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EXHIBIT 99.2
OPTION AGREEMENT
AGREEMENT made as of this 24th day of September, 1997 by and between
INFINITY INVESTORS LIMITED ("Infinity"), and _____________________ (the
"Optionee").
W I T N E S S E T H:
WHEREAS, Infinity is the holder of 560,126 shares of Series B
Convertible Redeemable Preferred Stock (the "Series B Preferred Stock") of
Xxxxxxxx Energy Corp. (the "Company"), which shares are convertible into shares
of the Company's Common Stock (the "Shares") in accordance with that certain
Certificate to Set Forth Designations, Voting Powers, Preferences, Limitations,
Restrictions and Relative Rights of the Series B Preferred Stock, as amended
and restated; and
WHEREAS, pursuant to the terms of a certain Restructuring Agreement
dated September 24, 1997 by and between Infinity, the Company, Xxxxxx X.
Xxxxxxxxx, Xxxxxxx X. Xxxxxxxxx and Xxxxxx X. Xxxxxxxxx (the "Restructuring
Agreement"), Infinity has agreed to grant to the Optionee and/or certain other
option holders (the "Option Holders") the right and option to purchase
2,170,488 Shares (the "Conversion Shares").
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained and those contained in the Restructuring Agreement, the
parties hereto hereby agree as follows:
1. Grant of Option and Stock Appreciation Rights. (a) Upon the
terms and subject to the conditions set forth herein, Infinity hereby grants to
the Optionee the right and option (the "Option") to purchase from Infinity, at
a price of $2.00 per share, all of the Conversion Shares during the period
commencing on the effectiveness of the Registration Statement contemplated by
Section 2(b)(i) of the Restructuring Agreement (the "Effective Date") and
ending on the 18-month anniversary of the Effective Date; provided, however
that the unexercised portion of the Option shall earlier terminate as follows:
(i) In the event that the Option Holders fail to purchase at
least 250,000 Conversion Shares on or prior to the 90th day following
the Effective Date, the Option shall terminate on such 90th day;
(ii) In the event that the Option Holders fail to purchase at
least an additional 400,000 Conversion Shares on or prior to the 181st
day following the Effective Date, the Option shall terminate on such
181st day;
(iii) In the event that the Option Holders fail to purchase
at least an additional 400,000 Conversion Shares on or prior to the
271st day following the Effective Date, the Option shall terminate on
such 271st day;
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(iv) In the event that the Option Holders fail to purchase at
least an additional 400,000 Conversion Shares on or prior to the 361st
day following the Effective Date, the Option shall terminate on such
361st day;
(v) In the event that the Option Holders fail to purchase at
least an additional 400,000 Conversion Shares on or prior to the 451st
day following the Effective Date, the Option shall terminate on such
451st day; and
(vi) In the event that the Option Holders fail to purchase
the balance of the Conversion Shares during the period beginning with
the 451st day following the Effective Date and ending on the
eighteen-month anniversary of the Effective Date, the Option shall
terminate on such eighteen-month anniversary.
In addition, in the event that Infinity exercises its rights under
Sections 4A(a) or 4A(b) of the Restructuring Agreement, the Option shall
automatically terminate in its entirety.
2. Method of Exercising Option. The Optionee may exercise the
Option by delivering to Infinity (i) a written notice stating the number of
Conversion Shares that the Optionee has elected to purchase at that time from
Infinity and (ii) full payment of the purchase price of the Conversion Shares
then to be purchased. Payment of the purchase price for the Conversion Shares
shall be made by wire transfer of immediately available funds to a bank
designated by Infinity.
3. Issuance of Stock Upon Exercise. As promptly as practicable
after receipt of such written notification of the Optionee's election to
exercise the Option and full payment of such purchase price, but in no event
more than three days after receipt, Infinity shall transfer to the Optionee the
number of Conversion Shares with respect to which the Option has been so
exercised and shall deliver to the Optionee a certificate or certificates
therefor, duly endorsed with signatures guaranteed in a form acceptable to the
Company's transfer agent or shall cause the transfer agent to issue the
Conversion Shares directly to the Optionee.
Notwithstanding any provision of this Agreement to the contrary, the
Optionee acknowledges and agrees that Infinity's right to receive the
Conversion Shares is dependent upon Infinity delivering a duly completed Notice
of Conversion to the Company, which must be honored by the Company, with the
Company's stock transfer agent promptly delivering Conversion Shares to
Infinity in connection therewith. Further, in order for Infinity to sell the
Conversion Shares to the Optionee following exercise of the Option, the Company
must maintain the effectiveness of the Registration Statement contemplated by
Section 2(b)(i) of the Restructuring Agreement. Accordingly, the Optionee
acknowledges and agrees that its right to exercise the Option shall be subject
to the Company maintaining the effectiveness of such Registration Statement.
Further, subject to Infinity's performance of its obligations hereunder, the
Optionee fully releases and discharges Infinity from any liability associated
with the failure of Infinity to deliver Conversion Shares to the Optionee upon
exercise of the Option prior to the
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time such Conversion Shares are delivered to Infinity by the Company and its
stock transfer agent upon receipt by the Company of a duly completed Notice of
Conversion from Infinity.
4. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and
oral, among the parties or between any of them with respect to the transactions
contemplated hereby.
5. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect unless such enforceability causes this Agreement to fail in its
essential purpose.
6. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made as of
the date delivered or mailed if delivered in person, by telecopy or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
if to Infinity to it at:
00 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx X0X 0XX
Attn: Xxxxx X. Xxxxxxxx, Esq.
with a copy to:
H.W. Partners, L.P.
0000 Xxx Xxxxxx
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telecopy: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxx, Esq.
if to the Optionee, to it at:
copies of all notices to:
Xxxxxxxx Energy Corp.
00 Xxxxxxxx Xxxxx
Xx. Xxxxx, Xxx Xxxx
Telecopy No. (000) 000-0000
Attn: President and General Counsel
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and
Piper & Marbury L.L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No. (000) 000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other address as the person to whom notices is given may have
previously furnished to the others in writing in the manner set forth above.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without giving
effect to principles of conflicts of law).
8. Headings. The descriptive headings herein are inserted for
convenience of reference only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
9. Binding Agreement. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, its successors and assigns.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
INFINITY INVESTORS LIMITED
By:
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[Optionee]
By:
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