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EXHIBIT 4.4
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STOCKHOLDER AGREEMENT
DATED AS OF
NOVEMBER 17, 1999
BY AND AMONG
ENERGY PARTNERS, LTD.,
EVERCORE CAPITAL PARTNERS L.P.,
EVERCORE CAPITAL PARTNERS (NQ) L.P.,
EVERCORE CAPITAL OFFSHORE PARTNERS L.P.,
ENERGY INCOME FUND, L.P.,
AND
THE INDIVIDUAL SHAREHOLDERS OF THE COMPANY
SIGNATORIES HERETO
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Table of Contents
Page
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ARTICLE I Definitions............................................................................................1
Section 1.1. Definitions................................................................................1
ARTICLE II Transfer of Securities................................................................................8
Section 2.1. Transferability............................................................................8
Section 2.2. Right of First Offer.......................................................................9
Section 2.3. Legend....................................................................................12
Section 2.4. Compliance with Applicable Law, Etc.......................................................12
Section 2.5. Effect....................................................................................12
ARTICLE III Board Representation................................................................................12
Section 3.1. Certain Shareholder Actions...............................................................12
Section 3.2. Directors.................................................................................13
Section 3.3. ERISA Management Rights...................................................................14
Section 3.4. Indemnification...........................................................................16
ARTICLE IV Covenants of the Company.............................................................................16
Section 4.1. Covenants.................................................................................16
Section 4.2. Affiliate Transactions....................................................................18
Section 4.3. Insurance.................................................................................18
ARTICLE V Tag Along Rights......................................................................................19
Section 5.1. Applicability.............................................................................19
Section 5.2. Tag Along Offer...........................................................................19
Section 5.3. Exercise..................................................................................19
Section 5.4. Right of First Offer......................................................................20
ARTICLE VI Drag Along Rights....................................................................................21
Section 6.1. Drag Along................................................................................21
Section 6.2. Drag Along Procedure......................................................................21
Section 6.3. Allocation of Purchase Price..............................................................22
ARTICLE VII Escrow Shares.......................................................................................22
Section 7.1. Release of Escrow Shares..................................................................22
ARTICLE VIII Common Stock.......................................................................................24
Section 8.1. Qualifying Public Offering................................................................24
Section 8.2. Issuance of Additional Shares of Common Stock.............................................24
Section 8.3. Adjustment Shares.........................................................................25
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ARTICLE IX Miscellaneous........................................................................................25
Section 9.1. Effectiveness............................................................................25
Section 9.2. Termination..............................................................................25
Section 9.3. Monitoring Fee...........................................................................26
Section 9.4. Notices..................................................................................26
Section 9.5. Interpretation...........................................................................27
Section 9.6. Severability.............................................................................28
Section 9.7. Counterparts.............................................................................28
Section 9.8. Entire Agreement; No Third Party Beneficiaries...........................................28
Section 9.9. Further Assurances.......................................................................28
Section 9.10. Governing Law; Equitable Remedies........................................................28
Section 9.11. Amendments; Waivers......................................................................28
Section 9.12. Assignment and Successors................................................................29
Section 9.13. Limitation of Liability..................................................................29
Section 9.14. Waiver of Notice; Amendment of Certificate of Incorporation
and By-Laws; Termination of Second Amended and Restated
Stockholders' Agreement...............................................................29
Section 9.15. Employment Agreements....................................................................29
Section 9.16. Rights of EIF............................................................................29
SCHEDULE A -- Shareholder Notice Addresses
EXHIBIT A -- Restated Certificate of Incorporation
EXHIBIT B -- Bylaws
EXHIBIT C -- Directors as of Closing
EXHIBIT D -- Capital Expenditure Budget
EXHIBIT E -- Management Shareholders
EXHIBIT F -- Additional Party Counterpart
EXHIBIT G -- Management Sale
EXHIBIT H -- Escrow Shares
EXHIBIT I -- Registration Rights Agreement
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STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of November 17, 1999 (the
"AGREEMENT"), by and among ENERGY PARTNERS, LTD., a Delaware corporation (the
"COMPANY"), EVERCORE CAPITAL PARTNERS L.P., EVERCORE CAPITAL PARTNERS (NQ) L.P.
and EVERCORE CAPITAL OFFSHORE PARTNERS L.P., each a limited partnership
organized under the laws of the State of Delaware (collectively, the "EVERCORE
ENTITIES"), ENERGY INCOME FUND, L.P., a limited partnership organized under the
laws of the State of Delaware ("EIF"), and the individual stockholders of the
Company that are signatories hereto (each, an "INDIVIDUAL SHAREHOLDER"). Each
holder of Common Stock of the Company that is a party to this Agreement and
each Permitted Transferee is referred to as a "SHAREHOLDER" and such holders
are referred to collectively herein as the "SHAREHOLDERS."
WHEREAS, the Evercore Entities and the Company are parties to a Stock
Purchase Agreement dated October 26, 1999 (the "STOCK PURCHASE AGREEMENT") by
which the Evercore Entities have agreed to purchase certain shares of preferred
stock from the Company, all upon the terms and subject to the conditions of the
Stock Purchase Agreement; and
WHEREAS the parties hereto wish to set forth their agreement
concerning certain matters relating to the Shareholders' ownership and
disposition of any shares of capital stock of the Company (or any rights to
acquire such shares or securities convertible into, or exchangeable for, such
shares) (the "SECURITIES") and to set forth herein certain provisions regarding
the operation and management of the Company during the term of this Agreement.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"ACTUAL CAP EX" has the meaning set forth in Section 7.1.
"ADDED PDP" has the meaning set forth in Section 7.1.
"ADDITIONAL PARTY COUNTERPART" means the document set forth in Exhibit
F.
"ADJUSTMENT SHARES" has the meaning set forth in Section 8.3(a).
"AFFILIATE" means, with respect to a specified Person, any other
Person directly or indirectly controlling, controlled by or under common
control with such specified Person and, with respect to
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any fund or trust, any Person which is a participant in or beneficiary of such
fund or trust. For purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" having
meanings correlative to the foregoing.
"AGREEMENT" has the meaning set forth in the recitals to this
Agreement.
"APPLICABLE LAW" means, with respect to any Person, any statute, law,
regulation, ordinance, rule, judgment, rule of common law, order, decree,
award, Governmental Approval, concession, grant, franchise, license,
agreements, directive, guideline, policy, requirement, or other governmental
restriction or any similar form of decision of, or determination by, or any
interpretation or administration of any of the foregoing by, any Governmental
Authority, whether in effect as of the date hereof or thereafter and in each
case as amended, applicable to such Person or its subsidiaries or their
respective assets.
A Person shall be deemed to "BENEFICIALLY OWN," to have "BENEFICIAL
OWNERSHIP" of, or to be "BENEFICIALLY OWNING" any securities (which securities
shall also be deemed "BENEFICIALLY OWNED" by such Person) that such Person is
deemed to "beneficially own" within the meaning of Rule 13d-3 under the
Exchange Act as in effect on the date of this Agreement.
"BOARD" means the board of directors of the Company.
"BOE" has the meaning set forth in Section 7.1.
"BUDGET CAP EX" has the meaning set forth in Section 7.1.
"CAUSE" has the meaning set forth in the Employment Agreements.
"CERTIFICATES OF DESIGNATION" means the terms of the Certificates of
Voting Powers, Designations, Preferences, and Relative, Participating, Optional
or Other Special Rights of Series A Convertible Preferred Stock, Series B
Convertible Preferred Stock and Series C Preferred Stock attached to the Stock
Purchase Agreement as Exhibits A, B and C.
"CLAIM SHARES" has the meaning set forth in Section 7.1.
"CLOSING" has the meaning given thereto in the Stock Purchase
Agreement.
"COMMON STOCK" means the Company's common stock, no par value, whether
owned as of the Effective Date or thereafter acquired.
"COMMON STOCK OWNERSHIP INTEREST" of any Person means the number of
shares of Common Stock owned by such Person, plus the number of any shares of
Common Stock underlying the then outstanding options or warrants or restricted
stock awards owned by such Person (including
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the Common Stock referenced in Article VII), plus the number of any shares of
Common Stock into which any outstanding preferred stock of the Company owned by
such Person is then convertible.
"COMPANY" has the meaning set forth in the recitals to this Agreement.
"COMPANY LOSSES" means any and all losses, costs, expenses, fines,
penalties and/or damages suffered and/or sustained by the Company that arise or
result from, or are based upon, a representation or warranty of the Company in
Section IV of the Stock Purchase Agreement not being true and correct on the
Effective Date; provided, however, that the aggregate amount of Company Losses
arising from environmental problems not known to the Company on the Effective
Date shall be limited to $6,000,000.
"COMPANY OWNERSHIP INTEREST" means, as of any time of calculation and
with respect to any Person or Persons, the percentage equal to (a) such
Person's Common Stock Ownership Interest, divided by (b) the total outstanding
shares of Common Stock plus the number of shares of Common Stock underlying the
then outstanding options, warrants or preferred stock.
A Person shall "DISPOSE" of Securities upon any transfer, sale, pledge,
assignment, grant of a security or participation interest in, encumbrance of or
other disposal of any Securities (which shall be a "DISPOSITION" by such
Person).
"DRAG ALONG NOTICE" has the meaning set forth in Section 6.2.
"DRAG ALONG PURCHASER" has the meaning set forth in Section 6.1(b).
"DRAG ALONG SALE" has the meaning set forth in Section 6.1(b).
"DRAG ALONG SELLERS" has the meaning set forth in Section 6.1.
"EFFECTIVE DATE" means the date of the Closing, as such date shall be
determined in the Stock Purchase Agreement.
"EIF" has the meaning set forth in recitals to this Agreement.
