EXHIBIT 99.2
EXECUTION COPY
STOCK PURCHASE AGREEMENT
among
THE HOUSTON EXPLORATION COMPANY,
KEYSPAN CORPORATION
and
THEC HOLDINGS CORP.
Dated as of February 20, 2003
TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE OF COMMON STOCK..............................................................1
1.1. Purchase and Sale of Common Stock......................................................1
1.2. Purchase Price.........................................................................2
1.3. Closing................................................................................2
1.4. Option Closing.........................................................................2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................3
2.1. Power, Authority and Enforceability....................................................3
2.2. Government Authorization...............................................................3
2.3. Noncontravention.......................................................................4
2.4. Representations and Warranties in the Underwriting Agreement...........................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF KEYSPAN AND THEC HOLDINGS..................................4
3.1. Power, Authority and Enforceability....................................................4
3.2. Government Authorization...............................................................4
3.3. Noncontravention.......................................................................5
3.4. Title to the Shares....................................................................5
ARTICLE IV COVENANTS.....................................................................................5
4.1. Company Compliance with Underwriting Agreement.........................................5
4.2. Relinquishment of Demand Registration Right............................................5
4.3. Delivery of Certain Documents..........................................................5
ARTICLE V INDEMNIFICATION................................................................................5
5.1. Indemnification by the Company.........................................................5
5.2. Indemnification by KeySpan and THEC Holdings...........................................6
5.3. Indemnification Procedures.............................................................6
5.4. Contribution...........................................................................7
5.5. Full Force and Effect..................................................................7
ARTICLE VI CONDITIONS PRECEDENT..........................................................................7
6.1. No Injunctions or Restraints...........................................................7
6.2. Consummation of the Public Offering....................................................8
6.3. Representations and Warranties.........................................................8
6.4. Performance of Agreements..............................................................8
6.5. Lock-Up Agreement......................................................................8
6.6. Other Actions..........................................................................8
ARTICLE VII GENERAL PROVISIONS...........................................................................8
7.1. Notices................................................................................8
7.2. Interpretation........................................................................10
7.3. Amendment.............................................................................10
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PAGE
7.4. Extension; Waiver.....................................................................10
7.5. Counterparts..........................................................................10
7.6. Entire Agreement; No Third-Party Beneficiaries........................................10
7.7. Governing Law.........................................................................10
7.8. Assignment; Binding on Successors and Assigns.........................................11
7.9. Enforcement...........................................................................11
7.10. Severability..........................................................................11
7.11. Expenses..............................................................................11
7.12. Registration Rights Agreement.........................................................12
7.13. Termination...........................................................................12
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is dated as of February
20, 2003 (the "Execution Date"), by and among The Houston Exploration Company, a
Delaware corporation (the "Company"), KeySpan Corporation, a New York
corporation ("KeySpan") and THEC Holdings Corp., a Delaware corporation ("THEC
Holdings"), a wholly owned subsidiary of KeySpan.
R E C I T A L S
WHEREAS, THEC Holdings owns 20,380,392 shares, or approximately 66%, of the
Company's common stock, par value $0.01 per share ("Common Stock");
WHEREAS, the Company and KeySpan have entered into an underwriting
agreement, dated the Execution Date (the "Underwriting Agreement"), with X.X.
Xxxxxx Securities Inc. (the "Underwriter") pursuant to which the Company is
publicly offering (the "Public Offering") for cash (i) 3,000,000 shares of its
Common Stock and (ii) in the event the Underwriter exercises its over-allotment
option pursuant to Sections 1 and 3 of the Underwriting Agreement, up to an
additional 300,000 shares of its Common Stock, in each case pursuant to the
Company's registration statement on Form S-3 (No. 333-78843) (as amended to the
date hereof, the "Registration Statement") and a prospectus supplement (together
with the prospectus included in the Registration Statement, the "Prospectus")
filed under Rule 424 under the Securities Act (as defined herein);
WHEREAS, THEC Holdings desires to sell, and the Company desires to
purchase, (i) 3,000,000 issued and outstanding shares of Common Stock owned by
THEC Holdings (the "Original Shares") upon the terms and conditions hereinafter
set forth (the "Original Purchase") and (ii) up to an additional 300,000 issued
and outstanding shares of Common Stock owned by THEC Holdings (the "Option
Shares", together with the Original Shares, the "Shares")) upon the terms and
conditions hereinafter set forth (the "Option Purchase", together with the
Original Purchase, the "Purchase"); and
WHEREAS, the Company, KeySpan and THEC Holdings desire to make certain
representations, warranties and agreements in connection with the Purchase;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
1.1. Purchase and Sale of Common Stock. On the basis of the
representations, warranties and covenants contained herein, and subject to the
terms and conditions hereof and contemporaneously with the consummation of the
Public Offering, the Company shall purchase all the Original Shares and, in the
event the Underwriter exercises its over-allotment option pursuant to Sections 1
and 3 of the Underwriting Agreement, the Option Shares.
