EXHIBIT 4.1
SECURITYHOLDERS AGREEMENT
among
DOMAIN ENERGY CORPORATION
and
its SECURITYHOLDERS
Dated as of December 31, 1996
TABLE OF CONTENTS
PAGE
ARTICLE I. Certain Definitions..................... 2
ARTICLE II. Management Agreements.................. 10
Section 2.1. Conduct of Business................................ 10
Section 2.2. Stock Purchase and Option Plan..................... 13
Section 2.3. Registration of Common Stock....................... 14
ARTICLE III. Corporate Governance.................. 14
Section 3.1. Board of Directors................................. 14
Section 3.2. Removal............................................ 17
Section 3.3. Vacancies.......................................... 17
ARTICLE IV. Transfers of Securities................ 17
Section 4.1. Restrictions on Transfer........................... 18
Section 4.2. Exceptions to Restrictions......................... 18
Section 4.3. Legending of Certificates.......................... 18
Section 4.4. Improper Transfer.................................. 19
ARTICLE V. Purchase Rights......................... 20
Section 5.1. Transfers by a Management Investor................. 20
Section 5.2. Puts and Calls..................................... 21
Section 5.3. Right of First Refusal for New Securities.......... 25
Section 5.4. Right to Join in Sale.............................. 26
Section 5.5. Rights to Compel Sale.............................. 27
ARTICLE VI. Registration Rights.................... 29
Section 6.1. Demand Registrations............................... 29
Section 6.2. Piggyback Registrations............................ 31
Section 6.3. Registration Procedures............................ 33
Section 6.4. Indemnification.................................... 37
Section 6.5. Contribution....................................... 40
Section 6.6. Rule 144........................................... 41
ARTICLE VII. Termination........................... 42
Section 7.1. Certain Terminations............................... 42
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PAGE
ARTICLE VIII. Miscellaneous........................ 42
Section 8.1. Successors and Assigns............................. 42
Section 8.2. Amendment and Modification; Waiver of
Compliance......................................... 42
Section 8.3. Notices............................................ 43
Section 8.4. Entire Agreement; Governing Law.................... 44
Section 8.5. Injunctive Relief.................................. 44
Section 8.6. Inspection......................................... 44
Section 8.7. Headings........................................... 44
Section 8.8. Recapitalizations, Exchanges, Etc.,
Affecting the Securities........................... 44
Section 8.9. Counterparts....................................... 45
Section 8.10. Additional Management Investors.................... 45
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SECURITYHOLDERS AGREEMENT
SECURITYHOLDERS AGREEMENT, dated as of December 31, 1996, among
DOMAIN ENERGY CORPORATION, a Delaware corporation (together with its successors
and assigns, the "Company"), FIRST RESERVE FUND VII, LIMITED PARTNERSHIP
(together with its successors and Permitted Transferees, the "First Reserve
Stockholders"), and the individuals named on the signature page hereof under
"Management Investors" (collectively, together with their respective successors
and assigns and any other individuals who become a party to this agreement and
are designated as "Management Investors" and their successors and assigns, the
"Management Investors").
W I T N E S S E T H :
WHEREAS, the Company is authorized by its Certificate of
Incorporation (the "Certificate of Incorporation") (a true and correct copy of
which, as in effect on the date hereof, has been delivered to each
Securityholder) to issue capital stock consisting of 20,000 shares of Common
Stock, par value $.01 per share (the "Common Stock");
WHEREAS, on the date hereof an aggregate of 9,519.4717 shares of
Common Stock are owned of record and beneficially by the First Reserve
Stockholders and no other shares of Common Stock, or warrants, options, rights
or other securities exercisable for or convertible into Common Stock are issued
or outstanding (except pursuant to the First Reserve Option (as defined below)
and the Stock Option Agreements under the Stock Option and Purchase Plan);
WHEREAS, pursuant to a Management Investor's Agreement Subscription
Agreement of even date herewith, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and Chief Executive
Officer of the Company and a Management Investor, has subscribed for the
purchase of 206.2552 shares of Common Stock, subject to the terms and conditions
set forth therein;
WHEREAS, subject to compliance with the Securities Act, and all
relevant state securities acts, rules and regulations, promptly after the date
hereof, the Company intends to offer for sale to the other Management Investors
274.2731 shares of Common Stock;
WHEREAS, the parties hereto deem it in their best interests and in
the best interests of the Company to provide consistent and uniform management
for the Company and desire to enter into this Agreement in order to effectuate
that purpose and to set forth their respective rights and obligations in
connection with their investment in the Company; and
WHEREAS, the parties hereto also desire to restrict the sale,
assignment, transfer, encumbrance or other disposition of the shares of Common
Stock and of any outstanding options therefor, including issued and outstanding
shares of Common Stock as well as shares of Common Stock that may be issued
hereafter, and to provide for certain rights and obligations in respect thereto
as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual agreements and
understandings set forth herein, the parties hereto hereby agree as follows:
ARTICLE I. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"Acquiror" shall have the meaning assigned to such term in Section
5.5(a).
"affiliate" shall mean with respect to any Person, (a) any Person
which directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such Person, (b) any Person
who is a director or executive officer (i) of such Person, (ii) of any
subsidiary of such Person, or (iii) of any Person described in the foregoing
clause (a), or (c) any spouse, parent, sibling, mother-in-law, father-in-law,
brother-in-law, sister-in-law, aunt, uncle, first cousin or direct descendant of
any Person described in the foregoing clause (b). For purposes of this
definition, "control" of a Person shall mean the power, direct or indirect, (i)
to vote or direct the voting of 50% or more of the outstanding shares of voting
Capital Stock of such Person, or (ii) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agreement" shall mean this Agreement as in effect on the date
hereof and as hereafter from time to time amended, modified or supplemented in
accordance with the terms hereof.
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"Board of Directors" shall mean the Board of Directors of the
Company as from time to time hereafter constituted.
"Book Value" means in respect of each share of Fully Diluted Common
Stock an amount equal to the quotient of (a) the sum of (i) $30 million PLUS
(ii) the aggregate net income of the Company from and after the Closing Date (as
decreased by any net losses from and after the Closing Date) PLUS (iii) the
aggregate dollar amount contributed to the Company after the date of the Closing
Date as equity by the stockholders of the Company (including consideration to be
received upon exercise of Stock Rights) PLUS (iv) to the extent reflected as
deductions to Book Value in clause (ii) above, or MINUS, to the extent reflected
as additions to Book Value in clause (ii) above, extraordinary or unusual items
recognized by the Company, if and to the extent determined in the sole
discretion of the Compensation Committee of the Board of Directors of the
Company, MINUS, (v) the aggregate dollar amount of any dividends paid by the
Company after the Closing Date, divided by (b) the sum of the number of shares
of Fully Diluted Common Stock. The calculations set forth in clauses (a)(ii),
(a)(iii), (a)(iv) and (a)(v) of the immediately preceding sentence shall be
determined in accordance with GAAP applied on a basis consistent with any prior
periods as reflected in the consolidated financial statements of the Company.
For purposes of clause (iii), the amount contributed to the Company upon any
exercise of the First Reserve Option shall be deemed to equal $8 million.
"By-Laws" shall mean the By-Laws of the Company as in effect on the
date hereof and as hereafter amended in accordance with the terms hereof and
thereof.
"Call" shall have the meaning assigned to such term in Section
5.2(b)(i).
"Capital Stock" shall mean, with respect to any Person, any and all
shares, interests, participations, rights in or other equivalents (however
designated) of such Person's capital stock or equity capital, including, without
limitation, shares of common stock, shares of preferred or preference stock,
general and limited partnership interests, and any rights, warrants or options
exercisable for or convertible into such capital stock or equity capital.
"Cause" shall have the meaning set forth in the Stock Option
Agreements.
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"Certificate of Incorporation" is defined in the Recitals. Such term
shall also include the Certificate of Incorporation as hereafter from time to
time amended in accordance with the terms thereof and of this Agreement.
"Closing Date" shall have the meaning specified in the First Reserve
Subscription Agreement.
"Common Stock" shall have the meaning set forth in the preamble.
"Company" shall have the meaning assigned to such term in the
preamble.
"Company Securities" shall have the meaning assigned to such term in
Section 6.1(g).
"Compelled Sale Transfer Notice" shall have the meaning assigned to
such term in Section 5.5(b)(i).
"Cost" shall have the meaning assigned to such term in Section
5.2(b)(ii).
"Consolidated Total Capitalization" shall mean consolidated total
stockholders' equity plus consolidated total long-term debt of the Company and
its subsidiaries, all as determined in accordance with GAAP.
"Credit Agreement" shall mean that credit agreement dated as of
December 31, 1996 among Domain Energy Corporation, the parties thereto and The
Chase Manhattan Bank, as Administrative Agent.
"DGCL" shall have the meaning assigned to such term in Section 2.3.
"Disposing Stockholder" shall have the meaning assigned to such term
in Section 5.4(a).
"Event" shall have the meaning assigned to such term in Section
5.2(c).
"Exchange Act" shall mean, as of any date, the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Fair Market Value" shall mean, if not otherwise agreed upon by the
Company and the Management Investor or his Permitted
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Transferee at such time the valuation is made, with respect to the Common Stock,
(A) if on the date as of which Fair Market Value is being determined such class
of capital stock is listed on a national securities exchange or is quoted in the
NASDAQ System or the over-the-counter market, the last sale price, regular way,
of such security on the principal national securities exchange on which such
security is at the time listed, or (B) if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
such exchange at the end of such day, or (C) if on any day such security is not
so listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or (D) if on any day such security
is not quoted in the NASDAQ System, the average of the highest bid and lowest
asked prices on such day in the domestic over-the-counter market as reported by
the National Quotation Bureau, Incorporated, or any similar successor
organization, in each such case of clauses (A)-(D) averaged over a period of 20
days consisting of the day as of which Fair Market Value is being determined and
the latest 19 consecutive trading days prior to such day, or (E) if the Common
Stock is not publicly traded and the number of shares of Common Stock being
valued is greater than or equal to 3% of the Fully Diluted Common Stock, then
the fair market value of the Common Stock to be purchased as determined by a
nationally recognized investment bank (the fees and expenses of which will be
paid by the Company) selected by the Board of Directors and reasonably
acceptable to the Management Investor or his Permitted Transferee or (F) if the
Common Stock is not publicly traded and the number of shares of Common Stock
being valued is less than 3% of the Fully Diluted Common Stock, then the fair
market value of the Common Stock as determined in good faith by the Board of
Directors. If fair market value is determined by reference to (E) or (F) above,
the Common Stock shall be valued on a per share basis as if the entire Company
were being sold.
"First Reserve" shall mean First Reserve Corporation, a Delaware
corporation, and its successors.
"First Reserve Option" means the option to purchase 2,538.5258
shares of Common Stock (subject to adjustment as provided in the First Reserve
Subscription Agreement) granted by the Company to the First Reserve Stockholders
pursuant to the First Reserve Subscription Agreement.
"First Reserve Stockholders" shall have the meaning specified in the
preamble.
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"First Reserve Subscription Agreement" means the Subscription
Agreement, dated as of December 31, 1996, between the Company and the First
Reserve Stockholders, as amended, supplemented or otherwise modified from time
to time.
"Fully Diluted Common Stock" at any time shall mean all shares of
Common Stock then issued and outstanding plus all shares of Common Stock
issuable upon the exercise of any Stock Rights.
"GAAP" means generally accepted accounting principles from time to
time in effect in the United States.
"Good Reason" shall have the meaning set forth in the Form of
Non-Qualified Stock Option Agreement attached hereto as Exhibit A.
"Holder Request" shall have the meaning assigned to such term in
Section 6.1(a).
"initial shares" shall have the meaning assigned to such term in
Section 6.3(f).