"EIF PERMITTED AFFILIATE" means (i) a Person wholly owned by EIF with
the same ownership and management of EIF that holds all Common Stock
beneficially owned by EIF and has no other assets or liabilities or (ii) a
successor liquidating trust of EIF, in each case if such Affiliate executes and
delivers to the parties hereto an Additional Party Counterpart.
"EIF PERMITTED TRANSFEREE" means (i) an EIF Permitted Affiliate, (ii)
any other transferee or transferees of EIF that executes and delivers to the
parties hereto an Additional Party Counterpart or (iii) any transferees of EIF
in a Public Offering or in a transaction pursuant to Rule 144.
"ERISA PARTNERSHIP" has the meaning set forth in Section 3.3(a).
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"ESCROW SHARES" means, with respect to each Management Shareholder,
the shares of Common Stock set forth opposite his or her name on Exhibit H.
"EVERCORE APPROVAL DIRECTOR" means a director or one of the directors
designated by the Evercore Entities from time to time, which initially shall be
at least one of either of Xxxxxx X. Xxxxxxx or Xxxxxxx X. Xxxxxxxx.
"EVERCORE ENTITIES" has the meaning set forth in the recitals to this
Agreement.
"EVERCORE PERMITTED AFFILIATE" means (i) a Person of which the equity
holders are limited partners or general partners of any Evercore Entity or its
Affiliates or (ii) a successor liquidating trust of any of the Evercore
Entities, in each case if such Affiliate executes and delivers to the parties
hereto an Additional Party Counterpart.
"EVERCORE PERMITTED TRANSFEREE" means (i) an Evercore Permitted
Affiliate, (ii) any other transferee or transferees of any Evercore Entity that
executes and delivers to the parties hereto an Additional Party Counterpart or
(iii) any transferees of the Evercore Entities in a Public Offering or in a
transaction pursuant to Rule 144.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"EXTENSION PERIOD" has the meaning set forth in Section 7.1(b).
"FAIR MARKET VALUE" of a share of Common Stock means on any particular
date (a) the last sales price per share of the Common Stock on such date on the
principal stock exchange on which the Common Stock has been listed or, if there
is no such price on such date, then the last price on such exchange on the date
nearest preceding such date, (b) if the Common Stock is not listed on any stock
exchange, the final bid price for a share of Common Stock in the
over-the-counter market, as reported by the Nasdaq Stock Market at the close of
business on such date, or the last sales price if such price is reported and
final bid prices are not available, (c) if the Common Stock is not quoted on
the Nasdaq Stock Market, the final bid price for a share of Common Stock in the
over-the-counter market as reported by the National Quotations Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices), or (d) if the Common Stock is not publicly traded, as
determined by a nationally recognized investment banking firm selected in good
faith by the Board of Directors of the Company (other than directors designated
for nomination by holders of the Preferred Stock or their successors under this
Agreement) and approved by the holders of a majority of the Preferred Stock,
which approval will not unreasonably be withheld.
"FINAL RESPONSE PERIOD" has the meaning set forth in Section 2.2(c).
"FIRST OFFEREE" has the meanings set forth in Section 2.2(c).
"FIRST RESPONSE PERIOD" has the meaning set forth in Section 2.2(c).
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"INTERRUPTION EVENT" has the meaning set forth in Section 7.1.
"GOVERNMENTAL APPROVAL" means any action, order, authorization,
consent, approval, license, lease, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any government or political subdivision
thereof, governmental department, commission, board, bureau, agency, regulatory
authority, instrumentality, judicial or administrative body having jurisdiction
over the matter or matters in question.
A "GROUP" has the meaning set forth in Section 13(d)(3) of the
Exchange Act as in effect on the date of this Agreement.
"HOLDING PERIOD" has the meaning set forth in Section 6.1(a).
"INDEPENDENT COMMITTEE" shall, as of any time, consist of the members
of the Board that are elected by the Management Shareholders.
"INDIVIDUAL SHAREHOLDER" has the meaning set forth in the recitals to
this Agreement.
"MANAGEMENT SALE" means the sale of certain shares of Common Stock
owned by certain Management Shareholders as set forth in Exhibit G.
"MANAGEMENT SHAREHOLDERS" means, subject to the provisions of Section
7.1(d), those individuals set forth on Exhibit E.
"MEASUREMENT DATE" has the meaning set forth in Section 7.1.
"NO EXERCISE NOTICE" has the meaning set forth in Section 2.1(c).
"NON-PDP ACQUISITION CAPITAL" has the meaning set forth in Section
7.1.
"OFFERED SECURITIES" has the meaning set forth in Section 2.2(b).
"OFFEREES" has the meaning set forth in Section 2.2(c).
"OFFER PRICE" has the meaning set forth in Section 2.2(b).
"PARTICIPATING SELLER" has the meaning set forth in Section 5.3.
"PDP" has the meaning set forth in Section 7.1.
"PERMITTED TRANSFEREES" means a Shareholder Permitted Transferee, an
EIF Permitted Transferee or an Evercore Permitted Transferee.
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"PERSON" means any individual, group, corporation, firm, partnership,
joint venture, trust, business association, organization, governmental entity
or other entity.
"PREFERRED STOCK" means the Series A Preferred Stock, the Series B
Preferred Stock and the Series C Preferred Stock.
"PROPOSED TRANSFEROR" has the meaning set forth in Section 2.2(b).
"PUBLIC OFFERING" means any offering of stock registered under the
Securities Act.
"QUALIFYING PUBLIC OFFERING" means an underwritten offering of Common
Stock (with underwriters selected by the Company with the consent of the
Evercore Entities (such consent not to be unreasonably withheld)) after the
Effective Date which is registered pursuant to an effective registration
statement filed by the Company under the Securities Act (other than a
registration statement filed on Form S-4 or S-8 or any other forms prescribed
for the same or similar purposes) covering shares of Common Stock (1) which
generates at least $75 million in gross proceeds, (2) pursuant to which 20% or
more of the issued and outstanding Common Stock is sold to the general public
and (3) after which the Common Stock is listed on a national securities
exchange or the NASDAQ National Market System.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement by and among the Company, the Evercore Entities and the Shareholders
in the form attached as Exhibit I.
"REQUIRED APPROVAL" has the meaning set forth in Section 4.1.
"RESERVE REPORT" has the meaning set forth in Section 7.1.
"RESIGN" has the meaning set forth in the Employment Agreements.
"REVOLVER" has the meaning set forth in Section 4.1(k).
"RULE 144" means Rule 144 promulgated under the Securities Act or any
successor rule or regulation.
"SALE" has the meaning set forth in Section 5.2.
"SALE PERCENTAGE" has the meaning set forth in Section 5.2(a).
"SECOND OFFEREE" has the meanings set forth in Section 2.2(c).
"SECOND RESPONSE PERIOD" has the meaning set forth in Section 2.2(c).
"SECURITIES" has the meaning set forth in the recitals to this
Agreement.
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"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SELLING HOLDER" has the meaning set forth in Section 5.2.
"SERIES A PREFERRED STOCK" means the Company's Series A Convertible
Preferred Stock issued pursuant to the Certificate of Voting Powers,
Designations, Preferences, and Relative, Participating, Optional or Other
Special Rights in the form attached to the Stock Purchase Agreement.
"SERIES B PREFERRED STOCK" means the Company's Series B Convertible
Preferred Stock issued pursuant to the Certificate of Voting Powers,
Designations, Preferences, and Relative, Participating, Optional or Other
Special Rights in the form attached to the Stock Purchase Agreement.
"SERIES C PREFERRED STOCK" means the Company's Series C Preferred
Stock issued pursuant to the Certificate of Voting Powers, Designations,
Preferences, and Relative, Participating, Optional or Other Special Rights in
the form attached to the Stock Purchase Agreement.
"SHAREHOLDER PERMITTED TRANSFEREE" means (i) a transferee or
transferees of an Individual Shareholder that executes and delivers to the
parties hereto an Additional Party Counterpart or (ii) any transferee of an
Individual Shareholder in a Public Offering or a transaction pursuant to Rule
144.
"SHAREHOLDER TRANSFEREE" means for any Individual Shareholder, any
transferee of an Individual Shareholder or a Shareholder Transferee, so long as
such transferee is (i) a family member of such an Individual Shareholder or
Shareholder Transferee, (ii) a distributee under the will or transferee under
the laws of intestate succession of an Individual Shareholder or a Shareholder
Transferee, or (iii) a trust, family partnership or similar family-related or
family-controlled entity for the benefit of family members of an Individual
Shareholder or a Shareholder Transferee.
"SHAREHOLDER" and "SHAREHOLDERS" have the meanings set forth in the
recitals to this Agreement.
"STOCK PURCHASE AGREEMENT" has the meaning set forth in the recitals
to this Agreement.
"TAG ALONG NOTICE" has the meaning set forth in Section 5.2.
"TAG ALONG OFFEREES" has the meaning set forth in Section 5.2.
"TAG ALONG PURCHASER" has the meaning set forth in Section 5.2(a).
"TARGET BOE" has the meaning set forth in Section 7.1.
"THIRD OFFEREE" has the meanings set forth in Section 2.2(c).
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"THIRD RESPONSE PERIOD" has the meaning set forth in Section 2.2(c).
"TRANSFER NOTICE" has the meaning set forth in Section 2.2(b).
"TRANSITION DATE" means the earlier to occur of (i) the date on which
the Evercore Entities hold less than 1/3 of their aggregate Common Stock
Ownership Interest held as of the Effective Date and (ii) the date on which the
Evercore Entities have received $120 million in proceeds (net of any fees to
underwriters or dealers) as a result of Disposition of Preferred Stock and/or
Common Stock.
"VOTING SECURITIES" means Preferred Stock, Common Stock and any other
issued and outstanding securities of the Company generally entitled to vote in
the election of directors of the Company.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, as of any
date of determination, any other Person as to which such Person owns, directly
or indirectly, or otherwise controls, 100% of the voting shares or other
similar interests.