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1.2. Purchase Price. The Company agrees to pay to THEC Holdings for all the
Original Shares the amount of $78,700,000, which represents the offering
proceeds to be received by the Company from the Public Offering (the "Offering
Proceeds") at the purchase price to the Underwriter of $26.40 per share of
Common Stock (the "Per Share Price") less Estimated Expenses (as defined in
Section 7.11(c)) of $500,000. In the event the Underwriter exercises its
over-allotment option pursuant to Sections 1 and 3 of the Underwriting
Agreement, the Company agrees to purchase from THEC Holdings the number of
Option Shares equal to the aggregate number of shares so purchased by the
Underwriter at the Per Share Price.
1.3. Closing.
(a) The closing of the Original Purchase (the "Closing") shall take place
at 10:00 a.m. (Eastern Time) on February 26, 2003, subject to satisfaction or
waiver of the conditions set forth in Article VI on or before such date, at the
offices of Xxxxxxx & Xxxxx LLP, 000 Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, or
such later date (which shall not be later than the third Business Day after
satisfaction or waiver of the conditions set forth in Article VI) or at such
other place as agreed to by the parties hereto (the actual time and date of the
Closing are referred to herein as the "Closing Time" and "Closing Date,"
respectively). As used in this Agreement, the term "Business Day" shall mean any
weekday other than a banking holiday in New York City.
(b) At the Closing, in addition to the deliveries required to be made at or
prior to the Closing pursuant to Article VI hereof,
(i) THEC Holdings shall sell, assign and transfer to the Company all
its right, title and interest in and to the Original Shares free and clear
of all mortgages, pledges, security interests, liens, claims, encumbrances
or equities (collectively, the "Liens") and deliver to the Company one or
more certificates representing the Original Shares owned and being
purchased pursuant to this Agreement, duly endorsed in blank or with duly
executed stock powers attached; and
(ii) the Company shall pay THEC Holdings cash in an amount equal to
the Offering Proceeds received by the Company pursuant to the Public
Offering, by wire transfer of immediately available funds to an account
designated by THEC Holdings.
1.4. Option Closing.
(a) In the event the Underwriter exercises its over-allotment option, the
closing of the Option Purchase (the "Option Closing") shall take place at 10:00
a.m. (Eastern Time), on the Additional Closing Date (as defined in Section 3 of
the Underwriting Agreement), or such later date (which shall not be later than
the third Business Day after the Additional Closing Date and satisfaction or
waiver of the conditions set forth in Article VI), at the location described in
Section 1.3(a) or at such other place as agreed to by the parties hereto (the
actual time and date of the Closing are referred to herein as the "Option
Closing Time" and "Option Closing Date," respectively).
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(b) At the Option Closing, in addition to the deliveries required to be
made at or prior to the Option Closing pursuant to Article VI hereof,
(i) THEC Holdings shall sell, assign and transfer to the Company all
its right, title and interest in and to the Option Shares free and clear of
all Liens and deliver to the Company one or more certificates representing
the Option Shares owned and being purchased pursuant to this Agreement,
duly endorsed in blank or with duly executed stock powers attached; and
(ii) the Company shall pay THEC Holdings cash in an amount equal to
the Per Share Price multiplied by the aggregate number of shares purchased
by the Underwriter upon the exercise of its over-allotment option, by wire
transfer of immediately available funds to an account designated by THEC
Holdings.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to KeySpan and THEC Holdings as
follows:
2.1. Power, Authority and Enforceability. The Company has the requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by (a) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, and (b) equitable principles of general
applicability relating to the availability of specific performance, injunctive
relief, or other equitable remedies.