"Liens" shall mean any lien, mortgage, pledge, charge, security
interest or similar encumbrance.
"Management Investors" shall have the meaning specified in the
preamble.
"Marketable Securities" shall mean securities that are publicly
traded and have a total market valuation for all outstanding securities of the
same publicly traded class after the relevant transaction of at least $150
million.
"NASD" means the National Association of Securities Dealers, Inc.,
or any successor regulatory body exercising similar functions.
"New Securities" shall have the meaning assigned to such term in
Section 5.3(b).
"Normal Retirement" shall have the meaning assigned to such term in
Section 5.2(a)(ii).
"Notice Designee" shall have the meaning assigned to such term in
Section 5.5(b)(i).
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"Option Put Price" shall have the meaning assigned to such term in
Section 5.2(a).
"option shares" shall have the meaning assigned to such term in
Section 6.3(f).
"permanent disability" shall mean a disability which renders an
individual unable to engage in the activities required by such individuals job
by reason of any medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
"Permitted Indebtedness" shall mean indebtedness for money borrowed
under the Credit Agreement, other indebtedness for borrowed money existing on
the date hereof and other indebtedness for borrowed money totalling less than
$100,000 in the aggregate and incurred in the ordinary course of business.
"Permitted Liens" shall mean "Permitted Encumbrances," as such term
is defined in the Deed of Trust, Mortgage, Security Agreement, Assignment of
Production, Financing Statement (Personal Property including hydrocarbons) and
Fixture Filing dated as of December 31, 1996 for each of Tenneco Ventures
Corporation and Tenneco Gas Production Corporation in favor of The Chase
Manhattan Bank, as Administrative Agent for the Lenders party to the Credit
Agreement.
"Permitted Number" shall have the meaning set forth in Section
5.2(c)
"Permitted Transferee" shall mean, with respect to any Management
Investor or First Reserve Stockholder, those Persons to whom transfers of
Securities are permitted to be made by such Management Investor or First Reserve
Stockholder, as the case may be, pursuant to Subsection (a), (b) or (c) of
Section 4.2 hereof.
"Person" shall mean an individual or a corporation, association,
partnership, joint venture, organization, business, individual, trust, or any
other entity or organization, including a government or any subdivision or
agency thereof.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by The Chase Manhattan Bank as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective from and including the date such change is publicly announced
as being effective.
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"Proposed Purchaser" shall have the meaning assigned to such term in
Section 5.4(b).
"Public Offering" shall mean the sale of shares of Common Stock to
the public subsequent to the date hereof pursuant to a registration statement
under the Securities Act which has been declared effective by the SEC (other
than a registration statement on Form S-8 or any other successor form).
"Purchase Offer" shall have the meaning assigned to such term in
Section 5.4(b).
"Put" shall have the meaning assigned to such term in Section
5.2(a).
"Put Price" shall have the meaning assigned to such term in Section
5.2(a).
"Qualified Public Offering" shall mean a Public Offering of Common
Stock, at the conclusion of which the aggregate number of issued and outstanding
shares of Common Stock that have been sold to the public pursuant to one or more
effective registration statements under the Securities Act is equal to at least
20% of the Fully Diluted Common Stock after giving effect to such sale and the
listing of the Common Stock on the New York Stock Exchange, Inc., the American
Stock Exchange, the Nasdaq Stock Market or the National Association of
Securities Dealers, Inc., Automated Quotation System.
"Registrable Securities" shall mean the following:
(a) all shares of Common Stock (i) outstanding on the date hereof or
hereafter acquired by any Securityholder or (ii) issuable under warrants
or options outstanding on the date hereof or hereafter issued to any
Securityholder; and
(b) any shares of Common Stock issued or issuable by the Company in
respect of any shares of Common Stock referred to in the foregoing clause
(a) by way of a pay-in-kind dividend, stock dividend or stock split or in
connection with a combination or subdivision of shares, reclassification,
recapitalization, merger, consolidation or other reorganization of the
Company.
As to any particular Registrable Securities that have been issued,
such securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the
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Securities Act and such securities shall have been disposed of under such
registration statement, (ii) they shall have been distributed to the public
pursuant to Rule 144 under the Securities Act, (iii) they shall have been
otherwise transferred or disposed of, and new certificates therefor not bearing
a legend restricting further transfer shall have been delivered by the Company,
and subsequent transfer or disposition of them shall not require their
registration or qualification under the Securities Act or any similar state law
then in force, or (iv) they shall have ceased to be outstanding.
"Registration Expenses" shall mean any and all out-of-pocket
expenses incident to the Company's performance of or compliance with Article VI
hereof, including, without limitation, all SEC, stock exchange or NASD
registration and filing fees, all fees and expenses of complying with all
applicable federal and state securities laws and blue sky laws (including the
reasonable fees and disbursements of underwriters' counsel in connection with
blue sky qualifications and NASD filings), all fees and expenses of the transfer
agent and registrar for the Registrable Securities, all printing expenses, the
fees and disbursements of counsel for the Company and of its independent public
accountants, including the expenses of any special audits and/or "cold comfort"
letters required by or incident to such performance and compliance, and, if any
Registrable Securities owned by the First Reserve Stockholders or the Management
Investors are included in such offering, the reasonable fees and disbursements
of one firm of counsel retained by the First Reserve Stockholders or the
Management Investors, respectively, but excluding underwriting discounts and
commissions and applicable transfer and documentary stamp taxes, if any, which
shall be borne by the seller of the securities in all cases.
"Remaining Securityholders" shall have the meaning assigned to such
term in Section 5.5(a).
"Repurchase Eligibility Date" shall have the meaning assigned to
such term in Section 5.2(c).
"Sale" shall have the meaning assigned to such term in Section
5.2(b).
"SEC" shall mean the Securities and Exchange Commission.
"Section 512(b)(ii) Call Price" shall have the meaning assigned to
such term in Section 5.2(b)(ii).
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"Securities" shall mean the Stock and the Stock Rights.
"Securities Act" shall mean, as of any date, the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder.
"Securityholder" shall mean any one of (i) the First Reserve
Stockholders, (ii) any Management Investor, and (iii) any Permitted Transferee
of any such Person, or of any other Permitted Transferee, who becomes a party to
or bound by the provisions of this Agreement in accordance with the terms
hereof.
"significant subsidiary" shall mean any subsidiary of the Company or
any other Person that constitutes a significant subsidiary within the meaning of
Rule 1-02 of Regulation S-X of the SEC.
"Significant Transaction" shall have the meaning assigned to such
term in Section 2.1(b) hereof.
"Stock" shall mean with respect to any Person, Capital Stock of such
Person of any class or classes, the holders of which are ordinarily (and not
only upon the happening of a contingency) entitled to vote for the election of
members of the board of directors (or Persons performing similar functions) of
such Person, including, without limitation, the Common Stock.
"Stock Option Agreements" means Non-Qualified Stock Option
Agreements to be entered into between the Company and key executives of the
Company, substantially in the form of Exhibit A hereto.
"Stock Purchase and Option Plan" shall mean the 1996 Stock Purchase
and Option Plan for Key Employees of Teleo Ventures, Inc. and Affiliates
attached hereto as Exhibit B.
"Stock Rights" shall mean at any time any and all warrants, options
and other rights outstanding at such time to purchase or otherwise acquire
Common Stock of the Company of any class, whether or not such warrants, options
or rights are exercisable at such time, including, without limitation, all
options now outstanding or hereafter granted pursuant to the First Reserve
Subscription Agreement or the Stock Purchase and Option Plan.
"subsidiary" shall mean as to any Person a corporation, partnership,
or similar entity of which (i) a majority of the outstanding shares of voting
Capital Stock, limited liability
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company interests, or other similar securities are at the time owned, directly
or indirectly through one or more intermediaries, or both, by such Person or
(ii) such Person is the general partner (or performs a role similar to a general
partner).
"Subsidiary Board" shall have the meaning assigned to such term in
Section 3.1(a).
"Substantial Assets" shall mean assets having a gross fair market
value in excess of, or assets to be acquired for consideration in excess of, 10%
of the Consolidated Total Capitalization of the Company and its subsidiaries, as
reflected on the consolidated balance sheet of the Company and its subsidiaries
as at the end of the last full fiscal quarter prior to the date such
determination is made.
"Tag-Along Offeree" shall have the meaning assigned to such term in
Section 5.4.
"transfer" shall, for the purposes of Articles IV and V hereof, have
the meaning assigned to such term in Section 4.1.
"Transfer Stock" shall have the meaning assigned to such term in
Section 5.5(a).
"Underwritten Offering" shall have the meaning assigned to such term
in Section 6.1(g).
"Vested Stock Rights" shall mean, at any time, those Stock Rights
that are then currently exercisable or which will become exercisable as a result
of the consummation of the relevant transaction.
ARTICLE II. MANAGEMENT AGREEMENTS
SECTION 2.1. CONDUCT OF BUSINESS.
(a) Each of the parties hereto agrees that, after the date hereof,
except in the case of (i) issuances of New Securities (as that term is defined
in Section 5.3), (ii) the issuance of shares of Common Stock pursuant to the
First Reserve Option and (iii) transactions expressly contemplated by this
Agreement, the Stock Purchase and Option Plan, or employment agreements between
the Company and its executive management approved by the Board of Directors,
neither the Company nor any of its subsidiaries will enter into any written or
oral contract, agreement or other arrangement to engage in business or enter
into any transaction, or will engage in business or enter into
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any transaction, with any Securityholder or any affiliate of a Securityholder
(other than the Company and its subsidiaries) unless the relevant transaction
(A) has been approved by a majority of the directors voting on such matter,
excluding any director designees of the Securityholder who (or whose affiliate)
has an interest in the transaction and such interest was disclosed to the Board
of Directors prior to such approval or (B) is a commercial transaction entered
into in the ordinary course of business by the Company or such subsidiary and
(x) such transaction has been negotiated on an arm's length basis between the
operating management or employees of the Company or such subsidiary and the
other party to the transaction and (y) the other party to the transaction is not
an affiliate of the managers or employees of the Company who negotiated such
transaction on behalf of the Company or such subsidiary.
(b) Notwithstanding the fact that no vote may be required, or that a
lesser percentage vote may be specified by law, by the Certificate of
Incorporation or By-Laws, by any agreement with any national securities exchange
or otherwise, except as hereinafter provided in this paragraph (b) or elsewhere
in this Agreement, the Company and the Securityholders shall not take or permit
any of the following actions (individually, a "Significant Transaction") unless
otherwise authorized by a vote of at least a majority of the whole Board of
Directors:
(i) Any recapitalization, merger, consolidation or other
similar transaction involving the Company or any subsidiary of the Company
(other than transactions involving the merger or consolidation of a
wholly-owned subsidiary of the Company into the Company or with or into
another wholly-owned subsidiary of the Company).
(ii) Any sale, lease, exchange, transfer or other
disposition, directly or indirectly, in a single transaction or series of
related transactions, of all or substantially all, or a substantial part
of, the assets of the Company or any of its subsidiaries, or of any of the
outstanding Capital Stock of the Company or any subsidiary of the Company,
to or with any Person other than to or with the Company or a wholly owned
subsidiary of the Company. The term "substantial part" means assets having
a gross fair market value which exceeds 10% of the Consolidated Total
Capitalization of the Company and its subsidiaries, as reflected on the
consolidated balance sheet of the Company and its subsidiaries as at the
end of the last full fiscal quarter prior to the date such determination
is made.
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(iii) Any purchase, lease, exchange or other acquisition of
assets (including securities) by the Company or any subsidiary of the
Company, in a single transaction or a series of related transactions, if
such assets constitute or would constitute Substantial Assets.
