SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT ("Agreement") is made and entered into as of
June 24, 1997 by and among American Exploration Company, a Delaware corporation
("Alpha"), Xxxxx Xxxxxxx Natural Gas Corp, an Oklahoma corporation ("Lima"), and
Xxxxx Xxxxxxx Natural Gas Holdings Corp. ("Shareholder") with reference to the
following circumstances.
A. Alpha, Lima and Lima Acquisition, Inc., an Oklahoma corporation and
wholly-owned subsidiary of Lima ("Merger Sub"), are entering into an Agreement
and Plan of Reorganization, dated as of the date hereof (the "Reorganization
Agreement"). Capitalized terms not defined in this Agreement have the meanings
ascribed to them in the Reorganization Agreement.
B. The Reorganization Agreement provides, among other things, for the
merger ("Merger"), upon the terms and subject to the conditions of the
Reorganization Agreement, of Alpha with and into Merger Sub, with Merger Sub
being the surviving corporation.
C. As of the date hereof, Shareholder owns of record and has the right to
vote 20,000,000 shares of Lima Common Stock (the "Shares").
D. As a condition to the willingness of Alpha to enter into the
Reorganization Agreement, Alpha has required that Shareholder agree, and in
order to induce Alpha to enter into the Reorganization Agreement, Shareholder
has agreed, to vote the Shares in accordance with the terms of this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties agree as follows:
ARTICLE I
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SHAREHOLDER
1.1 Representations and Warranties. Shareholder represents and warrants to
Alpha as follows:
(a) Title to Shares. Shareholder has good and marketable title to
the Shares, free and clear of all liens, claims, charges and encumbrances
and has full power and authority to exercise all voting rights in respect
thereof.
(b) Authority Relative to This Agreement.
(i) Shareholder is a corporation duly organized and validly
existing under the laws of the State of Delaware, has all necessary
power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
(ii) This Agreement has been duly and validly executed and
delivered by Shareholder and, assuming the due authorization,
execution and delivery by Alpha and Lima, constitutes a legal, valid
and binding obligation of Shareholder, enforceable against
Shareholder in accordance with its terms.
(c) No Conflict.
(i) The execution and delivery of this Agreement by
Shareholder does not, and the performance of this Agreement by
Shareholder shall not, (A) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Shareholder or
by which the Shares are bound or affected, (B) conflict with or
violate any term or provision of the certificate of incorporation or
by-laws of Shareholder or any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Shareholder is party or by which
Shareholder or the Shares are bound or affected, or (C) result in
any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance
on any of the Shares pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Shareholder is party or by
which Shareholder or the shares are bound or affected, except in the
case of the foregoing, for any such conflicts, violations, breaches,
defaults or other occurrences which would not prevent or delay or
render invalid the performance by Shareholder of its obligations
under this Agreement.
(ii) The execution and delivery of this Agreement by
Shareholder does not, and the performance of this Agreement by
Shareholder shall not, require any consent, approval, authorization
or permit of, or filing with or notification to, any Governmental
Authority (as such term is defined in the Reorganization Agreement)
or third party except for applicable requirements, if any, of the
Securities Exchange Act of 1934.
1.2 Agreement to Vote. Shareholder will attend in person through its duly
authorized representatives or by proxy any meeting of the shareholders of Lima
to be held for the purpose of obtaining shareholder approval of the Merger and
related matters and will vote all the Shares in favor of the Merger and each of
the related matters recommended by the Board of Directors of Lima. However, the
foregoing notwithstanding, the obligation of Shareholder in the preceding
sentence shall be suspended during any period that Lima is claiming a right to
terminate the Reorganization Agreement and such claim is being disputed by
Alpha. In addition, provided the Reorganization Agreement is closed in
accordance with its terms, Shareholder shall vote all of
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the Shares in accordance with the recommendations of the Board of Directors of
Lima with respect to the election to the Board of Directors of Lima of certain
persons specified in Section 5.15 of the Reorganization Agreement at Lima's 1998
annual meeting of stockholders.
1.3 Pledge Agreements. The Shares are subject to Pledge Agreements dated
as of December 23, 1994 and December 27, 1995 among S.A. Xxxxx Xxxxxxx et Cie
and the banks (the "Banks") named therein (the "Pledge Agreements"), a copy of
each of which has been provided to Alpha. Anything herein to the contrary
notwithstanding, the representations, warranties, covenants, agreements, proxies
and obligations of Shareholder and rights of Alpha set forth in or resulting
from this Agreement are subject in all respects to, and qualified in their
entirety by, the Pledge Agreements and, without limiting the generality of the
foregoing, any consents or waivers of the Banks required by the Pledge
Agreements in connection with this Agreement and the transactions contemplated
hereby. Shareholder shall notify the Banks of its obligations under Section 1.2
hereof and shall use its reasonable best efforts to request that the Xxxxx xxxxx
all waivers and consents necessary, in each case, in accordance with the Pledge
Agreements.
