LIMITED STANDSTILL AGREEMENT
This LIMITED STANDSTILL AGREEMENT (this "Agreement") is entered into
as of this 5th day of May, 2000 (the "Effective Date") by and among OEC
Compression Corporation (the "Company"), Xxx X. Xxxxx ("Xxxxx"), Xxxxx X.
Xxxxxx ("Xxxxxx"), Xxxxxxx X. Xxxxxx ("Xxxxxx"), Xxxx X. Xxxxxxx
("JBrannon"), Xxxxxxx X. Xxxxxxx ("RBrannon"), Xxxx X. Xxxxxxxx ("Hawthorn"),
Xxx X. Xxxxxxxxxx ("Xxxxxxxxxx" and together with Davis, Warren, Xxxxxx,
JBrannon, RBrannon and Hawthorn sometimes collectively referred to herein as
the "Group A"), HACL, Ltd. a Texas limited partnership ("HACL"), Energy
Investors, a Texas joint venture ("Energy Investors"), Xxxxxx X. Xxxxx
("Xxxxx"), Xxxxxxx X. Xxxxxx III ("Xxxxxx"), Xxx X. Xxxxx ("Xxxxx") and
Xxxxxx Xxxxxxx ("Xxxxxxx" and together with Xxxxx, Xxxxxx and Xxxxx sometimes
collectively referred to herein to as the "Group B"). The members of Group B
are sometimes referred to herein collectively as "Members" and individually
as a "Member." The Company, Davis, Warren, Xxxxxx, JBrannon, RBrannon,
Hawthorn, Stephenson, HACL, Energy Investors, Estis, Butler, Xxxxx and
Xxxxxxx are sometimes collectively referred to herein as the "Parties" and
individually as a "Party."
W I T N E S S E T H :
WHEREAS, Group B has filed a Schedule 13D and a Schedule 14A
indicating that they intend to solicit proxies to elect a slate of directors
at the next annual meeting of the shareholders of the Company (the "Annual
Meeting") in opposition to certain of the directors currently on the Board of
Directors of the Company and
WHEREAS, Xxxxx has obtained irrevocable proxies from each of
Xxxxxxx, Xxxxxx and Xxxxx as to certain matters; and
WHEREAS, HACL and Energy Investors are significant shareholders of
the Company and the transactions contemplated by this Agreement will directly
affect such shareholders; and
WHEREAS, the Company has engaged Prudential Securities, Inc.
("Prudential") to pursue the sale of the Company and Prudential is in the
process of soliciting bids for the purchase of all of the Company (the "Sales
Process"); and
WHEREAS. each of the Parties support the Sales Process and do not
want to take any actions that would impede the Sales Process; and
WHEREAS, the Parties desire to temporarily suspend certain public
actions in order to not impede the Sales Process; and
WHEREAS, the Parties desire to support the orderly process of
solicitation of proxies; and
WHEREAS, the Board of Directors of the Company has unanimously set a
new date for the Company's annual meeting of the Shareholders at July 13,
2000 with a record date of June 12, 2000;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledge, the Parties,
intending to be legally bound, hereby contract and agree as follows:
1. LIMITED STANDSTILL. From the Effective Date until June 5, 2000
(the "Standstill Period"), neither Group B, Group A, the Company or any other
Party to this Agreement will take any of the following actions: (i) institute
any litigation concerning the Annual Meeting or the solicitation of proxies
for the annual meetings, or (ii) solicit proxies (as such terms are defined
in Rule 14a-1 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) by means of newspaper ads or by means of mass or general
mailings to the shareholders of the Company. This Section 1 shall not
prohibit or prevent any Party from filing (i) Schedules 13D or 14A with
respect to any planned proxy solicitation or amending any existing filings
with respect to any such proxy solicitation, (ii) contacting employees or
significant shareholders on a private or non-public basis concerning the
Annual Meeting and the solicitation of proxies for the election of directors
at the Annual Meeting; (iii) consulting with special counsel, proxy
solicitation firms and investment banking firms concerning a proxy
solicitation or (iv) preparing or drafting pleadings for litigation to be
instituted after the end of the Standstill Period and or investigating
matters related to such potential litigation. If any Party (the "First
Party") feels that another Party (the "Other Party") has breached the
provisions of this Section 1, then the First Party shall notify the Other
Party of such breach and the Other Party shall have two business days to cure
such breach.
