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EXHIBIT 10.2
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of September
30, 1998, is entered into by and between Triton Energy Limited, a Cayman
Islands company (the "Company"), and HM4 Triton, L.P., a Cayman Islands
exempted limited partnership (the "Purchaser").
In consideration of the obligations of the Company and Purchaser under
the Stock Purchase Agreement (as hereinafter defined), the premises, mutual
covenants and agreements hereinafter contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
"8% Preference Shares" means the 8% Convertible Preference Shares of
the Company, par value $.01 per share.
"8% Preference Shares Authorization" means the unanimous written
consent of the Board authorizing the 8% Preference Shares.
"Advice" shall have the meaning provided in Section 2.5 hereof.
"Affiliate means, with respect to any Person, any Person who, directly
or indirectly, controls, is controlled by or is under common control with that
Person.
"Agreement" means this Shareholders Agreement, as such from time to
time may be amended.
"ARCO Shareholders Agreement" shall have the meaning provided in
Section 4.3(ii) hereof.
"Asset Acquisition" shall mean (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged
with the Company or any Subsidiary of the Company or (ii) the acquisition by
the Company or any Subsidiary of the Company of assets of any Person comprising
a division, line of business or substantial portion of the assets of such
Person.
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"Asset Sale" shall mean any direct or indirect sale, issuance,
conveyance, transfer, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of its Subsidiaries (excluding any Sale and Leaseback
Transaction or any pledge of assets or stock by the Company or any of its
Subsidiaries) to any Person other than the Company or a wholly owned Subsidiary
of the Company of (i) any Capital Stock of any Subsidiary of the Company or
(ii) any other property or assets of the Company or any Subsidiary of the
Company other than in the ordinary course of business.
"Board" means the board of directors of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which state or federally chartered banking institutions in New York
City, New York or Dallas, Texas are not required to be opened.
"Class Directors" shall have the meaning provided in Section 4.1.8
hereof.
"Commodity Agreement" shall mean any commodity futures contract,
commodity option or other similar agreement or arrangement entered into by the
Company or any of its Subsidiaries designed to protect the Company or any of
its Subsidiaries against fluctuations in the price of commodities actually used
or bought or sold in the ordinary course of business of the Company and its
Subsidiaries.
"Common Stock" means the ordinary shares, $0.01 par value per share,
of the Company, and any shares or capital stock for or into which such Common
Stock hereafter is exchanged, converted, reclassified or recapitalized by the
Company or pursuant to an agreement to which the Company is a party.
"Common Stock Equivalents" means, without duplication with any other
Common Stock or Common Stock Equivalents, any rights, warrants, options,
convertible securities or indebtedness, exchangeable securities or
indebtedness, or other rights, exercisable for or convertible or exchangeable
into, directly or indirectly, Common Stock of the Company and securities
convertible or exchangeable into Common Stock of the Company, whether at the
time of issuance or upon the passage of time or the occurrence of some future
event.
"Company" shall have the meaning set forth in the introductory
paragraph hereof.
"Consolidated EBITDA" shall mean, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii)
to the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary or
nonrecurring gains or losses), (B) Consolidated Interest Expense and (C)
Consolidated Non-Cash Charges, all as determined on a consolidated basis for
such Person and its Subsidiaries in conformity with GAAP.
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"Consolidated Interest Expense" shall mean, with respect to any Person
for any period, without duplication, the sum of (i) the interest expense of
such Person and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP, including, without limitation, (a)
any amortization of debt discount, (b) the net cost under Interest Swap
Obligations (including any amortization of discounts), (c) the interest portion
of any deferred payment obligation, (d) all commissions, discounts and other
fees and charges owed with respect to letters of credit, bankers' acceptance
financing or similar facilities, and (e) all accrued interest and (ii) the
interest component of Capitalized Lease Obligations paid or accrued by such
Person and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Net Income" of any Person shall mean, for any period,
the aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided
that there shall be excluded therefrom, without duplication, (a) gains and
losses from Asset Sales or abandonments or reserves relating thereto and the
related tax effects, (b) items classified as extraordinary or nonrecurring
gains and losses, and the related tax effects according to GAAP, (c) the net
income (or loss) of any Person acquired in a pooling of interests transaction
accrued prior to the date it becomes a Subsidiary of such first referred to
Person or is merged or consolidated with it or any of its Subsidiaries, (d) the
net income of any Subsidiary to the extent that the declaration of dividends or
similar distributions by that Subsidiary of that income is restricted by
contract, operation of law or otherwise, (e) the net income of any Person,
other than a Subsidiary, except to the extent of the lesser of (x) dividends or
distributions paid to such first referred to Person or its Subsidiary by such
Person and (y) the net income of such Person (but in no event less than zero),
and the net loss of such Person shall be included only to the extent of the
aggregate Investment of the first referred to Person or a consolidated
Subsidiary of such Person and (f) any non-cash expenses attributable to grants
or exercises of employee stock options.
"Consolidated Non-Cash Charges" shall mean, with respect to any Person
for any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Subsidiaries (excluding any such charges
constituting an extraordinary or nonrecurring item) reducing Consolidated Net
Income of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.
"Credit Agreements" means, collectively, (i) that certain Credit
Agreement between the Company and Societe Generale, Southwest Agency, dated
October 8, 1997, as amended, (ii) that certain Credit Agreement between the
Company and Barclays Bank PLC, dated November 26, 1997, as amended, (iii) that
certain Credit Agreement between the Company and Toronto Dominion (Texas),
Inc., dated November 26, 1997, as amended, (iv) that certain Credit Agreement
between the Company and Union Bank of California, N.A., dated December 31,
1997, as amended, (v) that certain Credit Agreement between the Company and
Credit Suisse First Boston, dated February 9, 1998, as amended, and (vi) that
certain Demand Promissory Note with Banque Paribas dated September 15, 1997.
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"Currency Agreement" shall mean any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuations in currency
values.
"Current Market Price" of Common Stock or any other class of stock or
other security of the Company or any other issuer for any day shall mean the
last reported sales price, regular way on such day, or, if no sale takes place
on such day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the New York Stock Exchange
("NYSE") or, if such security is not listed or admitted for trading on the
NYSE, on the principal national securities exchange on which such security is
listed or admitted for trading or, if not listed or admitted for trading on any
national securities exchange, on The Nasdaq Stock Market or, if such security
is not quoted on The Nasdaq Stock Market, the average of the closing bid and
asked prices on such day in the over-the-counter market as reported by the
National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if bid and asked prices for such security on such day shall not
have been reported through NASDAQ, the average of the bid and asked prices on
such day as furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by the Board or, if no such market is
regularly made, as determined by a majority of the Board based on advice of an
independent appraiser selected by a majority of the Board.
"Demand Registration" shall have the meaning set forth in Section
2.1.1 hereof.
"Demand Request" shall have the meaning set forth in Section 2.1.1.
hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Excluded Registration" means a registration under the Securities Act
of (i) securities registered on Form S-8 or any similar successor form and (ii)
securities registered to effect the acquisition of all or a substantial portion
of the securities of a Person or a substantial portion of its assets or a
merger or other combination with another Person.
"GAAP" shall mean United States generally accepted accounting
principles, applied on a consistent basis for the periods involved.
"Holder" shall mean Purchaser and shall include all direct or indirect
transferees of Purchaser who shall become a party to this Agreement, and each
subsequent transferee of any such Holder who shall become a party to or
otherwise agree to be bound by this Agreement. "Holders" shall mean each
Holder collectively. If at any time there is more than one Holder, except as
otherwise specifically set forth in this Agreement, any notices, designations,
consents, or similar actions to be taken by the Holder or Holders hereunder
shall be taken as provided in Section 4.4.
"Immediate Family" means the spouse of an individual and the
grandparents, parents, siblings and children (and children and spouses of any
of the foregoing) of the individual or his or her spouse. An adopted child
will be treated as the child of his or her adoptive parent or parents if (but
only if) he or she was adopted before he or she reached 21 years of age.
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"Inspectors" shall have the meaning provided in Section 2.5(x) hereof.
"Indebtedness" shall mean with respect to any Person, without
duplication, any liability of such Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar instruments, (iii)
constituting Capitalized Lease Obligations, (iv) incurred or assumed as the
deferred purchase price of property, or pursuant to conditional sale
obligations and title retention agreements (but excluding trade accounts
payable arising in the ordinary course of business), (v) for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (vi) for Indebtedness of others guaranteed by such Person, (vii)
for Interest Swap Obligations, Commodity Agreements and Currency Agreements and
(viii) for Indebtedness of any other Person of the type referred to in clauses
(i) through (vii) which is secured by any Lien on any property or asset of such
first referred to Person, the amount of such Indebtedness being deemed to be
the lesser of the value of such property or asset or the amount of the
Indebtedness so secured. The amount of Indebtedness of any Person at any date
shall be (A) the outstanding principal amount of all unconditional obligations
described above, as such amount would be reflected on a balance sheet prepared
in accordance with GAAP, and (B) with respect to all contingent obligations
described above, the maximum liability as of such date of such Person for any
guarantees of Indebtedness for borrowed money of any other Person and the
amount required under GAAP to be accrued with respect to any other contingent
obligation.
"Interest Swap Obligations" shall mean the obligations of any Person
under any interest rate protection agreement, interest rate future, interest
rate option, interest rate swap, interest rate cap or other interest rate hedge
or arrangement.