2.2. Government Authorization. No consent, approval, authorization, order,
license, registration or qualification of or with any such court or governmental
agency or body is required for the execution and delivery by the Company of this
Agreement, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby and in the
Prospectus, except such consents, approvals, authorizations, orders, licenses,
registrations or qualifications as have been obtained under the Securities Act
of 1933, as amended, and the rules and regulations of the Securities and
Exchange Commission thereunder (collectively, the "Securities Act"), and as may
be required under state securities or blue sky laws in connection with the
Public Offering or which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect on general affairs, business,
prospects, management, financial position, stockholders' equity or results of
operations of the Company and Seneca Upshur Petroleum Company, the Company's
only subsidiary (its "Subsidiary"), taken as a whole, or on the ability of the
Company to perform its respective obligations hereunder or consummate the
transactions contemplated hereby on a timely basis.
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2.3. Noncontravention. The execution and delivery by the Company of this
Agreement, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby and in the
Prospectus will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights or termination, amendment, acceleration or cancellation of, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or its Subsidiary is a party or by which the
Company or its Subsidiary is bound or to which any of the property or assets of
the Company or its Subsidiary is subject, nor will any such action result in any
violation of the provisions of the certificate of incorporation or the by-laws
of the Company or its Subsidiary or any applicable law or statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company, its Subsidiary or any of their respective
properties.
2.4. Representations and Warranties in the Underwriting Agreement. The
representations and warranties of the Company set forth in Section 4 of the
Underwriting Agreement are true and correct.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF KEYSPAN AND THEC HOLDINGS
KeySpan and THEC Holdings jointly and severally represent and warrant to
the Company as follows:
3.1. Power, Authority and Enforceability. Each of KeySpan and THEC Holdings
has the requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by such party and the consummation by such party of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of such respective party. This Agreement has been
duly executed and delivered by each such party and constitutes the legal, valid
and binding agreement of such party enforceable against it in accordance with
its terms, except as may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, and (b) equitable principles of
general applicability relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
3.2. Government Authorization. No consent, approval, authorization, order,
license, registration or qualification of or with any such court or governmental
agency or body is required for the execution and delivery by KeySpan or THEC
Holdings, as the case may be, of this Agreement, the performance by such party
of its respective obligations hereunder and the consummation by such party of
the transactions contemplated hereby, except such consents, approvals,
authorizations, orders, licenses, registrations or qualifications which, if not
obtained, would not, individually or in the aggregate, have a material adverse
effect on the ability of such party to perform its respective obligations
hereunder or consummate the transactions contemplated hereby on a timely basis.
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3.3. Noncontravention. The execution and delivery by KeySpan or THEC
Holdings, as the case may be, the performance by such party of its obligations
hereunder and the consummation by such party of the transactions contemplated
hereby will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to others any
rights or termination, amendment, acceleration or cancellation of, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which KeySpan or THEC Holdings, as the case may be, is a party or
by which such party is bound or to which any of its respective property or
assets is subject, nor will any such action result in any violation of the
provisions of the certificate of incorporation or the by-laws of such party or
any applicable law or statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over KeySpan, THEC Holdings or
any of their respective properties.
3.4. Title to the Shares. THEC Holdings has good and valid title to the
Shares, free and clear of all Liens, with full right and authority to deliver
the same hereunder. Upon payment for the Shares to be sold by THEC Holdings in
accordance with the terms of this Agreement, the Company will acquire good and
valid title thereto, free and clear of all Liens.
ARTICLE IV
COVENANTS
4.1. Company Compliance with Underwriting Agreement. The Company shall
comply in all material respects with all its covenants, agreements and
obligations pursuant to the Underwriting Agreement for the benefit of KeySpan
and THEC Holdings.
4.2. Relinquishment of Demand Registration Right(a) . Upon consummation of
the Original Purchase and receipt of the Offering Proceeds by THEC Holdings,
THEC Holdings shall agree not to exercise any demand registration right from the
date hereof until May 20, 2003 pursuant to Section 2.1 of the registration
rights agreement, dated as of September 25, 1996, between the Company and THEC
Holdings (the "Registration Rights Agreement").
