EXHIBIT 10.124
SETTLEMENT AGREEMENT
This Settlement Agreement, is hereby made this 7th day of June
1996 by and between NORTHERN NATURAL GAS COMPANY ("Northern") and
LATEX RESOURCES, INC. ("LaTex").
WITNESSETH:
Recitals. Northern and LaTex are parties to the following firm
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natural gas transportation agreements which have been terminated by
the parties and are no longer in effect: Northern Contract Nos. 77152
and 77153/20139 ("Transportation Agreements"). Disputes have arisen
between Northern and LaTex regarding the performance of the
transportation agreements. As a result of the disputes, Northern
instituted the following litigation against LaTex: Northern Natural
----------------
Gas Company v. LaTex Resources Inc., in the 152nd Judicial District
-----------------------------------
Court of Xxxxxx County, Texas, Case No. 94-49766 ("Litigation").
Northern and LaTex have now agreed to compromise and settle their
disputes with respect to the Transportation Agreements and the
Litigation.
NOW, THEREFORE, for and in consideration of the mutual promises,
covenants, and agreements contained herein, and intending to be bound,
Northern and LaTex agree as follows:
A. Stock Issuance.
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(1) On June 7, 1996, LaTex will issue to Northern Fifty Thousand
(50,000) shares of LaTex's Series B Senior Convertible Preferred Stock
(the "Series B Preferred Stock") which are convertible into Three
Hundred Thirty Three Thousand Three Hundred
Thirty Three (333,333) shares of LaTex's Common Stock (the "Common Shares"). The
timing of the conversion is at Northern's sole discretion.
(2) On or before June 7, 1996, LaTex and Northern will execute a
Registration Rights Agreement in substantially the form of Exhibit A attached
hereto (the "Registration Rights Agreement").
B. Representations of LaTex.
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LaTex hereby represents and warrants to Northern as follows:
(1) LaTex is a corporation duly organized and validly existing under the
laws of the state of Delaware. LaTex has the corporate right, power and
authority, and qualifications to conduct its business and own its properties,
and LaTex has the legal right, power and authority to (i) execute and deliver
the Registration Rights Agreement, (ii) issue the Series B Preferred Stock and
perform its obligations in relation thereto, and (iii) execute and deliver this
Settlement Agreement and perform all of its obligations under the same.
(2) This Settlement Agreement has been, and when executed, the
Registration Rights Agreement will have been duly executed and delivered on
behalf of LaTex, and this Settlement Agreement constitutes, and when executed,
the Registration Rights Agreement will constitute, the legal, valid and binding
obligations of LaTex enforceable against it in accordance with their terms,
subject, however, to bankruptcy, insolvency, fraudulent transfer, reorganization
and other laws affecting creditors' rights generally and with regard to any
equitable remedies, to the discretion of the court before which proceedings to
obtain such remedies may be pending.
(3) The making and performance by LaTex of this Settlement Agreement and
the Registration Rights Agreement are within its corporate powers, have been
duly authorized by all necessary corporate action on the part of LaTex and do
not and will not (i) violate in any material respect any provision of law or any
rule, regulation, order, writ, judgment, decree, or determination currently in
effect having applicability to LaTex or LaTex's certificate of incorporation,
bylaws, or other governing documents, (ii) result in a material breach of or
constitute a material default under any indenture, bank loan, or credit
agreement, or any other material agreement or instrument to which LaTex is a
party or by which LaTex or its properties may be currently bound or affected, or
(iii) result in or require the creation or imposition of any mortgage, lien,
pledge, security interest, charge, or other encumbrance upon or of any of the
properties or assets of LaTex under any such existing indenture, bank loan,
credit agreement, or other material agreement or instrument. LaTex is not in
default under any such order, writ, judgment, decree, determination, indenture,
agreement, or instrument in any way that now or in the future will materially
adversely affect the ability of LaTex to perform its obligations under this
Settlement Agreement or the Registration Rights Agreement; and all consents or
approvals under such indentures, agreements, and instruments necessary to permit
valid execution, delivery, and performance by LaTex of this Settlement Agreement
and the Registration Rights Agreement and the transactions to be consummated
hereby and thereby have been obtained.
(4) The authorized capital stock of LaTex consists of 50,000,000 shares
of common stock, par value $0.01 per share, of which 18,165,195 shares are
issued and outstanding, and 5,000,000 shares of preferred stock, par value $0.01
per share, of which there are two classes, namely Series A Convertible Preferred
Stock, consisting of 700,000 authorized shares, of which 448,885 shares are
issued and outstanding, and the Series B Preferred Stock, consisting of 675,000
authorized shares, of which 417,117 shares are issued and outstanding. All of
the issues and outstanding shares of LaTex common stock have been duly
authorized, are validly issued, fully paid, and non-assessable. The Series B
Preferred Stock has been duly authorized, and at the Closing will be validly
issued, fully paid and non-assessable and will be free of any liens or
encumbrances, except for the restrictions on transfer under state and/or federal
securities laws as set forth herein. Upon issuance and payment therefor in
accordance with the terms of the Series B Preferred Stock, the shares of LaTex
Common Stock issuable upon conversion of the Series B Preferred Stock shall be
validly issued, fully paid and non-assessable and will be free of any liens or
encumbrances except for the restrictions on transfer under state and/or federal
securities laws as set forth herein. The rights, restrictions, privileges and
preferences of the Series B Preferred Stock are as stated in the Certificate of
Designations attached hereto as Exhibit B.
(5) The financial statements contained in LaTex's Annual Report on Form
10-K for the fiscal year ended July 31, 1995, as filed with the Securities and
Exchange Commission and quarterly report on Form 10-Q for the three months
ending January 31, 1996, as filed with the Securities and Exchange Commission
have been prepared in
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accordance with generally accepted accounting principles applied on a consistent
basis and present fairly the financial condition and changes in financial
position of LaTex as at the date or dates and for the period or periods stated.
Since January 31, 1996, to the knowledge of LaTex no change either in any case
or in the aggregate has occurred in the condition, financial or otherwise, of
LaTex which has had or is reasonably likely to have a material and adverse
effect on the assets, liabilities, financial condition, business, operations,
affairs or circumstances of LaTex or on the ability of LaTex to carry out its
business as of the date of this Settlement Agreement or as proposed at the date
of this Sefflement Agreement to be conducted or to meet its obligations under
this Settlement Agreement.
C. Representations and Warranties of Northern. Northern hereby represents
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and warrants to LaTex as follows:
(1) Northern is a corporation duly organized, validly existing and in good
standing under the laws of the state of Delaware. Northern has the corporate
right, power and authority: (i) to conduct its business and own its properties
and (ii) to execute and deliver this Settlement Agreement and perform all of its
obligations under the same.
(2) This Settlement Agreement has been duly executed and delivered on
behalf of Northern and this Settlement Agreement constitutes the legal, valid
and binding obligation of Northern enforceable against it in accordance with its
terms, subject, however, to bankruptcy, insolvency, fraudulent transfer,
reorganization and other laws affecting creditors' rights generally and with
regard to any equitable remedies, to the discretion of the court before which
proceedings to obtain such remedies may be pending.
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(3) The making and performance by Northern of this Settlement Agreement is
within its corporate powers, has been duly authorized by all necessary corporate
action on the part of Northern and does not and will not (i) violate in any
material respect any provision of law or any rule, regulation, order, writ,
judgment, decree, or determination currently in effect having applicability to
Northern or Northern's certificate of incorporation, by laws, or other governing
documents, (ii) result in a material breach of or constitute a material default
under any indenture, bank loan, or credit agreement or any other material
agreement or instrument to which Northern is a party; and Northern is not in
default under any such order, writ, judgment, decree, determination indenture,
agreement, or instrument in any way that now or in the future will materially
adversely affect the ability of Northern to perform its obligations under this
Settlement Agreement.