"Investment" shall mean (i) any transfer or delivery of cash, stock or
other property of value in exchange for Indebtedness, stock or other security
or ownership interest in any Person by way of loan, advance, capital
contribution, guarantee or otherwise and (ii) an investment deemed to have been
made by the Company at the time any entity which was a Subsidiary of the
Company ceases to be such a Subsidiary in an amount equal to the value of the
loans and advances made, and any remaining ownership interest in, such entity
immediately following such entity ceasing to be a Subsidiary of the Company.
The amount of any non-cash Investment shall be the fair market value of such
Investment, as determined conclusively in good faith by management of the
Company unless the fair market value of such Investment exceeds $1,000,000, in
which case the fair market value shall be determined conclusively in good faith
by the Board of Directors at the time such Investment is made.
"Issue Date" shall have the meaning ascribed to such term under the 8%
Convertible Preference Shares Authorization.
"Junior Shares" has the meaning provided in the 8% Preference Shares
Authorization.
"Leverage Ratio" shall mean the ratio of (i) the aggregate outstanding
amount of Indebtedness of the Company and its Subsidiaries (including Permitted
Indebtedness) as of the date of calculation on a consolidated basis in
accordance with GAAP (subject to the terms described in
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the next paragraph) plus (A) the aggregate liquidation preference on such date
of (1) all outstanding Preferred Stock of the Company's Subsidiaries (except
Preferred Stock issued to the Company or a wholly owned Subsidiary of the
Company and except Preferred Stock issued by Triton International Oil
Corporation in respect of costs to conduct petroleum operations pursuant to
Section 8.3 of the Shareholders Agreement with ARCO JDA Limited), (2) all
Senior Shares, (3) all Parity Liquidation Shares and (4) all other outstanding
shares of Preferred Stock of the Company the terms of which require, or permit
the holder thereof to require, the Company to redeem all or any portion thereof
at a future date, but in the case of clause (4), only with respect to the
present value of such amount as required to be redeemed or with respect to
which the holders thereof could require redemption, calculated at a discount
rate equal to the weighted average of the interest rates under the Credit
Agreements (or any Refinancing Indebtedness related thereto as from time to
time in effect) (excluding in each of cases (2), (3) and (4) such securities
issued to a wholly-owned Subsidiary of the Company) less (B) cash and the
current market value of marketable securities held by the Company and its
Subsidiaries to (ii) the Consolidated EBITDA of the Company for the four full
fiscal quarters (the "Four Quarter Period") ending on or as of the most recent
quarter end prior to the date of determination.
For purposes of this definition, the amount of Indebtedness which is
issued at a discount shall be deemed to be the accreted value of such
Indebtedness at the end of the Four Quarter Period, whether or not such amount
is the amount then reflected on a balance sheet prepared in accordance with
GAAP. In addition to the foregoing, for purposes of this definition,
"Consolidated EBITDA" shall be calculated on a pro forma basis after giving
effect to (i) the incurrence of the Indebtedness of such Person and its
Subsidiaries and the issuance of the Preferred Stock of such Person and its
Subsidiaries (and the application of the proceeds therefrom) giving rise to the
need to make such calculation and any incurrence (and the application of the
proceeds therefrom) or repayment of other Indebtedness, other than the
incurrence or repayment of Indebtedness pursuant to working capital facilities,
at any time subsequent to the beginning of the Four Quarter Period and on or
prior to the date of determination, as if such incurrence or issuance (and the
application of the proceeds thereof), or the repayment, as the case may be,
occurred on the first day of the Four Quarter Period, (ii) any Asset Sales or
Asset Acquisitions (including without limitation any Asset Acquisition giving
rise to the need to make such calculation as a result of such Person or one of
its Subsidiaries (including any Person that becomes a Subsidiary as a result of
such Asset Acquisition) incurring, assuming or otherwise becoming liable for
Indebtedness or issuing Preferred Stock) at any time on or subsequent to the
first day of the Four Quarter Period and on or prior to the date of
determination, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Indebtedness and the issuance
of such Preferred Stock and also including any Consolidated EBITDA associated
with such Asset Acquisition) occurred on the first day of the Four Quarter
Period and (iii) cost savings resulting from employee terminations, facilities
consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other insurance
coverage and policies, standardization of sales representation commissions and
other contract rates, and reductions in taxes other than income taxes
(collectively "Cost Savings Measures"), which cost savings the Company
reasonably believes in good faith would have been achieved during the Four
Quarter Period as a result of such Asset Acquisitions (regardless of whether
such cost savings could then be reflected in pro forma financial statements
under GAAP, Regulation
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S-X promulgated by the Commission or any other regulation or policy of the
Commission), provided that both (A) such cost savings and Cost Savings Measures
were identified and such cost savings were quantified in an officer's
certificate delivered to the Board of Directors (with a copy delivered to
Purchaser) at the time of the consummation of the Asset Acquisition and such
officer's certificate states that such officer believes in good faith that
actions will be commenced or initiated within 90 days of such Asset Acquisition
to effect such Cost Savings Measures and (B) with respect to each Asset
Acquisition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90
days of such Asset Acquisition to effect the Cost Savings Measures identified
in such officer's certificate (regardless, however, of whether the
corresponding cost savings have been achieved).
"Majority Interest" shall have the meaning provided in Section 4.4
hereof.
"Material Adverse Effect" shall have the meaning provided in Section
2.1.5 hereof.
"NASD" shall have the meaning provided in Section 2.5(xiv) hereof.
"Original Number" shall have the meaning provided in Section 4.1.6
hereof.
"Parity Shares" has the meaning provided in the 8% Preference Shares
Authorization.
"Parity Dividend Shares" has the meaning provided in the 8% Preference
Shares Authorization.
"Parity Liquidation Shares" has the meaning provided in the 8%
Preference Shares Authorization.
"Permitted Indebtedness" shall mean, without duplication, (i)
Indebtedness outstanding on the First Closing Date, other than Indebtedness
under the Credit Facilities; (ii) Indebtedness of the Company or a Subsidiary
incurred pursuant to the Credit Agreements in an aggregate principal amount at
any time outstanding not to exceed $135 million; (iii) Interest Swap
Obligations; provided that such Interest Swap Obligations are entered into to
protect the Company from fluctuations in interest rates of its Indebtedness;
(iv) obligations under Commodity Agreements and Currency Agreements, provided
that such Commodity Agreements and Currency Agreements are entered into to
protect the Company from fluctuations in commodity prices and currency values,
respectively; (v) Refinancing Indebtedness; (vi) Indebtedness owed by the
Company to any wholly owned Subsidiary of the Company or by any Subsidiary of
the Company to the Company or any wholly owned Subsidiary of the Company; (vii)
Indebtedness in respect of performance bonds, letters of credit, bankers'
acceptances and surety or appeal bonds provided by the Company or any of its
Subsidiaries to their customers in the ordinary course of their business;
(viii) Indebtedness required to be incurred pursuant to the Shareholders'
Agreement between Triton International Oil Corporation and ARCO JDA Limited;
and (ix) Indebtedness represented by Capitalized Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property
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used in a related business or incurred to refinance any such purchase price or
cost of construction or improvement, in each case incurred no later than 365
days after the date of such acquisition or the date of completion of such
construction or improvement; provided, however, that the principal amount of
any Indebtedness incurred pursuant to this clause (ix) shall not exceed
$10,000,000 at any time outstanding.
"Permitted Transfer" means any Transfer (a) with respect to a Holder
who is an individual, to a member of the Immediate Family of the Holder or a
trust whose sole beneficiaries are the Holder and/or members of the Immediate
Family of the Holder, (b) with respect to a Holder that is a corporation,
partnership or other entity (other than a trust), to an owner of at least 10%
of the equity interest in the corporation, partnership or other legal entity or
to a general partner of any partnership, (c) with respect to a Holder that is a
trust, to any beneficiary of the trust or any member of the Immediate Family of
a beneficiary of the trust, (d) to any Affiliate of a Holder, (e) pursuant to a
pledge to secure indebtedness provided that the pledgee agrees in writing that
the Registrable Shares subject to such Transfer shall be subject to the terms
hereof, (f) to any charitable trust, foundation or other charitable or
non-profit organization or entity, (g) to a Holder pursuant to the provisions
of Section 3.3, (h) pursuant to a merger, consolidation, share exchange, scheme
of arrangement or other similar transaction by the Company or pursuant to an
agreement to which the Company is a party, (i) by a Holder in response to a
tender or exchange offer for all of the outstanding Common Stock of the Company
and (j) by a Holder pursuant to a public offering registered under the
Securities Act or pursuant to Rule 144 promulgated under the Securities Act;
provided that, in each of case (a) through (f), the transferee agrees to be
bound by the terms and provisions of this Agreement.
"Person" or "person" shall mean any individual, firm, partnership,
company or other entity, and shall include any successor (by merger or
otherwise) of such entity.
"Preferred Stock" of any Person shall mean any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"Records" shall have the meaning provided in Section 2.4(x) hereof.
"Refinancing Indebtedness" shall mean any refinancing by the Company
of Indebtedness of the Company or any of its Subsidiaries that does not (i)
result in an increase in the aggregate principal amount of Indebtedness (such
principal amount to include, for purposes of this definition, any premiums,
penalties or accrued interest paid with the proceeds of the Refinancing
Indebtedness) of such Person or (ii) create Indebtedness with (a) a Weighted
Average Life to Maturity that is less than the Weighted Average Life to
Maturity of the Indebtedness being refinanced or (b) a final maturity earlier
than the final maturity of the Indebtedness being refinanced.