(iv) Any increase or reduction of the number of shares of
any class of the Company's authorized Capital Stock or the creation of any
additional class of Capital Stock of the Company, or the issuance or sale
of shares of Capital Stock of the Company or any of its subsidiaries (or
warrants, options or rights to acquire shares of Capital Stock or
securities convertible into or exchangeable for Capital Stock or any type
of debt instrument which has equity features), except the issuance or sale
of shares of Capital Stock of a wholly-owned subsidiary of the Company to
the Company or to another wholly-owned subsidiary of the Company or the
issuance or sale of Capital Stock under the Stock Purchase and Option Plan
in accordance with the applicable provisions of the Stock Purchase and
Option Plan.
(v) Any amendment to or modification or repeal of
any provision of the Certificate of Incorporation or By-Laws
of the Company.
(vi) The dissolution of the Company; the adoption of a plan
of liquidation of the Company or any significant subsidiary; any action by
the Company or any subsidiary of the Company to commence any suit, case,
proceeding or other action (A) under any existing or future law of any
jurisdiction relating to bankruptcy, insolvency, reorganization or relief
of debtors seeking to have an order for relief entered with respect to the
Company or such subsidiary, or seeking to adjudicate the Company or such
subsidiary bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to the Company or such subsidiary, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official
for such Company or such subsidiary or for all or any substantial part of
its assets, or making a general assignment for the benefit of its
creditors.
(vii) Any redemption or offer to purchase made by the
Company or any of its subsidiaries or other acquisition of Capital Stock
of the Company or any of its subsidiaries, except (A) the purchase of
Stock or Stock Rights held by any of the Management Investors in
accordance with Section 5.2
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of this Agreement or (B) the purchase or redemption of Stock or Stock
Rights issued under the Stock Purchase and Option Plan, in each case in
accordance with the applicable provisions of the Stock Purchase and Option
Plan.
(viii) Any amendment, modification or supplement to
the Stock Purchase and Option Plan.
(ix) Adopt, or cause or permit any subsidiary to adopt, any
operating or capital budget or business plan for any fiscal year or other
period, amend or materially deviate from, or cause or permit any of its
subsidiaries to amend or materially deviate from, any such budget or
business plan as to expenditures;
(x) Become subject to, or cause or permit any of its
subsidiaries to become subject to (in each case including, by way of
amendment to or modification of), any agreement or instrument (other than
the Credit Agreement and the security instruments executed and delivered
in connection therewith) which by its terms would (under any
circumstances) (a) restrict the right of any subsidiary to make loans or
advances or pay dividends to, transfer property to, or repay any
indebtedness owed to, the Company or any subsidiary or (b) restrict the
ability of the Company or any subsidiary thereof to perform the provisions
of, or performance of which would otherwise conflict with, any provision
of this Agreement or the documents entered into in connection with this
Agreement;
(xi) Establish or acquire after the date hereof, or cause
or permit any subsidiary to establish or acquire after the date hereof,
(a) any subsidiary other than a wholly-owned subsidiary or (b) any
subsidiary organized outside of the United States and its territorial
possessions;
(xii) Create, incur, assume or suffer to exist, or cause or
permit or cause any subsidiary to create, incur, assume or suffer to
exist, any indebtedness other than Permitted Indebtedness, or amend or
modify after the date hereof, or cause or permit any subsidiary to amend
or modify after the date hereof, the Credit Agreement or any other any
bank loan agreement or any other agreement or instrument relating to any
indebtedness or establish or modify any banking relationship;
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(xiii) Create, incur, assume or suffer to exist, or cause or
permit any subsidiary to create, incur, assume or suffer to exist, any
Liens on any of its properties or assets other than Permitted Liens;
(xiv) Institute or settle, or cause or permit any subsidiary
to institute or settle, any claim or lawsuit (or series of related claims
and/or lawsuits) for any amount in excess of $100,000 individually, or
involving equitable relief; or
(xv) Agree to, or cause or permit any of its
subsidiaries to agree to, do any of the foregoing prohibited
acts.
SECTION 2.2. STOCK PURCHASE AND OPTION PLAN. (a) The Board of
Directors has adopted the Stock Purchase and Option Plan. Options and other
rights granted under the Stock Purchase and Option Plan shall be granted to such
persons, in such amounts and on such terms as shall be approved by a majority of
the whole Board of Directors, which majority shall include at least one director
designated by the First Reserve Securityholders, one director designated by the
Management Investors and the Chief Executive Officer of the Company (which Chief
Executive Officer and which director designated by the Management Investors may
be the same person). The persons participating in the Stock Purchase and Option
Plan and the amount and other terms of such participation shall be approved by a
majority of the whole Board of Directors, which majority shall include at least
one director designated by the First Reserve Stockholders, one director
designated by the Management Investors and the Chief Executive Officer of the
Company (which Chief Executive Officer and which director designated by the
Management Investors may be the same person).
(b) The Board of Directors of the Company has authorized the
issuance of up to 1,000 options to purchase shares of Common Stock on the terms
set forth in the Stock Option Agreements. The Company will not issue any such
options except upon the terms and subject to the conditions of the Stock Option
Agreements and will not enter into any Stock Option Agreement unless the
optionee thereunder and his/her spouse (if applicable) becomes a "Management
Investor" party to this Agreement pursuant to a written instrument in form and
substance satisfactory to the First Reserve Stockholders and the Company. The
Securityholders acknowledge that, subject to the foregoing, the Chief Executive
Officer is authorized to cause such options to be issued to key managers of the
Company and its affiliates, provided that the
15
number of such options to be issued to the Chief Executive Officer will not
exceed 450.
SECTION 2.3. REGISTRATION OF COMMON STOCK. In the event of a Public
Offering of Common Stock, each Securityholder shall, at a meeting convened for
the purpose of amending the Certificate of Incorporation (or by means of written
consent pursuant to the applicable provisions of the Delaware General
Corporation Law (the "DGCL")), vote to increase the number of issued and
outstanding shares of Common Stock, whether by stock split, stock dividend or
otherwise, or change in its par value or increase the authorized number of
shares of stock, as recommended by a majority of the members of the Board of
Directors in order to facilitate such Public Offering.
ARTICLE III. CORPORATE GOVERNANCE
SECTION 3.1. BOARD OF DIRECTORS.
(a) The Securityholders and the Company hereby agree that at all
times after the Closing Date, the Board of Directors of the Company and the
board of directors (or comparable governance body of any partnership or similar
entity) of each significant subsidiary (each, a "Subsidiary Board"), shall
consist entirely of the members described in this Section 3.1(a), except that
(i) the First Reserve Stockholders may in their discretion elect (which election
may be revoked at any time by the First Reserve Stockholders) to designate fewer
than three persons, or no persons at all, to be members of any Subsidiary Board
and (ii) the Management Investors may in their discretion elect (which election
may be revoked at any time by the Management Investors) to designate fewer than
two persons, or no persons at all, to be members of any Subsidiary Board,
PROVIDED, HOWEVER, that if the Management Investors designate only one person to
any such board of directors, such person must be the Chief Executive Officer of
the Company. On the Closing Date, and from time to time thereafter, the
Securityholders shall take all such actions as may be necessary or appropriate
to cause the persons described below to be elected or re-elected as the members
of the Board of Directors and each Subsidiary Board and to be maintained in such
positions at all times:
(i) three persons designated by the First Reserve
Stockholders; and
16
(ii) two persons designated by the Management Investors, one
of whom must be the Chief Executive Officer of the Company;
PROVIDED, HOWEVER, that (i) if ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is not the Chief
Executive Officer of the Company, the First Reserve Stockholders shall have the
right to designate all of the members of the Board of Directors and the right of
the Management Investors to designate members of the Subsidiary Boards shall
terminate, (ii) if the First Reserve Stockholders own less than 50% of the
outstanding Common Stock, calculated on a fully diluted basis, the First Reserve
Stockholders shall have the right to designate two members of the Board of
Directors and (iii) if the First Reserve Stockholders own less than 10% of the
outstanding Common Stock, calculated on a fully diluted basis, the First Reserve
Stockholders shall have the right to designate one member of the Board of
Directors. For the purposes of this Article III, all actions to be taken by the
First Reserve Stockholders shall be taken only by the holders of a majority of
the Stock owned by the First Reserve Stockholders at the time such action is
taken. For the purposes of this Article III, all actions to be taken by the
Management Investors will be taken only by the holders of a majority of the
Stock owned by the Management Investors at the time such action is taken.
(b) Each Securityholder hereby agrees to vote all shares of Stock
owned or held of record by such Securityholder, at each annual or special
meeting of stockholders of the Company at which directors of the Company are to
be elected, in favor of, or to take all actions by written consent in lieu of
any such meeting as are necessary to cause, the election or re-election as
members of the Board of Directors of those individuals described in Section
3.1(a), and to otherwise effect the intent of the provisions of Section 3.1(a).
(c) Each committee of the Board of Directors and each Subsidiary
Board shall include a number of directors designated by the First Reserve
Stockholders and the Management Investors (rounded up to the nearest whole
number) equivalent in each case to the proportion of directors designated by
each of them who are then serving on the whole Board of Directors or such whole
Subsidiary Board, as applicable; PROVIDED, HOWEVER that the Management Investors
shall not have the right to designate any directors to serve on any audit
committee or similar committee of the Board of Directors or any Subsidiary Board
and the Compensation Committee of the Board of Directors will be constituted as
described below. The committees of the Board of Directors shall consist of an
Audit Committee and a Compensation
17
Committee each of which shall, subject to Section 2.1, have functions
customarily performed by such committees. The Audit Committee shall consist of
two directors, each of whom were designated by the First Reserve Stockholders to
sit on the Board of Directors. The Compensation Committee shall consist of three
directors, two of whom were designated by the First Reserve Stockholders to sit
on the Board of Directors and one of whom is the Chief Executive Officer of the
Company.
(d) Unless otherwise agreed by the parties hereto, the Board of
Directors and each Subsidiary Board shall follow the following procedures:
(i) MEETINGS. Special Meetings of the applicable board of
directors may be held at any time upon the call of at least two directors,
including (in the event the First Reserve Stockholders have a designee on
such board of directors) one designee of the First Reserve Stockholders,
by oral, telephonic, telegraphic or facsimile notice duly given or sent at
least one day, or by written notice sent by express mail at least three
days, before the meeting to each director. Reasonable efforts shall be
made to ensure that each director actually receives timely notice of any
meeting. The annual meeting of the Board of Directors and each Subsidiary
Board shall be held without notice immediately following the annual
meeting of stockholders of the Company or such subsidiary, as the case may
be.
(ii) AGENDA. A reasonably detailed agenda shall be supplied
to each director reasonably in advance of each meeting of the applicable
board of directors, together with other appropriate documentation with
respect to agenda items calling for board action, to inform adequately
directors regarding matters to come before the board. Any director wishing
to place a matter on the agenda for any meeting of the applicable board of
directors may do so by communicating with the chairman of such board of
directors sufficiently in advance of the meeting of the applicable board
of directors so as to permit timely dissemination to all directors of
information with respect to the agenda items.
(e) Each of the First Reserve Stockholders that is not directly
represented on the Board of Directors or any Subsidiary Board shall be entitled
to designate a nonvoting observer to attend meetings of any such Board of
Directors or Subsidiary Board (which designation shall be provided in writing to
the Company or a Subsidiary, as the case may be, a reasonable time in advance of
such meetings). The Company or the subsidiary, as the
18
case may be, shall provide each such observer with the same notice of, and
information regarding, meetings of the Board of Directors or Subsidiary Board as
that provided to directors. Each such observer shall be provided reasonable
access to the books, records and properties of the Company or the subsidiary and
shall be provided with a reasonable opportunity to discuss the business and
affairs of the Company or subsidiary with the officers of the Company or
subsidiary, provided that the First Reserve Stockholders shall cause all
information relating to the Company or the subsidiary that is provided to such
observer to be held in strict confidence.