4.3. Delivery of Certain Documents. The Company shall ensure that KeySpan
is the named recipient of the certificates, opinions, letters and other
documents referred to in Sections 6(e), 6(f), 6(g) and 6(i) of the Underwriting
Agreement and that KeySpan shall receive original copies of all such
documentation at or prior to the Closing Time. ARTICLE V
INDEMNIFICATION
5.1. Indemnification by the Company. The Company will indemnify and hold
harmless each of KeySpan, THEC Holdings, their respective officers, directors
and each person who controls KeySpan or THEC Holdings within the meaning of
Section 15 of the Securities Act and Section 20 of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission thereunder (collectively, the "Exchange Act") (collectively,
the "KeySpan/THEC Indemnified Persons") from and against any and all
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losses, claims, damages and liabilities (including, without limitation, the
legal fees and other expenses incurred in connection with any suit, action,
proceeding or any claim asserted) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
prospectus, offering circular or other document (including any related
registration statement, notification or the like) incident to any registration,
qualification or compliance with respect to the Public Offering, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading (except
insofar as such losses, claims, damages or liabilities are caused by any untrue
statement or omission or alleged untrue statement or alleged omission made in
reliance upon and in conformity with information relating to KeySpan or THEC
Holdings furnished to the Company in writing by KeySpan or THEC Holdings,
respectively, expressly for use therein), or any violation by the Company of the
Securities Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required by the Company in connection with
any registration, qualification, or compliance with respect to the Public
Offering.
5.2. Indemnification by KeySpan and THEC Holdings. KeySpan and THEC
Holdings will, jointly and severally, indemnify the Company, each of its
officers, directors and each person who controls the Company within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act
(collectively, the "Company Indemnified Persons"), from and against any and all
losses, claims, damages and liabilities (including, without limitation, the
legal fees and expenses incurred in connection with any suit, action, proceeding
or any claim asserted) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any registration, qualification
or compliance with respect to the Public Offering, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to information relating to KeySpan or THEC Holdings furnished to the Company in
writing by KeySpan or THEC Holdings, respectively, expressly for use therein.
The liability of KeySpan and THEC Holdings pursuant to this Section 5.2 shall be
limited to the Offering Proceeds.
5.3. Indemnification Procedures. If any suit, action, proceeding (including
any governmental or regulatory investigation), claim or demand shall be brought
or asserted against any person in respect of which indemnity may be sought
pursuant to the preceding paragraphs of this Article V, such person (the
"Indemnified Person") shall promptly notify the person or persons against whom
such indemnity may be sought (each an "Indemnifying Person") in writing, and
such Indemnifying Persons, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Persons may designate in such
proceeding and shall pay the reasonable fees and expenses of such counsel
related to such proceeding. In any such proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person and not the
Indemnifying Persons unless (i) the Indemnifying Persons and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to
the Indemnified Person or (iii) the named parties in any such proceeding
(including any impleaded parties) include both an Indemnifying Person and the
Indemnified Person and, based upon the advice of counsel, representation of both
parties by
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the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that no Indemnifying Person shall, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. No Indemnifying
Person shall be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
non-appealable judgment for the plaintiff, each Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Person, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that are the
subject matter of such proceeding.
5.4. Contribution. The Company, KeySpan and THEC Holdings agree that it
would not be just and equitable if contribution pursuant to this Article V were
determined by pro rata allocation. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in
this Article V shall be deemed to include any legal or other expenses incurred
by such Indemnified Person in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Article V, in no
event shall KeySpan or THEC Holdings be required to contribute any amount in
excess of the amount of Offering Proceeds received by it, respectively. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
5.5. Full Force and Effect. The remedies provided for in this Article V are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity. The indemnity and
contribution agreements contained in this Article V and the representations and
warranties of the Company, KeySpan and THEC Holdings set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any party hereto, its respective officers or directors or any person controlling
such party and (iii) the consummation of the Purchase.
ARTICLE VI
CONDITIONS PRECEDENT
The respective obligation of each party to consummate the transactions
contemplated to occur at the Closing and at the Option Closing, if any, is
subject to the satisfaction or waiver on or prior to the Closing Time or the
Option Closing Time, respectively, of each of the following conditions:
6.1. No Injunctions or Restraints. No action, claim, suit, hearing,
complaint, demand, injunction, litigation, judgment, arbitration, order, decree,
ruling or governmental investigation or proceeding shall be pending or
threatened by any court or governmental or
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regulatory agency or body, and no such court or governmental or regulatory
agency or body shall have issued any injunction, judgment or order, which shall
remain in effect, that would prevent consummation of the Purchase; provided,
however, that the parties hereto shall use their reasonable best efforts to have
any such injunction, judgment or order vacated or reversed.