(4) With respect to Northern's acquisition of the Series B Preferred
Stock, Northern represents and warrants to LaTex as follows:
(i) Northern is an accredited Investor as defined in Section 2(15) of the
Securities Act of 1933 ("1933 Act") and Rule 501(a)(3) promulgated by
the Securities and Exchange Commission ("SEC") in that Northern is a
corporation not formed for the specific purpose of acquiring the
Series B Preferred Stock and Northern has total assets in excess of
$5,000,000.
(ii) Northern acknowledges that neither the Series B Preferred Stock nor
the Common Shares issuable to Northern upon conversion of the Series B
Preferred Stock have been registered under the 1993 Act, the Oklahoma
Securities Act, as amended, or the securities laws of any other state
and are
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being offered, and will be sold, pursuant to applicable exemptions
from such registration and will be issued as "restricted securities"
as defined by Rule 144 promulgated pursuant to the 1933 Act. The
Series B Preferred Stock and the Common Shares may not be resold in
the absence of an effective registration thereof under the 1933 Act
and applicable state securities laws unless applicable exemptions from
registration are available.
(iii) Northern is acquiring the Series B Preferred Stock in connection with
the settlement of the Litigation, and may assign the Series B
Preferred Stock to an affiliate. Neither Northern nor its affiliate is
acquiring the Series B Preferred Stock with a view to or for sale in
connection with any distribution (within the meaning of the 0000 Xxx)
or in a manner which would require registration under the 1933 Act or
any state securities laws, and neither Northern nor its affiliate has
any present intention or plan to effect any such distribution of the
Series B Preferred Stock, except pursuant to effective registration in
compliance with applicable securities laws or pursuant to applicable
exemptions from such registration.
(iv) Northern understands and acknowledges that the certificates evidencing
the Series B Preferred Stock and the Common Shares issued upon
conversion of the Series B Preferred Stock shall bear the following
restrictive legend:
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THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR
VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION THEREOF
UNDER THE SECURITIES ACT OF 1933 AND/OR THE SECURITIES ACT OF
ANY STATE HAVING JURISDICTION UNLESS APPLICABLE EXEMPTIONS
FROM REGISTRATION ARE AVAILABLE.
or such other restrictive legend as counsel to LaTex may reasonably
deem appropriate at the time of such issuance.
(v) Northern understands and acknowledges the speculative nature of and
substantial risk of loss associated with an investment in the Series B
Preferred Stock. Northern represents and warrants that the Series B
Preferred Stock constitute an investment which is suitable and
consistent with Northern's financial condition and that Northern is
able to bear the risks of such an investment for an indefinite period
of time, which may include the total loss of Northern's investment.
Northern further represents that it has adequate means of providing for
Northern's current financial needs and contingencies and that there is
no need for liquidity in Northern's investment in the Series B
Preferred Stock and that Northern has sufficient
8
financial and business experience to evaluate the merits and risks of
an investment in the Series B Preferred Stock.
(vi) Northern confirms that (a) Northern has received, reviewed, and has
fully considered (including, without limitation, the financial
statements contained therein) for purposes of Northern's acquisition of
the Series B Preferred Stock, LaTex's Annual Report on Form 10-K for
the fiscal year ended July 31, 1995, as filed with the SEC, and
Quarterly Report on Form 10-Q for the three months ended January 31,
1996, as filed with the SEC, and that (b) Northern has been expressly
offered the opportunity to be provided a copy of and to review all
reports, documents, and exhibits referenced therein. Northern
acknowledges that (a) LaTex has limited financial resources and will
need additional sources of capital to implement its current business
plan, the availability of which is uncertain and cannot be assured, and
(b) the Series B Preferred Stock are a highly speculative investment
with a high degree of risk of loss by Northern of its investment
therein. Northern represents and warrants that in making the decision
to acquire the Series B Preferred Stock, it has relied upon its own
independent investigation of LaTex and the independent investigations
of LaTex by Northern's representatives, including its own
9
professional legal, tax, and business advisors, and that Northern and
its representatives have been given the opportunity to examine all
relevant documents and to ask questions and to receive answers from
LaTex, or person(s) acting on its behalf, concerning LaTex and its
operations and financial condition, the terms and conditions of
acquisition by Northern of the Series B Preferred Stock, and any other
matters concerning an investment in LaTex, and to obtain any additional
information Northern deems necessary or appropriate to verify the
accuracy of the information provided.
D. Payment.
-------
In further consideration of the compromise and settlement of the
parties' disputes with respect to the Transportation Agreements and the
Litigation, LaTex agrees to pay Northern the sum of Four Hundred Sixty-Five
Thousand Dollars ($465,000) ("Settlement Amount"). The Settlement Amount shall
be paid in installments as follows:
(1) On June 21, 1996, LaTex shall pay Northern, by wire transfer, the sum
of Fifty Thousand Dollars ($50,000.00).
(2) On May 1, 1997, LaTex shall pay Northern, by wire transfer, the sum of
One Hundred Fifty Thousand Dollars ($150,000.00).
(3) On May 1, 1998, LaTex shall pay Northern, by wire transfer, the sum of
One Hundred Twenty Five Thousand Dollars ($125,000.00).
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(4) On May 1, 1999, LaTex shall pay Northern, by wire transfer, the sum of
One Hundred Forty Thousand Dollars ($140,000.00).
E. Litigation.
----------
Within ten (10) business days after execution of this Settlement
Agreement, an Agreed Judgment, in the form attached hereto as Exhibit C, shall
be executed by counsel for the parties and filed by Northern in Northern Natural
----------------
Gas Company v. LaTex Resources, Inc., Case No. 94-49766, in the 152nd Judicial
------------------------------------
District Court of Xxxxxx County, Texas. Northern agrees to withhold enforcement
of and execution upon the judgment to the extent that the installment payments
referenced in paragraph D are received by Northern in the manner prescribed on
or before the dates required. If any installment payment is not timely and
properly made, Northern may proceed at any time thereafter to enforce and
execute upon the judgment and may pursue whatever other rights and remedies
Northern finds available to it. If all installment payments are received and
the Settlement Amount is fully paid, Northern agrees to file, upon LaTex's
request, a Satisfaction and Release of Judgment in the form attached hereto as
Exhibit D.
F. Successors and Assigns. This Settlement Agreement shall be binding on
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all parties hereto and their respective agents, successors and/or assigns.
G. Joint Preparation. This Settlement Agreement was prepared jointly by
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the parties hereto. The person who executes this Settlement Agreement on behalf
of each party hereto represents and warrants that he or she has full and
complete authority to do so and that such party shall be bound thereby.
11
party hereto represents and warrants that he or she has full and complete
authority to do so and that such party shall be bound thereby.
H. Applicable Law and Jurisdiction. This Settlement Agreement is subject
-------------------------------
to all applicable laws of the State of Texas. Further, the parties agree to
submit to the jurisdiction of Xxxxxx County, State of Texas, relative to any
claim or cause of action arising out of or related to this Settlement Agreement.
I. Entire Agreement. This Settlement Agreement contains the final
----------------
expression of the agreement among the parties hereto with respect to the subject
matter hereof and it is the complete and exclusive statement of the terms of the
agreement of the parties. No oral understandings, statements, promises, or
inducements contrary to the terms of this Settlement Agreement have been made or
exist. The Settlement Agreement cannot be modified or rescinded except by a
signed writing.