"WRITTEN COMMITMENT" has the meaning set forth in Section 5.3.
ARTICLE II
TRANSFER OF SECURITIES
SECTION 2.1. TRANSFERABILITY.
(a) An Individual Shareholder may Dispose of Securities at any time to
a Shareholder Transferee, the Evercore Entities may Dispose of Securities at
any time to an Evercore Permitted Affiliate, and EIF may Dispose of Securities
at any time to an EIF Permitted Affiliate, in each case without any such
Disposition being subject to this Article II or Articles V and VI of this
Agreement. The parties agree that any such transferee or transferees shall be
bound by the terms and conditions of this Agreement, and, upon execution of an
Additional Party Counterpart in the form of Exhibit F, shall succeed to the
rights and obligations of the transferor.
(b) Subject to the terms of Sections 2.2, 2.3, 2.4 and 2.5 and
Articles V and VI, (i) the Evercore Entities, Evercore Permitted Transferees,
EIF, EIF Permitted Transferees, and, after three years after the Effective
Date, the Individual Shareholders and Shareholder Transferees may Dispose of
any Securities, in whole or in part, at any time or from time to time to
Evercore Permitted Transferees, EIF Permitted Transferees or Shareholder
Permitted Transferees without any restriction, except for limitations and
restrictions under the Securities Act. Except in connection with a Disposal to
an Evercore Permitted Affiliate, the Evercore Entities may not transfer their
rights under Section 3.1(b), 3.3, 4.1 and/or 4.2 in connection with any
Disposal of Securities. Except in connection with a Disposal of their entire
Common Stock Ownership Interest held as of the Effective Date, the Evercore
Entities may not transfer their rights under Section 2.2, Section 3.2 or
Articles V and VI. Any Disposition pursuant to clause (iii) of the definition
of Evercore Permitted Transferee or EIF Permitted Transferee or clause (ii) of
the definition of Shareholder Permitted Transferee shall not
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be subject to the provisions of this Agreement and any transferee in such a
Disposition shall not be required to become a party hereto.
(c) Without prior approval of the Board, Individual Shareholders,
Shareholder Transferees and Shareholder Permitted Transferees may not Dispose
of any shares of Common Stock other than to Shareholder Transferees for three
years after the Effective Date; provided, however, that
(i) a Management Shareholder may Dispose of shares of Common
Stock without being subject to Section 2.2 or Articles V or VI,
(A) in the Management Sale;
(B) prior to a Qualifying Public Offering, up to 35%
(25% following the Management Sale) of Common Stock Ownership Interest held by
such Management Shareholder as of the Effective Date (including shares sold in
the Management Sale); and
(C) following a Qualifying Public Offering, up to
50% of Common Stock Ownership Interest held by such Management Shareholder as
of the Effective Date (including shares sold in the Management Sale);
provided, however, that a Management Shareholder may not Dispose of any shares
of Common Stock pursuant to this Section 2.1 (c)(i) which would result in such
Management Shareholder receiving more than $600,000 in gross proceeds in the
aggregate from all of such Dispositions.
(ii) any Shareholders may Dispose of Securities pursuant to a
Public Offering in accordance with registration rights agreement with the
Company or pursuant to Rule 144 under the Securities Act without being subject
to the provisions of Section 2.2 or Articles V or VI,
(iii) an Individual Shareholder that has ceased to be a
Management Shareholder as a result of a termination without Cause shall be
permitted to Dispose of shares of Common Stock to a Shareholder Permitted
Transferee in compliance with the Securities Act, subject to the provisions of
Section 2.2 and Article V, and
(iv) a Management Shareholder may pledge, encumber or grant a
security interest in up to 25% of the Common Stock beneficially owned by him or
her in order to finance any purchase of shares of Common Stock permitted by the
provisions of Section 2.2 without being subject to the provisions of Section
2.2 or Article V.
SECTION 2.2. RIGHT OF FIRST OFFER.
(a) Subject to Section 2.1, the provisions of this Section 2.2 shall
apply to (i) Dispositions by EIF and Xxxxxxx X. Xxxxxxxx or any direct or
indirect transferee of EIF or Xx. Xxxxxxxx until the Transition Date and (ii)
Dispositions by any other Individual Shareholder or any direct or indirect
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transferee of any Individual Shareholder until the earlier of (A) the date of
completion of a Qualifying Public Offering and (B) the Transition Date.
(b) If EIF or any Individual Shareholder or any direct or indirect
transferee of EIF or any Individual Shareholder (any such Person, a "PROPOSED
TRANSFEROR") desires to transfer any Securities other than (i) pursuant to a
Public Offering in accordance with any registration rights agreement with the
Company, or (ii) pursuant to Rule 144 under the Securities Act, such Proposed
Transferor shall first give written notice (a "TRANSFER NOTICE") to that effect
to the Company (which shall forward such notice to the Management Shareholders)
and the Evercore Entities containing (A) the number of Securities proposed to
be transferred (the "OFFERED SECURITIES"), and (B) the purchase price (the
"OFFER PRICE") which the Shareholder proposes to be paid for the Offered
Securities.
(c) (i) The First Offeree shall have a period of up to 15 days
after the date of receipt of the Transfer Notice (the "FIRST RESPONSE PERIOD")
to accept the offer made pursuant to the Transfer Notice to purchase all of the
Offered Securities at the Offer Price by delivering written notice of
acceptance to the Proposed Transferor within the First Response Period. If the
First Offeree does not elect to purchase the Offered Securities within the
First Response Period (or gives notice to the Company and the Evercore Entities
prior to the expiration of such period that it will not exercise its rights (a
"NO EXERCISE NOTICE")), the Second Offeree shall have a period of up to 15 days
immediately following the earlier of (i) the end of the First Response Period
and (ii) the receipt of the No Exercise Notice (the "SECOND RESPONSE PERIOD")
to accept the offer made pursuant to the Transfer Notice to purchase all of the
Offered Securities at the Offer Price by delivering written notice of
acceptance to the Proposed Transferor within the Second Response Period. If the
Second Offeree does not elect to purchase the Offered Securities within the
Second Response Period or delivers a No Exercise Notice prior to the expiration
of such period, the Third Offeree (if, under Section 2.2(c)(ii), there is a
Third Offeree) shall have a period of up to 15 days immediately following the
earlier of (i) the end of the Second Response Period and (ii) the receipt of
the No Exercise Notice (the "THIRD RESPONSE PERIOD") to accept the offer made
pursuant to the Transfer Notice to purchase all of the Offered Securities at
the Offer Price by delivering written notice of acceptance to the Proposed
Transferor within the Third Response Period. The final applicable response
period under this Section 2.2(c)(i) (whether it is the Second Response Period
or the Third Response Period) is referred to as the "FINAL RESPONSE PERIOD."
(ii) (A) If the Proposed Transferor is EIF then: the
"FIRST OFFEREE" means the Evercore Entities, the "SECOND OFFEREE" means Xxxxxxx
X. Xxxxxxxx (unless he is no longer a member of the Board and Chief Executive
Officer of the Company) and the "THIRD OFFEREE" means the Management
Shareholders as a group; if Xx. Xxxxxxxx is no longer a member of the Board and
Chief Executive Officer of the Company, the "SECOND OFFEREE" means the
Management Shareholders as a group and there shall not be a Third Offeree.
(B) If the Proposed Transferor is Xxxxxxx X.
Xxxxxxxx, then: the "FIRST OFFEREE" means the Evercore Entities and the "SECOND
OFFEREE" means the Management Shareholders as a group.
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(C) If the Proposed Transferor is a Management
Shareholder, the "FIRST OFFEREE" means Xxxxxxx X. Xxxxxxxx (unless he is no
longer a member of the Board and Chief Executive Officer of the Company), the
"SECOND OFFEREE" means the Evercore Entities and the "THIRD OFFEREE" means the
other Management Shareholders as a group; if Xx. Xxxxxxxx is no longer a member
of the Board and Chief Executive Officer of the Company, the "FIRST OFFEREE"
means the Evercore Entities, the SECOND OFFEREE" means the Management
Shareholders as a group and there shall not be a Third Offeree.
(D) The First Offeree, the Second Offeree and the
Third Offeree (if any) are collectively referred to as the "OFFEREES."
(d) If the First Offeree elects to purchase all of the Offered
Securities, the closing of the sale of the Offered Securities will be held at
the Company's principal office on a date to be specified by the First Offeree
which is not less than 10 days nor more than 30 days after the end of the First
Response Period. At the closing, the First Offeree will deliver the
consideration in accordance with the terms of the offer set forth in the
Transfer Notice, and the Proposed Transferor will deliver the Offered
Securities to the First Offeree, duly endorsed for transfer, free and clear of
all liens, claims and encumbrances.
(e) If the Second Offeree elects to purchase all of the Offered
Securities, the closing of the sale of the Offered Securities will be held at
the Company's principal office on a date to be specified by the Second Offeree
which is not less than 10 days nor more than 30 days after the end of the
Second Response Period. At the closing, the Second Offeree will deliver the
consideration in accordance with the terms of the offer set forth in the
Transfer Notice, and the Proposed Transferor will deliver the Offered
Securities to the Second Offeree, duly endorsed for transfer, free and clear of
all liens, claims and encumbrances.
(f) If applicable, if the Third Offeree elects to purchase all of the
Offered Securities, the closing of the sale of the Offered Securities will be
held at the Company's principal office on a date to be specified by the Third
Offeree which is not less than 10 days nor more than 30 days after the end of
the Third Response Period. At the closing, the Third Offeree will deliver the
consideration in accordance with the terms of the offer set forth in the
Transfer Notice, and the Proposed Transferor will deliver the Offered
Securities to the Third Offeree, duly endorsed for transfer, free and clear of
all liens, claims and encumbrances.