"Registrable Shares" means at any time the 8% Preference Shares of the
Company and Common Stock owned by the Holder or Holders, whether owned on the
date hereof or acquired hereafter, including upon the conversion of 8%
Preference Shares by the Holder thereof or otherwise; provided, however, that
Registrable Shares shall not include any shares (x) the sale of which has been
registered pursuant to the Securities Act and which shares have been sold
pursuant to such
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registration, or (y) which have been sold to the public pursuant to Rule 144
promulgated under the Securities Act.
"Registration Expenses" shall have the meaning provided in Section 2.7
hereof.
"Replacement Shelf Registration Statement" shall have the meaning
provided in Section 2.2.3 hereof.
"Requesting Holder" shall have the meaning provided in Section
2.1.1(a) hereof.
"Required Filing Date" shall have the meaning provided in Section
2.1.1(b) hereof.
"Sale and Leaseback Transaction" shall mean any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of any property, whether owned
by the Company or any Subsidiary at the Issue Date or later acquired, which has
been or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced
by such Person on the security of such property.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Seller Affiliates" shall have the meaning provided in Section 2.8.1
hereof.
"Senior Shares" shall have the meaning provided in the 8% Convertible
Preference Shares Authorization.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement
dated August 31, 1998, between the Company and Purchaser.
"Subsidiary" of any Person means (i) a corporation a majority of whose
outstanding shares of capital stock or other equity interests with voting
power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by such Person, by one or more subsidiaries of
such Person or by such Person and one or more subsidiaries of such Person, and
(ii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (x)
at least a majority ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person. For purposes
hereof, Triton International Oil Corporation shall be deemed a Subsidiary of
the Company.
"Suspension Notice" shall have the meaning provided in Section 2.6
hereof.
"Third-Party Sale" means any Transfer other than a Permitted
Transfer.
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"TIOC" shall have the meaning provided in Section 4.3(ii) hereof.
"Trading Day" shall mean any day on which the securities in question
are traded on the NYSE, or if such securities are not listed or admitted for
trading on the NYSE, on the principal national securities exchange on which
such securities are listed or admitted, or if not listed or admitted for
trading on any national securities exchange, on The Nasdaq Stock Market, or if
such securities are not quoted on The Nasdaq Stock Market, in the applicable
securities market in which the securities are traded.
"Transfer" means any direct or indirect sale, transfer, pledge or
other disposition of Registrable Shares.
"Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
Section 1.2 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words
in the plural include the singular;
(4) provisions apply to successive events and
transactions; and
(5) "herein," "thereof" and other words of similar import
refer to this Agreement as a whole and not to any particular Article,
Section or other subdivision.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
2.1.1 Request for Registration.
(a) At any time after September 30, 1999, one or more
Holders may request the Company, in writing (a "Demand Request"), to
effect the registration under the Securities Act of all or part of its
or their Registrable Shares (a "Demand Registration"); provided that
the Registrable Shares proposed to be sold by the Holders requesting a
Demand Registration
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(the "Requesting Holders," which term shall include parties deemed
"Requesting Holders" pursuant to Section 2.1.5 hereof) represent, in
the aggregate, more than 20% of the total number of Registrable Shares
held by all Holders (a "Registrable Amount").
(b) Each Demand Request shall specify the number of
Registrable Shares proposed to be sold (which shall represent, in the
aggregate, more than 20% of the total number of Registrable Shares
held by all Holders) and the intended method of disposition thereof.
Subject to Section 2.1.6, the Company shall file the Demand
Registration within 45 days after receiving a Demand Request (the
"Required Filing Date") and shall use all commercially reasonable
efforts to cause the same to be declared effective by the SEC as
promptly as practicable after such filing; provided, that the Company
need effect only five Demand Registrations; provided, further, that if
any Registrable Shares requested to be registered pursuant to a Demand
Request under this Section 2.1 are excluded from a registration
pursuant to Section 2.1.4 below, the Holders shall have the right,
with respect to each such exclusion, to one additional Demand
Registration under this Section 2.1 with respect to such excluded
Registrable Shares; and provided, further, that the Company shall not
be obligated to file a registration statement relating to a
registration request under this Section 2.1 more frequently than once
in any nine month period or within a period of six months after the
effective date of any other registration statement of the Company
other than an Excluded Registration or any registration statement
filed at the request or on behalf of, or for the benefit of, another
securityholder of the Company (other than pursuant to this Section
2.1) in which Holders were not entitled to include all Registrable
Shares requested to be included therein.
2.1.2 Effective Registration and Expenses. A registration will not
count as a Demand Registration until it has become effective (unless (i) (A)
the Requesting Holders shall have made a written request for a registration
which is subsequently withdrawn by the Requesting Holders with respect to a
number of Registrable Securities such that the number of Registrable Securities
requested to be included in such registration statement is less than a
Registrable Amount after the Company has filed a registration statement with
the SEC in connection therewith, (B) the Company has performed its obligations
hereunder in all material respects and (C) there has not been any event, change
or effect which, individually or in the aggregate, has had or would be
reasonably likely to have a material adverse effect on the business,
operations, prospects, assets, condition (financial or otherwise) or results of
operations of the Company, or (ii) such registration statement is not declared
effective solely as a result of the failure of the Requesting Holders to take
all actions reasonably required in order to have the registration and the
related registration statement declared effective by the SEC, in which case
such demand will count as a Demand Registration unless the Requesting Holders
pay all Registration Expenses, as hereinafter defined, in connection with such
withdrawn registration); provided, that if, after it has become effective, an
offering of Registrable Shares pursuant to a registration is interfered with by
any stop order, injunction, or other order or requirement of the SEC or other
governmental agency or court, such registration will be deemed not to have been
effected and will not count as a Demand Registration, unless such order,
injunction or requirement shall have been imposed solely as a result of the
actions of the Requesting Holders or the failure of the Requesting Holders to
take all actions reasonably required in order to prevent such imposition, in
which case such registration shall be counted as a Demand Registration without
regard
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to whether it is so interfered with. Subject to the following sentence, in
the event that a Demand Request is made by a Holder that is subsequently
withdrawn by that Holder, all Registration Expenses incurred in connection
therewith shall be borne by that Holder and such withdrawn Demand Request shall
not be counted as a Demand Registration in determining the number of Demand
Registrations to which the Holders are entitled pursuant to Section 2.1.1(b).
In the event that a Demand Request is made by a Holder that is subsequently
withdrawn by that Holder, all Registration Expenses shall be borne by the
Company if (i) the Company has not performed its obligations hereunder in all
material respects or (ii) there has been any event, change or effect which,
individually or in the aggregate, has had or would be reasonably likely to have
a material adverse effect on the business, operations, prospects, assets,
condition (financial or otherwise) or results of operations of the Company; and
in such case a withdrawn Demand Request shall not be counted as a Demand
Registration in determining the number of Demand Registrations to which the
Holders are entitled pursuant to Section 2.1.1(b).
2.1.3 Selection of Underwriters. If requested by the Requesting
Holders, the offering of Registrable Shares pursuant to a Demand Registration
shall be in the form of a "firm commitment" underwritten offering. The
Requesting Holders of a majority of the Registrable Shares to be registered in
a Demand Registration shall determine whether the offering shall be in the form
of a firm commitment underwriting and, if so, shall select the investment
banking firm or firms to manage the underwritten offering; provided that such
selection shall be subject to the consent of the Company, which consent shall
not be unreasonably withheld.
2.1.4 Priority on Demand Registrations. No securities to be sold
for the account of any Person (including the Company) other than a Requesting
Holder shall be included in a Demand Registration if the managing underwriter
or underwriters shall advise the Requesting Holders in writing that the
inclusion of such securities will materially and adversely affect the price or
success of the offering (a "Material Adverse Effect"). Furthermore, in the
event the managing underwriter or underwriters shall advise the Requesting
Holders that even after exclusion of all securities of other Persons pursuant
to the immediately preceding sentence, the amount of Registrable Shares
proposed to be included in such Demand Registration by Requesting Holders is
sufficiently large to cause a Material Adverse Effect, the Registrable Shares
of the Requesting Holders to be included in such Demand Registration shall
equal the number of shares which the Requesting Holders are so advised can be
sold in such offering without a Material Adverse Effect and such shares shall
be allocated pro rata among the Requesting Holders on the basis of the number
of Registrable Shares held by the Requesting Holders.
2.1.5 Rights of Nonrequesting Holders. Upon receipt of any Demand
Request, the Company shall promptly (but in any event within 10 days) give
written notice of such proposed Demand Registration to all other Holders, who
shall have the right, exercisable by written notice to the Company within 15
days of their receipt of the Company's notice, to elect to include in such
Demand Registration such portion of their Registrable Securities as they may
request. All Holders requesting to have their Registrable Shares included in a
Demand Registration in accordance with the preceding sentence shall be deemed
to be "Requesting Holders" for purposes of this Section 2.1.