J. Confidentiality. This Settlement Agreement and all its terms and
---------------
provisions are confidential and shall not be disclosed by any party hereto, nor
shall any party permit the disclosure thereof by any officer, employee, agent,
attorney, consultant, or any other person; provided, however, the parties may
disclose only such portions of the Settlement Agreement as may be required or
necessary before a state or federal agency or regulatory authority, as may be
necessary for outside auditors, or as may be necessary in litigation seeking
enforcement of this Settlement Agreement. The parties, when making any necessary
or required filing or disclosure shall notify the other party in writing prior
to such disclosure, and shall obtain confidential treatment to the maximum
extent practicable.
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IN WITNESS WHEREOF, the parties hereto have caused this Settlement
Agreement to be executed in multiple originals as of the day and year first
written above.
"LaTex"
LaTex Resources,Inc.
By:/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
--------------------------------
Title: Vice President of Marketing
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Date: June 6, 1996
--------------------------------
"NORTHERN"
Natural Gas Com
By: /s/ Xxxxxxx X. XxXxxxx
----------------------------------
Name: Xxxxxxx X. XxXxxxx
--------------------------------
Title: Vice President - Marketing
-------------------------------
Date: June 5, 1996
--------------------------------
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State of Oklahoma )
) ss.
County Tulsa )
The foregoing instrument was acknowledged before me on this 6th day of June
1996, by Xxxxxxx X. Xxxxxx, Vice President of Mktg., of LaTex behalf of said
corporation for the uses and purposes set forth.
WITNESS my hand and official seal on the day and year first written above.
[NOTARY PUBLIC SEAL OF /s/ Xxxxx X. Xxxxxxxx
XXXXX X. XXXXXXXX ---------------------------------
APPEARS HERE] Notary Public
My Commission expires: May 13, 2000
--------------------------
*****
State of NEBRASKA )
) SS.
County of Xxxxxxx )
The foregoing instrument was acknowledged before me on this 5 day of 1996,
by Xxxxxxx X. XxXxxxx, VP Marketing, of Northern Natural Gas Company, on behalf
of said corporation for the uses and purposes set forth.
WITNESS my hand and official seal on the day and year first written above.
[NOTARY PUBLIC SEAL OF /s/ Xxxxxxx X. Xxxxxxxx
XXXXXXX X. XXXXXXXXX --------------------------------
APPEARS HERE] Notary Public
My Commission expires: Aug. 23, 1997
-------------------------
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EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is entered into this 7th day of June, 1996
by and between LaTex Resources, Inc., a Delaware corporation and Northern
Natural Gas Company, a Delaware corporation.
For good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows.
1. Certain Definitions. The following terms shall have the respective meanings
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indicated.
"Company" means LaTex Resources, Inc., a Delaware corporation.
---------
"Commission" means the Securities and Exchange Commission and its
-----------
successors.
"ERAC" means Enron Reserve Acquisition Corp., a Delaware corporation,
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and its successors and assigns.
"Northern" means Northern Natural Gas Company, a Delaware corporation,
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and its successors and assigns.
"Registrable Securities" means (a) the shares of Common Stock issued or
------------------------
issuable to the holders of Preferred Stock upon conversion of such holders'
shares of Preferred Stock pursuant to Section 7 of the Certificate of
Designation, Voting Power and Rights of Series B Senior Convertible Preferred
Stock of the Company dated March 30, 1995 and (b) any securities issued in
exchange for, as a dividend on, or in replacement of, or otherwise issued in
respect of (including securities issued in a stock dividend, split or
recombination or pursuant to the exercise of preemptive rights, if any), any
shares of Common Stock in clause (a) above, until such time as such securities
described in clauses (a) and (b) above have been (i) distributed to the public
pursuant to a registration statement covering such securities that has been
declared effective under the Securities Act, (ii) distributed to the public in
accordance with the provisions of Rule 144 (or any similar provision then in
force) under the Securities Act or (iii) repurchased by the Company.
"Securities Act" shall mean the Securities Act of 1933, as amended.
----------------
2. Demand Registration Rights
--------------------------
(a) Subject to the conditions stated hereinafter in this Section 2 at
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any time and from time to time (but no more often than once in any 12-month
period, except as provided in Section 2(e) from and after March 31, 1996, any
-----------
holder of Registrable Securities may make a written request to the Company for
registration with the Commission of the offer and
sale of all or part of the Registrable Securities held thereby under and in
accordance with the provisions of the Securities Act and all other applicable
securities laws (a "Demand Registration"); provided that the Company may if
--------
necessary delay the filing of any registration statement relating to any such
Demand Registration for such reasonable period of time, not to exceed 90 days,
as is necessary to prepare the financial statements of the Company for the
fiscal period most recently ended prior to such written request. Within 10
business days after receipt of such request the Company will serve written
notice (the "Demand Notice") of such registration request to all holders of
Registrable Securities and, subject to Section 2(c) and Section 2(e), the
------------ ------------
Company will include in such registration all Registrable Securities of such
other holders with respect to which the Company has received written requests
for inclusion therein within 15 business days after the receipt by the
applicable holder of the Demand Notice.
(b) Registration expenses of each such Demand Registration, whether or not
it becomes effective, shall be paid as set forth in Section 4.
---------
(c) If the managing underwriter or underwriters of a Demand Registration
advise the Company in writing that in its or their opinion the number of
Registrable Securities proposed to be sold in such Demand Registration exceeds
the number that can be sold in such offering at the desired price, the Company
will include in such registration only the number of Registrable Securities that
in the opinion of such underwriter or underwriters can be sold.
(d) The Company shall have the right to select a managing underwriter or
underwriters reasonably acceptable to Northern (and ERAC if Registrable
Securities held by ERAC are included in such Demand Registration) to administer
the offering.
(e) Northern acknowledges that the Company has granted to ERAC pursuant to
that certain Registration Rights Agreement dated March 30, 1995, a senior right
to include Registrable Securities in any Demand Registration made by a holder of
Registrable Securities. If Northern requests a Demand Registration and is
unable to register all or any portion of the Registrable Securities it sought to
include therein as a result of ERAC's exercise of its senior right to include
Registrable Securities in such offering, then Northern shall not be required to
wait 12 months prior to requesting another Demand Registration. Any such
subsequent Demand Registration, however, may be postponed for up to six months
following effectiveness of the registration statement filed pursuant to the
previous Demand Registration if the Board of Directors of the Company determines
in its good faith judgment that postponement would be in the best interests of
the Company.
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3. Right to Piggyback. In the event that at any time or from time to time
------------------
the Company proposes to register any class of equity securities under the
Securities Act (other than a registration statement on Forms S-4 or S-8 (or
their successor forms), the Company will give prompt written notice (the
"Registration Notice") to the holder or holders of Registrable Securities of its
----------------------
intention to effect such a registration and will, subject to the remaining
provisions of this Agreement, include in such registration all Registrable
Securities with respect to which the Company has received the written request
from the holder thereof for inclusion therein within 15 days after the receipt
of the Registration Notice (a "Piggyback Registration"). From and after receipt
----------------------------
of such notice from the holder, the Company shall cause the specified
Registrable Securities to be registered under the Securities Act and to effect
and to comply with all such qualifications, compliances and requirements as may
be necessary to permit the sale of such Registrable Securities in the manner
described in the Registration Notice including, without limitation,
qualification under applicable state securities laws (provided that the Company
shall not be required in connection therewith to qualify as a foreign
corporation or to execute general consent to service of process in any state).
4. Registration Expenses. The Company will pay all expenses necessary to
---------------------
effect registration of Registrable Securities (other than underwriters'
discounts and commissions and brokerage commissions and fees, if any, payable
with respect to Registrable Securities sold by the holders thereof), including,
without limitation, printing expenses, fees of the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc., expenses of
compliance with state securities laws, and accounting and legal fees and
expenses.