(f) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending (i) the meetings of the
Board of Directors, any Subsidiary Board and any committee thereof and (ii) any
other meetings at the request of the Company or any of its subsidiaries. So long
as any director designated pursuant to Section 3.1(a) serves on the Board of
Directors or a Subsidiary Board and for six years thereafter, the Company shall
maintain directors and officers indemnity insurance coverage satisfactory to the
holders of a majority of the then outstanding Common Stock and the
organizational documents of each of the Company and each of its subsidiaries, as
appropriate, shall provide for indemnification and exculpation of directors to
the fullest extent permitted under applicable law.
SECTION 3.2. REMOVAL. If a director designated and elected pursuant
to Section 3.1,
(i) has been designated pursuant to Section 3.1(a)(i),
and, during such director's term as director, the First Reserve
Stockholders request by written notice to the other Securityholders that
such director be removed;
(ii) has been designated pursuant to Section 3.1(a)(ii),
and, during such director's term as director, the Management Investors
request by written notice to the other Securityholders that such directors
be removed; or
(iii) has been designated pursuant to Section 3.1(a)(ii) and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ is not the Chief Executive Officer of the Company, and
the First Reserve Stockholders request by written notice to the other
Securityholders that such director be removed;
then such director shall be removed upon the affirmative vote of the holders of
a majority of the outstanding shares of Stock, and
19
each Securityholder hereby agrees promptly to vote all shares of Stock owned or
held of record by it and to take all such other actions as may be necessary or
appropriate to effect such removal in accordance with such request.
SECTION 3.3. VACANCIES. In the event that a vacancy is created on
the Board of Directors at any time by the death, disability, retirement,
resignation or removal of any director or for any other reason there shall exist
or occur any vacancy on the Board of Directors, each Securityholder hereby
agrees to take such actions as will result in the election or appointment of a
new director or directors in accordance with Section 3.1.
ARTICLE IV. TRANSFERS OF SECURITIES.
SECTION 4.1. RESTRICTIONS ON TRANSFER. (a) Each Securityholder
agrees that it will not, directly or indirectly, offer, sell, transfer, assign
or otherwise dispose of (or make any exchange, gift, assignment or pledge of)
(collectively, for purposes of Articles IV and V hereof only, a "transfer") any
of its shares of Stock or Stock Rights, except (i) as provided in Section 4.2,
(ii) in accordance with Article V or (iii) other than in connection with an
exercise of any Stock Right in accordance with its terms.
(b) In addition to the other restrictions prescribed by this
Article IV, each Securityholder agrees that it will not, directly or indirectly,
offer, sell, transfer, assign or otherwise dispose of any of its Securities
except as permitted under the Securities Act and other applicable securities
laws.
SECTION 4.2. EXCEPTIONS TO RESTRICTIONS. The provisions of Section
4.1 (a) shall not apply to any of the following transfers:
(a) From any First Reserve Stockholder to any affiliate of the First
Reserve Stockholders, provided that such affiliate shall assume in writing the
obligations hereunder of a First Reserve Stockholder, which writing shall in
form and substance be reasonably satisfactory to the Company and the Management
Investors' board designees.
(b) From any Management Investor to a trust solely for such Person's
benefit or the benefit of such Person's spouse or children (a "Purchaser's
Trust"), PROVIDED that such Person acts as trustee and retains the sole power to
direct voting and disposition of such shares; and, PROVIDED, FURTHER, that any
such
20
Purchaser's Trust shall agree in a writing in form and substance reasonably
satisfactory to the Company and the First Reserve Stockholders to be bound and
shall become bound by the terms of this Agreement;
(c) From any First Reserve Stockholder to any Person, subject only
to the requirements of Section 5.4, PROVIDED that such transferee shall assume
in writing the obligations hereunder of a First Reserve Stockholder; and
(d) Pursuant to any merger or consolidation of the Company; and
(e) To the public pursuant to a Public Offering.
18
SECTION 4.3. LEGENDING OF CERTIFICATES.
(a) In addition to any other legend which the Company may reasonably
deem advisable under the Securities Act and applicable state securities laws,
the certificates representing all shares of Stock and all Stock Rights subject
to this Agreement shall be legended at all times during the term of this
Agreement as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS, AND ARE
SUBJECT TO THE PROVISIONS (INCLUDING THE RESTRICTIONS ON TRANSFER)
SET FORTH IN THAT CERTAIN SECURITYHOLDERS AGREEMENT DATED AS OF
DECEMBER 31, 1996 AMONG DOMAIN ENERGY CORPORATION (THE "COMPANY"),
FIRST RESERVE FUND VII, LIMITED PARTNERSHIP, AND THE INDIVIDUALS AND
TRUSTS SIGNATORY THERETO, AS SUCH AGREEMENT MAY BE AMENDED (AS
AMENDED, IF AMENDED, THE "SECURITYHOLDERS AGREEMENT"), A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT (AND THE HOLDER OF THIS
CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES THAT SUCH
SECURITIES MAY NOT AND WILL NOT) BE TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF (1) EXCEPT IN
COMPLIANCE WITH THE SECURITYHOLDERS AGREEMENT AND (2) EXCEPT AS
OTHERWISE PROVIDED IN THE SECURITYHOLDERS AGREEMENT, UNLESS AND
UNTIL SUCH SECURITIES ARE REGISTERED UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL FOR THE
HOLDER SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.
21
ADDITIONALLY, IF THE HOLDER IS A CITIZEN OR RESIDENT OF ANY COUNTRY
OTHER THAN THE UNITED STATES, OR THE HOLDER DESIRES TO EFFECT ANY
SUCH TRANSACTION IN ANY SUCH COUNTRY, THE COMPANY MUST BE FURNISHED
WITH A SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE
HOLDER THAT SUCH TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH
COUNTRY."
(b) The obligations of each party hereto shall be binding upon each
transferee to whom shares of Stock or Stock Rights are transferred by any party
hereto (including, without limitation, any third party to whom shares are
transferred pursuant to Article V) except shares transferred pursuant to a
Public Offering. Prior to consummation of any applicable transfer, such party
shall cause the transferee to execute an agreement in form and substance
reasonably satisfactory to the other parties hereto, providing that such
transferee shall fully comply with the terms of this Agreement. Prompt notice
shall be given to the Company, the First Reserve Stockholders and by the
transferor of any transfer of any of its Stock or Stock Rights.
SECTION 4.4. IMPROPER TRANSFER. Any attempt to transfer any shares
of Stock or any Stock Rights not in accordance with this Agreement shall be null
and void and neither the Company nor any transfer agent shall give any effect to
such attempted transfer or encumbrance in its stock records.
ARTICLE V. PURCHASE RIGHTS.
SECTION 5.1. TRANSFERS BY A MANAGEMENT INVESTOR.
Except for transfers permitted by Section 4.2(b) or a sale of shares
of Stock pursuant to an effective registration statement under the Securities
Act filed by the Company or pursuant to Sections 5.2, 5.4 or 5.5 of this
Agreement, each Management Investor agrees that he will not transfer any shares
of the Stock of the Company at any time prior to the fifth anniversary of the
date hereof. No transfer of any such shares in violation hereof shall be made or
recorded on the books of the Company and any such transfer shall be void and of
no effect.
If at any time after the fifth anniversary of the date hereof and
prior to a Public Offering, a Management Investor receives a bona fide offer to
purchase any or all of his shares of Stock (the "Offer") from a third party (the
"Offeror") which such Management Investor wishes to accept, such Management
Investor shall cause the Offer to be reduced to writing and shall
22
notify the Company in writing of his wish to accept the Offer. A Management
Investor's notice shall contain an irrevocable offer to sell such shares of
Stock to the Company (in the manner set forth below) at a purchase price equal
to the price contained in, and on the same terms and conditions of, the Offer,
and shall be accompanied by a true copy of the Offer (which shall identify the
Offeror). At any time within 30 days after the date of the receipt by the
Company of a Management Investor's notice, the Company shall have the right and
option to purchase, or to arrange for a third party to purchase, all of the
shares of Stock covered by the Offer either (i) at the same price and on the
same terms and conditions as the Offer or (ii) if the Offer includes any
consideration other than cash, then at the sole option of the Company, at the
equivalent all cash price, determined in good faith by the Company's Board of
Directors, by delivering a certified bank check or checks in the appropriate
amount (and any such non-cash consideration to be paid) to the applicable
Management Investor at the principal office of the Company against delivery of
certificates or other instruments representing the shares of the Stock so
purchased, appropriately endorsed by the applicable Management Investor. If at
the end of such 30 day period, the Company has not tendered the purchase price
for such shares in the manner set forth above, the applicable Management
Investor may during the succeeding 60 day period sell not less than all of the
shares of Stock covered by the Offer to the Offeror at a price and on terms no
less favorable to such Management Investor than those contained in the Offer.
Promptly after such sale, the applicable Management Investor shall notify the
Company of the consummation thereof and shall furnish such evidence of the
completion and time of completion of such sale and of the terms thereof as may
reasonably be requested by the Company. If, at the end of 60 days following the
expiration of the 30 day period for the Company to purchase the Stock, the
applicable Management Investor has not completed the sale of such shares of the
Stock as aforesaid, all the restrictions on sale, transfer or assignment
contained in this Agreement shall again be in effect with respect to such shares
of the Stock.
SECTION 5.2. PUTS AND CALLS.
The Company and each Management Investor (which term, for purpose of
this Section 5.2, shall include all Permitted Transferees thereof as the context
may require) shall be subject to the following purchase and sale obligations and
rights:
(a) Subject to Section 5.2(c), upon any termination of employment of
a Management Investor by reason of:
23
(i) death or permanent disability,
(ii) retirement from the Company and its subsidiaries at age 62 or
over (or such other age as may be approved by the Board of
Directors of the Company) after having been employed by the
Company or any subsidiary for at least three years after the
Closing Date ("Normal Retirement"), or
(iii) involuntary termination from the Company and its subsidiaries
without Cause or voluntary termination from the Company and
its subsidiaries for Good Reason,
the Management Investor and his Permitted Transferees or his or their
representative shall be entitled for a period of 120 days following the
effective date of such termination of employment to exercise a put (any such
put, a "Put") to the Company of all of the Stock and Vested Stock Rights of such
Management Investor or Permitted Transferees by requiring the Company to (A)
purchase such Stock at a price per share (the "Put Price") equal to (i) if such
purchase is consummated prior to the second anniversary of the Closing Date, the
Book Value or (ii) if such purchase is consummated on or after the second
anniversary of the Closing Date, the Fair Market Value and (B) purchase such
Vested Stock Rights at a price (the "Option Put Price") equal to the excess of
(x) the product of the Put Price multiplied by the number of shares to be
received upon exercise of the Vested Stock Rights over (y) the aggregate
exercise price of those shares. A Put shall be exercised by delivery of written
notice to the Company. The purchase shall be consummated within 30 days after
receipt of such notice by the Company.
(b) (i) Subject to Section 5.2(c), upon the termination of
employment of any Management Investor for any reason, including, without
limitation, death or permanent disability, and provided such Management
Investor or his Permitted Transferee shall not have previously exercised a
Put pursuant to Section 5.2(a), the Company shall be entitled for a period
of one year after the effective date of such termination of employment to
exercise a call (any such call, a "Call") on all of the shares of Stock
and all Vested Stock Rights owned by such Management Investor and his
Permitted Transferees by requiring such Management Investor and his
Permitted Transferees to sell to the Company all of such shares at the Put
Price and all of such Vested Stock Rights at the Option Put Price;
provided, however, if a Management Investor's employment is terminated by
the Company without Cause or by the Management Investor
24
for Good Reason and the Management Investor does not desire to exercise a
Put pursuant to Section 5.2(a), the Company shall defer its Call pursuant
to this Section 5.2(b)(i) until the second anniversary of the date of this
Agreement. The Company may exercise its Call by delivery of written notice
to such Management Investor and his Permitted Transferees. Consummation of
the sale shall occur within 30 days after delivery of such notice, at a
purchase price per share, subject to Section 5.2(b)(ii), determined in
accordance with the provisions of Section 5.2(a).