(g) If, at the end of the Final Response Period, none of the Offerees
have given notice of their decision to purchase all of the Offered Securities,
then the Proposed Transferor shall be entitled for a period of 30 days
beginning the day after the expiration of the Final Response Period to enter
into an agreement to sell the Offered Securities to a Permitted Transferee at a
price not lower than the Offer Price and on terms not more favorable to the
transferee than were contained in the Transfer Notice, which sale shall be
closed no later than 60 days after the expiration of the Final Response Period.
Promptly after any sale pursuant to this Section 2.2, the Proposed Transferor
shall notify the Company of the consummation thereof and shall furnish such
evidence of the completion of such sale and of the terms thereof as the Company
may request.
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(h) If, at the end of any such 30-day or 60-day period provided for in
this Section 2.2, the Proposed Transferor has not entered into an agreement to
sell or completed the sale of the Offered Securities, respectively, the
Proposed Transferor shall no longer be permitted to sell any of such Offered
Securities pursuant to this Section 2.2 without again fully complying with the
provisions of this Section 2.2 and all the restrictions on sale, transfer,
assignment or other disposition contained in this Agreement shall again be in
effect.
SECTION 2.3. LEGEND. Each certificate representing the Securities
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
STATE SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED IN A STOCKHOLDER
AGREEMENT DATED NOVEMBER 17, 1999. A COPY OF SUCH TERMS AND CONDITIONS
WILL BE FURNISHED BY THE CORPORATION TO THE HOLDER HEREOF UPON WRITTEN
REQUEST AND WITHOUT CHARGE. THESE SECURITIES MAY NOT BE RESOLD OR
TRANSFERRED UNLESS SUCH TERMS AND CONDITIONS ARE COMPLIED WITH AND
UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933 AND APPLICABLE STATE SECURITIES LAWS.
SECTION 2.4. COMPLIANCE WITH APPLICABLE LAW, ETC. The exercise of the
right of first offer set forth in Section 2.2 and the completion of any
transfer or sale of Securities contemplated hereunder shall be subject to
compliance with Applicable Law. The Company and the Shareholders shall
cooperate with each other and shall take all such action, including, without
limitation, obtaining all Governmental Approvals required to comply with
Applicable Law in connection with the sale or transfer of the Securities
pursuant to this Agreement. Each of the Company and the Shareholders shall bear
their own costs and expenses in connection with obtaining any such Governmental
Approvals.
SECTION 2.5. EFFECT. Any purported transfer of securities that is
inconsistent with the provisions of this Article II shall be null and void and
of no force or effect and will not be registered on the stock transfer books of
the Company.
ARTICLE III
BOARD REPRESENTATION
SECTION 3.1. CERTAIN SHAREHOLDER ACTIONS.
(a) Attached hereto as Exhibits A and B are the Restated Certificate
of Incorporation and the Bylaws of the Company, respectively, which shall be in
effect as of the Closing. The Shareholders agree to vote, and to cause all
persons designated by them as directors to vote, against
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any proposal to modify or amend the Restated Certificate of Incorporation or
Bylaws of the Company or otherwise to change the number of directors, to
classify the Board of Directors or otherwise to change the character of the
Board of Directors in a manner inconsistent with this Agreement.
(b) Each Shareholder agrees that, until the Transition Date, the
presence of at least one Director nominated or designated by the Evercore
Entities and, if Xxxxxxx X. Xxxxxxxx is at such time a member of the Board,
also Xx. Xxxxxxxx shall be required for a quorum of the Board of Directors
unless the purpose of the meeting is to consider matters relating to the
employment of Xx. Xxxxxxxx (including the termination of such employment), in
which case his presence is not required for a quorum and he is not permitted to
vote on such matter.
(c) Each Shareholder agrees to take no action to remove any director
elected by holders of a class or series of Company stock not held by such
Shareholder or any director nominated or designated by other Shareholders under
this Agreement; provided, however, that this Section 3.1(c) shall not apply to
removal of Xx. Xxxxxxxx as a director if he no longer serves as Chief Executive
Officer of the Company.
(d) Each Shareholder further agrees to cooperate fully with the other
Shareholders in connection with the voting of its shares of Common Stock, the
execution of written consents, the calling of meetings and other stockholder
matters.
SECTION 3.2. DIRECTORS.
(a) The Board shall be composed of eight directors, unless Xxxxxxx X.
Xxxxxxxx ceases to serve as Chairman and Chief Executive Officer of the Company
but remains a member of the Board, in which case (and until Xx. Xxxxxxxx no
longer serves on the Board) the Board shall be composed of nine directors. At
Closing, the Directors of Company shall be as set forth on Exhibit C. The
number of Directors constituting the Board shall not be changed until the
earlier to occur of (x) the Transition Date and (y) such time as any Person
acquires at least 80% of the issued and outstanding Common Stock, provided,
however, that a majority of the Board, with the unanimous consent of each
Director who is a designee of any Evercore Entities pursuant to this Section
3.2, may alter the size of the Board; provided, further, that no reduction
shall eliminate a designee of any Shareholder under Section 3.2(b) without such
Shareholder's consent.
(b) Until the Transition Date, The Evercore Entities shall be entitled
to designate, nominate or elect four persons (with each Evercore Entity
designating or electing at least one of the persons) as directors of the
Company (five persons if Xxxxxxx X. Xxxxxxxx no longer serves as Chief
Executive Officer of the Company but serves on the Board), EIF shall be
entitled to designate, nominate or elect one person as a director of the
Company and the Management Shareholders and any other holders of Securities
shall be entitled to designate, nominate or elect the three remaining directors
of the Company. From the Transition Date until such time as the Evercore
Entities Beneficially Own a Company Ownership Interest of less than 10%, the
Evercore Entities shall be able to designate, nominate or elect a number of
persons as directors of the Company equal to the
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product (rounded to the next highest whole number) of (i) the Company Ownership
Interest of the Evercore Entities, times (ii) the total number of directors
then on the Company's Board.
(c) At all times after the Effective Date, the Company agrees to
support the nomination of, and the Company's nominating committee (or any other
committee exercising a similar function), if any, shall recommend to the Board
the number of Persons recommended or nominated in accordance with Section
3.2(b) be included in the slate of nominees recommended by the Board to
shareholders for election as Directors at each annual meeting of shareholders
of the Company commencing with the next annual meeting of shareholders. The
Company will solicit proxies and consents from its shareholders for such
nominees and will vote all management proxies in favor of such nominees except
for such proxies that specifically indicate to the contrary. If any Director of
the Company designated by any Person or group under Section 3.2 shall cease to
be a Director of the Company for any reason whatsoever, the Company shall
promptly, upon the request of such Person or group, cause to be elected to the
Board of Directors, a Person designated by such Person or group to replace such
director; provided that, such Person may not be a Person who was previously
removed as a Director of the Company for Cause.
(d) At all times after the Effective Date at which the Evercore
Entities beneficially own a Company Ownership Interest of 10% or more, the
Company, upon the Evercore Entities' request and recommendation, shall ensure
that at least one director designated by one of the Evercore Entities is a
member of each committee of the Board of Directors of the Company (other than
the Independent Committee). If any such Committee shall consist of more than
three directors, the number of directors designated by the Evercore Entities
that shall be appointed to such committee shall as nearly as practicable be
approximately proportionate to the number of Directors the Evercore Entities
are entitled to nominate as Directors of the Company at that time.
(e) Nothing in this Agreement shall prevent the Company's shareholders
from removing any Director for Cause. For purposes of this Agreement, "Cause"
shall mean any of the following, (i) a Director's conviction of, any crime or
offense involving monies or other property or any felony, crime or any offense
of moral turpitude; (ii) a Director's breach of any of his fiduciary duties to
the Company or its shareholders as determined by a judgment of a court of
competent jurisdiction, or making of a willful misrepresentation or omission
which breach or misrepresentation or omission has had a material adverse effect
on the Company's and its subsidiaries business, taken as a whole; or (iii) a
Director's material breach of any non-competition or confidentiality agreement
with the Company.
SECTION 3.3. ERISA MANAGEMENT RIGHTS.
(a) (i) Subject to the last sentence of this Section 3.3(a)(i),
each of Evercore Capital Partners L.P. and Evercore Capital Partners (NQ) L.P.
(the "ERISA Partnerships") shall have the right to designate one member of the
Board of the Company. Such right shall belong solely to, and shall be exercised
exclusively by, the ERISA Partnerships for their own benefit and for their own
account. The ERISA Partnerships' designated directors shall have the right to
serve as a member of any and all committees of the Board. The appointment and
removal of the ERISA Partnerships' designated directors shall be by written
notice from the ERISA Partnerships to the Company and,
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upon the delivery thereof at the Company's registered office or at any meeting
of the Board or any committee thereof, the Company will use its best efforts to
cause such appointment or removal. The directors appointed by the ERISA
Partnerships pursuant to this Section 3.3(a)(i) shall be included in (and shall
not be additional to) the directors which the Evercore Entities are entitled to
nominate or recommend pursuant to Section 3.2 of this Agreement.
(ii) Notwithstanding anything to the contrary specified in
Section 3.2 or this Section 3.3, to the extent that the Evercore Entities
reasonably believe that it is necessary or advisable to preserve the status of
the ERISA Partnerships as "venture capital operating companies," or to
otherwise ensure that the assets of the ERISA partnerships are not considered
"plan assets" for purposes of ERISA, each ERISA Partnership shall have the
right to appoint an observer who shall have the right to attend all meetings of
the Board of the Company and shall have all rights of a director of the Company
(including, but not limited to, the right to participate and be heard in
meetings of the Board) other than the right to vote on matters brought before
the Board; it being understood that, to the extent not prohibited by applicable
law, the ERISA Partnerships shall be represented on the Board of the Company by
directors nominated by the Evercore Entities pursuant to Section 3.2; provided
that the ERISA Partnerships shall not be entitled to appoint any observer
pursuant to this Section 3.3(a)(ii) unless fewer than two designees of the
Evercore Entities are serving as directors of the Company pursuant to Section
3.2; provided, further, that at any time the ERISA Partnerships have the right
to appoint an observer pursuant to this Section 3.3(a)(ii), the combined number
of directors designated by, and observers appointed by, the Evercore Entities
(including, without limitation, the ERISA Partnerships) shall not exceed the
number of directors the Evercore Entities have the right to nominate or
recommend under Section 3.2.