5. Priority on Primary Registration. If the registration described in
--------------------------------
Section 3 is for the account of the Company, and the managing underwriters
---------
advise the Company in writing that in their opinion the number of shares of
Registrable Securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (a) first, all of the securities the Company proposes to sell for
its own account (but not for the account of any other Person) and (b) second,
such number of Registrable Securities (other than Registrable Securities with
piggy-back registration rights that are subordinate to those granted herein)
requested to be included therein which the managing underwriters advise the
Company can be sold in such offering; provided that the reduction imposed upon
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holders of Registrable Securities shall not be greater, on a percentage basis
with respect to the Registrable Securities requested to be included, than the
reduction imposed upon other Persons with piggy-back registration rig
requesting to be included in such registration whose rights are not expressly
subordinate to those granted herein.
6. Priority on Secondary Registrations. If the registration described in
-----------------------------------
Section 3 is an underwritten secondary registration on behalf of the holders of
---------
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of shares of Common Stock requested to
be included in such registration exceeds the number which can be sold in such
offering, the Company will include in such registration such number of
Registrable Securities (other than Registrable Securities with piggy-back
registration rights that
-3-
are subordinate to those granted herein) requested to be included therein which
the managing underwriters advise the Company can be sold in such offering;
provided, that the reduction imposed upon holders of Registrable Securities
---------
shall not be greater, on a percentage basis with respect to the Registrable
Securities requested to be included, than the reduction imposed upon other
Persons with piggy-back registration rights requesting to be included in such
registration whose rights are not expressly subordinate to those granted herein.
7. Other Registrations. If the Company has previously filed a registration
-------------------
statement with respect to Registrable Securities pursuant to this Agreement and
if such previous registration has not been withdrawn or abandoned, the Company
will not file or cause to effected any other registration of any of its equity
securities or securities convertible or exchangeable into or exercisable for its
equity securities under the Securities Act (except on Form S-8 or any successor
form), whether on its own behalf or at the request of any bolder of holders of
its securities, until a period of at least six months has elapsed from the
effective date of such previous registration.
8. Indemnification. In the event of any registration pursuant to this
---------------
Agreement covering Registrable Securities, the Company will indemnify and hold
harmless the holders and each person, if any, who controls the holders within
the meaning of the Securities Act against any losses, claims, damages, costs,
expenses (including reasonable attorneys' fees), or liabilities (or actions in
respect thereof under the Securities Act or otherwise, which arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in any such registration statement, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company will not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said prospectus, or any said amendment or
supplement, in reliance upon and in conformity with written information
furnished by the holder specifically for use in the preparation thereof. The
------------
Company also agrees to reimburse the holders and each such controlling person
for any legal or other expenses reasonably incurred by the holders or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action to the extent that the same are not incurred
in connection with the provisions of the preceding sentence.
9. Assignability. The registration rights provided herein may be assigned to
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any Person holding shares of Registrable Securities as reflected on the stock
records of the Company.
10. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance wit the laws of the State of Delaware except to the extent the laws
of any other state are mandatorily applicable.
Witness the execution hereof as the date set forth above.
-4-
LATEX RESOURCES, INC.
[SIGNATURE OF XXXXXXX X. XXXXXX APPEARS HERE]
-----------------------------------
Xxxxxxx X. Xxxxxx, President
NORTHERN NATURAL GAS COMPANY
By:/s/ X.X. XxXxxxx
--------------------------------
Name: X.X. XxXxxxx
------------------------------
Title: Vice President
-----------------------------
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EXHIBIT B PAGE 1
State of Delaware
Office of the Secretary of State
------------------------------
I, XXXXXX X. XXXXX, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY
CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
DESIGNATION OF "LATEX RESOURCES, INC.", FILED IN THIS OFFICE ON THE FOURTH DAY
OF APRIL, A.D. 1995, AT 10:01 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE
COUNTY RECORDER OF DEEDS FOR RECORDING.
[SEAL OF SECRETARY'S OFFICE APPEARS HERE]
/s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, Secretary of State
AUTHENTICATION: 7461259
DATE: 04-04-95
CERTIFICATE OF DESIGNATION, VOTING POWERS AND
RIGHTS OF SERIES B SENIOR CONVERTIBLE
PREFERRED STOCK OF LATEX RESOURCES, INC.
LaTex Resources, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Company" or "Issuer"),
DOES HEREBY CERTIFY.
That, pursuant to authority conferred upon the Board of Directors by the
Company's Certificate of Incorporation, as amended, and pursuant to the
provisions of Section 151 of the General Corporation Law of the state of
Delaware, as amended, said Board of Directors, pursuant to a Unanimous Consent
to Action Without a Meeting, dated March 27, 1995, unanimously adopted the
following resolutions providing for the creation and issuance of a new series of
shares of the Company's authorized preferred stock designated as "Series B
Senior Convertible Preferred Stock":
RESOLVED, that the Board of Directors hereby establishes and designates a
new class of the Company's authorized but unissued preferred stock and that the
designation and amount thereof and the relative rights, preferences,
qualifications, limitations and restrictions thereof are as follows:
1. Designation and Amount. The shares of this series of preferred stock
----------------------
shall be designated as "Series B Senior Convertible Preferred Stock," par value
$0.01 per share, and the number of shares constituting this series shall be
675,000 plus the number of shares which are necessary to be issued from time to
time to comply with the provisions of Section 7.6.
2. Certain Definitions. The following terms shall have the respective
-------------------
meanings indicated.
Additional Shares means all shares of Common Stock issued (or,
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pursuant to Section 7.3(b). deemed to be issued) by Issuer after the
--------------
Original Issue Date other than shares of Common Stock issued in connection
with a stock dividend, subdivision or combination referred to in Section
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7.3(b)(i) and other than shares of Common Stock issued or issuable at any
---------
time:
(i) in an aggregate amount of up to 2,000,000 shares (which
number shall be proportionately adjusted in the case of
recapitalizations, stock splits, stock dividends or combinations of
shares) of Common Stock and Options therefor (including shares of
Common Stock issuable upon exercise of Options which were issued on or
before the Original Issue Date) to directors and employees of Issuer
pursuant to Issuer's 1993 Incentive Stock Plan or similar plan adopted
by Issuer;
(ii) upon exercise of Issuer's Underwriter's Warrant issued to the
underwriter of Issuer's 1991 public offering to purchase up to 225,000
shares of Common Stock;
(iii) upon exercise of Issuer's common stock purchase warrant issued
to Baytree Associates, Inc. to purchase up 80,000 shares of Common Stock;
(iv) upon exercise of the warrants described in that certain Warrant
Agreement dated as November 6, 1992 between the Issuer and Society
National Bank, as in effect on the Original Issue Date;
(v) upon the exercise of Issuer's Common Stock purchase warrants to
purchase up to 1,000,000 shares of Common Stock issued to various holders
pursuant to Issuer's 1994 Private Placement; provided, shares of Common
Stock issued upon such exercise shall, notwithstanding this clause (v), be
included as Additional Shares if the consideration received upon issuance
or exercise of such warrant or convertible security is less than $1.50 per
share of Common Stock; or
(vi) up to 250,000 shares of Common Stock in the aggregate issued
to shareholders of Germany Oil Company as consideration for the sale,
cancellation or other relinquishment of shares of Germany Oil Company
owned by such shareholders in connection with the sale of Germanv Oil
Company to, or merger of Germany Oil Company with, Issuer or any of its
Affiliates; provided, the shares covered by this clause (vi) shall not
include shares issued directly or indirectly in respect of any notes or
other agreements between any such shareholder and Germanv Oil Company or
its Affiliates.
Affiliate means, with respect to any Person, any other Person controlling,
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controlled by, or under common control with that first Person. As used in this
definition, the term "control" means the possession, directly or indirectly, of
the power to direct, or cause the direction of, the management and policy of the
controlled Person.