(ii) Notwithstanding Section 5.2(b)(i), any purchase of
Stock by the Company pursuant to the exercise of any Call as a result of
termination by the Company for Cause or termination by the Management
Investor without Good Reason shall be made at a purchase price per share
(the "Section 5.2(b)(ii) Call Price") equal to (1) if such purchase is
consummated prior to the second anniversary of the Closing Date, the lower
of (x) Book Value and (y) the price per share originally paid by such
Management Investor (appropriately adjusted for any stock dividends,
splits, reverse splits, combinations, recapitalizations and the like
occurring after the Closing Date) ("Cost"), or (2) if such purchase is
consummated on or after the second anniversary of the Closing Date, the
lower of (x) Book Value and (y) Fair Market Value.
(iii) Notwithstanding Section 5.2(b)(i), any purchase of
Vested Stock Rights by the Company pursuant to any Call as a result of
termination by the Company for Cause or termination by the Management
Investor without Good Reason shall be made at a price equal to the excess
of (x) the product of the Section 5.2(b)(ii) Call Price multiplied by the
number of shares to be received upon exercise of the Vested Stock Rights
over (y) the aggregate exercise price of those shares.
(c) Notwithstanding anything in Section 5.2(a) or 5.2(b) to the
contrary, if there exists and is continuing a default or an event of default on
the part of the Company or any subsidiary of the Company under any loan,
guarantee or other agreement under which the Company or any subsidiary of the
Company has borrowed money or if the repurchases referred to in Section 5.2(a)
or 5.2(b) would result in a default or an event of default on the part of the
Company or any subsidiary of the Company under any such agreement or if a
repurchase would not be permitted under the DGCL (or if the Company
reincorporates in another state, the business corporation law of such state)
(each
25
such occurrence being an "Event"), the Company shall not be obligated to
repurchase any of the Stock or the Vested Stock Rights from the Management
Investor or the Permitted Transferee, as the case may be, until the first
business day which is 10 calendar days after all of the foregoing Events have
ceased to exist (the "Repurchase Eligibility Date"); provided, that the Company
shall repurchase an amount of Stock or Stock Rights (the "Permitted Number")
which is less than all of the Stock or Stock Rights held by such Management
Investor or Permitted Transferee but as to which, the purchase of a single
additional share of Stock would violate applicable law or any loan, guarantee or
other agreement described above.
(d) The Board of Directors shall determine whether the Company will
exercise its call rights to purchase a Management Investor's (or Permitted
Transferee's) Stock pursuant to Sections
5.2(b) or 5.2(c) hereof.
(e) If any Management Investor's marital relationship is terminated
by the death of his spouse or divorce and he does not succeed to his or her
spouse's interest in any Stock or Stock Rights, he shall have the option to
purchase all such spouse's interest and the interests of any of his or her
Permitted Transferees in any shares of Stock or Stock Rights, but only to the
extent such interests arise from such spouse's community or marital property
rights and such spouse or the executor or administrator of his or her estate and
any such Permitted Transferees (any such spouse, executor, administrator or
Permitted Transferee, the "Spouse") shall be obligated to sell such Stock or
Stock Rights to such Management Investor. The price per share at which such
Stock and Stock Rights shall be purchased shall be determined in accordance with
the provisions of Section 5.2(a). Such option must be exercised within 90 days
after such death or divorce. If such Management Investor should fail to exercise
such option within such 90 day period, the Spouse shall give prompt written
notice of such failure to the Company and each of the other Management
Investors, which notice shall describe the nature of the above referenced
interests of the Spouse in such Stock and Stock Rights. The Company shall be
entitled to exercise a call (a "Spouse Call") on all of the shares of such Stock
and on all Stock Rights owned by such Spouse, within 120 days after receiving
such notice, by requiring such Spouse to sell to the Company all of such shares.
The Company may exercise its call by delivery of written notice to such Spouse.
Consummation of the sale shall occur within 30 days after delivery of such
notice at a purchase price per share determined in accordance with the
provisions of Section 5.2(a).
26
(f) If by reason of Section 5.2(c) above the Company purchases less
than all (or none) of the shares of Stock and Vested Stock Rights held by a
Seller (provided that the Company shall have purchased the Permitted Number),
then notwithstanding anything to the contrary in Section 5.2(a), 5.2(b) or
5.2(c), the Company may elect, in the case of any such Call or Spouse Call, and
shall elect, in the case of any such Put, by delivering written notice to such
Seller at the time of such purchase (or, if no such shares are purchased, within
30 days after delivery of the notice, in accordance with the provisions of
Sections 5.2(a), 5.2(b) or 5.2(c), as the case may be, of the Put or Call in
respect of such Seller), to purchase, as soon as possible after all of the
Events have ceased to exist, the remainder of such Stock and Vested Stock
Rights, up to but in no event more than the Permitted Number at the time of each
purchase and each subsequent purchase necessary to allow purchase of all the
shares and Vested Stock Rights subject to the Put or Call. In such event the
Company shall deliver to such Seller as soon as it is possible to purchase such
shares a written notice of such purchase, and such purchase shall be on the
terms and subject to the limitations contained in this Section 5.2 (including
Section 5.2(c) above), except that the purchase price to be paid shall be the
price determined with reference to the first notice given exercising the Put or
Call with respect to such Seller, plus interest thereon from the 31st day after
the date of delivery of the first notice to the closing of the applicable
purchase at the Prime Rate.
(g) The Company shall exercise its call rights to purchase a
Management Investor's (or a Spouse's or Permitted Transferee's) Stock and Vested
Stock Rights pursuant to Sections 5.2(b), 5.2(c) or 5.2(d) hereof.
Notwithstanding the foregoing, the Company may request, but not require, the
First Reserve Stockholders to exercise the Company's rights and obligations to
purchase such Stock and Vested Stock Rights (and, if such request is made, the
First Reserve Stockholders may decide in their sole discretion whether to
exercise the Company's rights and obligations). Should the Board of Directors
fail to exercise a call on the Stock as provided in Sections 5.2(b), 5.2(c) or
5.2(d), or be unable to purchase all of the Stock and Vested Stock Rights for
cash pursuant to a Put or Call, (an "Unexercised Right"), each Management
Investor (and his Permitted Transferees) then owning Stock, other than the
Management Investor (and his Permitted Transferees) subject to the call, shall
be entitled to exercise a call (any such call, a "Management Call"), on up to a
pro rata basis (based upon the number of shares of Fully Diluted Common Stock
then beneficially owned, within 10 days after notice by the Company to the
Management Investor that it will not
27
exercise its call or is unable to purchase all of the Stock for cash and Vested
Stock Rights pursuant to a Put or a Call. A Management Call shall be exercised
by delivery of written notice to the Company and to the Management Investor (or
Spouse or Permitted Transferee) whose shares and Vested Stock Rights were
subject to the Unexercised Right.
SECTION 5.3. RIGHT OF FIRST REFUSAL FOR NEW SECURITIES.
(a) The Company hereby grants to the Securityholders a pro rata
right of first refusal to purchase shares of any New Securities (as defined
below) which the Company may, from time to time, propose to sell and issue. Such
right of first refusal shall allow each Securityholder to purchase a pro rata
portion of the shares of Stock or Stock Rights or other securities as may be
included in the New Securities proposed to be issued. Such pro rata portions
shall be determined by reference to the aggregate number of shares of (i) Fully
Diluted Common Stock in the case of issuances to the First Reserve Stockholders
or any of their affiliates or (ii) outstanding Common Stock in the case of
issuances to Persons other than to the First Reserve Stockholders or any of
their affiliates, as the case may be, owned in each case by each Securityholder
(including the First Reserve Stockholders) before the proposed issuance of New
Securities. The right of first refusal granted hereunder shall terminate if
unexercised within thirty (30) days after receipt of the notice described in
Section 5.3(c) below.
(b) "New Securities" shall mean any authorized but unissued shares,
and any treasury shares, of Capital Stock (including, without limitation, Common
Stock) of the Company and all rights, options or warrants to purchase Capital
Stock of the Company (including, without limitation, Stock Rights), and
securities of any type whatsoever that are, or may become, convertible into
Capital Stock of the Company; PROVIDED, HOWEVER, that the term "New Securities"
does not include (i) shares of Common Stock issued upon the exercise of Stock
Rights or other rights to acquire Stock that are (x) outstanding on the date
hereof (including, without limitation, the First Reserve Option) or (y) issued
after the date hereof in a transaction in which the Securityholders have the
right to purchase their respective pro rata portions of the relevant Stock
Rights or other rights pursuant to Section 5.3(a) hereof, in each such case in
accordance with the terms thereof or (ii) shares of Stock issued in connection
with any stock split, stock dividend or recapitalization of the Company, (iii)
securities issued by the Company pursuant to the acquisition of another
corporation or
28
other entity by merger, purchase of all or substantially all of the assets or
other recapitalization, reorganization or business combination, (iv) shares of
Common Stock and Options to purchase shares of Common Stock issued to employees,
officers or directors of the Company pursuant to the Stock Purchase and Option
Plan, provided that the aggregate number of shares of Common Stock issued
pursuant to the Stock Purchase and Option Plan shall not exceed 1,000 or (v) up
to 529 shares of Common Stock issued and sold by the Company to the Management
Investors at a price per share of $3,151.4354, PROVIDED, such issuance and sale
shall have been consummated on or before February 15, 1997.
(c) In the event the Company proposes to undertake an issuance of
New Securities, it shall give each Securityholder written notice of its
intention, describing the number of shares of Stock and/or Stock Rights or other
securities it intends to issue as New Securities, the purchase price therefor
(which shall be payable solely in cash) and the terms upon which the Company
proposes to issue the same. Each Securityholder shall have 30 days from the date
such notice is received to determine whether to purchase all or any portion of
the Securityholder's pro rata share of such New Securities for the purchase
price and upon the terms specified in the Company's notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased.
(d) The obligations of the Company under this Section 5.3 shall
terminate immediately prior to any Public Offering pursuant to a firm
underwriting commitment.
SECTION 5.4. RIGHT TO JOIN IN SALE.
(a) If any Securityholder or group of Securityholders proposes to
sell, dispose of or otherwise transfer in any single transaction or series of
related transactions any Securities representing more than 10% of the Fully
Diluted Common Stock (each a "Disposing Stockholder") other than (i) to the
Company, (ii) to the Company or its designee pursuant to Section 5.1 hereof or
(iii) any transfer by a First Reserve Stockholder to any affiliate of such First
Reserve Stockholder, such Disposing Stockholder shall refrain from effecting
such transaction unless, prior to the consummation thereof, each other
Securityholder shall have been afforded the opportunity to join in such sale on
a pro rata basis, as hereinafter provided.