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2.1.6 Deferral of Filing. The Company may defer the filing (but not
the preparation) of a registration statement required by Section 2.1 until a
date not later than 180 days after the Required Filing Date (or, if longer, 180
days after the effective date of the registration statement contemplated by
clause (ii) below) if (i) at the time the Company receives the Demand Request,
the Company or any of its Subsidiaries are engaged in confidential negotiations
or other confidential business activities, disclosure of which would be
required in such registration statement (but would not be required if such
registration statement were not filed), and the Board of the Company determines
in good faith that such disclosure would be materially detrimental to the
Company and its shareholders or would have a material adverse effect on any
such confidential negotiations or other confidential business activities, or
(ii) prior to receiving the Demand Request, the Board had determined to effect
a registered underwritten public offering of the Company's securities for the
Company's account and the Company had taken substantial steps (including, but
not limited to, selecting a managing underwriter for such offering) and is
proceeding with reasonable diligence to effect such offering. A deferral of
the filing of a registration statement pursuant to this Section 2.1.6 shall be
lifted, and the requested registration statement shall be filed forthwith, if,
in the case of a deferral pursuant to clause (i) of the preceding sentence, the
negotiations or other activities are disclosed by the Company or terminated,
or, in the case of a deferral pursuant to clause (ii) of the preceding
sentence, the proposed registration for the Company's account is abandoned. In
order to defer the filing of a registration statement pursuant to this Section
2.1.6, the Company shall promptly (but in any event within 10 days), upon
determining to seek such deferral, deliver to each Requesting Holder a
certificate signed by an executive officer of the Company stating that the
Company is deferring such filing pursuant to this Section 2.1.6 and, subject to
applicable confidentiality agreements, a general statement of the reason for
such deferral and an approximation of the anticipated delay. Within 20 days
after receiving such certificate, the holders of a majority of the Registrable
Shares held by the Requesting Holders and for which registration was previously
requested may withdraw such Demand Request by giving notice to the Company; if
withdrawn, the Demand Request shall be deemed not to have been made for all
purposes of this Agreement. The Company may defer the filing of a particular
registration statement pursuant to this Section 2.1.6 only once.
Section 2.2 Piggyback Registrations.
2.2.1 Right to Piggyback. Each time the Company proposes to
register any of its equity securities (other than pursuant to an Excluded
Registration) under the Securities Act for sale to the public (whether for the
account of the Company or the account of any securityholder of the Company and
including any registration statement pursuant to Rule 415 under the Securities
Act (such as a "universal shelf" registration statement), including the
Replacement Shelf Registration Statement) or proposes to make such an offering
of equity securities pursuant to a previously filed registration statement
pursuant to Rule 415 under the Securities Act and the form of registration
statement to be used permits the registration of Registrable Shares, the
Company shall give prompt written notice to each Holder of Registrable Shares
(which notice shall be given not less than 30 days prior to the effective date
of the Company's registration statement), which notice shall offer each such
Holder the opportunity to include any or all of its or his Registrable Shares
in such registration statement, subject to the limitations contained in Section
2.2.2 hereof. Each Holder who desires to have its or his Registrable Shares
included in such registration statement shall so advise the Company in writing
(stating the number of shares desired to be registered and the intended method
of disposition) within
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20 days after the date of such notice from the Company. Any Holder shall have
the right to withdraw such Holder's request for inclusion of such Holder's
Registrable Shares in any registration statement pursuant to this Section 2.2.1
by giving written notice to the Company of such withdrawal. Subject to Section
2.2.2 below, the Company shall use all commercially reasonable efforts to
include in such registration statement all such Registrable Shares so requested
to be included therein; provided, however, that the Company may at any time
withdraw or cease proceeding with any such registration if it shall at the same
time withdraw or cease proceeding with the registration of all other equity
securities originally proposed to be registered.
2.2.2 Priority on Registrations. If the Registrable Shares
requested to be included in the registration statement by any Holder differ
from the type of securities proposed to be registered by the Company and the
managing underwriter advises the Company that due to such differences the
inclusion of such Registrable Shares would cause a Material Adverse Effect,
then (i) the number of such Holder's or Holders' Registrable Shares to be
included in the registration statement shall be reduced to an amount which, in
the opinion of the managing underwriter, would eliminate such Material Adverse
Effect or (ii) if no such reduction would, in the opinion of the managing
underwriter, eliminate such Material Adverse Effect, then the Company shall
have the right to exclude all such Registrable Shares from such registration
statement provided no other securities of such type are included and offered
for the account of any other Person in such registration statement. Any
partial reduction in number of Registrable Shares to be included in the
registration statement pursuant to clause (i) of the immediately preceding
sentence shall be effected pro rata based on the ratio which such Holder's
requested shares bears to the total number of shares requested to be included
in such registration statement by all Persons other than the Company who have
requested that their shares be included in such registration statement. If the
Registrable Shares requested to be included in the registration statement are
of the same type as the securities being registered by the Company and the
managing underwriter advises the Company in writing that the inclusion of such
Registrable Shares would cause a Material Adverse Effect, the Company will be
obligated to include in such registration statement, as to each Holder, only a
portion of the shares such Holder has requested be registered equal to the
ratio which such Holder's requested shares bears to the total number of shares
requested to be included in such registration statement by all Persons who have
requested that their shares be included in such registration statement. If the
Company initiated the registration, then the Company may include all of its
securities in such registration statement before any of such Holder's requested
shares are included. If another securityholder initiated the registration,
then the Company may not include any of its securities in such registration
statement unless all Registrable Shares requested to be included in the
registration statement by all Holders are included in such registration
statement. If as a result of the provisions of this Section 2.2.2 any Holder
shall not be entitled to include all Registrable Securities in a registration
that such Holder has requested to be so included, such Holder may withdraw such
Holder's request to include Registrable Shares in such registration statement
prior to its effectiveness. No Holder may participate in any registration
statement hereunder unless such Person (x) agrees to sell such Person's
Registrable Shares on the basis provided in any underwriting arrangements
approved by the Company and (y) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements, and other documents
reasonably required under the terms of such underwriting arrangements;
provided, however, that no such Person shall be required to make any
representations or warranties in connection with any such registration other
than representations and warranties as to (i) such
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Person's ownership of his or its Registrable Shares to be sold or transferred
free and clear of all liens, claims, and encumbrances, (ii) such Person's power
and authority to effect such transfer, and (iii) such matters pertaining to
compliance with securities laws and other applicable laws and governmental
rules and regulations, if any, as may be reasonably requested; provided
further, however, that the obligation of such Person to indemnify pursuant to
any such underwriting arrangements shall be several, not joint and several,
among such Persons selling securities, and the liability of each such Person
will be in proportion to, and provided further that such liability will be
limited to, the net amount received by such Person from the sale of his or its
Registrable Shares pursuant to such registration.
Section 2.3 Shelf Registration.
2.3.1 Replacement Shelf Registration. Upon the written request of
Purchaser at any time after the Second Closing Date, the Company promptly shall
prepare and file with the SEC a universal shelf registration statement pursuant
to Rule 415 under the Securities Act to supersede and replace the Company's
existing universal shelf registration statement (registration no. 333-11703)
currently effective under the Securities Act and shall include therein such
Registrable Shares as Holder shall request (but in no event less than a
Registrable Amount) (the "Replacement Shelf Registration Statement"). The
Company shall use all commercially reasonable efforts to cause such Replacement
Shelf Registration Statement to become effective under the Securities Act, and
at any time after the effectiveness thereof when the Company elects to effect
an offering of securities pursuant to the Replacement Shelf Registration
Statement, Holder shall be entitled to exercise its rights under Section 2.1
(subject to the first sentence of Section 2.1.1 with respect to any demand for
any offering to be made pursuant thereto) and Section 2.2.1 with respect to
such offering.
2.3.2 Use of Shelf Registration. At any time that Holder requests a
Demand Registration pursuant to Section 2.1 or to include Registrable Shares in
a registration statement pursuant to Section 2.2, in each case with respect to
the Replacement Shelf Registration Statement or any other "shelf" registration
statement, the provisions of Sections 2.1 and 2.2, including references in such
Sections to "file," "register" or "included in," as relating to the rights of
the Holders to request to include Registrable Shares in a registration
statement to be filed with the SEC shall be construed as referring to a request
to have Registrable Shares included in such registration statement pursuant to
Section 2.2 in the case of the initial filing of such registration statement or
to a request to include Registrable Shares in an offering to be effected
pursuant to such registration statement pursuant to Section 2.1 or 2.2, as
applicable, in the case of an offering to be effected pursuant to a
registration statement that previously has been declared effective under the
Securities Act.
Section 2.4 Holdback Agreement. Unless the managing underwriter
otherwise agrees, each of the Company and the Holders agrees, and the Company
agrees, in connection with any underwritten registration, to use its reasonable
efforts to cause its Affiliates to agree, not to effect any public sale or
private offer or distribution of any Common Stock or Common Stock Equivalents
during the ten business days prior to the effectiveness under the Securities
Act or pricing of any underwritten offering pursuant to a registration
statement in which Registrable Securities are included and during such time
period after the effectiveness under the Securities Act of any underwritten
registration or pricing of underwritten securities (not to exceed 90 days)
(except, if
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applicable, as part of such underwritten registration) as the Company and the
managing underwriter may agree.