Common Stock means Issuer's common stock, par value $0.01 per share, and
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any capital stock of Issuer which has the right to participate in the
distribution of earnings and assets of Issuer without limit as to amount or
percentage, into which common stock may hereafter be reclassified by appropriate
amendment to Issuer's Certificate of Incorporation.
Convertible Securities means any securities of Issuer convertible into or
----------------------
exchangeable for (through one or more conversions or exchanges) Common Stock.
Convertible Securities shall include any evidences of indebtedness, any capital
stock of Issuer (other than the Preferred Stock authorized herein) or other
securities convertible into or exchangeable for Common Stock.
-2-
Delaware Act means the General Corporation Law of the State of Delaware,
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as amended from time to time.
Dividend Payment Date means the last day of December, March, June and
---------------------
September of each year; commencing June 30, 1995.
Dividend Period means the period beginning on any Dividend Payment Date
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and ending on the day before the succeeding Dividend Payment Date; provided,
--------
however, that the first Dividend Period for each share of Preferred Stock shall
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commence on the Dividend Payment first occurring after the date of issuance of
such shares of Preferred Stock, and the last Dividend Period for each share of
Preferred Stock shall end on the date such share is redeemed by the Company or
converted to Common Stock by the holder.
Germany Shares means any Additional Shares issued or deemed issued
--------------
pursuant to Section 7.3(b) to any shareholder or noteholder of Germany Oil
Company or any Affiliate thereof.
Junior Stock means the Common Stock and any other capital stock of the
------------
Company other than the Preferred Stock.
Liquidation Value means, as to each share of Preferred Stock, the sum of
-----------
$10.00.
Market Price of any security means the average of the closing prices of
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such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 p.m., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which "Market Price" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" will be the fair value thereof determined jointly by Issuer and
the holders of a majority of the shares of Preferred Stock. If such parties are
unable to reach agreement within a reasonable period of time, such fair value
will be determined by an independent appraiser jointly selected by Issuer and
the holders of a majority of the shares of Preferred Stock.
Options means rights, options or warrants to subscribe for, purchase other
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otherwise acquire either Common Stock or Convertible Securities.
-3-
Original Issue Date means April 1, 1995.
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Person shall mean any individual, corporation, partnership, joint
------
venture, association, joint-stock company, trust, unincorporated
organization or government or a political subdivision, agency or
instrumentality thereof or other entity or organization of any kind.
Preferred Stock means the Company's Series B Senior Convertible
---------------
Preferred Stock having a par value of $0.01 per share.
Redemption Price means, as to each share of Preferred Stock to be
----------------
redeemed, an amount equal to $10.00 plus all dividends (and interest
accrued thereon and other charges related thereto) accumulated and unpaid
on such share through the date of redemption.
Subsidiary means any corporation of which the shares of stock having a
----------
majority of the general voting power in the electing the board of directors
are, at the time as of which any determination is being made, owned by the
Company either directly or indirectly through a Subsidiary.
3. Dividends.
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3.1 Right and Payment The holders of the Preferred Stock shall be
-----------------
paid cumulative cash dividends at the annual rate of $1.20 per share. Dividends
shall accrue daily and accrued dividends for any period of less than one year
shall be computed on the basis of the number of days elapsed out of a 360-day
year. Dividends shall be payable in cash in quarterly installments on each
Dividend Payment Date in the amount accrued to such Dividend Payment Date;
provided, however, that cash dividends shall be required to be paid only to the
extent the Company may lawfully do so under the Delaware Act; and, provided
further, that notwithstanding any other provision of this Certificate of
Designation, if the Company may not lawfully under the Delaware Act pay all the
dividends it is required to pay under this Section 3 on any Dividend Payment
---------
Date, it shall pay on such date all the dividends it may lawfully pay pro rata
among the holders of the Preferred Stock and, at the earliest time or times
thereafter when it may lawfully pay any or all of the balance of such dividends,
it shall do so; and, provided further, notwithstanding any other provision of
this Certificate of Designation, until such time as the Company's indebtedness
to Bank of America National Trust and Savings Association has been paid in full
or refinanced by a third party, the Company shall be permitted, in lieu of the
cash dividend payments required above, to satisfy its obligation to make
dividend payments by issuing a number of additional shares of Preferred Stock
equal to the amount of the dividend payment otherwise payable on such Dividend
Payment Date divided by $10.00. For the purposes of (i) computing the number of
shares of Preferred Stock issuable to a particular holder pursuant to the last
proviso of the preceding sentence and (ii) minimizing fractional shares, all
dividends payable to a particular holder in respect of all of its shares of
Preferred Stock shall be aggregated prior to dividing by $10.00. Any remaining
fractional share after the foregoing computation shall be rounded up if the
fraction is one-half or more, and rounded down if the fraction
-4-
is less than one-half. For example, if by reason of the application of the
proviso above referring to Bank of America indebtedness the Company is only
permitted to pay dividends in additional shares of Preferred Stock, the
following stock dividends would be payable; (x) a holder of 10,000 shares of
Preferred Stock would be entitled to $.30 (the quarterly dividend amount) x
10,000 = $3000/$10 = 300 shares of Preferred Stock and (y) a holder of 10,550
shares of Preferred Stock would be entitled to $.30 (the quarterly dividend
amount) x 10,550 = $3165/$10 = 316.5 shares or 317 shares of Preferred Stock
after rounding up. Dividends on each share of the Preferred Stock shall commence
to accrue and shall be cumulative from (i) April 1, 1995, in the case of the
initial 370,000 shares of Preferred Stock issued; and (ii) in the case of all
shares of Preferred Stock issued as dividends pursuant to Section 3.1, the
Dividend Payment Date with respect to which such shares were issued. Dividends
shall accrue and be cumulative as provided in the preceding sentence whether or
nor they are earned, declared, or lawfully payable under the Delaware Act If any
dividend which is required to be paid on any Dividend Payment Date is not paid
for any reason, such unpaid dividend shall thereafter bear interest at the
higher of (i) eighteen percent (18%) per annum, or (ii) the prime rate charged
by First Interstate Bank of Texas, N.A. to its commercial customers, plus three
percentage points per annum; provided, in no event shall the foregoing interest
rate exceed the maximum nonusurious rate of interest permitted by applicable
law. In the event the Company fails to make any dividend required to be made
pursuant to the preceding provisions for two consecutive Dividend Payment Dates,
the holders of Preferred Stock. voting as a class, shall immediately be entitled
at its option to appoint a person or persons comprising not more than 22% of the
Company's Board of Directors to serve thereon until all unpaid dividends have
been made current; provided, under the circumstances described, the holders of
Preferred Stock shall be entitled to appoint at least one director to the
Company's Board of Directors.
3.2 Priority. The Company shall make no distribution to the holders of
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Junior Stock in any fiscal year except as permitted in this Section 3.2 and
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Section 8.4. "Distribution" in this Section 3.2 means the transfer of cash or
----------- -----------
property, whether by Way of dividend or otherwise (except a dividend in shares
(common or preferred) of the Company), or the purchase or redemption of shares
of the Company for cash or property, but does not include repurchase of shares
from a terminated employee or consultant of the Company within the terms of an
agreement applicable to such an employee providing for such repurchase. The
Company shall make no distributions to the holders of Junior Stock at any time
that any share of Preferred Stock remains outstanding except in accordance with
Section 9 below.
3.3 Conversion. Upon conversion of a share of Preferred Stock into
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Common Stock, all accumulated dividends on each share of Preferred Stock so
converted shall be payable by the Company to the holder of such share in cash;
provided, that to the extent such dividend cannot be legally declared and paid
or to the extent the holder elects at the time of such conversion, the holder
shall be entitled to receive additional shares of Common Stock on conversion
equal to the number of shares that the unpaid dividends on converted shares of
Preferred Stock would purchase at the Market Price on the date of conversion.