(b) Prior to consummation of any proposed sale, disposition or
transfer (a "Sale") of the Securities described in Section 5.4(a), the Disposing
Stockholder shall cause the Person
29
or group that proposes to acquire such shares (the "Proposed Purchaser") to
offer (the "Purchase Offer") in writing to each other Securityholder (each, a
"Tag-Along Offeree") to purchase shares of Stock and/or Stock Rights owned by
such Tag-Along Offeree which are the same type, class or series proposed to be
sold by the Disposing Stockholders, such that the sum of the number of shares of
such Stock so offered to be purchased and the number of shares of Stock then
represented by the Stock Rights so offered to be purchased from such Tag-Along
Offeree shall be equal to the product obtained by multiplying the total number
of shares of the same type, class or series of Stock or other Securities being
sold by the Disposing Stockholder then owned by such Tag-Along Offeree by a
fraction, the numerator of which is the aggregate number of shares of each type,
class or series of Stock or other Securities proposed to be purchased by the
Proposed Purchaser from the Disposing Stockholder and the denominator of which
is the aggregate number of outstanding shares of each type, class or series of
Stock or other Securities that are owned by the Disposing Stockholder; PROVIDED,
however, that if after the consummation of such Sale the First Reserve
Stockholders will own less than 50% of the outstanding Common Stock, then each
Tag-Along Offeree may elect to include in such Sale all of the shares of Stock
and/or Stock Rights owned by such Tag-Along Offeree and any Purchase Offer shall
be amended to reflect any such election by the Tag-Along Offeree. Such purchase
shall be made at the price per share and on such other terms and conditions as
the Proposed Purchaser has offered to purchase each type, class or series of
Stock or other Securities, as the case may be, to be sold by the Disposing
Stockholder. Each Tag-Along Offeree shall have 20 calendar days from the date of
receipt of the Purchase Offer in which to accept such Purchase Offer, and the
closing of such purchase shall occur at the same time as the closing of the
Sale. The number of shares of Stock and/or Stock Rights, as the case may be, to
be sold to the Proposed Purchaser by the Disposing Stockholder shall be reduced
by the aggregate number of shares of Stock and/or Stock Rights, as the case may
be, purchased by the Proposed Purchaser from the Tag-Along Offerees pursuant to
the acceptance by them of Purchase Offers in accordance with the provisions of
this Section 5.4(b). In the event that a sale or other transfer subject to this
Section 5.4 is to be made to a Proposed Purchaser who is not a Securityholder,
the Disposing Stockholder shall notify the Proposed Purchaser that the sale or
other transfer is subject to this Section 5.4 and shall ensure that no sale or
other transfer is consummated without the Proposed Purchaser first complying
with this Section 5.4. It shall be the responsibility of each Disposing
Stockholder to determine whether any transaction to which it is a party is
subject to this Section 5.4.
30
SECTION 5.5. RIGHTS TO COMPEL SALE.
(a) If the First Reserve Stockholders and their respective
affiliates propose to make a transfer of 100% of their Stock in the Company, at
any time when the First Reserve Stockholders and their affiliates own at least
50% of the Fully Diluted Common Stock, to a Person that is neither an affiliate
of the First Reserve Stockholders nor a Person with respect to which the First
Reserve Stockholders or any of their affiliates has a direct or indirect
economic interest, then the First Reserve Stockholders shall have the right,
exercisable as set forth below, to require all of the other Securityholders (the
"Remaining Securityholders") to sell all of the Stock and Vested Stock Rights
then owned by such Remaining Securityholders (the "Transfer Stock") to the
proposed transferee (the "Acquiror") for the same consideration per share of
Stock or Vested Stock Right as is being paid to the First Reserve Stockholders,
which consideration shall consist entirely of cash and/or Marketable Securities
and otherwise on the same terms as are applicable to the First Reserve
Stockholders. The purchase price for each Vested Stock Right in any such
transfer shall equal the "spread" between the exercise price for such Vested
Stock Right and the purchase price per share of Stock. The terms and conditions
other than the consideration to be received by the Remaining Securityholders for
Stock and Vested Stock Rights sold pursuant to this Section 5.5 shall be as set
forth in the applicable Purchase Agreement between the First Reserve
Stockholders and the Acquiror.
(b) (i) the First Reserve Stockholders shall cause the terms of the
transfer to be reduced to writing and shall provide a written notice (the
"Compelled Sale Transfer Notice") of such transfer to the Company and the
Company shall provide such Compelled Sale Transfer Notice to the Remaining
Securityholders. The Compelled Sale Transfer Notice shall contain written
notice of the exercise of the First Reserve Stockholders rights pursuant
to Section 5.5(a) hereof, setting forth the consideration to be paid by
the Acquiror for each type of Stock and Stock Right and the other terms
and conditions of the transfer. Within 20 calendar days following the date
of receipt of the Compelled Sale Transfer Notice, each of the Remaining
Securityholders shall deliver to the First Reserve Stockholders (the
"Notice Designee") certificates representing the Stock and instruments
representing Stock Rights owned by such Remaining Stockholder, duly
endorsed, together with all other documents required to be executed in
connection with such transfer or, if such delivery is not permitted by
31
applicable law, an unconditional agreement to deliver such certificates
pursuant to this Section 5.5(b) at the closing for such transfer against
delivery to such Remaining Securityholder of the consideration therefor.
Such certificates shall be held by the First Reserve Stockholders in
escrow for the benefit of the appropriate Remaining Securityholder and, if
requested by the Remaining Securityholder, the First Reserve Stockholders
shall execute such form of escrow agreement as is reasonably satisfactory
to the First Reserve Stockholders and such Remaining Securityholder and
which assures that the relevant Stock and/or Stock Rights are not
considered property of the First Reserve Stockholders. In the event that a
Remaining Securityholder should fail to deliver such certificates as
aforesaid, the Company shall cause the books and records of the Company to
show that such Stock and Stock Rights are bound by the provisions of this
Section 5.5(b) and that such Stock and Stock Rights shall be transferred
only to the Acquiror upon surrender for transfer by the Remaining
Securityholder thereof.
(ii) If, within 150 calendar days (or such longer period
not exceeding 210 calendar days as may be necessary to comply with any
applicable provisions of the ▇▇▇▇-ScottRodino Antitrust Improvements Act
of 1976, as amended, or to obtain other required regulatory approval)
after the First Reserve Stockholders give the Compelled Sale Transfer
Notice, it has not completed the sale of all the Transfer Stock, the First
Reserve Stockholders shall return to each of the Remaining Securityholders
all certificates representing Stock and Stock Rights that such Remaining
Securityholders delivered for sale pursuant hereto, and all the
restrictions on sale or other disposition contained in this Agreement with
respect to such Stock and Stock Rights and the Stock owned by the First
Reserve Stockholders shall again be in effect.
(iii) Upon the consummation of the sale of Stock held by the
First Reserve Stockholders and the Remaining Securityholders pursuant to
this Section 5.5, the First Reserve Stockholders shall give notice thereof
to the Remaining Securityholders, shall (or shall cause the purchaser to)
remit to each of the Remaining Securityholders a net amount with respect
to the Stock and Stock Rights of such Remaining Securityholders sold
pursuant thereto, after deduction of a pro rata portion of any related
out-of-pocket fees and expenses payable to Persons other than the First
Reserve Stockholders or any of its affiliates, and shall
32
furnish such other evidence of the completion and time of completion of
such sale or other disposition and the terms thereof as may be reasonably
requested by such Remaining Securityholders, PROVIDED that if the cash or
the fair market value of the Marketable Securities payable to any
Remaining Securityholder exceeds $5,000,000, such Remaining Securityholder
shall be entitled to have such cash and/or Marketable Securities (net of
any fees and expenses that are to be deducted in accordance with this
Section) paid directly to the Remaining Securityholder by the Acquiror at
the closing of the transaction.
ARTICLE VI. REGISTRATION RIGHTS.
SECTION 6.1. DEMAND REGISTRATIONS.
(a) At any time after the first to occur of (1) a Qualified Public
Offering or (2) the first anniversary of the Closing Date, the First Reserve
Stockholders may request in writing that the Company effect the registration
under the Securities Act (other than a shelf registration made pursuant to Rule
415 of the Securities Act) of all or part of their Registrable Securities,
specifying in the request the number and types of Registrable Securities to be
registered by each such holder and the intended method of disposition thereof
(such notice is hereinafter referred to as a "Holder Request"). Upon receipt of
such Holder Request, the Company will promptly give written notice of such
requested registration to all other holders of Registrable Securities, which
other holders shall have the right, subject to the provisions of Section 6.1(h)
hereof, to include the Registrable Securities held by them in such registration
and thereupon the Company will, as expeditiously as possible, use reasonable
best efforts to effect the registration under the Securities Act of:
(i) the Registrable Securities which the Company has
been so requested to register by the First Reserve
Stockholders; and
(ii) all other Registrable Securities which the Company has been
requested to register by any other holder thereof by written request given
to the Company within 30 calendar days after the giving of such written
notice by the Company,
all to the extent necessary to permit the disposition of the Registrable
Securities so to be registered pursuant to an
33
Underwritten Offering or by such other method of disposition as the First
Reserve Stockholders may specify in the Holder Request; PROVIDED, HOWEVER, that
the Company shall not be obligated to file a registration statement pursuant to
any Holder Request under this Section 6.1(a):
(A) Unless the Company shall have received requests for such
registration with respect to at least 10% of the Fully Diluted
Common Stock; or
(B) Other than a registration statement on Form S-3 or a
successor short form registration statement, within a period of 6
months after the effective date of any other registration statement
relating to any registration request under this Section 6.1(a) that
was not effected on Form S-3 (or any successor short form).
(C) Within the six month period immediately following the
effective date of a registration previously effected by the Company
pursuant to this Section 6.1.
(b) Notwithstanding the foregoing provisions of Section 6.1(a), and
except as provided in Section 6.1(h), the Company shall not be obligated to file
more than an aggregate of four (4) registration statements pursuant to this
Section 6.1.
(c) If the Company proposes to effect a registration requested
pursuant to this Section 6.1 by the filing of a registration statement on Form
S-3 (or any successor short-form registration statement), the Company will
comply with any request by the managing underwriter to effect such registration
on another permitted form if such managing underwriter advises the Company that,
in its opinion, the use of another form of registration statement is of material
importance to the success of such proposed offering.
(d) A registration requested pursuant to Section 6.1 (a) will not be
deemed to have been effected unless the applicable registration statement has
become effective; PROVIDED, that, if after it has become effective, the offering
of Registrable Securities pursuant to such registration statement is interfered
with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court, such registration will be deemed not to have
been effected.
34
(e) The Company will pay all Registration Expenses in connection
with each of the registrations of Registrable Securities effected by it pursuant
to this Section 6.1.
(f) Subject to any existing commitments of the Company, the First
Reserve Stockholders shall have the right to select the investment bank (or
investment banks) that shall manage the offering (collectively, the "managing
underwriter") involving a registration under this Section 6.1; provided that
such managing underwriter is reasonably acceptable to the Company.
(g) Whenever a requested registration pursuant to this Section 6.1
involves a firm commitment underwriting (an "Underwritten Offering"), the only
shares that may be included in such Underwritten Offering are (i) Registrable
Securities, and (ii) securities of the Company which are not Registrable
Securities included in such Underwritten Offering upon the written consent of
the First Reserve Stockholders ("Company Securities").
(h) If a registration pursuant to this Section 6.1 involves an
Underwritten Offering and the managing underwriter shall advise the Company
that, in its judgment, the number of shares proposed to be included in such
Underwritten Offering should be limited due to market conditions, then the
Company will promptly so advise each holder of Registrable Securities that has
requested registration, and the Company Securities, if any, shall first be
excluded from such Underwritten Offering to the extent necessary to meet such
limitation; and if further exclusions are necessary to meet such limitation,
Registrable Securities requested to be registered pursuant to Section 6.1(a)(i)
or Section 6.1(a)(ii) shall be excluded pro rata, based on the respective
numbers of shares of Common Stock as to which registration shall have been
requested by such Persons. If the number of Registrable Securities requested to
be registered pursuant to Section 6.1(a)(i), but that are excluded from
registration pursuant to this Section 6.1(h), is equal or greater to 10% of the
total number of Registrable Securities requested to be so registered, then such
registration by the Company shall not count as a registration for the purposes
of Section 6.1(b) only.
(i) Notwithstanding the foregoing, this Section 6.1 shall not apply
at such time as the First Reserve Stockholders own less than 5% of the Fully
Diluted Common Stock.
35
SECTION 6.2. PIGGYBACK REGISTRATIONS.