Section 2.5 Registration Procedures. Whenever any Holder has
requested that any Registrable Shares be registered pursuant to this Agreement,
the Company will use its commercially reasonable efforts to effect the
registration and the sale of such Registrable Shares in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will
as expeditiously as reasonably possible:
(i) prepare and file with the SEC a registration statement on any
appropriate form under the Securities Act with respect to such Registrable
Shares and use all commercially reasonable efforts to cause such registration
statement to become effective;
(ii) prepare and file with the SEC such amendments, post-effective
amendments, and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days (or such lesser
period as is necessary for the underwriters in an underwritten offering to sell
unsold allotments) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Shares and the
underwriters of the securities being registered such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), any documents incorporated by reference therein and such other
documents as such seller or underwriters may reasonably request in order to
facilitate the disposition of the Registrable Shares owned by such seller or
the sale of such securities by such underwriters (it being understood that,
subject to Section 2.6 and the requirements of the Securities Act and
applicable state securities laws, the Company consents to the use of the
prospectus and any amendment or supplement thereto by each seller and the
underwriters in connection with the offering and sale of the Registrable Shares
covered by the registration statement of which such prospectus, amendment or
supplement is a part);
(iv) use all commercially reasonable efforts to register or qualify
such Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the managing underwriter reasonably requests; use all
commercially reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each seller to
consummate the disposition of the Registrable Shares owned by such seller in
such jurisdictions (provided, however, that the Company will not be required to
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (B) consent to
general service of process in any such jurisdiction);
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(v) promptly notify each seller and each underwriter and (if
requested by any such Person) confirm such notice in writing (A) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed and, with respect to a registration statement or any post-effective
amendment, when the same has become effective, (B) of the issuance by any state
securities or other regulatory authority of any order suspending the
qualification or exemption from qualification of any of the Registrable Shares
under state securities or "blue sky" laws or the initiation of any proceedings
for that purpose, and (C) of the happening of any event which makes any
statement made in a registration statement or related prospectus untrue in any
material respect or which requires the making of any changes in such
registration statement, prospectus or documents so that they will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading, and, as promptly as practicable thereafter, prepare and file with
the SEC and furnish a supplement or amendment to such prospectus so that, as
thereafter deliverable to the purchasers of such Registrable Shares, such
prospectus will not contain any untrue statement of a material fact or omit a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(vi) make generally available to the Company's securityholders an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act no later than 30 days after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after the
effective date of a registration statement, which earnings statement shall
cover said 12-month period, and which requirement will be deemed to be
satisfied if the Company timely files complete and accurate information on
Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with
Rule 158 under the Securities Act;
(vii) if requested by the managing underwriter or reasonably
requested by any seller promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or any
seller reasonably requests to be included therein, including, without
limitation, with respect to the Registrable Shares being sold by such seller,
the purchase price being paid therefor by the underwriters and with respect to
any other terms of the underwritten offering of the Registrable Shares to be
sold in such offering, and promptly make all required filings of such
prospectus supplement or post-effective amendment;
(viii) as promptly as practicable after filing with the SEC of any
document which is incorporated by reference into a registration statement (in
the form in which it was incorporated), deliver a copy of each such document to
each seller;
(ix) cooperate with the sellers and the managing underwriter to
facilitate the timely preparation and delivery of certificates (which shall not
bear any restrictive legends unless required under applicable law) representing
securities sold under any registration statement, and enable such securities to
be in such denominations and registered in such names as the managing
underwriter or such sellers may request and keep available and make available
to the Company's transfer agent prior to the effectiveness of such registration
statement a supply of such certificates;
(x) promptly make available for inspection by any seller, any
underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent
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or representative retained by any such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the "Records"), as shall be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information requested by any such Inspector in connection with such
registration statement; provided, that, unless the disclosure of such Records
is necessary to avoid or correct a misstatement or omission in the registration
statement or the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, the Company shall not be
required to provide any information under this subparagraph (x) if (A) the
Company believes, after consultation with counsel for the Company, that to do
so would cause the Company to forfeit an attorney-client privilege that was
applicable to such information or (B) if either (1) the Company has requested
and been granted from the SEC confidential treatment of such information
contained in any filing with the SEC or documents provided supplementally or
otherwise or (2) the Company reasonably determines in good faith that such
Records are confidential and so notifies the Inspectors in writing unless prior
to furnishing any such information with respect to (A) or (B) such Holder of
Registrable Securities requesting such information agrees to enter into a
confidentiality agreement in customary form and subject to customary
exceptions; and provided, further that each Holder of Registrable Securities
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give notice to the Company and allow the
Company at its expense, to undertake appropriate action and to prevent
disclosure of the Records deemed confidential;
(xi) furnish to each seller and underwriter a signed counterpart of
(A) an opinion or opinions of counsel to the Company, and (B) a comfort letter
or comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the sellers or managing
underwriter reasonably requests;
(xii) use all commercially reasonable efforts to cause the
Registrable Shares included in any registration statement to be (A) listed on
each securities exchange, if any, on which securities of the same type issued
by the Company are then listed, or (B) authorized to be quoted and/or listed
(to the extent applicable) on the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") or The New York Stock Exchange if the
Registrable Shares so qualify and securities of the same type issued by the
Company are so listed or quoted;
(xiii) provide a CUSIP number for the Registrable Shares included in
any registration statement not later than the effective date of such
registration statement;
(xiv) cooperate with each seller and each underwriter participating
in the disposition of such Registrable Shares and their respective counsel in
all reasonable respects in connection with any filings required to be made with
the National Association of Securities Dealers, Inc. ("NASD");
(xv) during the period when the prospectus is required to be
delivered under the Securities Act, file within the required time periods all
documents required to be filed with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act;
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(xvi) notify each seller of Registrable Shares promptly of any
request by the SEC for the amending or supplementing of such registration
statement or prospectus or for additional information;
(xvii) prepare and file with the SEC promptly any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for the Company or the managing underwriter, is required in
connection with the distribution of the Registrable Shares;
(xviii) enter into such agreements (including underwriting agreements
in the managing underwriter's customary form) as are customary in connection
with an underwritten registration; and
(xix) advise each seller of such Registrable Shares, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for such purpose
and promptly use all commercially reasonable efforts to prevent the issuance of
any stop order or to obtain its withdrawal at the earliest possible moment if
such stop order should be issued.
Section 2.6 Suspension of Dispositions. Each Holder agrees by
acquisition of any Registrable Shares that, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the kind
described in Section 2.5(v)(C), such Holder will forthwith discontinue
disposition of Registrable Shares until such Holder's receipt of the copies of
the supplemented or amended prospectus, or until it is advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the
Company, such Holder will deliver to the Company all copies, other than
permanent file copies then in such Holder's possession, of the prospectus
covering such Registrable Shares current at the time of receipt of such notice.
In the event the Company shall give any such notice, the time period regarding
the effectiveness of registration statements set forth in Section 2.4(ii)
hereof shall be extended by the number of days during the period from and
including the date of the giving of the Suspension Notice to and including the
date when each seller of Registrable Shares covered by such registration
statement shall have received the copies of the supplemented or amended
prospectus or the Advice. The Company shall use its commercially reasonable
efforts and take such actions as are reasonably necessary to render the Advice
as promptly as practicable.
Section 2.7 Registration Expenses. All expenses incident to the
Company's performance of or compliance with this Article 2 including without
limitation, (i) all registration and filing fees, (ii) all fees and expenses
associated with filings required to be made with the NASD (including, if
applicable, the fees and expenses of any "qualified independent underwriter" as
such term is defined in Schedule E of the By-Laws of the NASD, and of its
counsel), as may be required by the rules and regulations of the NASD, (iii)
fees and expenses of compliance with securities or "blue sky" laws (including
reasonable fees and disbursements of counsel in connection with "blue sky"
qualifications of the Registrable Shares), (iv) rating agency fees, (v)
printing expenses (including expenses of printing certificates for the
Registrable Shares in a form eligible for deposit with Depository Trust Company
and of printing prospectuses if the printing of prospectuses is requested by a
holder of Registrable Shares), (vi) messenger and delivery expenses, (vii) the
Company's internal expenses
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(including without limitation all salaries and expenses of its officers and
employees performing legal or accounting duties), (viii) the fees and expenses
incurred in connection with any listing of the Registrable Shares, (ix) fees
and expenses of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance), (x) securities acts
liability insurance (if the Company elects to obtain such insurance), (xi) the
fees and expenses of any special experts retained by the Company in connection
with such registration, and (xii) the fees and expenses of other persons
retained by the Company, subject to Section 2.1.2., will be borne by the
Company, whether or not any registration statement becomes effective; provided
that in no event shall Registration Expenses include any underwriting discounts
or commissions or transfer taxes or the fees and expenses of counsel for the
Holders.
Section 2.8 Indemnification.
2.8.1 The Company agrees to indemnify and reimburse, to the fullest
extent permitted by law, each seller of Registrable Shares, and each of its
employees, advisors, agents, representatives, partners, members, officers, and
directors and each Person who controls such seller (within the meaning of the
Securities Act or the Exchange Act) and any agent or investment advisor thereof
(collectively, the "Seller Affiliates") (A) against any and all losses, claims,
damages, liabilities, and expenses, joint or several (including, without
limitation, attorneys' fees and disbursements except as limited by Section
2.8.3) based upon, arising out of or resulting from any untrue or alleged
untrue statement of a material fact contained in any registration statement,
prospectus, or preliminary prospectus relating to the offer and sale of
Registrable Shares or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, (B) against any and
all loss, liability, claim, damage, and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement (effected with the Company's
consent) of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon,
arising out of or resulting from any such untrue statement or omission or
alleged untrue statement or omission, and (C) against any and all costs and
expenses (including reasonable fees and disbursements of counsel) as may be
reasonably incurred in investigating, preparing, or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon, arising out of or
resulting from any such untrue statement or omission or alleged untrue
statement or omission, to the extent that any such expense or cost is not paid
under subparagraph (A) or (B) above; except insofar as the same are made in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of such seller or any Seller Affiliate specifically for
inclusion in the registration statement or arise from such seller's or any
Seller Affiliate's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such seller or Seller Affiliate with a sufficient number of copies of
the same. The reimbursements required by this Section 2.8.1 will be made by
periodic payments during the course of the investigation or defense, as and
when bills are received or expenses incurred.