2. ANNUAL MEETING. By the unanimous vote of the Board of Directors
at a duly called meeting of the Board of Directors of the Company held on May
5, 2000, the Annual Meeting is currently set for July 13, 2000 with a record
date of June 12, 2000.
3. SALES UPDATES. The Parties agree that there will be weekly
updates as to the sales process by Prudential at which all directors will be
invited to participate. Xxxxx will be given reasonable notice of any meetings
between the Company and any potential bidder that Xxxxxxxx Xxxxx will be
participating in and Xxxxx (or if he is not available, Xxxxxx or Xxxxx) will
be invited to attend or participate in such meetings. Board members will be
furnished copies of any proposed sales or merger contracts to be submitted to
bidders and any other relevant written materials between the bidders and the
Company.
4. SUPPORT OF THE SALES PROCESS. Each of the Parties acknowledge and
agree that they support the process of selling the Company.
5. REPRESENTATIONS AND WARRANTIES.
5.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Members as follows:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of Oklahoma and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement.
(b) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company and is enforceable against the Company in accordance with its terms,
except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by the Company do
not, and the performance by the Company of its obligations hereunder and the
consummation of the transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any lien upon any of the assets or
properties of the Company, any of the terms, conditions or provisions of (A)
the certificates or articles of incorporation or bylaws of the Company or (B)
(x) any law or order of any Governmental or regulatory authority applicable
to the Company or any of its assets or properties, or (y) any contract to
which the Company is a party or by which the Company or any of its assets or
properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations and creations and impositions of liens which, individually or
in the aggregate, could not be reasonably expected to have a material adverse
effect on the ability of the Company to consummate the transactions
contemplated by this Agreement.
5.2 REPRESENTATIONS AND WARRANTIES OF GROUP B. Each Member of Group
B represents and warrants to the Company that:
(a) Such Member of Group B has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all action necessary to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, validly executed and
delivered by such Member and constitutes the legal, valid and binding
obligation of such Member, enforceable against such Member in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting enforcement of creditors'
rights generally and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and
general fiduciary duties.
(c) The execution and delivery of this Agreement by such Member does
not, and the performance by such Member of his obligations hereunder will
not, require any filing by such Member with any governmental or regulatory
authority or any third party, or require such Member to file for or obtain
any permit, authorization, consent or approval of any governmental
or regulatory authority or any third party other than an amendment to
Schedule 13D, Schedule 14A and Form 4 and/or Form 5. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of
which such Member is a trustee whose consent is required for the execution
and delivery of this Agreement or the consummation by such Member of the
transactions contemplated hereby.
5.3 REPRESENTATIONS AND WARRANTIES OF GROUP A. Each member of Group
A represents and warrants to the Members of Group B that:
(a) Such member of Group A has all requisite power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby and has taken all action necessary to authorize the execution,
delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, validly executed and
delivered by such member of Group A and constitutes the legal, valid and
binding obligation of such member, enforceable against such member in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting enforcement of
creditors' rights generally and by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and general fiduciary duties.
(c) The execution and delivery of this Agreement by such member of
Group A does not, and the performance by such member of his obligations
hereunder will not, require any filing by such member with any governmental
or regulatory authority or any third party or require such person file with
or obtain any permit, authorization, consent or approval of any governmental
or regulatory authority or any third party other than an amendment to
Schedule 13D, Schedule 14A and Form 4 and/or Form 5. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of
which such member is a trustee whose consent is required for the execution
and delivery of this Agreement or the consummation by such member of the
transactions contemplated hereby.