(a) If the Company at any time proposes to register any of its
equity or debt securities under the Securities Act (other than a registration on
Form S-4 or S-8 or any successor or similar forms thereto and other than
pursuant to a registration under Section 6.1), whether or not for sale for its
own account, on a form and in a manner that would permit registration of
Registrable Securities for sale to the public under the Securities Act, it will
give written notice to all the holders of Registrable Securities promptly of its
intention to do so, describing such securities and specifying the form and
manner and the other relevant facts involved in such proposed registration
(including, without limitation, (x) whether or not such registration will be in
connection with an underwritten offering of Registrable Securities and, if so,
the identity of the managing underwriter and whether such offering will be
pursuant to a "best efforts" or "firm commitment" underwriting and (y) the price
(net of any underwriting commissions, discounts and the like) at which the
Registrable Securities are reasonably expected to be sold) if such disclosure is
acceptable to the managing underwriter. Upon the written request of any such
holder delivered to the Company within 30 calendar days after the receipt of any
such notice (which request shall specify the Registrable Securities intended to
be disposed of by such holder and the intended method of disposition thereof),
the Company will use its reasonable best efforts to effect the registration
under the Securities Act of all of the Registrable Securities that the Company
has been so requested to register; PROVIDED, HOWEVER, that:
(i) If, at any time after giving such written notice of its
intention to register any securities and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities,
the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities who made a request
as provided herein and thereupon the Company shall be relieved of its
obligation to register any Registerable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses
in connection therewith), without prejudice, however, to the rights of the
holders of the Registrable Securities to request that such registration be
effected as a registration under Section 6.1; and
36
(ii) If such registration involves an Underwritten Offering, all
holders of Registrable Securities requesting some or all of their
Registrable Securities to be included in the Company's registration must
sell that portion of their Registrable Securities to the underwriters
selected by the Company on the same terms and conditions as apply to the
Company.
No registration effected under this Section 6.2 shall relieve the Company of its
obligation to effect registration upon request under Section 6.1.
(b) The Company shall not be obligated to effect any registration of
Registrable Securities under this Section 6.2 incidental to the registration of
any of its securities in connection with mergers, acquisitions, exchange offers,
dividend reinvestment plans or stock option or other employee benefit plans.
(c) The Registration Expenses incurred in connection with each
registration of Registrable Securities requested pursuant to this Section 6.2
shall be paid by the Company.
(d) If a registration pursuant to this Section 6.2 involves an
Underwritten Offering and the managing underwriter advises the Company that, in
its opinion, the number of securities proposed to be included in such
registration should be limited due to market conditions, then the Company will
include in such registration (i) first, the securities the Company proposes to
sell, and (ii) second, the number of shares of Common Stock requested to be
included in such registration that, in the opinion of such managing underwriter,
can be sold, such amount to be allocated pro rata among all such requesting
holders on the basis of the class of securities and the relative number of
shares of Registrable Securities, as the case may be, each such holder has
requested to be included in such registration.
(e) In connection with any Underwritten Offering with respect to
which holders of Registrable Securities shall have requested registration
pursuant to this Section 6.2, the Company shall have the right to select the
managing underwriter with respect to the offering; provided that such managing
underwriter is reasonably acceptable to the First Reserve Stockholders if
Registrable Securities of such First Reserve Stockholders are being registered
in connection therewith.
(f) Notwithstanding the foregoing, until the earlier of (i) the
second anniversary of the date of a Qualified Public
37
Offering and (ii) January 1, 2000, Management Investors and their Permitted
Transferees shall not have piggyback registration if none of the First Reserve
Stockholders are participating in the Public Offering to which this Section 6.2
could apply.
SECTION 6.3. REGISTRATION PROCEDURES.
(a) If and whenever the Company is required to use its reasonable
best efforts to effect or cause the registration of any Registrable Securities
under the Securities Act as provided in Section 6.1 or 6.2, the Company will, as
expeditiously as possible:
(i) Prepare and, in any event within 60 calendar days after the
end of the period within which requests for registration may be given to
the Company, file with the SEC a registration statement with respect to
such Registrable Securities and use reasonable best efforts to cause such
registration statement to become and remain effective, PROVIDED that the
Company may discontinue any registration of its securities that is being
effected pursuant to Section 6.2 at any time prior to the effective date
of the registration statement relating thereto.
(ii) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to
keep such registration statement effective for a period as may be
requested by the First Reserve Stockholders (if Registrable Securities of
such First Reserve Stockholders are being registered) not exceeding nine
months and to comply with the provisions of the Securities Act with
respect to the disposition of all Securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such
registration statement, PROVIDED, that before filing a registration
statement or prospectus relating to the sale of Registrable Securities, or
any amendments or supplements thereto, the Company will furnish to counsel
and to each holder of Registrable Securities covered by such registration
statement or prospectus, copies of all documents proposed to be filed,
which documents will be subject to the review of such counsel, and the
Company will give reasonable consideration in good faith to any comments
of such counsel.
38
(iii) Furnish to each holder of Registrable Securities covered by
the registration statement and to each underwriter, if any, of such
Registrable Securities, such number of copies of a prospectus and
preliminary prospectus for delivery in conformity with the requirements of
the Securities Act, and such other documents, as such Person may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Securities.
(iv) Use its reasonable best efforts to register or qualify such
Registrable Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as each seller
shall reasonably request, and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to
consummate the disposition of the Registrable Securities owned by such
seller, in such jurisdictions, except that the Company shall not for any
such purpose be required (A) to qualify to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
Section 6.3(a)(iv), it is not then so qualified, or (B) to subject itself
to taxation in any such jurisdiction, or (C) to take any action which
would subject it to general or unlimited service of process in any such
jurisdiction where it is not then so subject.
(v) Use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities.
(vi) Immediately notify each seller of Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the appropriate period mentioned in Section 6.3(a)(ii), if the
Company becomes aware that the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing, and, at the request of any such seller,
deliver a reasonable number of copies of an amended or supplemented
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not
include an
39
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 in the light of the circumstances then existing.
(vii) Otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the SEC and make generally available
to its security holders, in each case as soon as practicable, but not
later than 45 calendar days after the close of the period covered thereby
(90 calendar days in case the period covered corresponds to a fiscal year
of the Company), an earnings statement of the Company which will satisfy
the provisions of Section 11(a) of the Securities Act.
(viii) Use its reasonable best efforts in cooperation with the
underwriters to list such Registrable Securities on each securities
exchange as they may reasonably designate.
(ix) In the event the offering is an Underwritten Offering, use
its reasonable best efforts to obtain a "cold comfort" letter from the
independent public accountants for the Company in customary form and
covering such matters of the type customarily covered by such letters and
as the First Reserve Stockholders may reasonably request (if Registrable
Securities of such First Reserve Stockholder are being registered), in
order to effect an underwritten public offering of such Registrable
Securities.
(x) Execute and deliver all instruments and documents (including
in an Underwritten Offering an underwriting agreement in customary form)
and take such other actions and obtain such certificates and opinions as
the First Reserve Stockholders may reasonably request (if Registrable
Securities of such First Reserve Stockholders are being registered) in
order to effect an underwritten public offering of such Registrable
Securities.
(xi) Make available for inspection by the seller of such
Registrable Securities covered by such registration statement, by any
underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent
financial and other records, pertinent corporate documents and properties
of the Company, and cause all of the Company's officers, directors and
employees to supply all information reasonably requested by any such
seller,
40
underwriter, attorney, accountant or agent in connection with such
registration statement.
(xii) Obtain for delivery to the underwriter or agent an opinion or
opinions from counsel for the Company in customary form and in form and
scope reasonably satisfactory to such underwriter or agent and their
counsel.
(b) Each holder of Registrable Securities will, upon receipt of any
notice from the Company of the happening of any event of the kind described in
Section 6.3(a)(vi), forthwith discontinue disposition of the Registrable
Securities pursuant to the registration statement and prospectus covering such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6.3(a)(vi).
(c) If a registration pursuant to or described in Section 6.1 or 6.2
involves an Underwritten Offering, each holder of Registerable Securities
agrees, whether or not such holder's Registrable Securities are included in such
registration, not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Registrable Securities, or
of any security convertible into or exchangeable or exercisable for any
Registrable Securities (other than as part of such Underwritten Offering),
without the consent of the managing underwriter, during a period commencing
seven calendar days before and ending 180 calendar days (or such lesser number
as the managing underwriter shall designate) after the effective date of such
registration.
(d) If a registration pursuant to or described in Section 6.1 or 6.2
involves an Underwritten Offering, the Company agrees, if so required by the
managing underwriter, not to effect any public sale or distribution of any of
its equity or debt securities, as the case may be, or securities convertible
into or exchangeable or exercisable for any of such equity or debt securities,
as the case may be, during a period commencing seven calendar days before and
ending 180 calendar days (or such lesser number as the managing underwriter
shall designate) after the effective date of such registration, except for such
Underwritten Offering or except in connection with a stock option plan, stock
purchase plan, savings or similar plan, or an acquisition, merger or exchange
offer.
(e) If a registration pursuant to or described in Section 6.1 or 6.2
involves an Underwritten Offering, any holder of Registrable Securities
requesting to be included in such
41
registration may elect, in writing, prior to the effective date of the
registration statement filed in connection with such registration, not to
register such securities in connection with such registration, unless such
holder has agreed with the Company or the managing underwriter to limit its
rights under this Section 6.3.
(f) It is understood that in any Underwritten Offering in addition
to any shares of stock (the "initial shares") the underwriters have committed to
purchase, the underwriting agreement may grant the underwriters an option to
purchase up to a number of additional shares of stock (the "option shares")
equal to 15% of the initial shares (or such other maximum amount as the NASD may
then permit), solely to cover overallotments. Shares of stock proposed to be
sold by the Company and the other sellers shall be allocated between initial
shares and option shares as agreed or, in the absence of agreement, pro rata
among the Company and all such Sellers on the basis of the relative number of
shares to be included by each in such registration.
SECTION 6.4. INDEMNIFICATION.
(a) In the event of any registration of any securities of the
Company under the Securities Act pursuant to Section 6.1 or 6.2, the Company
will, and it hereby agrees to, indemnify and hold harmless, to the extent
permitted by law, each seller of any Registrable Securities covered by such
registration statement, each affiliate of such seller and their respective
directors, officers, employees and agents or general and limited partners (and
directors, officers, employees and agents thereof) and, if such seller is a
portfolio or investment fund, its investment advisors or agents, each other
Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls such seller or any such
underwriter within the meaning of the Securities Act, as follows:
(i) against any and all loss, liability, claim, damage or expense
whatsoever arising out of or based upon an untrue statement or alleged
untrue statement of a material fact contained in any registration
statement (or any amendment or supplement thereto), including all
documents incorporated therein by reference, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, or arising out of
an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or prospectus (or any amendment or
supplement thereto) or the omission or alleged omission
42
therefrom of a material fact required to be stated therein or necessary in
order to make the statements therein not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense reasonably incurred by them in
connection with investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director, officer,
employee, agent, general or limited partner, investment advisor or agent,
underwriter or controlling Person and shall survive the transfer of such
securities by such seller.
Notwithstanding the foregoing, the Company shall not be liable to
any person described in Section 6.4(a) in any such case to the extent that any
such loss, liability, claim, damage or expense whatsoever arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement or amendment or supplement
thereto or in any such preliminary, final or summary prospectus in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such person specifically stating that it is for use
in the preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such person or the
Company and shall survive the transfer of such securities by such seller.