2.8.2 In connection with any registration statement in which a
seller of Registrable Shares is participating, each such seller will furnish to
the Company in writing such information and
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affidavits as the Company reasonably requests for use in connection with any
such registration statement or prospectus and, to the fullest extent permitted
by law, each such seller will indemnify and reimburse the Company and its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act or the Exchange Act) against any and all losses,
claims, damages, liabilities, and expenses (including, without limitation,
reasonable attorneys' fees and disbursements except as limited by Section
2.8.3) based upon, arising out of or resulting from any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement, prospectus, or any preliminary prospectus or any amendment thereof
or supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with any information or affidavit so furnished in writing by such
seller or any of its Seller Affiliates specifically for inclusion in the
registration statement; provided that the obligation to indemnify will be
several, not joint and several, among such sellers of Registrable Shares, and
the liability of each such seller of Registrable Shares will be in proportion
to, and provided further that such liability will be limited to, the net amount
received by such seller from the sale of Registrable Shares pursuant to such
registration statement; provided, however, that such seller of Registrable
Shares shall not be liable in any such case to the extent that prior to the
filing of any such registration statement or prospectus or amendment thereof or
supplement thereto, such seller has furnished in writing to the Company
information expressly for use in such registration statement or prospectus or
any amendment thereof or supplement thereto which corrected or made not
misleading information previously furnished to the Company.
2.8.3 Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such notice
shall not limit the rights of such Person except to the extent that the
indemnifying party is materially prejudiced thereby) and (B) unless such
indemnified party has been advised by counsel that a conflict of interest
between such indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party; provided,
however, that any person entitled to indemnification hereunder shall have the
right to employ separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the expense of
such person unless (i) the indemnifying party has agreed to pay such fees or
expenses, (ii) the indemnifying party shall have failed to assume the defense
of such claim and employ counsel reasonably satisfactory to such person, (iii)
the named parties to any such action or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel in writing that there
is a conflict of interest on the part of counsel employed by the indemnifying
party to represent such indemnified party, or (iv) the indemnified party's
counsel shall have advised the indemnified party that there are defenses
available to the indemnified party that are different from or in addition to
those available to the indemnifying party and that the indemnifying party is
not able to assert on behalf of or in the name of the indemnified party (in
which case of either (iii) or (iv), if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action or proceeding on behalf of such
indemnified party but shall have the right to participate
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through its own counsel). If such defense is not assumed by the indemnifying
party as permitted hereunder, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). If such defense is
assumed by the indemnifying party pursuant to the provisions hereof, such
indemnifying party shall not settle or otherwise compromise the applicable
claim unless (1) such settlement or compromise contains a full and
unconditional release of the indemnified party or (2) the indemnified party
otherwise consents in writing (such consent not to be unreasonably withheld).
An indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless any indemnified party shall have been advised by
counsel in writing that a conflict of interest exists between such indemnified
party and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the reasonable
fees and disbursements of such additional counsel or counsels.
2.8.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 2.8.1 or Section 2.8.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, liabilities, or expenses (or actions in respect thereof) (i) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, claims, damages, liabilities or expenses or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect the relative benefits of
the indemnified party and indemnifying party from the offering of the
securities covered by such registration statement as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
such indemnifying party or indemnified party, and the parties, relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 2.8.4 were determined by pro
rata allocation (even if the Holders or any underwriters or all of them were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in this
Section 2.8.4. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such indemnified party in connection with
investigating or, except as provided in Section 2.8.3, defending any such
action or claim. Notwithstanding the provisions of this Section 2.8.4, no
Holder shall be required to contribute an amount greater than the dollar amount
by which the proceeds received by such Holder with respect to the sale of any
Registrable Shares exceeds the amount of damages which such Holder has
otherwise been required to pay by reason of such statement or omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Holders'
obligations in this Section 2.8.4 to contribute shall be several in proportion
to the amount of Registrable Shares registered by them and not joint.
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If sufficient indemnification is available under this Section 2.8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 2.8.1 and Section 2.8.2 without regard to the relative
fault of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.8.4.
2.8.5 The indemnification and contribution provided for under this
Stockholders Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director, or controlling Person of such indemnified party and will survive the
transfer of securities.
ARTICLE 3
RESTRICTIONS ON TRANSFER
Section 3.1 General. Any Third-Party Sale shall be subject to
compliance with provisions of this Article 3.
Section 3.2 Transfer Restrictions. During the one year period
following the date hereof, the Holder shall not engage in any Third-Party Sales
without the Company's prior written consent.
Section 3.3 Right of First Offer. (a) Until the earlier of the
fifth annual anniversary of the date hereof or the date on which Purchaser and
its Affiliates own less than 10% of the then outstanding Common Stock (assuming
conversion of all Common Stock Equivalents, including all 8% Preference Shares,
then held by Purchaser and its Affiliates) prior to consummating any
Third-Party Sale in respect of Common Stock, 8% Preference Shares or a
combination of Common Stock and 8% Preference Shares that constitute, in the
aggregate, more than 9.9% of the then outstanding Common Stock (assuming
conversion of all Common Stock Equivalents, including all 8% Preference Shares,
then held by Purchaser and its Affiliates proposed to be sold) to any one buyer
or related group of buyers in a single transaction or a series of related
transactions, Purchaser or any Affiliate of Purchaser (the "Offeror") will
deliver to the Company a written notice (an "Offer Notice") specifying the
aggregate number of Registrable Securities intended to be Transferred and the
minimum consideration (the "Offer Price") for which the Offeror proposes in
good faith to sell the Registrable Securities to be offered in such Third-Party
Sale (the "Offered Shares"). Upon receipt of such notice, the Company shall
have 30 days to notify the Offeror in writing (the "ROFO Notice") of the
identity of one or more designated buyers (collectively, the "Designated
Buyer") of the Offered Shares (which may include the Company). The Designated
Buyer shall then have an additional 30 days from the date the Company notifies
the Offeror to close the acquisition of the Offered Shares.
(b) Rights to Purchase Offered Shares. If the Designated
Buyer delivers to the Offeror a written notice (an "Acceptance Notice") within
30 days following delivery of the ROFO Notice (the "ROFO Acceptance Period"),
stating that such Designated Buyer is willing to purchase all of the Offered
Shares for the Offer Price and on the other terms, if any, as are set forth in
the Offer Notice, the Offeror will sell all (but not less than all) of the
Offered Shares to such Designated Buyer, and such Designated Buyer will
purchase such Offered Shares from the Offeror, on the
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proposed terms and subject to the conditions set forth in the Offer Notice and
below ; provided, however, that if the Offer Price is payable in whole or in
part in property (which term shall include the securities of any issuer other
than the Company) other than cash, the Designated Buyer may pay, in lieu of
such property, a sum of cash equal to the fair market value of such property as
determined by the selling Holder and the Designated Buyer in good faith or, if
the selling Holder and the Designated Buyer do not agree on the fair market
value of such property within five (5) days after the delivery of the
Acceptance Notice, then each of the selling Holder and the Designated Buyer
shall select one nationally recognized independent appraiser (with each of the
selling Holder and the Designated Buyer bearing the expense of the appraiser
selected by it) to determine the fair market value of that property and the
average of the appraised fair market values of that property as determined by
those appraisers shall be deemed the fair market value of that property for
purposes of this Article 3.
(c) The ROFO Closing. The consummation of any purchase
of the Offered Shares by the Designated Buyer pursuant to this Section 3.3 (the
"ROFO Closing") will occur no later than the last day of the ROFO Acceptance
Period, at such time and place as may be agreed upon by the Offeror and the
Designated Buyer or, if such parties fail to agree to such time and place, at
the offices of the Offeror at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ at 10:00 a.m. (Central Time) on the last business day of the ROFO
Acceptance Period. At the ROFO Closing, (1) the Designated Buyer will deliver
to the Offeror by certified or official bank check or wire transfer to an
account designated by the Offeror an amount in immediately available funds
equal to the aggregate Offer Price for the Offered Shares, and (2) the Offeror
will deliver one or more certificates evidencing the Offered Shares, together
with such other duly executed instruments or documents (executed by the
Offeror) as may be reasonably requested by the Designated Buyer to acquire the
Offered Shares.
(d) Right to Consummate Third-Party Sale If no ROFO
Notice or no Acceptance Notice relating to the proposed Third-Party Sale is
delivered to the Offeror prior to the expiration of the applicable period set
forth above, or an Acceptance Notice is so delivered to the Offeror but the
ROFO Closing fails to occur prior to the expiration of the ROFO Closing Period
(unless the Designated Buyer was ready, willing and able prior to the
expiration of the ROFO Closing Period to consummate the transactions to be
consummated by the Designated Buyer at the ROFO Closing), the Offeror may
(without affecting its rights, if any, arising out of such failure) consummate
the Third-Party Sale, but only (1) during the 6-month period immediately
following the expiration of the applicable 30 day period (in the event that no
ROFO Notice or Acceptance Notice, as the case may be, was timely delivered to
the Offering Holder) or the 6- month period immediately following the
expiration of the ROFO Closing Period (in the event that an Acceptance Notice
was timely delivered to the Offeror but the ROFO Closing failed timely to
occur) and, (2) at a price at least equal to 95% of the Offer Price.
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ARTICLE 4
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
Section 4.1 Board.