6. MISCELLANEOUS.
6.1 NOTICES. All notices, requests or instruction hereunder shall be
in writing and delivered personally or sent by registered or certified mail,
postage prepaid or by telecopier (or like transmission), as follows:
(1) if to the Company or any member of Group A:
OEC Compression Corporation
0000 Xxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
with a copies to:
Xxxx Xxxxxxxxx, Esq.
Schlanger, Mills, Xxxxx & Silver, LLP
000 Xxxxx Xxxx Xxx, Xxxx 000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
Xxx X. Xxxxx
Energy Transfer Group
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
Fax (000) 000-0000
(2) if to any Member, at its or his address set forth in
the Schedule 13D filed by Group B with a copy to:
Xxxx X. Xxxxxx
Mayor, Day, Xxxxxxxx &
Xxxxxx, LLP 000 Xxxxxxxxx, Xxxx 0000
Xxxxxxx, XX 00000 FAX (000) 000-0000
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices and other communications
given to any party hereto in accordance with the provisions hereof shall be
deemed to have been given on the date of receipt, provided that any notice or
other communication that is received other than during regular business hours
of the recipient shall be deemed to have been given at the opening of
business on the next business day of the recipient.
6.2 ENTIRE AGREEMENT This Agreement constitutes the entire agreement
between the parties hereto with respect to the transactions contemplated
hereby and supersede and amend all prior understandings, arrangements and
agreements with respect to the subject matter hereof. No modification hereof
shall be effective unless in writing and signed by the Party against whom it
is sought to be enforced. The Parties may, by written agreement, make any
modification or amendment of this Agreement, but no such modification or
amendment will be effective unless signed by all of the Parties. The captions
appearing herein are for the convenience of the parties only and shall not be
construed to affect the meaning of the provisions of this Agreement. Except
as specifically set forth herein, nothing in this Agreement is intended to
release, amend or modify any of the rights of the Parties under the Merger
Agreement or Asset Purchase Agreement or the documents executed in connection
with the consummation of the Purchase Transactions.
6.3 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oklahoma applicable in the case
of agreements made and to be performed entirely within such State.
6.4 INJUNCTIVE RELIEF. Each of the Parties recognizes that any
breach of the terms of this Agreement would give rise to irreparable harm for
which money damages would not be an adequate remedy, and accordingly agree
that, in addition to other remedies, any nonbreaching Party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce the terms and provisions of this Agreement by a
decree of specific performance in any action instituted in any court of the
United States or any state hereof having jurisdiction without the necessity
of proving the inadequacy as a remedy of money damages.
6.5 BINDING EFFECT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs, legal representatives and permitted assigns,
but neither this Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any of the Parties without the prior written
consent of the other parties and any such attempted assignment without
consent shall be void.
6.6 THIRD PARTY BENEFICIARIES. This Agreement is not intended, and
shall not be construed, to confer any rights or remedies hereunder upon any
party other than the Parties.
6.7 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement, or any such terms in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
6.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which taken together
shall constitute one and the same instrument.
6.9 EXPENSES. Group B acknowledges and agrees that the Company is
under no current obligation to pay or reimburse any expenses incurred by
Group B and that Group B shall bear their own expense with respect to the
transactions contemplated by this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
OEC COMPRESSION CORPORATION
BY
NAME:
TITLE:
--------------------------------
GROUP A
XXX X. XXXXX
XXXXX X. XXXXXX
XXXXXXX X. XXXXXX
XXXX X. XXXXXXX
XXXXXXX X. XXXXXXX
XXXX X. XXXXXXXX
XXX X. XXXXXXXXXX
HACL
HACL, LTD.
by Six-Da Waco, Inc., general partner
BY
NAME:
TITLE:
ENERGY INVESTORS
ENERGY INVESTORS
BY
NAME:
TITLE:PRESIDENT OF SIX-DAWACO, INC., GENERAL
PARTNER OF HACL, LTD., MANAGING JOINT
VENTURE PARTNER
GROUP B
XXXXXX X. XXXXX
XXXXXXX X. XXXXXX, III
XXX XXXXX
XXXXXX XXXXXXX