(b) The ERISA Partnerships shall have the right to receive, within a
reasonable time after their written request therefor, any information relating
to the Company or its subsidiaries or associated companies as they in their
sole discretion may require, including without limitation: (i) financial
information and statements, including a balance sheet, profit and loss and cash
flow statements of the Company and each of its subsidiaries; (ii) on an annual
basis or, if reasonably requested, more frequent basis, budgets and cash flow
forecasts and projections of the Company and each of its subsidiaries; and
(iii) such additional financial or other information as the ERISA Partnerships
may reasonably request; and the ERISA Partnerships shall be entitled, upon
reasonable notice during regular business hours, to inspect and review the
premises, books and records of the Company, its subsidiaries or associated
companies.
(c) The ERISA Partnerships shall have the right to meet on a regular
basis with the management personnel of the Company and its subsidiaries from
time to time and upon reasonable notice to the Company (or the applicable
subsidiary) for the purpose of consulting with, rendering advice,
recommendations and assistance to, and influencing the management of the
Company (or such subsidiary) or obtaining information regarding the Company's
or any of its subsidiaries' or associated companies' operations, activities and
prospects and expressing its views thereon.
(d) If counsel for the ERISA Partnerships concludes that the rights
granted to the ERISA Partnerships pursuant to this Section 3.3 should be
altered in order to preserve the qualification of each of the ERISA
Partnerships as a "venture capital operating company," or otherwise to ensure
that
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the assets of the ERISA Partnerships are not considered "plan assets" for
purposes of ERISA, the parties hereto agree to negotiate in good faith an
amendment to this Agreement that will effect such alteration in a manner
reasonably acceptable to the Company and the Evercore Entities.
SECTION 3.4. INDEMNIFICATION. The Restated Certificate of
Incorporation, Bylaws and other organizational documents of the Company and
each of its subsidiaries shall at all times, to the fullest extent permitted by
law, provide for indemnification of, advancement of expenses to, and limitation
of the personal liability of, officers of the Company and the members of the
Board and the members of the boards of directors or other similar managing
bodies of each of the Company's subsidiaries and such other persons, if any,
who, pursuant to a provision of such Restated Certificate of Incorporation,
Bylaws or other organizational documents, exercise or perform any of the powers
or duties otherwise conferred or imposed upon members of the Board or the
boards of directors or other similar managing bodies of each of the Company's
subsidiaries. Such provisions may not be amended, repealed or otherwise
modified in any manner adverse to any member of the Board or any member of the
boards of directors of other similar managing bodies of any of the Company's
subsidiaries until at least six years following the date that any Shareholder
is no longer entitled to designate or nominate any member of the Board.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1. COVENANTS. Until the Transition Date, without the
Required Approval, except as provided in Section 8.1, the Company will not take
any of the following actions:
(a) consolidate or merge with or into any Person or enter into any
similar business combination, transaction or series of transactions, except any
such transaction or series of transactions, as the case may be, involving only
Wholly Owned Subsidiaries of the Company;
(b) amend or repeal any provision of, or add any provision to, the
Company's Certificate of Incorporation, Bylaws or any Certificate of
Designation or otherwise alter or change the preferences, rights, privileges or
powers of the Securities;
(c) create, designate, reclassify, authorize the issuance of, or issue
or sell any new series or class of securities or increase the authorized number
of, authorize the issuance of, or issue, any additional shares of securities,
except in connection with redemptions or repurchases of preferred stock under
the Certificates of Designation;
(d) except as specifically provided otherwise in this Agreement,
change or modify the size of the Company's Board of Directors or any provision
of the Company's Restated Certificate of Incorporation, Certificate of
Designation, Bylaws or other governance document establishing requirements for
quorum or action of the Company's Board of Directors;
(e) voluntarily liquidate, dissolve, wind up or discontinue the
business of the Company;
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(f) pay, declare or set aside any sums for the payment of, any
dividends, or make any distributions on, any Securities except as required by
the terms of the Preferred Stock;
(g) redeem, purchase or otherwise acquire any of its Securities or
redeem, purchase or make any payments with respect to any stock appreciation
rights, phantom stock plans or similar rights or plans relating to the Company
or its subsidiaries, except for redemptions or repurchases of Preferred Stock
permitted under the Certificates of Designation;
(h) purchase, acquire or obtain any capital stock or other proprietary
interest, directly or indirectly, in any other entity or all or substantially
all of the business or assets of another Person for consideration (including
assumed liabilities) in excess of $250,000;
(i) enter into or commit to enter any joint ventures or any
partnerships or establish any non-Wholly Owned Subsidiaries, in each case,
where the contributions or investments by the Company are in excess of $250,000
in cash or assets, except as set forth or provided for in a capital expenditure
budget of the Company set forth in Exhibit D or approved after the Effective
Date under subpart (o) below;
(j) sell, lease, transfer or otherwise dispose of any asset or group
of assets, in an aggregate amount (as to the Company and all of its
subsidiaries), for consideration in excess of $250,000, except for field
equipment sold or disposed of in the ordinary course or business in an amount
not in excess of $2,000,000 in a single transaction or in a series of related
transactions;
(k) create, incur, assume or suffer to exist any indebtedness for
borrowed money of the Company or any of its subsidiaries in an aggregate amount
(as to the Company and all of its subsidiaries) in excess of $250,000, or repay
any indebtedness for borrowed money, except for any indebtedness existing as of
the date hereof and any net increase in borrowings not in excess of $2,000,000
in the aggregate by the Company under its existing Loan Agreement Revolving
Line of Credit dated June 23, 1999 (the "REVOLVER") between the Company and
Bank One, Texas, N.A.;
(l) mortgage, encumber, create, incur or suffer to exist, liens on its
assets, in an aggregate amount (as to the Company and all of its subsidiaries)
in excess of $250,000, except for liens on assets that exist as of the date
hereof, liens incurred after the Effective Date in the ordinary course of
business that do not secure indebtedness for borrowed money or capitalized
lease obligations and liens on assets of the Company that increase the
borrowing base under the Revolver not in excess of $1,000,000 in the aggregate
after the Effective Date;
(m) increase any compensation or benefits or enter into or amend any
employment agreement with any of its current or future officers or directors or
adopt any new employee benefit plan or amend any existing employee benefit plan
in any material respect that provides benefits more favorable to participants
in such plans, except for such changes to or new plans set forth on Schedule
4.1;
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(n) make any award of any restricted stock or stock options or other
stock-based compensation to any Person or reallocate any such awards, including
the shares referenced in Section 7.1 to be executed and delivered at the
Effective Date;
(o) adopt, approve or amend (in excess of $1,000,000 in the aggregate)
any capital budget or operating budget of the Company or make expenditures (in
excess of $1,000,000 in the aggregate) not contemplated by a capital or
operating budget of the Company, except for individual operating expenditures
of $100,000 or less in the ordinary course that require immediate action by the
Company and that would otherwise cause the total expenditures not contemplated
by a capital or operating budget of the Company to exceed $1,000,000;
(p) engage in hedging transactions with respect to oil and/or gas
prices; and
(q) agree in writing or otherwise to take any of the foregoing
actions.
Nothing in this Section 4.1 shall affect, impair or limit the requirements of
class voting with respect to the Preferred Stock set forth in the Certificates
of Designation. For purposes of this Section 4.1, the "REQUIRED APPROVAL"
means, (i) for so long as Xxxxxxx X. Xxxxxxxx serves on the Board and is Chief
Executive Officer of the Company, the approval of Xx. Xxxxxxxx and an Evercore
Approval Director, (ii) if Xx. Xxxxxxxx either no longer serves on the Board or
is not Chief Executive Officer of the Company, the approval of an Evercore
Approval Director and (iii) with respect to any cash dividends on Common Stock,
the approval of an Evercore Approval Director and either Xx. Xxxxxxxx or a
majority of the members of the Independent Committee. Until the Transition
Date, the Company shall give notice as promptly as possible to the Evercore
Entities of any plans or proposals to incur indebtedness for borrowed money
(under the Revolver or otherwise) in excess of $500,000, to amend any budget or
make any capital expenditure not contemplated by any budget in excess of
$500,000, or to encumber any assets (to increase the borrowing base under the
Revolver or otherwise).
SECTION 4.2. AFFILIATE TRANSACTIONS. Prior to the Transition Date, the
Company shall not, without the prior written consent of the Evercore Entities
or, in the case of any such transaction with an Affiliate of any Evercore
Entity, the Independent Committee, engage in any transaction with any Affiliate
of the Company which is not a Wholly Owned Subsidiary of the Company, if such
transaction has a value in excess of $100,000 individually or in excess of
$250,000 in the aggregate in any year, unless such transaction is (i) in the
ordinary course of business consistent with past practice and (ii) is on an
arm's length basis.
SECTION 4.3. INSURANCE. The Company shall maintain, and cause each of
its subsidiaries to maintain, insurance with financially sound and responsible
insurance carriers of the kinds, against the risks and in the relative
proportions and amounts usually carried by companies engaged in similar
businesses and of similar size. Without limiting the generality of the
foregoing, the Company shall maintain Directors and Officers Liability
insurance, in an amount not less than ten million dollars ($10,000,000), with
insurance carriers and covering such risks as is normal and customary for
corporations which have common stock that is publicly traded on the NASDAQ
National Market System, naming as insured the directors of the Company.
