EXHIBIT 3
OPTION EXERCISE AGREEMENT
THIS OPTION EXERCISE AGREEMENT (this "Agreement"), effective as of July
31, 1997, is between Xxxxxxx XxXxxx Xxxxx ("Xxxxxxx") and Xxxxxx X. Xxxxx
("Xxxxxx").
RECITALS
A. Xxxxxxx and Xxxxxx are parties to that certain Agreement dated
September 14, 1995 (the "Option Agreement").
B. Pursuant to the Option Agreement, Xxxxxx acquired an option to
purchase from Xxxxxxx 89,560 shares of common stock of Ouachita Energy
Corporation, a Louisiana corporation ("OEC"), and 390 shares of common stock
of Ouachita Energy Partners, Ltd., a Louisiana corporation ("OEP"), for the
aggregate amount of $5 million, payable in cash at the closing of such
purchase (the "Option").
C. A certain Asset Purchase and Sale Agreement among OEP, Ouachita
Compression Group, LLC, a Louisiana limited liability company ("OCG"),
Xxxxxx, OEC Acquisition Corporation, a Delaware corporation ("Acquisition"),
and Equity Compression Services Corporation, an Oklahoma corporation
("Equity"), dated May 15, 1997 (the "Asset Purchase Agreement") and providing
for the sale of substantially all of the assets of OEP and OCG has been
executed.
D. A certain Agreement and Plan of Merger among Equity, Acquisition,
OEC and Xxxxxx dated May 15, 1997 (the "Merger Agreement") and providing for
the merger of OEC into Acquisition, with Acquisition remaining as the
surviving corporation of such merger has been executed.
E. Xxxxxxx and Xxxxxx now desire to provide for a conditional exercise
of the Option, modify the manner in which the $5 million payable upon an
exercise of the Option is paid and to reflect their agreement on certain
other matters.
NOW, THEREFORE, the parties hereto agree as follows:
1. CONDITIONAL EXERCISE OF OPTION. Subject to the closing of the
transactions contemplated by the Asset Purchase Agreement and the Merger
Agreement (the "Equity Transactions"), Xxxxxx hereby exercises the Option,
and Xxxxxx and Xxxxxxx agree that the $5 million owing to Xxxxxxx shall be
payable as follows, notwithstanding anything to the contrary in the Option
Agreement:
(a) Xxxxxxx will receive an amount of cash equal to the amount she
would be entitled to receive if she were to retain her shares in OEP.
Xxxxxx will cause OEP to pay Xxxxxxx the cash owing to her at the same
time the other shareholders of OEP are paid, most of which is
anticipated to be paid within a few days of such closing. Xxxxxxx
understands that because certain post-closing adjustments to the
purchase price payable under the Asset Purchase Agreement may be
required, a small part of the cash payable to her may be withheld
pending the determination of whether such purchase price will be
reduced. In addition, a small part of the proceeds received from
Equity will be used to cover final expenses while OEP and OCG are
being liquidated.
(b) Xxxxxxx will receive a number of shares of Equity's common stock
determined by subtracting the total amount of cash paid to Xxxxxxx
under Section 1(a) above from $5 million and dividing the result by
$1.65, which is the value of the shares being received from Equity.
Xxxxxx agrees to cause OEC to deliver most of such shares to Xxxxxxx
at the same time the shareholders of OEC receive their shares of
Equity's common stock, which is anticipated to be within a few days of
such closing. However, because of the post-closing adjustments
described in the preceding paragraph, final delivery of all of
Barbara's shares may not take place until a few months after the
closing.
2. WAIVER OF CONSIDERATION. Xxxxxxx acknowledges and agrees that the
cash and stock payable pursuant to Section 1 of this Agreement constitute all
of the consideration that she is entitled to receive pursuant to the exercise
of the Option by Xxxxxx hereunder and hereby waives any right to receive any
cash or common stock of Equity payable pursuant to the terms of the Asset
Purchase Agreement or the Merger Agreement.
3. CONSENT TO ALLOCATION OF CONSIDERATION. Xxxxxxx acknowledges that
(a) she has received a Memorandum dated July 25, 1997 to which copies of the
Asset Purchase Agreement, the Merger Agreement and a schedule reflecting the
allocation of consideration to be paid by Equity in connection with the
Equity Transactions among OEC, OEP and OCG are attached; (b) she has been
given an opportunity to ask questions regarding the manner in which such
allocation has been made; (c) such allocation is fair and reasonable; (d) she
hereby releases OEC, OEP, OCG, Xxxxxx and Xxxx Xxxxx from any claim that such
allocation is unfair; and (e) OEC, OEP, OCG, Xxxxxx and Xxxx Xxxxx will
exercise reasonable efforts to close the Equity Transactions in reliance on
Barbara's execution of this Agreement.
4. AGREEMENT CONDITIONED ON CLOSING OF EQUITY TRANSACTIONS. In the
event the Equity Transactions do not close for any reason, (a) Xxxxxx shall
not be deemed to have exercised the Option pursuant to the terms of this
Agreement; (b) Xxxxxxx and Xxxxxx will remain subject to the terms of the
Option Agreement as set forth therein; and (c) this Agreement shall be void
and of no further force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment.
/S/ XXXXXXX XXXXXX XXXXX /S/ XXXXXX X. XXXXX
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Xxxxxxx XxXxxx Xxxxx Xxxxxx X. Xxxxx
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