6.2. Consummation of the Public Offering. The closing of the Public
Offering shall have occurred in accordance with terms of the Underwriting
Agreement, or, with respect to the Option Shares, the Additional Closing shall
have occurred in accordance with Section 3 of the Underwriting Agreement.
6.3. Representations and Warranties. (a) The representations and warranties
of the Company, KeySpan and THEC Holdings set forth in this Agreement shall be
true and correct in all material respects on and as of the Execution Date and on
and as of the Closing Date as though made on and as of the Closing Date. Each of
the Company, KeySpan and THEC Holdings shall have received certificates signed
on behalf of the Company, KeySpan and THEC Holdings by their respective
executive officers, in such capacity, certifying to such effect.
(b) In the event of an Option Closing, the representations and warranties
of the Company, KeySpan and THEC Holdings set forth in this Agreement shall be
true and correct in all material respects on and as of the Execution Date and on
and as of the Option Closing Date as though made on and as of the Option Closing
Date. Each of the Company, KeySpan and THEC Holdings shall have received
certificates signed on behalf of the Company, KeySpan and THEC Holdings by their
respective executive officers, in such capacity, certifying to such effect.
6.4. Performance of Agreements. The Company shall have performed in all
material respects all obligations required to be performed by it under this
Agreement and the Underwriting Agreement at or prior to the Closing Time.
6.5. Lock-Up Agreement. Each of THEC Holdings and KeySpan shall have
executed and delivered to X.X. Xxxxxx Securities Inc. a lock-up agreement
substantially in the form attached hereto as Annex A.
6.6. Other Actions. All actions, corporate or other, to be taken by the
Company, KeySpan and THEC Holdings in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to each of them and their
respective counsel.
ARTICLE VII
GENERAL PROVISIONS
7.1. Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be delivered
personally, sent by overnight courier (providing proof of delivery) to the
parties or sent by telecopy (providing confirmation of transmission) at the
following addresses or telecopy numbers (or at such other address or telecopy
number for a party as shall be specified by like notice):
(a) if to the Company, to:
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The Houston Exploration Company
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxxxx
Corporate Secretary
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx & Xxxxx
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: G. Xxxxxxx X'Xxxxx, Esq.
Facsimile: (000) 000-0000
(b) if to KeySpan, to:
KeySpan Corporation
Xxx XxxxxXxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Assistant General Counsel
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
(c) if to THEC Holdings, to:
THEC Holdings Corp.
c/o KeySpan Corporation
Xxx XxxxxXxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Assistant General Counsel
Facsimile: (000) 000-0000
Except as described in the next sentence, all notices shall be deemed given only
when actually received. Insofar as any approval or consent is required under
this Agreement by any party, any such request for approval or consent that is
delivered by a party in accordance with this Section 6.1 shall be deemed to have
been validly sent. Any failure to take action or respond by the
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recipient party within five Business Days of receiving such request shall be
deemed acceptance, approval and consent to such request.
7.2. Interpretation. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. The table of contents and 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 "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation."
7.3. Amendment. This Agreement may not be modified or amended except by an
instrument or instruments in writing signed by the party against whom
enforcement of such modification or amendment is sought.
7.4. Extension; Waiver. At any time prior to the Closing, the Company,
KeySpan and THEC Holdings may (a) extend the time for the performance of any of
the obligations or other acts of the other party or parties hereto, (b) waive
any inaccuracies in the representations and warranties of the other party or
parties contained herein or in any document delivered by such other party
pursuant hereto or (c) waive compliance with any of the agreements of such other
party or conditions to its own obligations contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party to be bound thereby. Waiver of any term or condition of this Agreement
by a party shall not be construed as a waiver of any subsequent breach or waiver
of the same term or condition by such party, or a waiver of any other term or
condition of this Agreement by such party. The failure of any party to assert
any of its rights hereunder shall not constitute a waiver of any such rights.