1.4 Irrevocable Proxy. In the event Shareholder fails to comply with the
provisions of Section 1.2 hereof, such failure shall result, without any further
action by Shareholder, in the irrevocable appointment of Alpha, until
termination of this Agreement, as Shareholder's attorney and proxy pursuant to
the provisions of Section 1057 of the Oklahoma General Corporation Act, with
full power of substitution, to vote, and otherwise act (by written consent or
otherwise) with respect to the Shares which Shareholder is entitled to vote at
any meeting of shareholders of Lima (whether annual or special and whether or
not an adjourned or postponed meeting) or consent in lieu of any such meeting or
otherwise, but only for the approval of the Merger and related matters as
contemplated by Section 1.2. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND
COUPLED WITH AN INTEREST. Shareholder hereby revokes all other proxies and
powers of attorney with respect to the Shares which Shareholder may have
heretofore appointed or granted, and no subsequent proxy or power of attorney
shall be given or written consent executed (and if given or executed, shall not
be effective) by Shareholder with respect thereto. All authority herein
conferred or agreed to be conferred shall survive the dissolution or winding up
of Shareholder and any obligation of Shareholder under this Agreement shall be
binding upon the successors and assigns of Shareholder.
1.5 Further Assurances. Shareholder shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with its
obligations under this Agreement, including without limitation any actions
reasonably requested by Lima or Alpha in connection with obtaining any required
consents or approvals to the actions contemplated hereby under the HSR Act or
the Exchange Act or the Pledge Agreements. Without limiting the generality of
the foregoing, Shareholder shall not enter into any new agreement or arrangement
(or alter, amend or terminate any existing agreement or arrangement) if such
action would impair its ability to effectuate, carry out or comply with the
terms of this Agreement. However, nothing in this Section 1.5 shall require
Shareholder to cause the terms of either of the Pledge Agreements or the loans
secured thereby to be changed.
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ARTICLE II
MISCELLANEOUS
2.1 Expenses. Except as otherwise provided in this Agreement or in the
Reorganization Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
2.2 Specific Performance. Irreparable damage may occur in the event any
provision of this Agreement were not performed in accordance with its terms, and
the parties shall be entitled to specific performance or injunctive relief in
respect of those terms.
2.3 Entire Agreement. This Agreement constitutes the entire agreement
among Alpha, Lima and Shareholder with respect to the obligations of Shareholder
to vote the shares in accordance with Section 1.2 hereof and supersedes all
prior agreements and understandings, both written and oral, among Alpha, Lima
and Shareholder with respect to that obligation.
2.4 Assignment. This Agreement shall not be assigned by operation of law
or otherwise, except with the prior written consent of each of the other parties
hereto.
2.5 Parties in Interest. This Agreement shall inure to the benefit of, and
be enforceable by, the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended to
or shall confer upon any person other than the parties hereto any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
2.6 Amendment; Waiver. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto. Lima or Shareholder,
on the one hand, and Alpha, on the other hand, may (i) extend the time for the
performance of any obligation or other act of the other, (ii) waive any
inaccuracy in the representations and warranties of the other contained herein
or in any document delivered by the other pursuant hereto and (iii) waive
compliance by the other with any agreement or condition contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby.
2.7 Effect on the Reorganization Agreement. Nothing in this Agreement
shall be construed to limit any rights or obligations that Lima or Alpha have
under the Reorganization Agreement. In case of any inconsistency between this
Agreement and the Reorganization Agreement, the terms of the Reorganization
Agreement shall control.
2.8 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the approval by or on behalf of
Shareholder of the Merger, as contemplated by Section 1.2, is not
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affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the terms of this
Agreement remain as originally contemplated to the fullest extent possible.
2.9 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and either delivered personally, by facsimile
transmission or by registered or certified mail (postage prepaid and return
receipt requested) and shall be deemed given when received (or, if mailed, five
business days after the date of mailing), if to Lima or Alpha, at their
respective addresses or facsimile transmission numbers set forth for notices in
the Reorganization Agreement or, if to Shareholder, at the following address or
facsimile transmission number (or at such other address or facsimile
transmission number for a party as shall be specified by like notice):
To Shareholder:
Xxxxx Xxxxxxx Natural Gas Holdings Corp.
0000 Xxxxxxxxxx Xxxx, Xxxxxxx Xxxxxxxx, Xxxxx 000X
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: President
with a copy to:
Xxxxxx Xxxxxxx, Esq.
Xxxxx Xxxxxxx Holding Company, Inc.
00 Xxxxxxxx Xxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxx 00000
2.10 Termination. This Agreement shall terminate upon the Effective Time
or upon the termination of the Reorganization Agreement in accordance with the
termination provisions provided therein.
2.11 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Oklahoma applicable to contracts
executed in and to be performed in that State.
2.12 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
2.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of Lima, Alpha and Shareholder have caused this
Agreement to be executed by its respective officer thereunto duly authorized
each as of the date first written above.
"ALPHA"
AMERICAN EXPLORATION COMPANY
By:
-------------------------------
Name: Xxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
"LIMA"
XXXXX XXXXXXX NATURAL GAS CORP.
By:
-------------------------------
Name: Xxxx X. Xxxxxx
Title: President and Chief Executive Officer
"SHAREHOLDER"
XXXXX XXXXXXX NATURAL GAS
HOLDINGS CORP.
By:
-------------------------------
Name:
Title:
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