneys' fees) suffered or incurred by any of the
Indemnitees and which arise out of any breach by the Indemnitor of its
representations, warranties, covenants or other obligations hereunder.
7
3.15 ARBITRATION. Any and all claims, demands, causes of action,
-----------
disputes, controversies and other matters in question arising out of or relating
to this Agreement, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement ("CLAIMS"), even though some or all of such
Claims allegedly are extracontractual in nature, whether such Claims sound in
contract, tort or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
shall be resolved and decided exclusively by binding arbitration pursuant to the
Federal Arbitration Act in accordance with the Commercial Arbitration Rules then
in effect with the American Arbitration Association. The arbitration proceeding
shall be conducted in Dallas, Texas. The arbitration shall be before a panel of
three arbitrators. Each party to such dispute shall select one arbitrator (with
all Management Investors parties to the dispute considered to be one party) and
the two arbitrators selected by the parties shall select the third arbitrator.
The arbitrators are authorized to issue subpoenas for depositions and other
discovery mechanisms, as well as trial subpoenas, in accordance with the Federal
Rules of Civil Procedure. Either party may initiate a proceeding in the
appropriate United States District Court to enforce this provision. This
agreement to arbitrate shall be enforceable in either federal or state court.
Judgment upon any award rendered in any such arbitration proceeding may be
entered by any federal or state court having jurisdiction. The enforcement of
this agreement to arbitrate and all procedural aspects of this agreement to
arbitrate, including the construction and interpretation of this agreement to
arbitrate, the scope of the arbitrable issues, allegations of waiver, delay or
defenses to arbitrability, and the rules governing the conduct of the
arbitration, shall be governed by and construed pursuant to the Federal
Arbitration Act. The arbitrators shall have no authority to award punitive
(including without limitation any exemplary damages, treble damages, or any
other penalty or punitive type of damages), consequential, incidental or
indirect damages (in tort, contract or otherwise) under any circumstances. The
parties hereto hereby waive their right, if any, to recover such damages in
connection with any Claims. The arbitrators shall be entitled to award costs of
the arbitration and attorney's fees as they deem appropriate. Prior to the
institution of a Claim under this Agreement by any Person, such Person shall
provide to the Corporation and all other Parties to this Agreement a written
notice specifying the nature and basis of the Claim. The Persons who are the
subject of any Claim shall be given thirty (30) days to cure any breach before
any Claim is filed. It is further agreed that prior to such Claims being
submitted to the arbitrators on such Claims, the parties to the Claims shall
attempt to resolve such Claims through non-binding mediation of such Claims
provided that such mediation period shall not exceed 30 days from the date such
Claim is asserted.
3.16 TERMINATION. This Agreement shall terminate (i) upon termination of
-----------
the Merger Agreement in accordance with its terms or (ii) upon written agreement
of all the Parties to this Agreement.
* * * * *
8
IN WITNESS WHEREOF, the parties hereby have executed this Agreement as of
the date first above written.