7.5. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
7.6. Entire Agreement; No Third-Party Beneficiaries. This Agreement
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral between the parties with respect to the
subject matter of this Agreement. Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any Person, the parties hereto, and their permitted
successors or assigns, any rights or remedies under or by reason of this
Agreement. No third party is entitled to rely on any of the representations,
warranties and agreements contained in this Agreement, and the Company, KeySpan
and THEC Holdings assume no liability to any third party because of any reliance
on the representations, warranties and agreements of the Company, KeySpan and
THEC Holdings contained in this Agreement.
7.7. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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7.8. Assignment; Binding on Successors and Assigns. Neither this Agreement
nor any of the rights, interests or obligations under this Agreement shall be
assigned or delegated, in whole or in part, by operation of law or otherwise by
any of the parties without the prior written consent of the other parties.
Subject to the preceding sentence and except as otherwise provided in this
Agreement, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by and against, the parties and their respective successors and
assigns (by reason of merger, consolidation, spin-off or split-off of the
parties, or sale of substantially all of the assets or similar transaction or
series of transactions).
7.9. Enforcement. The parties 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 shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any action instituted in any court
of the United States or any state thereof having jurisdiction over the parties
and the matter, this being in addition to any other remedy to which they are
entitled at law or in equity.
7.10. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
7.11. Expenses.
(a) Whether or not the transactions contemplated by this Agreement are
consummated, KeySpan shall pay the fees and expenses of its counsel, investment
bankers, financial advisors, accountants and other experts and the other
expenses incident to the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby.
(b) If the Closing does not occur, KeySpan will reimburse the Company for
all reasonable fees and expenses of counsel, investment bankers, financial
advisors, accountants and other experts incurred by the Company in connection
with the transactions contemplated hereby (the "Transaction Expenses"), the
other reasonable expenses incurred by the Company incident to the negotiation
and preparation of this Agreement and the consummation of the transactions
contemplated hereby (the "Incidental Expenses") and any other reasonable fees
and expenses of the Company and the Special Committee (or any of its members) of
the Board of Directors of the Company incurred in connection therewith (the
"Other Expenses," together with the Transaction Expenses and the Incidental
Expenses, the "Expenses"); provided that if the Closing does not occur based
upon material adverse information relating to the Company that is not known by
or available (upon request from the Company or otherwise) to KeySpan on the date
hereof, KeySpan shall not be liable for the reimbursement of any Expenses
pursuant to this Section 7.11(b). Notwithstanding the foregoing, the parties
understand and agree that the Expenses shall not include any fees and expenses
of any underwriter other than X.X. Xxxxxx Securities Inc.
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(c) If the Closing does occur, an estimate of the Expenses (the "Estimated
Expenses") shall be deducted in calculating the Per Share Price as provided in
Section 1.2. Within 30 days following the Closing Date, the parties shall agree
on the actual amount of the Expenses (the "Actual Expenses") incurred by the
Company and the Special Committee (or any of its members) of the Board of
Directors of the Company in connection with the transactions contemplated hereby
and (i) in the event the Actual Expenses exceed the Estimated Expenses, KeySpan
shall reimburse the Company for such difference or (ii) in the event the
Estimated Expenses exceed the Actual Expenses, the Company shall reimburse
KeySpan for such difference.
7.12. Registration Rights Agreement. Notwithstanding any provision in this
Agreement to the contrary, each of the Company, KeySpan and THEC Holdings affirm
that, except as otherwise provided in Section 4.2, the Registration Rights
Agreement shall remain in full force and effect on and after the Execution Date
and on and after the Closing Date.
7.13. Termination. Notwithstanding any provision in this Agreement to the
contrary, this Agreement (other than the terms of Section 7.11, which shall
remain in full force and effect) shall terminate in the event the Underwriting
Agreement is terminated in accordance with the terms contained therein.
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IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
signed by its respective officers thereunto duly authorized as of the date first
written above.
THE HOUSTON EXPLORATION COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
KEYSPAN CORPORATION.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President and Treasurer
THEC HOLDINGS CORP.