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ARTICLE V
TAG ALONG RIGHTS
SECTION 5.1. APPLICABILITY. Subject to Section 2.1, the provisions of
this Article V shall apply after three years from the Effective Date and prior
to the earlier of (i) the date of completion of a Qualifying Public Offering or
(ii) the Transition Date to sales by the Evercore Entities and any direct or
indirect transferees of the Evercore Entities or by any Individual Shareholders
and any direct or indirect transferees of an Individual Shareholder.
SECTION 5.2. TAG ALONG OFFER. Subject to Section 5.1, if a Shareholder
or any direct or indirect transferee of a Shareholder (other than EIF or any of
its Permitted Transferees) (the "SELLING HOLDER") desires to Dispose of
Securities to any Person (other than an Evercore Permitted Affiliate or a
Shareholder Transferee) in a single transaction or in a series of related
transactions, then prior to the consummation of such Disposition (a "SALE"),
the Selling Holder shall provide written notice (the "TAG ALONG NOTICE") of the
proposed Sale to the Company and the other Shareholders (collectively the "TAG
ALONG OFFEREES") at least 45 days prior to the proposed date of the Sale. The
Tag Along Notice shall include:
(a) The principal terms of the proposed Sale, including the number of
Securities to be purchased from the Selling Holder, the percentage such
Securities represent of the total number of Securities Beneficially Owned (on a
fully diluted basis) by the Selling Holder (the "SALE PERCENTAGE"), the
purchase price (allocated among Securities as provided in Section 6.3, if
applicable) and the name and address of the proposed purchaser (the "TAG ALONG
PURCHASER"); and
(b) An offer by the Selling Holder to include, at the option of each
Tag Along Offeree, in the Sale to the Tag Along Purchaser such number of
Securities (not in any event to exceed the Sale Percentage of the total number
of Securities Beneficially Owned (on a fully diluted basis) by such Tag Along
Offeree) owned by each Tag Along Offeree as determined in accordance with
Section 5.3, on the same terms and conditions, with respect to each share sold,
as the Selling Holder shall sell such of its Securities.
SECTION 5.3. EXERCISE. Each Tag Along Offeree desiring to accept the
offer contained in the Tag Along Notice shall send a written commitment (a
"WRITTEN COMMITMENT") to the Selling Holder specifying the number of Securities
(not in any event to exceed the Sale Percentage of the total number of
Securities Beneficially Owned (on a fully diluted basis) by such Tag Along
Offeree) which such Tag Along Offeree desires to have included in the Sale
within 30 days after the effectiveness of the Tag Along Notice (each a
"PARTICIPATING SELLER"). Each Tag Along Offeree who has not so accepted such
offer shall be deemed to have waived all of its rights with respect to the
Sale, and the Selling Holder and the Participating Sellers, if any, shall
thereafter be free to sell to the Tag Along Purchaser, at a price no greater
than the purchase price set forth in the Tag Along Notice and otherwise on
terms not more favorable in any material respect to them than those set forth
in the Tag Along Notice, without any further obligation to such non-accepting
Tag Along Offerees. If, prior to consummation, the terms of such proposed Sale
shall change with the result that the price shall be greater than the maximum
price set forth in the Tag Along Notice or the other terms shall
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be more favorable to a Participating Seller in any material respect than as set
forth in the Tag Along Notice, it shall be necessary for a separate Tag Along
Notice to have been furnished, and the terms and provisions of this Article V
separately complied with, in order to consummate such proposed Sale pursuant to
this Article V; provided, however, that in the case of such a separate Tag
Along Notice, the applicable period referred to in Section 5.2 shall be 20 days
and the applicable period referred to above in this Section 5.3 shall be 15
days.
The acceptance of each Participating Seller shall be irrevocable
except as hereinafter provided, and each such Participating Seller shall be
bound and obligated to sell its shares in the Sale, on the same terms and
conditions specified in the Tag Along Notice as the Selling Holder, such number
of Securities as such Participating Seller shall have specified in such
Participating Seller's written commitment. In the event the Selling Holder
shall be unable to obtain the inclusion in the Sale of all Securities which the
Selling Holder and the Participating Sellers desire to have included in the
Sale (as evidenced in the case of the Selling Holder by the Tag Along Notice
and in the case of each Participating Seller by such Participating Seller's
written commitment), the shares of Common Stock to be sold in the Sale by the
Participating Sellers shall be reduced, to the extent possible, before any
other Securities are reduced. The number of Securities to be sold in the Sale
by the Participating Sellers shall be reduced as follows: (i) in the event that
the Evercore Entities or any of their Affiliates is the Selling Holder(s) (A)
100% of the number of shares of Common Stock to be sold in the Sale shall first
be allocated to the Evercore Entities (or, if applicable, such lesser number of
Securities that would allow the Evercore Entities to include all Securities
specified in its Written Commitment in the Sale) then (B) the remaining
Securities to be sold in the Sale shall be allocated first to EIF and then on a
pro rata basis to other Shareholders according to the proportion which the
number of shares of Common Stock which each such Participating Seller desires
to have included in the Sale bears to the total number of shares desired by all
such Participating Sellers to have included in the Sale; (ii) in all other
circumstances, the number of Securities be sold in the Sale shall be reduced on
a pro rata basis (to zero if necessary) according to the proportion which the
number of Securities which each such Participating Seller desires to have
included in the Sale bears to the total number of shares desired by all
Participating Sellers to have included in the Sale. Notwithstanding any
provision to this Section 5.3 to the contrary, in the event of a reduction in
the number of Securities to be sold in the Sale by any Participating Seller,
such party may, within 10 business days after the date of its receipt of notice
of such reduction, elect not to be a Participating Seller in such sale and
shall be released from its obligations under its commitment.
If at the end of the 90th day following the date of the effectiveness
of the Tag Along Notice the Selling Holder has not completed the Sale as
provided in the foregoing provisions of this Article V, each Participating
Seller shall be released from its obligations under its written commitment, the
Tag Along Notice shall be null and void and it shall be necessary for a
separate Tag Along Notice to have been furnished, and the terms and provisions
of this Article V separately complied with, in order to consummate such Sale
pursuant to this Article V, unless the failure to complete such Sale resulted
from any failure by any Tag Along Offeree to comply in any material respect
with the terms of this Article V.
SECTION 5.4. RIGHT OF FIRST OFFER. The provisions of this Article V
shall not apply to any Securities that are purchased under Section 2.2.
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ARTICLE VI
DRAG ALONG RIGHTS
SECTION 6.1. DRAG ALONG.
(a) Subject to Section 2.1, the provisions of this Article VI shall
apply after the Holding Period to (i) EIF and Xxxxxxx X. Xxxxxxxx or any direct
or indirect transferee of EIF or Xx. Xxxxxxxx until the Transition Date and
(ii) any other Individual Shareholder or any direct or indirect transferee of
any Individual Shareholder until the earlier of (A) the Transition Date and (B)
the date of completion of a Qualifying Public Offering. The "HOLDING PERIOD"
means three years after the Effective Date; provided, however, that if Added
PDP as of the Measurement Date is equal or greater than 75% but less than 100%
of Target BOE, the "HOLDING PERIOD" means four years after the Effective Date
and, if Added PDP as of the Measurement Date is equal to or greater than 100%
of Target BOE, the "HOLDING PERIOD" means five years after the Effective Date.
(b) Each Shareholder and any direct or indirect transferee of a
Shareholder hereby agrees, if requested by the Evercore Entities, to
participate in a sale (a "DRAG ALONG SALE") of all of the Securities
Beneficially Owned by the Evercore Entities and its Affiliates to any Person
not affiliated with the Evercore Entities (the "DRAG ALONG PURCHASER") in the
manner and on the terms set forth in this Section 6.
SECTION 6.2. DRAG ALONG PROCEDURE. If the Evercore Entities elect to
exercise their rights under Section 6.3, a notice (the "DRAG ALONG NOTICE")
shall be furnished to the other Shareholders. The Drag Along Notice shall set
forth the principal terms of the Drag Along Sale, the purchase price and the
name and address of the Drag Along Purchaser. If the Evercore Entities
consummate the sale referred to in the Drag Along Notice on the terms and
conditions set forth therein, each Shareholder shall be bound and obligated to
sell all of the Securities held by it and its Affiliates in the Drag Along Sale
on the same terms and conditions. In any Drag Along Sale,
(a) Shareholders or any direct or indirect transferees thereof shall
not be required to make any representations or warranties other than as to (i)
title to shares, (ii) legal capacity and/or authority to enter into an
agreement and consummate a sale, and (iii) the validity, binding nature and
enforceability thereof, and
(b) any indemnities shall be several among selling Shareholders and
not joint, and limited in the case of any selling Shareholder to cash proceeds
received by such Shareholder in the Drag Along Sale. If, at the end of the 90th
day following the date of the effectiveness of the Drag Along Notice, the
Evercore Entities have not completed the Drag Along Sale, the other
Shareholders shall be released from their obligations under the Drag Along
Notice, the Drag Along Notice shall be null and void, and it shall be necessary
for a separate Drag Along Notice to be furnished and the terms and provisions
of this Article VI separately complied with, in order to consummate such Drag
Along Sale pursuant to this Article VI, unless the failure to complete such
sale resulted from any failure by a Shareholder to comply in any material
respect with the terms of Section 6.1 and this Section 6.2.