CODA ENERGY, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
JOINT ENERGY DEVELOPMENT
INVESTMENTS LIMITED PARTNERSHIP
By: Enron Capital Management Limited
Partnership, its general partner
By: Enron Capital Corp., its general
partner
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Agent and Attorney-in-Fact
MANAGEMENT INVESTORS:
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇.▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
9
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇. ▇. ▇▇▇▇▇▇▇, III
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
10
EXHIBIT A
---------
RELEASE
--------
In consideration of the actions to be taken pursuant to that certain
Agreement and Plan of Merger dated as of October 31, 1997 (the "AGREEMENT") by
and among Belco Oil & Gas Corp., Belco Acquisition Sub, Inc. and Coda Energy,
Inc. (the "COMPANY"), and the Stockholders Allocation Agreement, dated as of
October 31, 1997, among the parties referenced therein, each of the individuals
and entities listed on the signature pages of this Release (each such individual
and entity, the "RELEASOR"), on behalf of the Releasor and the heirs,
beneficiaries, personal representatives, successors and assigns of the Releasor
(collectively, the "RELEASOR PARTIES"), for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, hereby releases and
discharges (i) the Company and the parents, subsidiaries and affiliated
corporations, past and present, of the Company (the "COMPANY AFFILIATES") with
respect to periods prior to the Closing (as defined in the Agreement), (ii) the
directors, officers, partners, agents and employees, past and present, of the
Company and the Company Affiliates in their capacities as directors, officers,
partners, agents and employees, and (iii) each other Releasor and the heirs,
beneficiaries, personal representatives, successors and assigns of each such
other Releasor, including with respect to Joint Energy Development Investments
Limited Partnership ("JEDI"), the parents, subsidiaries and affiliated
corporations, past and present, of JEDI (the "JEDI AFFILIATES") with respect to
periods prior to the Closing, and the directors, officers, partners, agents and
employees of JEDI and the JEDI Affiliates (all such released individuals and
entities referenced in clauses (i), (ii) and (iii), the "RELEASED PARTIES") from
any and all actions, causes of actions, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants, contracts,
controversies, agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims, and demands whatsoever, whether known or unknown,
in law, admiralty, equity or otherwise, that any one or more of the Releasor
Parties ever had, now has or hereafter can, shall or may have against any one
EXHIBIT A
---------
or more of the Released Parties, for, upon or by reason of any matter, cause or
thing whatsoever occurring on or prior to the date of this Release relating to
the Company or any of the Company Affiliates (such actions, causes of actions,
suits, etc. collectively, "CLAIMS"), except for Claims arising out of
obligations expressly granted or continued pursuant to the terms of (i) the
Agreement and (ii) the documents listed on Exhibit A.
---------
Each Releasor represents and warrants that it has made no assignment or
other transfer of any interest in any of the Claims released hereby to any other
party or person and that it shall file no legal action or other proceeding nor
shall it take any other action that causes any other party or person to assert
said released Claims against any other party to this Release.
Each Releasor hereby acknowledges that (i) such Releasor (other than the
Company) has not been represented by ▇▇▇▇▇▇ and ▇▇▇▇▇, LLP or any other counsel
or advisors engaged by the Company in connection with this Release or any other
agreements or issues related to the transactions contemplated in the Agreement,
(ii) such Releasor has had sufficient time and opportunity to review this
Release and all other agreements related to the transactions contemplated in the
Agreement and (iii) such Releasor has had the opportunity to engage and consult
with separate counsel and advisors in connection with this Release and all other
agreements or issues related to the transactions contemplated in the Agreement.
Whenever the text hereof requires, the use of singular number shall
include the appropriate plural number.
This RELEASE may not be changed orally.
This RELEASE may be executed in several counterparts, each of which when
fully executed shall constitute but one and the same instrument.
* * * * *
-2-
IN WITNESS WHEREOF, each Releasor has caused this Release to be executed
and delivered on this, the ____________ day of ______________, 1997.
RELEASORS:
Joint Energy Development Investments
Limited Partnership
By: Enron Capital Management Limited
Partnership, its general partner
By: Enron Capital Corp.,
its general partner
By:
-----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Agent and Attorney-in-Fact
Coda Energy, Inc.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-3-
EXHIBIT A
---------
--------------------------------------------
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇. ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-4-
EXHIBIT A
---------
--------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------------
▇. ▇. ▇▇▇▇▇▇▇, III
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-5-
EXHIBIT A
---------
EXHIBIT A TO RELEASE
1. Stockholders Allocation Agreement, dated October 31, 1997
2. Shareholders Agreement, dated October 31, 1997
3. Each individual Releasor's Employment Agreement, if any, with the Company,
as it may have been amended
4. Director or Officer Indemnity Agreements between Coda Energy, Inc. and
certain Officers and Directors of Coda Energy, Inc.
5. Written employment plans of Coda Energy, Inc.
6. JEDI Agreement, dated October 31, 1997.
7. Such definitive agreements as may be entered into pursuant to Section 2 of
the JEDI Agreement.
-6-
AMENDMENT TO EXECUTIVE EMPLOYMENT AGREEMENT
-------------------------------------------
THIS AMENDMENT (hereinafter this "Amendment") is made and entered into
between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter "▇▇▇▇▇▇") and Coda Energy, Inc.