-5-
4. Redemption.
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4.1 Optional Redemption. The Company, at its option and subject to
-------------------
the conditions hereinafter stated, may, at any time and from time to time,
redeem all or any part of the outstanding Preferred Stock at the Redemption
Price payable in cash.
4.2 Optional Redemption Procedure. The right of the Company to make
-----------------------------
any optional redemption pursuant to Section 4.1 shall be subject to
-----------
satisfaction, at or prior to such redemption, of all the following conditions.
(a) Any redemption effected pursuant to Section 4.1 shall be made on a
-----------
pro rata basis among the holders of the Preferred Stock in proportion to
the shares of Preferred Stock then held by them.
(b) No such optional redemption may be made unless all accumulated
dividends (including any interest thereon or other charges related thereto)
on all outstanding shares of Preferred Stock have been paid to the date of
such optional redemption and adequate provision has been made for the
payment of all dividends on the Preferred Stock due for the then current
Dividend Period.
(c) The optional redemption shall be effected by call and written or
printed notice by certified mail, postage prepaid, return receipt
requested, to the holders of record of the Preferred Stock being redeemed,
such notice to be addressed to each holder at the address shown in the
Company's records which notice shall (i) specify the date of redemption,
(ii) the number of shares of the holder to be redeemed (iii) the Redemption
Price, (iv) the place at which holders of the Preferred Stock may obtain
payment of the Redemption Price, (v) the date on which conversion rights
with respect to the Preferred Stock terminate and (vi) such other
information, if any, as the Company's Board of Directors may deem
appropriate. Such notice shall be given no more than 60 but no less than 30
days prior to the date fixed for redemption. On or after the date of
redemption as specified in such notice, each holder shall surrender to the
Company, at the place specified in such notice, his certificate or
certificates (or comply with applicable lost certificate provisions) for
the Preferred Stock to be redeemed as stated in the notice (except that
such number of shares shall be reduced by the number of shares which have
been converted pursuant to Section 7 hereof between the date of notice and
---------
the date on which conversion rights terminate). Provided such notice is
duly given and provided that on the redemption date specified there shall
be a source of funds legally available for such redemption and the
Redemption Price necessary for the redemption shall have been paid, then
all rights with respect to such shares shall, after the specified
redemption date, terminate, whether or not said certificates have been
surrendered, excepting only in the latter instance the rights of the holder
to receive the Redemption Price thereof, without interest, upon such
surrender (or compliance with lost certificate provisions).
-6-
4.3 No Reissue of Shares. Any shares of the Preferred Stock redeemed,
--------------------
purchased, or otherwise acquired by the Company shall be deemed retired and
shall be canceled and may not under any circumstances thereafter be issued or
otherwise disposed of by the company.
4.4 Conversion. In the event the Company shall give notice of an
----------
optional redemption of Preferred Stock as provided in Section 4.2 above, then
-----------
each holder of Preferred Stock may thereafter elect, in accordance with
Section 7 below, to convert all or any portion of such holder's Preferred Stock
---------
to Common Stock at any time on or before the last business day preceding the
date fixed for redemption.
5. Voting Rights. Except as otherwise required by law or as provided in
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this Certificate of Designation, the holders of the Preferred Stock shall not be
entitled to notice of any meeting of the holders of the Company's voting
securities and the shares of Preferred Stock shall not have any voting rights.
6. Liquidation Preference.
----------------------
6.1 General.
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(a) Subject to the remaining provisions of this Section 6, in the
---------
event of any liquidation, dissolution, or winding up of the affairs of the
Company, whether voluntary or involuntary, after payment or provision for
payment of the debts and liabilities of the Company, the holders of the
Preferred Stock shall be entitled to receive, out of the remaining assets
of the Company, the Liquidation Value in cash for each of the shares of
Preferred Stock they then hold, plus an amount equal to all dividends
accumulated and unpaid on each such share (including any interest thereon
or other charges related thereto) through the date fixed for distribution,
before any distribution shall be made to the holders of any shares of
Junior Stock. If upon any liquidation, dissolution or winding up of the
affairs of the Company, whether voluntary or involuntary, the assets of the
Company available for distribution to shareholders shall be insufficient to
permit the payment to the holders of the Preferred Stock of the aforesaid
preferential amounts, then the entire assets of the Company shall be
distributed ratably among the holders of the Preferred Stock then
outstanding according to the number of shares held by each.
(b) After payment to the holders of the Preferred Stock of the
amounts set forth in Section 6.1(a) above, the entire remaining assets and
--------------
funds of the Company legally available for distribution, if any, shall be
distributed among the holders of the Common Stock and the Preferred Stock
in proportion to the shares of Common Stock then held by them and the
shares of Common Stock which they then have the right to acquire upon
conversion of the shares of Preferred Stock then held by them.
6.2 Merger or Consolidation. For purposes of this Section 6, a
----------------------- ---------
liquidation, dissolution, or winding up of the Company shall be deemed to be
occasioned by, and
-7-
include, the Company's sale of all or substantially all of its assets or the
merger or consolidation for the Company into or with any other Person if the
holders of the outstanding voting shares of the Company prior to such merger or
consolidation do not retain a majority of the voting power of the surviving
Person. For such purposes, the exchange of securities of the surviving Person
for securities of the Company shall be deemed to constitute a merger or
consolidation of the Company.
6.3 Fair Value. The fair value of the assets or property to be
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distributed or exchanged to or with the holders of the Preferred Stock in the
event of a liquidation, dissolution or winding up of the Company pursuant to
Section 6.1 shall be determined by the Board of Directors of the Company in good
-----------
faith, provided that any securities to be delivered to the holders of Preferred
Stock or Common Stock under this Section 6 shall be valued at Market Price.
---------
6.4 No Restriction on Surplus. No provision of this Section 6 shall
------------------------- ---------
in any manner, prior to any liquidation, dissolution, or winding up of the
affairs of the Company, whether voluntary or otherwise, create or be deemed to
create any restrictions upon the surplus of the Company or prohibit the payment
of dividends on the capital stock of the Company out of the funds of the Company
legally available therefor, nor shall any such restrictions or prohibition be in
any manner inferred from the provisions of this Section 6.
---------
7. Conversion.
----------
7.1 Voluntary Conversion. Any holder of Preferred Stock may at any
--------------------
time and from time to time convert all or any portion of the Preferred Stock
held thereby (and any fractional share thereof) into a number of fully paid and
nonassessable shares of Common Stock of Issuer determined by multiplying the
number of shares of Preferred Stock to be converted by $10.00 and dividing the
result by the Conversion Price (as defined in Section 7.3) then in effect.
-----------
7.2 Conversion Procedure.
--------------------
(a) Each conversion of Preferred Stock will be deemed to have
been effected as of the close of business on the date on which the
certificate or certificates representing the Preferred Stock to be
converted have been surrendered at the principal office of Issuer. At such
time as such conversion has been effected, the rights of the holder of such
Preferred Stock as such holder will cease and the Person or Persons in
whose name or names any certificate or certificates for shares of Common
Stock are to be issued upon such conversion will be deemed to have been the
holder or holders of record of the shares of Common Stock represented
thereby.
(b) As soon as possible after a conversion has been effected (but
in any event within seven business days), Issuer (in the case of clause (i)
below) will deliver to the converting holder:
-8-
(i) A certificate or certificates representing the number of
shares of Common Stock issuable by reason of such conversion in such
name or names and such denomination or denominations as the converting
holder has specified;
(ii) Subject to the provisions of Section 3.3, payment of an
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amount equal to all accrued dividends with respect to each share of
Preferred Stock converted, which have not been paid prior thereto;
(iii) A certificate representing any Preferred Stock which was
represented by the certificate or certificates delivered to the
Company in connection with such conversion but which was not covered.