(b) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 6.1 or 6.2, that the
43
Company shall have received an undertaking reasonably satisfactory to it from
the prospective seller of such Registrable Securities or any underwriter, to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in Section 6.4(a)) the Company and its directors, officers, employees,
agents and controlling Persons with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such seller or underwriter
specifically stating that it is for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or supplement.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Company or any such director, officer,
employee, agent or controlling Person and shall survive the transfer of such
securities by such seller. In that event, the obligations of the Company and
such sellers pursuant to this Section 6.4 are to be several and not joint;
PROVIDED, HOWEVER, that, with respect to each claim pursuant to this Section,
the Company shall be liable for the full amount of such claim, and each such
seller's liability under this Section 6.4 shall be limited to an amount equal to
the net proceeds (after deducting the underwriting discount and expenses)
received by such seller from the sale of Registrable Securities held by such
seller pursuant to this Agreement.
(c) Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a claim
referred to in this Section 6.4, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to such indemnifying party of the commencement of such action; PROVIDED,
HOWEVER, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section 6.4, except to the extent (not including any such notice of an
underwriter) that the indemnifying party is materially prejudiced by such
failure to give notice. In case any such action is brought against an
indemnified party, unless in such indemnified party's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim (in which case the indemnifying party shall not be
liable for the fees and expenses of, with respect to the First Reserve
Stockholders, more than one firm of counsel selected by the First Reserve
44
Stockholders, or with respect to the underwriters, more than one firm of counsel
for the underwriters in connection with any one action or separate but similar
or related actions), the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified, to the extent that it may wish with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses subsequently incurred by such indemnifying party in
connection with the defense thereof provided that the indemnifying party will
not agree to any settlement without the prior consent of the indemnified party
(which consent shall not be unreasonably withheld) unless such settlement
requires no more than a monetary payment for which the indemnifying party agrees
to indemnify the indemnified party and includes a full, unconditional and
complete release of the indemnified party, provided, however, that the
indemnified party shall be entitled to take control of the defense of any claim
as to which, in the reasonable judgment of the indemnifying party's counsel,
representation of both the indemnifying party and the indemnified party would be
inappropriate under the applicable standards of professional conduct due to
actual or potential differing interests between them. In the event that the
indemnifying party does not assume the defense of a claim pursuant to this
Section 6.4(c), the indemnified party will have the right to defend such claim
by all appropriate proceedings, and will have control of such defense and
proceedings, and the indemnified party shall have the right to agree to any
settlement without the prior consent of the indemnifying party. Each indemnified
party shall, and shall cause its legal counsel to, provide reasonable
cooperation to the indemnifying party and its legal counsel in connection with
its assuming the defense of any claim, including the furnishing of the
indemnifying party with all papers served in such proceeding. In the event that
an indemnifying party assumes the defense of an action under this Section
6.4(c), then such indemnifying party shall, subject to the provisions of this
Section 6.4, indemnify and hold harmless the indemnified party from any and all
losses, claims, damages or liabilities by reason of such settlement or judgment.
(d) The Company and each seller of Registerable Securities shall
provide for the foregoing indemnity (with appropriate modifications) in any
underwriting agreement with respect to any registration or other qualification
of securities under any federal or state law or regulation of any governmental
authority.
45
SECTION 6.5. CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances under which the indemnity contemplated
by Section 6.4 is for any reason not available or insufficient for any reason to
hold harmless an indemnified party in respect of any losses, claims, damages or
liabilities referred to therein, the parties required to indemnify by the terms
thereof shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity agreement incurred by
the Company, any seller of Registrable Securities and one or more of the
underwriters, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act. In determining the amounts which the
respective parties shall contribute, there shall be considered the relative
benefits received by each party from the offering of the Registrable Securities
by taking into account the portion of the proceeds of the offering realized by
each, and the relative fault of each party by taking into account the parties'
relative knowledge and access to information concerning the matter with respect
to which the claim was asserted, the opportunity to correct and prevent any
statement or omission and any other equitable considerations appropriate under
the circumstances. The Company and each Person selling securities agree with
each other that no seller of Registrable Securities shall be required to
contribute any amount in excess of the amount such seller would have been
required to pay to an indemnified party if the indemnity under Section 6.4(b)
were available. The Company and each such seller agree with each other and the
underwriters of the Registrable Securities, if requested by such underwriters,
that it would not be equitable if the amount of such contribution were
determined by pro rata or per capita allocation (even if the underwriters were
treated as one entity for such purpose) or for the underwriters' portion of such
contribution to exceed the percentage that the underwriting discount bears to
the initial public offering price of the Registrable Securities. For purposes of
this Section 6.5, each Person, if any, who controls an underwriter within the
meaning of Section 15 of the Securities Act shall have the same rights to
contribution as such underwriter, and each director and each officer of the
Company who signed the registration statement, and each Person, if any, who
controls the Company or a seller of Registrable Securities within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as
the Company or a seller of Registrable Securities, as the case may be.
SECTION 6.6. RULE 144. If the Company shall have filed a
registration statement pursuant to the requirements of Section 12 of the
Exchange Act or a registration statement pursuant to
46
the requirements of the Securities Act, the Company covenants that it will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder (or, if the
Company is not required to file such reports, it will, upon the request of any
holder of Registrable Securities, make publicly available other information),
and it will take such further action as any holder of Registrable Securities may
reasonably request, all to the extent required from time to time to enable such
holder to sell shares of Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (ii)
any similar rule or regulation hereafter adopted by the SEC. Upon the request of
any holder of Registrable Securities, the Company will deliver to such holder a
written statement as to whether it has complied with such requirements,
ARTICLE VII. TERMINATION.
SECTION 7.1. CERTAIN TERMINATIONS.
(a) Except to the extent specifically provided elsewhere in this
Agreement, the provisions of Articles II, III, IV and V shall terminate on the
date on which there occurs a Qualified Public Offering.
(b) Notwithstanding the foregoing, and except as specifically
provided elsewhere in this Agreement, this Agreement shall in any event
terminate with respect to any Securityholder when such Securityholder no longer
owns any shares of Common Stock or Stock Rights.
ARTICLE VIII. MISCELLANEOUS.
SECTION 8.1. SUCCESSORS AND ASSIGNS. Except as provided in Section
4.2 and as otherwise provided herein, all of the terms and provisions of this
Agreement shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective successors and assigns of the parties hereto. No
Securityholder may assign any of its rights hereunder to any Person other than a
transferee that has complied with the requirements of Sections 4.1 and 4.2 as
provided therein in all respects. The Company may not assign any of its rights
hereunder to any Person other than an affiliate of the Company. If any
transferee of any Securityholder shall acquire any shares of
47
Stock or Stock Rights, in any manner, whether by operation of law or otherwise,
such Stock or Stock Rights shall be held subject to all of the terms of this
Agreement, and by taking and holding such Securities such Person shall be
entitled to receive the benefits of and be conclusively deemed to have agreed to
be bound by and to comply with all of the terms and provisions of this
Agreement, provided, however, that any transferee from a Management Investor
shall have only those rights, benefits and obligations of a Management Investor
hereunder.
SECTION 8.2. AMENDMENT AND MODIFICATION; WAIVER OF COMPLIANCE.
(a) This Agreement may be amended only by a written instrument duly
executed by the First Reserve Stockholders. No amendment to this Agreement which
adversely affects the rights of the Management Investors hereunder may be
effected without the prior written consent of Management Investors holding a
majority of the shares of Stock or Stock Rights at the time held by the
Management Investors, calculated on the basis of Fully Diluted Common Stock. In
the event of the amendment or modification of this Agreement in accordance with
its terms, the Securityholders shall cause the Board of Directors of the Company
to meet within 30 calendar days following such amendment or modification or as
soon thereafter as is practicable for the purpose of adopting any amendment to
the Certificate of Incorporation and By-Laws of the Company that may be required
as a result of such amendment or modification to this Agreement, and, if
required, proposing such amendments to the Securityholders entitled to vote
thereon, and the Securityholders agree to vote in favor of such amendments.
(b) Except as otherwise provided in this Agreement, any failure of
any of the parties to comply with any obligation, covenant, agreement or
condition herein may be waived by the party entitled to the benefits thereof
only by a written instrument signed by the party granting such waiver, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
(c) In the event of any conflict between the provisions of this
Agreement and the provisions of any other agreement, the provisions of this
Agreement shall govern and prevail, except as otherwise provided herein.
SECTION 8.3. NOTICES. Any notice, request, claim, demand, document
or other communication hereunder to any party
48
shall be effective upon receipt (or refusal of receipt) and shall be in writing
and delivered personally or sent by telex or telecopy (with such telex or
telecopy confirmed promptly in writing sent by first class mail), or first class
mail, or other similar means of communication, as follows:
(i) If to the Company, addressed to its principal
executive offices to the attention of its Secretary;
(ii) If to a Securityholder other than the First
Reserve Stockholders to the address of such Securityholder
set forth in the stock records of the Company; and
(iii) If to the First Reserve Stockholders or to
First Reserve, to:
First Reserve Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
or, in each case, to such other address or telex or telecopy number as such
party may most recently designate, in writing to the Company and each
Securityholder in the manner specified above.
All such communications shall be deemed to have been given or made when so
delivered by hand or sent by telex (answer back received) or telecopy, or if
mailed, five business days after being so mailed.
SECTION 8.4. ENTIRE AGREEMENT; GOVERNING LAW.
(a) This Agreement and the other writings referred to herein or
delivered pursuant hereto which form a part hereof contain the entire agreement
among the parties hereto with respect to the subject transactions contemplated
hereby and supersede all prior oral and written agreements and memoranda and
undertakings among the parties hereto with regard to this subject
49
matter. The Company represents to the Securityholders that the rights granted to
the holders hereunder do not in any way conflict with and are not inconsistent
with the rights granted or obligations accepted under any other agreement
(including the Certificate of Incorporation) to which the Company is a party.
(b) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD REQUIRE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN DELAWARE).
SECTION 8.5. INJUNCTIVE RELIEF. The Securityholders acknowledge and
agree that a violation of any of the terms of this Agreement will cause the
Securityholders irreparable injury for which adequate remedy at law is not
available. Therefore, the Securityholders agree that each Securityholder shall
be entitled to an injunction, restraining order or other equitable relief from
any court of competent jurisdiction, restraining any Securityholder from
committing any violations of the provisions of this Agreement.
SECTION 8.6. INSPECTION. For so long as this Agreement shall be in
effect, this Agreement shall be made available for inspection by any
Securityholder at the principal executive offices of the Company.
SECTION 8.7. HEADINGS. The section and paragraph 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 8.8. RECAPITALIZATIONS, EXCHANGES, ETC., AFFECTING THE
SECURITIES. The provisions of this Agreement shall apply to the full extent set
forth herein with respect to the Stock and the Stock Rights, and to any and all
equity or debt securities of the Company or any successors or assigns of the
Company (whether by merger, consolidation, sale of assets, or otherwise) which
may be issued in respect of, in exchange for, or in substitution of, such Stock
and Stock Rights or equity or debt securities and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations,
reclassifications, recapitalizations, reorganizations and the like occurring
after the date hereof.
SECTION 8.9. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be
50
deemed an original, but all of which together shall constitute one and the same
instrument.
SECTION 8.10. ADDITIONAL MANAGEMENT INVESTORS. If the Company shall
at any time issue, grant, sell or otherwise transfer any options, shares of
Common Stock or other equity securities of the Company to any employee of the
Company or its Affiliates then, prior to such issuance such employee and his/her
spouse (if applicable) will become a "Management Investor" party to this
Agreement pursuant to a written instrument in form and substance reasonably
satisfactory to the First Reserve Investors and the Company. Upon execution and
delivery of such written instrument, such employee shall become a "Management
Investor" party to this Agreement and have all of the rights and obligations of
a Management Investor hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be duly executed as of the date first above written.
DOMAIN ENERGY CORPORATION
By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief
Executive Officer
FIRST RESERVE FUND VII, LIMITED
PARTNERSHIP
By: First Reserve Corporation,
as Managing General Partner
By:
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
51
MANAGEMENT INVESTOR SPOUSE
By: By:
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name:
52