By: /s/ Xxxxxx Zain Mirza
-------------------------------------------
Name: Xxxxxx Zain Mirza
Title: Vice President and Chief Financial Officer
13
ANNEX A
FORM OF LOCK-UP AGREEMENT
February 20, 2003
X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: The Houston Exploration Company -- Public Offering
Ladies and Gentlemen:
The undersigned understands that you, as underwriter (the "Underwriter"),
propose to enter into an Underwriting Agreement (the "Underwriting Agreement")
with The Houston Exploration Company, a Delaware corporation (the "Company"),
and KeySpan Corporation, a New York corporation ("KeySpan"), providing for the
sale by the Company to the Underwriter of common stock, $0.01 par value (the
"Common Stock"), of the Company and the public offering (the "Public Offering")
of the Common Stock by the Underwriter. Pursuant to a stock purchase agreement
(the "Stock Purchase Agreement"), dated as of the date of the Underwriting
Agreement, among the Company, KeySpan and THEC Holdings Corp., a Delaware
corporation (the "THEC Holdings") and a wholly owned subsidiary of KeySpan, the
Company will, among other things, apply the offering proceeds received by the
Company from the Public Offering to the purchase of 3,000,000 shares of Common
Stock owned by THEC Holdings. Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Underwriting Agreement.
In consideration of the Underwriter's agreement to purchase and make the
Public Offering of the Common Stock, and for other good and valuable
consideration receipt of which is hereby acknowledged, each of the undersigned
hereby agrees that, without the prior written consent of X.X. Xxxxxx Securities
Inc., such undersigned will not, during the period ending 90 days after the date
of the Prospectus Supplement relating to the Public Offering (the "Prospectus"),
other than with respect to the shares of Common Stock to be sold pursuant to the
Stock Purchase Agreement, (1) directly or indirectly offer, pledge, announce the
intention to sell, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, any shares of Common
Stock or any securities of the Company which are substantially similar to the
Common Stock, including, but not limited to, any securities convertible into or
exercisable or exchangeable for, or that represent the right to receive, Common
Stock or any such substantially similar securities (including, but not limited
to, Common Stock which may be deemed to be beneficially owned by the undersigned
in accordance with the rules and regulations of the Securities and Exchange
Commission) or (2) enter into any swap, option, future, forward or other
agreement that transfers, in whole or in part, any of the economic consequences
of
1
ownership of the Common Stock or any securities of the Company which are
substantially similar to the Common Stock, including, but not limited to, any
security convertible into or exercisable or exchangeable for, or that represent
the right to receive, Common Stock or any such substantially similar securities,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. In addition, each of the undersigned agrees that, without the prior
written consent of X.X. Xxxxxx Securities Inc., it will not, during the period
ending 90 days after the Closing Date, make any demand for or exercise any right
with respect to the registration of any shares of Common Stock or any
substantially similar securities of the Company, including, but not limited to,
any security convertible into or exercisable or exchangeable for Common Stock.
In furtherance of the foregoing, the Company and any duly appointed
transfer agent for the registration or transfer of the securities described
herein are hereby authorized to decline to make any transfer of securities if
such transfer would constitute a violation or breach of this Lock-Up Agreement.
Notwithstanding the foregoing provisions of this Lock-Up Agreement, it is
expressly understood that the terms of this Lock-Up Agreement shall not apply to
any transaction that results in a Change in Control of the Company. For the
purposes of this Lock-Up Agreement, "Change in Control" shall mean any change in
ownership of the shares of stock of the Company such that a person or group of
persons other than KeySpan or any of its wholly owned subsidiaries acquires a
direct or indirect interest in the voting stock of the Company which is greater
than the direct or indirect interest in the voting stock of the Company held by
KeySpan and any of its wholly owned subsidiaries.
Each of the undersigned hereby represents and warrants that such
undersigned has full power and authority to enter into this Lock-Up Agreement.
All authority herein conferred or agreed to be conferred and any obligations of
such undersigned shall be binding upon the successors, assigns, heirs or
personal representatives of such undersigned.
Each of the undersigned understands that, if the Underwriting Agreement
does not become effective, or if the Underwriting Agreement (other than the
provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Common Stock to be sold thereunder, the
undersigned shall be released from all obligations under this Lock-Up Agreement.
Each of the undersigned understands that the Underwriter is entering into
the Underwriting Agreement and proceeding with the Public Offering in reliance
upon this Lock-Up Agreement.
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THIS LOCK-UP AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
KEYSPAN CORPORATION
By:
------------------------------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President and Treasurer
THEC HOLDINGS CORP.
By:
-----------------------------------------
Name: Xxxxxx Zain Mirza
Title: Vice President and Chief Financial Officer
Accepted as of the date first set forth above:
X.X. XXXXXX SECURITIES INC.
By:
----------------------------------------------
Name:
Title:
3