(c) Subject to the provisions of Section 3.3, if for any reason the
-----------
Company is unable to pay any accrued dividends on the Preferred Stock being
converted, the Company will pay such dividends to the converting holder as soon
thereafter funds of the Company are legally available for such payment. At the
request of any such converting holder, the Company will provide such holder with
written evidence of its obligation to such holder.
(d) The issuance of certificates for shares of Common Stock upon
conversion of Preferred Stock will be made without charge to the holder for any
issuance tax in respect thereof or other cost incurred by Issuer in connection
with such conversion and the related issuance of shares of Common Stock. Upon
conversion, Issuer will take all such actions as are necessary in order to
insure that the Common Stock issuable with respect to such conversion will be
validly issued, fully paid and nonassessable.
(e) The Company will not close its books against the transfer of
Preferred Stock or of Common Stock issued or issuable upon conversion of
Preferred Stock in any manner which interferes with the timely conversion of
Preferred Stock.
7.3 Conversion Price and Adjustments.
---------------------------------
(a) The initial Conversion Price at which shares of Common Stock shall
be deliverable upon conversion of Preferred Stock will be $1.50 per share. The
initial Conversion Price is subject to adjustment as hereinafter provided.
Except as provided in this Certificate of Designation, no adjustment in the
Conversion Price shall be made in respect of the issuance of Additional Shares
unless the consideration per share for an Additional Share issued or deemed to
be issued by Issuer is less than the Conversion Price in effect on the date of,
and immediately prior to, such issue.
(b) In the event Issuer at any time or from time to time after the
Original Issue Date shall issue any Options or Convertible Securities or shall
fix a
-9-
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the following shall
apply:
(i) The maximum number of shares of Common Stock issuable upon the
exercise of such Options or, in the case of Convertible Securities and
Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares issued as of the
earlier of (x) the time of such Options or Convertible Securities are
issued or (y) in case such a record date shall have been fixed, as of
the close of business on such record date; provided, that if such
Options or Convertible Securities by their terms provide, with the
passage of time or otherwise, for any change in the minimum amount of
consideration payable to Issuer, or any change in the maximum number
of shares of Common Stock issuable upon the exercise, conversion or
exchange thereof other than changes which may occur as a result of
anti-dilution provisions (for which each Conversion Price shall be
readjusted based on the provisions of this Section 7.3 when each such
-----------
change is effective), the consideration per share (determined pursuant
to Section 7.3(e) hereof) for Common Stock issuable pursuant to such
--------------
Options or Convertible Securities shall be the minimum consideration
per share that could at any time result, taking into consideration all
subsequent changes in the minimum amount of consideration payable to
Issuer and/or in the maximum number of shares of Common Stock issuable
upon the exercise, conversion or exchange.
(ii) No further adjustment in the Conversion Price shall be made
upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or
exchange of such Convertible Securities.
(iii) Upon the expiration of any such Options or any rights of
conversion or exchange of such Convertible Securities which shall not
have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon
such expiration, be recomputed (provided that recomputation shall not
affect any Preferred Stock converted or tendered for conversion prior
to such exercise or expiration) as if:
(A) in the case of Convertible Securities or Options for
Common Stock, the only Additional Shares issued were shares of
Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible
Securities and the consideration received therefor was the
consideration actually received by Issuer for the issue
-10-
of all such Options that were exercised plus the consideration
actually received by Issuer upon such exercise, or for the issue of
all such Convertible Securities which were actually converted or
exchanged, plus the additional consideration, if any, actually
received by Issuer upon such conversion or exchange; and
(B) in the case of Options for Convertible Securities, only the
Convertible Securities, if any, actually issued upon the exercise
thereof were issued at the time of issue of such Options, and the
consideration received by Issuer for the Additional Shares deemed to
have been then issued was the consideration actually received by
Issuer for the issue of all such Options that were exercised, plus
the consideration deemed to have been received by Issuer upon the
issue of the Convertible Securities with respect to which such Options
that were actually exercised.
(iv) No readjustment pursuant to clause (iii) above shall have the
effect of increasing the Conversion Price to an amount which exceeds the
Conversion Price in effect immediately prior to the original adjustment If
Additional Shares were issued between the original adjustment date and the
readjustment date (other than Common Stock issued upon exercise of the
Options or conversion of the Convertible Securities that are the subject to
the readjustment), then the Conversion Price on the readjustment date shall
be recomputed (but only if a lower Conversion Price results therefrom) by
treating the readjusted Conversion Price as the Conversion Price in effect
on the original adjustment date and adjusting such Conversion Price for all
issuances of Additional Shares (other than Common Stock issued upon
exercise of the Options or conversion of the Convertible Securities that
are the subject of the readjustment).
(c) The Conversion Price shall be adjusted in accordance with the following
provisions:
(i) In the event Issuer at any time or from time to time after the
Original Issue Date shall declare or pay any dividend on the Common Stock
payable in Common Stock or effect a subdivision or combination of the
outstanding shares of Common Stock (by reclassification or otherwise), then
and in any such event, the Conversion Price shall be proportionately
decreased in the case of a stock dividend or subdivision and
proportionately increased in the case of a combination of shares effective,
in the case of such dividend, immediately after the close of business on
the record date for the determination of holders of Common Stock entitled
to receive such dividend or, in the case of a subdivision or combination,
at the close
-11-
of business immediately prior to the date upon which such corporate action
becomes effective.
(ii) In the event Issuer shall at any time after the Original Issue
Date issue Additional Shares (including Additional Shares deemed to be
issued pursuant to Section 7.3(b)) other than Germany Shares, without
---------------
consideration or for a consideration per share less than the Conversion
Price in effect on the date of and immediately prior to such issuance,
then and in each such event, the Conversion Price shall be reduced
concurrently with such issue of shares, to a price (calculated to the
nearest cent) determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such issuance plus the number of
shares of Common Stock which the aggregate consideration received by
Issuer for the total number of Additional Shares so issued would purchase
at the Conversion Price in effect immediately prior to such issuance, and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the number of such
Additional Shares so issued. For the purpose of the above calculation,
the number of shares of Common Stock outstanding immediately prior to such
issuance shall be calculated on a fully diluted basis, as if all shares of
Preferred Stock and all Options and Convertible Securities had been fully
exercised or converted into shares of Common Stock immediately prior to
such issuance (and the resulting securities fully convened into shares of
Common Stock, if so convertible) as of such date, but not including in
such calculation any additional shares of Common Stock issuable with
respect to shares of Preferred Stock, Options or Convertible Securities
solely as a result of the adjustment of the Conversion Price (or other
conversion ratios) resulting from the issuance of the Additional Shares
causing the adjustment in question.
(iii) In the event Issuer shall at any time after the Original Issue
Date issue Germany Shares (including Germany Shares deemed issued pursuant
to Section 7.3(b)), without consideration or for a consideration per share
---------------
less than the Conversion Price in effect on the date of and immediately
prior to such issuance, then and in each such event, the Conversion Price
shall be reduced concurrently with such issue of shares to the price at
which such Germany Shares are issued.
(d) For purposes of this Section 7.3, the consideration received by Issuer
-----------
for the issue of any Additional Shares shall be computed as follows:
(i) Insofar as it consists of cash, such consideration shall consist
of the aggregate amount of cash received by Issuer excluding amounts paid
or payable for accrued interest or accrued dividends.
-12-
Insofar as it consists of property other than cash, such
consideration shall be computed at the fair value thereof at the
time of such issue, as determined in good faith by the Board of
Directors of Issuer. In the event Additional Shares are issued
together with other securities or other assets of Issuer for
consideration which covers both, such consideration shall be the
proportion of such consideration so received, computed as
determined in good faith by the Board of Directors of Issuer.