4.1.1 Board Representation. Subject to the provisions of Section
4.1.6 below, Holder shall be entitled to designate individuals for nomination
for election to the Board as follows:
(i) for so long as the Board consists of ten
members, Holder shall be entitled to designate four nominees;
(ii) if the number of members constituting the
entire Board shall be increased or decreased from ten, Holder shall be
entitled to designate a number of nominees so that such nominees, if
elected, would constitute that percentage of the total number of
members of the Board that the number of directors Holder was entitled
to nominate immediately prior to such increase or decrease bears to
the total number of directorships on the entire Board immediately
prior to such increase or decrease, with any fractional directorship
resulting from such calculation being rounded up to the next whole
number.
Members of the Board designated by Holder pursuant to this Section
4.1.1 or elected to fill a vacancy by members designated by Holder as provided
in subsection 4.1.4 herein shall be referred to as the "Holder Designees."
Subject to Section 4.1.6, the Company and the Board shall take such actions as
necessary to cause Holder Designees to be nominated and submitted to the
shareholders for election to the Board as provided in Sections 4.1.2 and 4.1.3.
4.1.2 Initial Board Designees. Simultaneously with the execution
and delivery of this Agreement, the Company and the Board shall take such
actions as necessary to cause the Board to consist of ten members, four
vacancies to exist on the Board, and to cause four Holder Designees to fill
such vacancies on the Board created pursuant to the terms of the Stock Purchase
Agreement.
4.1.3 Annual Meeting.
(a) At each annual meeting of the Company's shareholders
or any extraordinary meeting in lieu thereof at which the term of any Holder
Designee is to expire or prior to which there shall be less than the maximum
number of Holder Designees serving on the Board, Holder shall be entitled to
designate for nomination as a director the number of individuals as necessary
so that, if such designees are elected to the Board at such annual meeting or
any extraordinary meeting in lieu thereof, the maximum number of Holder
Designees shall be serving on the Board. The Company agrees to cause each
Holder Designee so designated by Holder to be nominated for election to the
Board at each annual meeting of the Company's shareholders or any extraordinary
meeting in lieu thereof. To the extent the Company's proxy statement for any
annual meeting of shareholders, or any extraordinary meeting in lieu thereof,
includes a recommendation regarding the election of any other nominees to the
Company's Board, the Company agrees to include a recommendation of its Board
that the shareholders also vote in favor of each Holder Designee standing for
election at such
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meeting. The Company shall take all actions necessary to ensure that the
Articles of Association of the Company as in effect immediately following the
date hereof do not, at any time thereafter, conflict in any respect with the
provisions of this Section 4.1.
(b) If, at any time Holder fails to advise (at least 90
days prior to the next annual meeting) the Board in writing of its intention to
designate the number of directors which Holder is then entitled to designate
for nomination at the next annual meeting of the Company's shareholders or
extraordinary meeting in lieu thereof (other than any such meeting that occurs
within 90 days after the resignation of a director designated by Holder, in
which case such writing shall be delivered within a reasonable amount of time
prior to the mailing of proxy materials for such meeting), then the rights
granted under this Section 4.1 with respect to the designation of Holder
Designees shall be applicable for such meeting only with respect to the number
of nominees as indicated in such writing, if any, that Holder intends to
designate, but shall continue to be fully effective with respect to subsequent
meetings and interim vacancies. At each annual meeting or extraordinary
meeting in lieu thereof for which Holder does not advise the Board of its
intention to nominate the maximum number of directors which it is entitled to
nominate for such meeting, the nominees for election to the Board, other than
those nominated by Holder, shall be determined by the Board and the Company.
4.1.4 Board Committees. For so long as Holder is entitled to
nominate at least one Holder Designee, the Company and the Board shall take
such actions as necessary to cause at least one Holder Designee to be elected
to, and to at all times be a member of, each committee established by the
Board.
4.1.5 Vacancies. If, prior to his election to the Board pursuant to
Section 4.1.1 hereof, any Holder Designee shall be unable or unwilling to serve
as a director of the Company, then the Holder shall be entitled to nominate a
replacement who shall then be a Holder Designee for purposes of this Section 4.
If, following an election or appointment to the Board pursuant to Section 4.1.1
hereof, any Holder Designee shall resign or be removed or be unable to serve
for any reason prior to the expiration of his term as a director of the
Company, then the Holder shall, within 30 days of such event, notify the Board
in writing of a replacement Holder Designee, and the Company and the Board
shall take such action as necessary to cause such replacement Holder Designee
to be appointed to the Board and each applicable committee thereof to fill the
unexpired term of the Holder Designee who such new Holder Designee is
replacing.
4.1.6 Reduction/Termination of Rights. The right of the Holder to
designate directors under this Section 4.1 shall be reduced and terminate as
follows:
If at any time after the Second Closing the number of shares of Common
Stock and 8% Preference Shares (assuming conversion of such shares into Common
Stock) held of record by Purchaser and its Affiliates, collectively, represent
less than the below specified percentage of the number of shares of Common
Stock into which a number of 8% Preference Shares equal to the Original Number
would be convertible as of such time of determination, the number of directors
that Holder shall be entitled to designate shall be reduced to the number
indicated:
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PERCENTAGE HELD HOLDER
BY PURCHASER AND ITS AFFILIATES DIRECTORS
------------------------------- ---------
Less than 75% but equal to
or more than 50% 3
Less than 50% but equal to
or more than 25% 2
Less than 25% but equal to
or more than 1% 1
Less than 1% 0
For purposes of this Agreement, "Original Number" shall mean the
aggregate number of 8% Preference Shares purchased by Purchaser pursuant to the
terms of the Stock Purchase Agreement (including 8% Preference Shares
purchased pursuant to the Rights (as defined in the Stock Purchase Agreement)).
Upon written request to Holder at any time that the number of Holder
Designees exceeds the number of directors Holder shall be entitled to designate
pursuant to this Section 4.1.5, Holder shall cause one or more Holder Designees
to resign from the Board as necessary to reduce the number of Holder Designees
to the number Holder is then entitled to designate.
4.1.7 Fees; Costs and Expenses. Except as provided in the following
sentence, Holder Designees shall not receive an annual retainer, meeting fees
or other consideration for serving on the Board (or committees thereof) or any
Board of Directors of any Subsidiary of the Company. The Company will pay or
reimburse each Holder Designee for all reasonable out-of-pocket expenses
incurred by such Holder Designee in connection with its participation in
meetings of the Board (and committees thereof) and the Boards of Directors (and
committees thereof) of the Subsidiaries of the Company.
4.1.8 Class Director Limitation. Notwithstanding the term of this
Section 4.1, if, at any time that Holder holds a majority of the outstanding 8%
Preference Shares and the holders of 8% Preference Shares are entitled, voting
separately as a class, to elect directors pursuant to Section 9(c) of the 8%
Preference Shares Authorization, the number of Holder Designees that Holder is
entitled to designate pursuant to this Section 4.1, when added to the two
directors the holders of 8% Preference Shares are entitled to elect pursuant to
Section 9(c) of the 8% Preference Shares Authorization (the "Class Directors"),
constitutes 50% or more of the members of the Board, the number of directors
Holder is entitled to designate pursuant to this Section 4.1 shall be reduced
to a number so that such Holder Designees and the Class Directors,
collectively, constitute less than 50% of the total Board until the earlier of
the date on which (i) Holder no longer owns a majority of the outstanding 8%
Preference Shares or (ii) the Class Directors and the number of Holder
Designees Holder is entitled to designate pursuant to this Section 4.1,
collectively, constitute less than 50% of the Board.
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Section 4.2 Other Activities of the Holder; Fiduciary Duties. It
is understood and accepted that the Holder and its Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable law, nothing in
this Agreement shall limit the current or future business activities of the
Holder or its Affiliates whether or not such activities are competitive with
those of the Company and its Subsidiaries. Nothing in this Agreement, express
or implied, shall relieve any officer or director of the Company (including any
designee of a Holder pursuant to Section 4.1.1) or any of its Subsidiaries of
any fiduciary or other duties or obligations they may have to the Company's
shareholders.