(hereinafter "Coda"), as of the date of execution below, amending that certain
Executive Employment Agreement effective as of February 16, 1996 between ▇▇▇▇▇▇
and Coda (hereinafter the "Employment Agreement");
WHEREAS, Coda is a party to that certain Agreement and Plan of Merger dated
as of October 31, 1997 entered into by and among Belco Oil & Gas Corp., Belco
Acquisition Sub, Inc. and Coda (hereinafter the "Merger Agreement"); and,
WHEREAS, ▇▇▇▇▇▇ and Coda desire to amend the Employment Agreement
conditioned upon and contemporaneous with the consummation of the transaction
contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements herein contained, and the mutual benefits to be derived therefrom,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, ▇▇▇▇▇▇ and Coda agree as follows:
1. Subject to and conditioned upon receipt of the payment described in
paragraph 2 below, the Employment Agreement is hereby amended in the following
particulars, effective as of the Closing (as defined in the Merger Agreement):
(A) On Exhibit "A" to the Employment Agreement, the wording "Term: Five
(5) years after the Effective Time" is amended to read "Term: Commencing as
of the Effective Time and terminating as of the date of closing of the
transaction contemplated by that certain Agreement and Plan of Merger dated
as of October 31, 1997 among Belco Oil & Gas Corp., Belco Acquisition Sub,
Inc. and Coda Energy, Inc."
(B) In Section 6.1, the second sentence of the first paragraph and the
second paragraph are deleted (only the first sentence of 6.1 remains); and,
in Section 6.3, the first sentence is deleted.
(C) In Section 6.2, the first (and only) sentence is amended to read:
"Until five (5) years after the date of termination of Employee's
employment relationship with Employer (such date of termination being
hereinafter referred to as the 'Termination Date'), Employee shall not
induce any employee of Employer or its affiliates to terminate his or her
employment with Employer or its affiliates, or hire or assist in the hiring
of any such employee by any person, association, or entity not affiliated
with Employer; provided, however, that notwithstanding the foregoing,
Employee may hire any employee of Employer or its affiliates who (i) is
discharged after six (6) months following the Termination Date; (ii) is
discharged within six (6) months following the Termination Date, but only
with the prior written consent of Employer; or, (iii) voluntarily
terminates his or her employment, but only if more than six months elapse
between such voluntary termination and employment by Employee."
(D) In Section 5.2, the words "land records, title information, geologic or
seismic data, oil and gas reserve information, acquisition or drilling
prospects, proposed unitization or secondary recovery prospects,
information pertaining to any Employer assets with respect to any prospects
or properties identified and described on Schedule A hereto," are added in
the first sentence, second line, immediately preceding the word
"strategies."
2. At the Closing, Coda shall pay ▇▇▇▇▇▇ a sum of money, less applicable
withholding, equal to the aggregate amount of Monthly Base Salary (as defined in
the Employment Agreement) that would otherwise have
been payable to ▇▇▇▇▇▇ if ▇▇▇▇▇▇'▇ employment had continued without interruption
under the Employment Agreement from the Closing through February 16, 2001.
3. At the Closing, ▇▇▇▇▇▇'▇ employment with Coda shall terminate,
continued medical insurance benefits will thereafter be made available to ▇▇▇▇▇▇
by Coda in accordance with Coda policies and in conformity with the Consolidated
Omnibus Reconciliation Act of 1985, as amended, and ▇▇▇▇▇▇ will thereafter
comply with the provisions of the Employment Agreement, as amended by this
Amendment, relating to matters following termination. Except as provided
herein, from and after the Closing Coda shall have no obligation to ▇▇▇▇▇▇ under
the Employment Agreement.
4. In the event the Merger Agreement is terminated and the transaction
contemplated thereby fails to occur for any reason, this Amendment shall
automatically become null and void.
5. Except as specifically amended by this Amendment, the terms and
provisions of the Employment Agreement shall remain in full force and effect.
6. This Amendment shall be binding upon and inure to the benefit of Coda
and any other person, association, or entity which may hereafter acquire or
succeed to all or substantially all of the business or assets of Coda by any
means whether direct or indirect, by purchase, merger, consolidation or
otherwise.
EXECUTED this _____ day of October, 1997.
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
CODA ENERGY, INC.
By:
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President and CFO
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