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SECTION 6.3. ALLOCATION OF PURCHASE PRICE. Notwithstanding any
contrary allocation in any sale documents between a Selling Holder or a seller
in a Drag Along Sale, for purposes of Articles V and VI, (i) the purchase price
for mixed Securities in a Sale or Drag Along Sale shall be allocated first to
the Preferred Stock in an amount equal to the stated value thereof and second
the balance thereof to Common Stock, with any options or warrants treated as
having been converted to Common Stock in a cashless exercise after giving
effect to such allocation, and (ii) if the purchase price consists of a
combination of cash and securities of an acquiring Person, the cash shall be
allocated first to the Preferred Stock in an amount up to the stated value
thereof and the balance of the consideration consisting of cash, if any, and
securities shall be allocated to any remaining Preferred Stock to the extent of
any remaining stated value of Preferred Stock and the Common Stock; provided,
that the holders of Preferred Stock shall cause to be furnished an opinion from
a nationally recognized investment banking firm that the total consideration to
be paid for all outstanding Securities in such transaction is fair from a
financial point of view.
ARTICLE VII
ESCROW SHARES
SECTION 7.1. RELEASE OF ESCROW SHARES.
(a) On the Effective Date, the Management Shareholders shall deliver
to the Company the Escrow Shares, together with signed stock transfer powers
endorsed in blank, to be held by the Company and to be released as contemplated
by Section 7.1(a) or Section 7.1(c) or cancelled by the Company as contemplated
by Section 7.1(e). Unless otherwise agreed by the Evercore Entities, Management
Shareholders will not vote the Escrow Shares unless and until they are released
under Section 7.1(a) or Section 7.1(c). On or before the 1st day of the second
calendar month next following the Measurement Date, the Company shall obtain a
Reserve Report which sets forth the XXXx of Added PDP as of the Measurement
Date. Within 60 days after receipt of the Reserve Report, the Company will
release a total number of the Escrow Shares to the Management Shareholders as
follows (with each Management Shareholder receiving a number of released Escrow
Shares equal to the percentage set forth opposite his or her name on Exhibit H
multiplied times the total number of Escrow Shares being released):
XXXx of Total Number of
Added PDP Escrow Shares to be Released
less than or equal to 25% of Target BOE 0
greater than 25% of Target BOE and less [(2,463.053 x Added PDP)/
than 100% of Target BOE (Target BOE)]-615.763
equal to or greater than 100% of Target [(2,035.640 x Added PDP)/
BOE and less than 125% of Target BOE (Target BOE)]-188.350
equal to or greater than 125% of Target BOE 2,203.22
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(b) For purposes of this Agreement,
"ACTUAL CAP EX" means the Company's actual capital expenditures
(excluding the purchase price for any acquisitions, but including subsequent
capital expenditures in connection with such acquisitions) between the
Effective Date and the Measurement Date.
"ADDED PDP" means the XXXx of the Company's PDP as of the Measurement
Date, plus the number of XXXx produced after the Effective Date and before the
Measurement Date, minus 3,103,077 XXXx and minus XXXx of PDP added as a result
of acquisitions by the Company after the Effective Date as determined in good
faith by the Company and approved by the Evercore Entities.
"BOE" means barrels of oil equivalent, with six thousand cubic feet of
natural gas being equivalent to one barrel of oil.
"BUDGET CAP EX" means the Company's budgeted capital expenditures (as
approved as contemplated by Section 4.1 hereof) between the Effective Date and
the Measurement Date.
"HYDROCARBON OPERATIONS" means all operations relating to the
exploration, development, production, stimulation or injection of hydrocarbons.
"INTERRUPTION EVENT" means a hurricane, tropical storm, tornado, tidal
wave or other similar violent weather event.
"MEASUREMENT DATE" means December 31, 2001. If as a result of an
Interruption Event, the Company is unable to conduct Hydrocarbon Operations,
the Company may notify the Evercore Entities within 30 days after the
occurrence of such Interruption Event. Such notice shall give full particulars
of the Interruption Event, and shall state the period of time (an "Extension
Period") during which the Company has been unable to conduct oil and gas
operations as a result of such Interruption Event. The Company shall use all
reasonable diligence to overcome the Interruption Event situation and resume
the conduct of Hydrocarbon Operations as quickly as possible. The Measurement
Date shall be extended by a period of time equal to the sum of any and all
Extension Periods.
"NON-PDP ACQUISITION CAPITAL" means the portion of the purchase price
in any acquisitions by the Company after the Effective Date and prior to the
Measurement Date that is determined in good faith by the Company and approved
by the Evercore Entities to be allocated to reserves that are not classified as
PDP.
"PDP" means the estimated quantities of oil, gas and other
hydrocarbons which geological and engineering data demonstrate with reasonable
certainty to be economically recoverable from completion intervals open and
producing in existing xxxxx without any additional capital expenditures.
"RESERVE REPORT" means a report, prepared by any of Netherland Xxxxxx
& Associates, Inc., XxXxxxxx and XxxXxxxxxxx, Xxxxxx & Xxxxx or Xxxxx Xxxxx
Company Petroleum Engineers (as
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selected by the Company) or any other independent engineering consulting firm
satisfactory to the Company and the Evercore Entities, setting forth the XXXx
of PDP attributable to the Company's oil and gas properties. Unless otherwise
agreed by the Evercore Entities, the engineering firm selected by the Company
to prepare the Reserve Report shall not be the Company's regular oil and gas
engineering or reporting firm.
"TARGET BOE" means 15,796,746 plus, if Actual Cap Ex plus Non-PDP
Acquisition Capital is greater than 110% of Budget Cap Ex, (A) Actual Cap Ex
plus Non-PDP Acquisition Capital minus Budget Cap Ex divided by (B) Budget Cap
Ex divided by 15,796,746.
(c) Upon the completion of any Qualifying Public Offering prior to the
Measurement Date that would result in the Evercore Entities' original Common
Stock Ownership Interest at the Effective Date having a value in excess of $120
million based on the offering price to be paid by the public in the Qualifying
Public Offering, 1,697 of the Escrow Shares will be released to the Management
Shareholders, and Section 7.1(a) shall no longer apply.
(d) Any Escrow Shares released pursuant to Section 7.1(a) or 7.1(c)
shall be allocated among the Management Shareholders in accordance with the
percentages set forth on Exhibit E; provided, however, that if any individual
Management Shareholder Resigns or is terminated by the Company for Cause, such
individual shall immediately cease to be a Management Shareholder and shall
forfeit any and all rights to the Escrow Shares, and any released Escrow Shares
which such individual would otherwise have been entitled to receive shall be
allocated among the remaining Management Shareholders as decided by the Board,
with the consent of a majority of directors on the Board nominated or
designated by the Evercore Entities.
(e) Escrow Shares not released pursuant to Section 7.1(a) or Section
7.1(c) shall be cancelled by the Company, and the Management Shareholders shall
no longer have any rights with respect to such Escrow Shares.
ARTICLE VIII
COMMON STOCK
SECTION 8.1. QUALIFYING PUBLIC OFFERING. The Evercore Entities agree
that they will take (and cause their director designees to take) reasonable
commercial efforts to allow the Company to pursue and complete a Public
Offering of Common Stock if the offering would be a Qualifying Public Offering
and if, after such offering, the Evercore Entities' original Common Stock
Ownership Interest at the Effective Date would have a value in excess of $120
million based on the offering price to be paid by the public in the Qualifying
Public Offering.
SECTION 8.2. ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. (a) If the
XXXx of Added PDP set forth in the Reserve Report are more than 50% of Target
BOE, the Evercore Entities agree that within 60 days after receipt of the
Reserve Report or (b) upon the completion of a Qualifying Public Offering that
would result in the Evercore Entities' original Common Stock Ownership Interest
at the Effective Date having a value in excess of $120 million based on the
offering price
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to be paid by the public in the Qualifying Public Offering, whichever first
occurs, the Company will also issue 153 additional shares of Common Stock to
Company employees selected by the Board, with the consent of a majority of
directors on the Board nominated or designated by the Evercore Entities.
SECTION 8.3. ADJUSTMENT SHARES.
(a) At any time before the earlier to occur of the Measurement Date or
the date of completion of a Qualifying Public Offering, the Evercore Entities
may notify the Company of the existence of one or more Company Losses. If, and
at such time as the aggregate amount of Company Losses exceeds $1,000,000, the
Company will issue to the Evercore Entities a number of shares of Common Stock
(the "Adjustment Shares") having an aggregate Fair Market Value (taking into
account the dilution caused by the issuance of such shares) equal to a
percentage of such Company Losses equal to the percentage of the Evercore
Entities' Company Ownership Interest and thereafter will similarly issue
Adjustment Shares with respect to any Company Losses notified to the Company by
the Evercore Entities.
(b) If the Evercore Entities notify the Company of a Company Loss and
the parties disagree as to the existence and/or the amount of such claimed
Company Loss within 30 days of such notice, the matter shall be submitted to
arbitration as follows: (i) The parties shall jointly select three persons as
arbitrators using the American Arbitration Association's current method of
striking all but three from a panel of knowledgeable oil and gas industry
arbitrators proposed by the Independent Committee (acting on behalf of the
Company) and the Evercore Entities. If such selection shall fail for any
reason, then either the Independent Committee or the Evercore Entities may in
writing request the judge of the United States District Court of Delaware
senior in term of service (but not on senior status) to appoint qualified
arbitrators. (ii) Any arbitration hearing shall be held at a place in New York
City acceptable to the arbitrators. (iii) The arbitrators shall settle disputes
regarding Company Losses in accordance with the Commercial Rules of the
American Arbitration Association, to the extent such rules do not conflict with
the terms hereof. The decision of the arbitrators shall be binding upon the
parties and may be enforced in any court of competent jurisdiction. The Company
and the Evercore Entities respectively, shall bear their own legal fees and
other costs incurred in presenting their respective cases. The charges and
expenses of the arbitrators shall be paid by the Company. (iv) The arbitration
shall commence within ten days after the arbitrators are selected as set forth
in subparagraph (a) above. In fulfilling their duties, the arbitrators may
consider such matters as in the opinion of the arbitrators are necessary or
helpful to make a proper evaluation.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. EFFECTIVENESS. This Agreement shall be effective as of
the Effective Date.