Section 4.3 Actions Requiring Consent of Purchaser. From and
after the First Closing and for so long after the Second Closing as Purchaser
and its Affiliates, collectively, hold of record shares of Common Stock and 8%
Preference Shares (assuming conversion into Common Stock of all 8% Preference
Shares held by Purchaser and its Affiliates) representing in the aggregate at
least (x) 50% of the number of shares of Common Stock into which a number of 8%
Preference Shares equal to the Original Shares would be convertible as of such
time of determination or (y) 10% of the number of outstanding shares of Common
Stock, determined giving effect to the full conversion of all outstanding
securities of the Company convertible or exchangeable for Common Stock, in
addition to any other vote or consent of shareholders required by law or by the
Company's Articles of Association, without the prior written consent of Holder,
the Company shall not, and shall not permit any Subsidiary to:
(i) Amend, alter or repeal any of the provisions
of the Articles of Association of the Company or the 8% Preference
Shares Authorization that affects the voting powers, rights or
preferences of the holders of the 8% Preference Shares; provided,
however, that action to authorize or create or to increase the
authorized amount of any Junior Shares, shall not be deemed to affect
the voting powers, rights or preferences of the holders of 8%
Preference Shares;
(ii) Merge, consolidate or enter into a similar
business combination, scheme of arrangement or transaction, effect any
reorganization, reclassification, recapitalization or other
transaction or event in connection with a plan pursuant to which a
majority of the outstanding Common Stock or any of the 8% Preference
Shares (or, with respect to any Subsidiary of the Company, any shares
or stock of such Subsidiary) shall be exchanged for, converted into,
acquired for or constitute solely the right to receive securities,
cash or other property (whether by means of an exchange offer,
liquidation, tender, offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise) or otherwise
reorganize with or into one or more entities (other than a merger of a
wholly-owned Subsidiary of the Company into another wholly-owned
Subsidiary of the Company); provided that this clause (ii) shall not
prohibit (x) the restructure of Triton International Oil Corporation
("TIOC") and its Subsidiaries pursuant to Section 14.1 of the
Shareholders Agreement between TIOC and ARCO JDA Limited (the "ARCO
Shareholders Agreement") or (y) any consolidation, merger or
reorganization of a Subsidiary of the Company in connection with a
transaction permitted by clause (iv) below and which does not
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affect (or result in any exchange, conversion or similar effect on)
any outstanding Common Stock or any of the 8% Preferenced Shares;
(iii) Authorize or create, modify the terms of or
increase the authorized amount of, (1) any shares of any class or
series or of any security convertible into shares of any class or
series ranking prior to the 8% Preference Shares in the distribution
of assets on any liquidation, dissolution or winding up of the Company
or any Subsidiary or in the payment of dividends, (2) any class of
Parity Shares, Parity Liquidation Shares or Parity Dividend Shares,
(3) any class or series of Junior Shares or any security convertible
into or exchangeable for any class or series of Junior Shares that,
pursuant to their terms, require, or permit the holders thereof to
require, the Company or any Subsidiary to redeem all or any portion of
such Junior Shares, or (4) any class or series of any other equity
security other than Junior Shares or any security convertible into or
exchangeable for any class or series of any other equity security
other than Junior Shares;
(iv) Sell, lease to a third party or otherwise
dispose of (in a single transaction or a series of related
transactions) assets comprising in excess of 50% of the market value
of the assets of the Company and its Subsidiaries as a whole or
dissolve, liquidate or terminate the Company;
(v) Other than regular dividends on the Company's
5% Convertible Preference Shares in accordance with the terms thereof
as in effect on the date hereof and subject to subsection 3(i) of the
8% Preference Shares Authorization, declare, pay or set aside for
payment any dividends or other distributions (whether in cash, shares
or property) with respect to, or redeem or otherwise purchase, any
Junior Shares or, in the case of any Subsidiary of the Company, any
shares or stock held other than by the Company or any wholly- owned
Subsidiary of the Company; provided that this clause (v) shall not
prohibit the payment of dividends on and/or redemption of shares of
TIOC pursuant to the ARCO Shareholders Agreement;
(vi) Directly, or indirectly through any
Subsidiary of the Company, create, incur, issue, assume, guarantee or
otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur") any Indebtedness
(other than Permitted Indebtedness) or issue, or permit any Subsidiary
of the Company to issue, any Preferred Stock (except Preferred Stock
issued to the Company or a wholly owned Subsidiary of the Company);
provided, however, that the Company and its Subsidiaries may incur
Indebtedness and, subject to the other limitations of this Section
4.3, issue shares of Preferred Stock if, in either case, the Company's
Leverage Ratio at the time of incurrence of such Indebtedness or the
issuance of such Preferred Stock, as the case may be, after giving pro
forma effect to such incurrence or issuance as of such date and to the
use of proceeds therefrom is less than 2.5 to 1; provided, further,
that this clause (vi) shall not prohibit the issuance of Preferred
Stock by TIOC pursuant to Section 8.3 of the ARCO Shareholders
Agreement;
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(vii) Issue any shares of 8% Preference Shares
other than (a) pursuant to the terms of the Stock Purchase Agreement
and the Rights Offering (as defined in the Stock Purchase Agreement)
and (b) as Additional Shares pursuant to subsection 3(b) of the 8%
Preference Shares Authorization;
(viii) Issue any shares of a class of shares ranking
pari passu or prior to the 8% Convertible Preference Shares with
respect to dividends or to the distribution of assets in liquidation
or, in the case of any Subsidiary of the Company, issue any shares or
stock to any Person other than the Company or any Subsidiary of the
Company (provided that this clause (viii) shall not prohibit the
issuance of Preferred Stock by TIOC pursuant to Section 8.3 of the
ARCO Shareholders Agreement);
(ix) Commence or effect any tender or exchange
offer made by the Company or any Subsidiary for all or any portion of
the Common Stock; or
(x) Decrease the number of shares designated as
8% Convertible Preference Shares as provided in Section 1 of the 8%
Preference Shares Authorization.
Section 4.4 Action by Holder. At any time there shall be more
than one Holder, the designation of Holder Designees and the consent of Holder
required for actions referred to in this Agreement shall be effected by
delivery to the Company of a written instrument designating such Holder
Designees or granting (or denying) such consent executed by Holders holding a
majority of outstanding Common Stock (calculated giving effect to the full
conversion of all 8% Preference Shares held by all Holders) (a "Majority
Interest"). Each such written instrument shall indicate the number of 8%
Preference Shares held by the Holder or Holders executing same and shall
contain a certification that such Holders' 8% Preference Shares represent a
Majority Interest.
ARTICLE 5
TERMINATION
The provisions of this Agreement, unless earlier terminated pursuant
to their terms, shall terminate on the tenth anniversary of the date of this
Agreement.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Notices. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows
(or at such other address as may be substituted by notice given as herein
provided):
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If to the Company:
c/o Triton Exploration Services Inc.
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Attention: President
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five calendar days after mailing if sent by registered or certified mail
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
Section 6.2 Third Party Registration Rights. The Company is not
a party, or otherwise subject, to any agreement granting registration rights to
any other Person with respect to the securities of the Company. The Company
will not on or after the date of this Agreement enter into any agreement
granting (a) demand registration rights to any other Person with respect to the
securities of the Company, or (b) piggy-back registration rights to any other
Person that are not junior or subordinate to the rights granted to the holders
of Registrable Securities under Sections 2.1 and 2.2 hereof, without the
written consent of the holders of a majority of the then outstanding
Registrable Shares. Any agreement entered into pursuant to such consent shall
not be amended without a further written consent of the holders of a majority
of the then outstanding Registrable Shares.
Section 6.3 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. This Agreement shall be
construed, interpreted, and enforced in accordance with the laws of the State
of Texas, excluding any choice-of-law provisions thereof. Each of the parties
hereby (a) irrevocably submits to the exclusive jurisdiction of the United
States Federal District Court for the Northern District of Texas, sitting in
Dallas County, Texas, the United States of America, in the event such court has
jurisdiction or, if such court does not have jurisdiction, to any district
court sitting in Dallas County, Texas, the United States of America, for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement, including any claims by any Indemnified Persons for indemnity
pursuant to Section 5 hereof, (b) waives, and agrees not to assert in any such
suit, acting or proceeding, any claim that (i) it is not personally subject to
the jurisdiction of such court or of any other court to which proceedings in
such court may be appealed, (ii) such suit, action or proceeding is brought in
an inconvenient forum or (iii) the venue of such suit, action or proceeding is
improper and (c) expressly waives any requirement for the posting of a bond by
the party bringing such suit, action or proceeding. Each of
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the parties consents to process being served in any such suit, action or
proceeding by mailing, certified mail, return receipt requested, a copy thereof
to such party at the address in effect for notices hereunder, and agrees that
such services shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 7 shall affect or limit any right to
serve process in any other manner permitted by law.
Section 6.4 Successors and Assigns. Whether or not an express
assignment has been made pursuant to the provisions of this Agreement,
provisions of this Agreement that are for the Holders' benefit as the holders
of any Registrable Shares are also for the benefit of, and enforceable by, all
subsequent holders of Registrable Shares and such subsequent holders shall be
deemed to be Holders and to have become parties to this Agreement (including
without limitation for purposes of Article IV hereof), except as otherwise
expressly provided herein; provided that the provisions of this Agreement shall
not be for the benefit of, applicable to or enforceable by any transferee, and
such transferee shall not be deemed a Holder for purposes of this Agreement of
Registrable Shares if the Holder effecting such transfer expressly shall have
designated such transferee as not constituting a Holder subject to or entitled
to the benefit of this Agreement at or prior to the effectiveness of the
transfer of Registrable Shares to such transferee. Subject to the preceding
sentence, this Agreement shall be binding upon the Company, each Holder, and
their respective successors and permitted assigns.
Section 6.5 Duplicate Originals. All parties may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
Section 6.6 Severability. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision in
every other respect and the remaining provisions shall not in any way be
affected or impaired thereby.
Section 6.7 Specific Performance. The Company and the Holder or
Holders recognize that if the Company refuses to perform under the provisions
of this Agreement, monetary damages alone will not be adequate to compensate
the Holder or Holders for its or their injury. The Holder or Holders shall
therefore be entitled, in addition to any other remedies that may be available,
to obtain specific performance of the terms of this Agreement.
Section 6.8 No Waivers; Amendments.
6.8.1 No failure or delay on the part of the Company or any Holder
in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.
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6.8.2 Any provision of this Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed by the
Company and the Holders holding a majority of the Registrable Shares.
Section 6.9 No Affiliate Liability. The partners, members,
officers, directors, shareholders and Affiliates of a Holder, the Company or
their respective Affiliates shall not have any personal liability or obligation
to any Person arising under this Agreement in such capacities.
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SIGNATURES TO SHAREHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, all as of the date first written above.
TRITON ENERGY LIMITED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Chief Executive Officer,
General Counsel and Secretary
HM4 TRITON, L.P.
By: HM Fund IV Cayman LLC,
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Senior Vice President
Address:
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[Signature Page to Shareholders Agreement]