SECTION 9.2. TERMINATION. Except with respect to Sections of this
Agreement which shall terminate on an earlier date as expressly provided
herein, this Agreement shall automatically terminate with respect to all
parties on the date on which the Evercore Entities and their Affiliates
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collectively have a Company Ownership Interest of less than 10%. The rights of
EIF under Section 3.2 shall terminate on the date on which EIF and its
Affiliates have a Company Ownership Interest of less than 10%.
SECTION 9.3. MONITORING FEE. The Company will pay the Evercore
Advisors Inc. an annual monitoring fee of $250,000, with the first payment to
be made on the Effective Date and subsequent payments to be made on each
anniversary of the Effective Date until this Agreement has been terminated.
Such fee shall be payable to any Evercore Permitted Affiliate that is a
successor to any Evercore Entity under this Agreement, but shall not be payable
to any other transferee of the Evercore Entities.
SECTION 9.4. NOTICES. All notices, requests and other communications
hereunder shall be in writing and shall be delivered by hand, by nationally
recognized courier service, by facsimile transmission, receipt confirmed, or
certified mail (postage prepaid, return receipt requested, if available.
If to the Company, to:
Energy Partners, Ltd.
000 Xx. Xxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Corporate Secretary
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx & Xxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Evercore Entities, to:
Evercore Partners, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxx & Xxxxx, L.L.P.
3000 One Shell Plaza
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. X. Xxxxxx, Xx.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to EIF, to:
Energy Income Fund
c/o Associated Energy Managers
000 Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Mr. Xxxxx XxXxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Siguler Guff & Company
Rockefeller Center
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to other Shareholders, to the respective notice addresses listed on
Schedule A hereto.
Each such notice, request or communication shall be effective (A) if
delivered by hand or by nationally recognized courier service, when delivered
at the address specified in this Section 9.4 (or in accordance with the latest
unrevoked written direction from such party), (B) if given by fax, when such
fax is transmitted to the fax number specified in this Section 9.4 (or in
accordance with the latest unrevoked written direction from such party), and
the appropriate confirmation is received or (C) if by certified mail, upon
mailing.
SECTION 9.5. INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "included," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
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SECTION 9.6. SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
SECTION 9.7. COUNTERPARTS. This Agreement maybe executed in multiple
counterparts, each of which shall be deemed an original and all of which shall,
taken together, be considered one and the same agreement, it being understood
that the parties need not sign the same counterpart.
SECTION 9.8. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof. At the Effective Date, the Common Stock Purchase
Agreement dated May 7, 1998 by and between the Company and EIF (except for the
provisions of Sections 4 and 11 thereof), and all rights of EIF thereunder, and
the Second Amended and Restated Stockholder's Agreement dated June 7, 1998
among the Company and certain of its stockholders, and all rights thereunder,
shall terminate. This Agreement is not intended to confer upon any Person,
other than the parties hereto, any rights or remedies hereunder.
SECTION 9.9. FURTHER ASSURANCES. Each party shall execute, deliver,
acknowledge and file such other documents and take such further actions as may
be reasonably requested from time to time by the other party hereto to give
effect to and carry out the transactions contemplated herein.
SECTION 9.10. GOVERNING LAW; EQUITABLE REMEDIES. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto shall be entitled to
equitable relief, including in the form of injunctions, in order to enforce
specifically the provisions of this Agreement, in addition to any other remedy
to which they are entitled at law or in equity.
SECTION 9.11. AMENDMENTS; WAIVERS.
(a) This Agreement may be amended, modified, superseded or canceled
and any of the terms may be waived only by a written instrument executed by the
Company, the Evercore Entities, EIF and holders of a majority of the Securities
owned by the Individual Shareholders or, in the case of a waiver, by whichever
party is waiving compliance, in which case the consent of holders of a majority
of the Securities owned by the Individual Shareholders is required to effect a
waiver on behalf of the Individual Shareholders.
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(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 9.12. ASSIGNMENT AND SUCCESSORS. This Agreement will be
binding upon the parties and their respective successors and assigns. Any
Permitted Transferee who signs an Additional Party Counterpart shall succeed to
the rights and obligations of the parties hereto, except as otherwise provided
herein with respect to EIF in Section 9.2 and the Evercore Entities in Section
2.1(b) and Section 9.3. Any attempted assignment in contravention hereof shall
be null and void.
SECTION 9.13. LIMITATION OF LIABILITY. In no event shall any direct or
indirect member, stockholder, officer, director, partner or other
representative of the Evercore Entities, EIF or the Company or any of their
respective Affiliates be personally liable for any obligation of the Evercore
Entities, EIF or the Company, respectively under this Agreement. In no event
shall recourse with respect to the obligations under this Agreement of the
Evercore Entities, EIF or the Company be had to the assets or business of any
Person other than the Evercore Entities, EIF or the Company.
SECTION 9.14. WAIVER OF NOTICE; AMENDMENT OF CERTIFICATE OF
INCORPORATION AND BY-LAWS; TERMINATION OF SECOND AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT. EIF and each Individual Shareholder that was a party
hereto prior to the Management Sale acknowledges and agrees that execution of
this Agreement shall constitute (i) a waiver by such Shareholder of the notice
required pursuant to Section 2.04 of the by-laws of the Company as in effect
immediately prior to the date hereof; (ii) such Shareholder's affirmative vote
to restate the Company's certificate of incorporation in form and substance as
attached hereto as Exhibit A and to adopt as the by-laws of the Company the
amended by-laws attached hereto as Exhibit B, in each case as contemplated by
Section 3.1 of this Agreement; and (iii) a waiver by such shareholder of any
notices required under the second amended and restated stockholders' agreement
dated effective as of June 7, 1998 by and among the Company, EIF and the
shareholders of the Company and termination of such agreement.
SECTION 9.15. EMPLOYMENT AGREEMENTS. The provisions of Articles II, V
and VI shall not apply to any transaction involving Securities of the Company
provided for in an employment agreement between any Management Shareholder and
the Company.
SECTION 9.16. RIGHTS OF EIF.
(a) If the Company desires to issue or sell shares of any class (now
or hereafter authorized) of Common Stock of the Company or any securities
convertible into such stock (the "Issued Shares"), to the Evercore Entities or
any Management Shareholder or any of their Affiliates (an "Insider Sale"), the
Company shall first give written notice (an "Issuance Notice") to EIF
containing (A) the type and number of Issued Shares proposed to be issued or
sold, (B) the proposed purchase price (the "Issue Price") for the Issued
Shares, and (C) any other material terms of such proposed issuance or sale.
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(b) EIF shall have a period of up to 15 days after the receipt of the
Issuance Notice to notify the Company in writing of its election to exercise
its right (the "Participation Right") to subscribe to and purchase an amount of
the Issued Shares in proportion to its holdings of Common Stock (or such lesser
number of Issued Shares as EIF shall elect to purchase), upon the same terms
and at the same price as the Issued Shares are being issued or sold to the
other purchasers. If EIF elects to exercise its Participation Right, it will
subscribe to and purchase the number of Issued Shares it has elected to
purchase at a closing held simultaneously with the closing for the Insider
Sale. If EIF fails to notify the Company of its exercise of its Participation
Right within such 15 day period, the Company shall be entitled, for a period of
30 days beginning the day after the expiration of such 15 day period, to enter
into an agreement to consummate the Insider Sale at a price not lower than the
Issue Price and on terms not more favorable to the purchaser than were
contained in the Issuance Notice, which transaction shall be closed no later
than 60 days after the expiration of such 15 day period.
(c) If, at the end of any such 30-day or 60-day period provided for in
this Section 9.16, the Company has not entered into an agreement to consummate
the Insider Sale or completed the Insider Sale, respectively, the Company shall
no longer be permitted to consummate the Insider Sale without again fully
complying with the provisions of this Section 9.16.
(d) EIF's Participation Right shall not apply to any issuance of
shares or securities issued or sold by the Company (A) pursuant to this
Agreement, the Stock Purchase Agreement or the EIF Warrant Agreement or (B)
pursuant to any bona fide employee benefit or incentive plan approved by the
Board of Directors. EIF's Participation Right shall expire following a
Qualified Public Offering.
(e) Any Issued Shares acquired by EIF pursuant to its Participation
Right shall be subject to the provisions of this Agreement.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Shareholder Agreement as of the date first above written.
ENERGY PARTNERS, LTD.
By:
----------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
EVERCORE CAPITAL PARTNERS, L.P.
By:
----------------------------
Name:
Title:
EVERCORE CAPITAL PARTNERS (NQ) L.P.
By:
----------------------------
Name:
Title
EVERCORE CAPITAL OFFSHORE PARTNERS L.P.
By:
----------------------------
Name:
Title:
ENERGY INCOME FUND, LP
By:
----------------------------
Name:
Title
[SIGNATURE PAGES TO STOCKHOLDER AGREEMENT]
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Xxxxxxx Xxxxxxxx
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Xxxxx Xxxxxxxxx
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Xxxxxxx X. Xxxxx
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Xxxx XxXxxxxxxx
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Xxx Xxxxx
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Xxxxx Xxxx
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Xxxxx Xxxxxxxx, Xx.
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Xxxx Xxxxxxxx
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Xxxxxxx Xxxxxxx
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Xxx Xxxxx
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Xxxxxx XxXxxxx
[SIGNATURE PAGES TO STOCKHOLDER AGREEMENT]
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Xxx Xxxxxx
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Xxxx Xxxxxxxx
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Xxxxx Xxxxx
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Xxxxxx Xxxxxx
[SIGNATURE PAGES TO STOCKHOLDER AGREEMENT]