(ii) For the purpose of computing the initial adjustment of
each Conversion Price pursuant to Section 7.3(b)(i) the
-----------------
consideration per share received by Issuer for additional Shares
of Common Stock deemed to have been issued pursuant to Section
-------
7.3(b)(i) shall be determined by dividing the total amount, if
---------
any, received or receivable by Issuer as consideration for the
issue of such Options or Convertible Securities, plus the minimum
aggregate amount of additional consideration payable to Issuer
upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of the Options for
Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such
Convertible Securities, by the maximum number of shares of Common
Stock issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(e) In the event Issuer at any time or from time to time makes,
or fixes a record date for the determination of holders of Common
Stock entitled to receive a dividend or other distribution payable in
securities of Issuer other than shares of Common Stock or any other
property (including cash), then and in each such event provision shall
be made so that each holder of Preferred Stock shall receive upon
conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of Issuer or
other property which he would have received had such holder's
Preferred Stock been converted into Common Stock on the record date of
such event and had the holder thereafter, during the period from the
record date of such event to and including the date of conversion,
retained such securities or other property (including cash) receivable
by the holder as aforesaid during such period, subject to all other
adjustments called for during such period under this Section 7.3 with
-----------
respect to the rights of the holders of the Preferred Stock.
7.4 No Impairment. Issuer will not, by amendment of its Certificate
-------------
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by Issuer, but will at all times
in good faith assist in the carrying out of all the provisions of this
Certificate of Designation and in the taking of all such action as may be
necessary
-13-
or appropriate in order to protect the conversion rights of the holders of
Preferred Stock against impairment.
7.5 Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Certificate
of Designation, Issuer at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to the holders of
Preferred Stock a certificate setting forth such adjustment or readjustment and
show in detail the facts upon which such adjustment or readjustment is based.
Issuer shall, upon the written request at any time of any holder of Preferred
Stock, furnish or cause to be furnished to such holder a like certificate
setting forth (i) such adjustments and readjustments, (ii) each Conversion Price
at the time in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which at the time Would be received upon the
conversion of Preferred Stock.
7.6 Reservation of Preferred Stock and Stock Issuable Upon
------------------------------------------------------
Conversation. Issuer shall at all times (any such time being referred to in this
------------
Section 7.6 as a "determination date") reserve and keep available out of its
-----------
authorized but unissued shares of Preferred Stock solely for the purpose of
effecting the payments of dividends pursuant to Section 3.1, 675,000 shares of
Preferred Stock plus such number of additional shares of Preferred Stock, if
any, as shall be needed to pay by the issuance of additional Preferred Stock all
dividends which may accrue under Section 3.1 during the two-year period from any
determination date. If at any time the number of authorized but unissued shares
of Preferred Stock shall not be sufficient to comply with the preceding
provisions of this Section 7.6, Issuer shall promptly take such corporate action
-----------
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Preferred Stock to such number of shares as shall be
required by the terms hereof. Issuer shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock solely for
the purpose of effecting the conversion of the Preferred Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to effect a
conversion of all and, if at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the conversion of all
shares of Preferred Stock, Issuer shall promptly take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.
7.7 Payment of Taxes. Issuer shall pay all issue taxes and other
----------------
governmental charges (other than income or other taxes imposed upon profits
realized by the recipient) that may be imposed in respect of the issue or
delivery of shares of Common Stock or other securities or property upon
conversion of the Preferred Stock; provided, however that Issuer shall not be
obligated to pay any tax or other charge imposed in connection with any
transfer involved in the issue and delivery of shares of Common Stock or other
securities in any name other than that in which the shares of Preferred Stock
were registered.
7.8 Reclassification: Recapitalization. In the event of any
----------------------------------
reclassification of the Common Stock or recapitalization involving Common Stock
(other than a change in
-14-
par value or as a result of a stock dividend, subdivision, or combination of
shares), each holder of Preferred Stock shall thereafter be entitled to receive
and provisions shall be made therefor in an agreement relating to the
reclassification or recapitalization, upon conversion of Preferred Stock, the
kind and number of shares of Common Stock or other securities or property
(including cash) of Issuer, to which such holder of Preferred Stock would have
been entitled if such holder had held the number of shares of Common Stock of
Issuer into which the shares of Preferred Stock held by such holder was
convertible immediately prior to such reclassification or recapitalization; and
in any such case appropriate adjustment shall be made in the application of the
provisions herein set forth with respect to the rights and interests thereafter
of the holders of the Preferred Stock; to the end that the provisions set forth
herein shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares, other securities, or property thereafter receivable upon
conversion of the Preferred Stock.
7.9 Notices. In the event that the Issuer intends:
-------
(a) to declare any dividend or distribution upon its Common
Stock, whether in cash, property, stock or other securities, whether
or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(b) to offer for subscription pro rata to the holders of any
class or series of its stock any additional shares of stock of any
class or series or other rights;
(c) to effect any reclassification or recapitalization of its
Common Stock outstanding involving a change in the Common Stock; or
(d) to merge or consolidate With or into any other corporation,
or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up.
THEN, in connection with each event and for the purpose of providing the holders
of Preferred Stock with an opportunity to elect to convert all or a portion of
the Preferred Stock held thereby in accordance with the other provisions of this
Certificate of Designation prior to the occurrence of any of the events or dates
described in clauses (a)-(d) above, Issuer shall send to each holder of
Preferred Stock:
(A) at least 20 days prior written notice of the date on which a
record shall be taken for such dividend, distribution or subscription
rights (and specifying the date on which the holders of Common Stock
shall be entitled thereto) or for determining rights to vote in
respect of the matters referred to in (a) and (b) above; and
(B) in the case of the matters referred to in (c) and (d) above, at
least 20 days prior written notice of the date when the same shall
take place (and specifying the date on which the holders of Common
Stock shall be entitled
-15-
to exchange their Common Stock for securities or other property
deliverable upon the occurrence of such event or such earlier date, if
any, on which a record shall be taken of the holders of Common Stock
who shall be entitled to exchange their Common Stock).
7.10 Manner of Notice. Any notice required by this Certificate of
----------------
Designation shall be deemed given if given by certified mail, postage prepaid,
return receipt requested, addressed to the holder of Preferred Stock at the
address for each such holder as shown on the books of Issuer.
7.11 Fractional Shares. No fractional share shall be issued upon the
-----------------
conversion of any portion of the Preferred Stock. All shares of Common Stock
(including fractions thereof) issuable upon conversion of Preferred Stock shall
be aggregated for purposes of determining whether the conversion would result in
the issuance of any fractional share. If, after such aggregation, the conversion
would result in the issuance of a fraction of a share of Common Stock, Issuer
shall, in lieu of issuing any fractional share, pay the holder otherwise
entitled to such fraction a sum in cash equal to the Market Price of such
fraction on the date of conversion.
8. Covenants. In addition to any other rights provided by law or
---------
agreement, so long as any share of Preferred Stock shall be outstanding, the
Company shall not, without first obtaining the affirmative vote or written
consent of the holders of not less than 60% of the outstanding shares of
Preferred Stock:
8.1 amend or repeal any provision of, or add any provision to, the
Company's Certificate of Incorporation or bylaws if such action would alter or
change the preferences, rights, privileges or powers of, or the restrictions
provided for the benefit of the Preferred Stock, or increase or decrease the
number of shares of the Preferred Stock authorized hereby;
8.2 authorize or issue shares of any class of stock having any
preference or priority as to dividends or assets superior to or on a parity
with any such preference or priority of the Preferred Stock, or authorize or
issue shares of stock of any class or any bonds, debentures, notes or other
obligations convertible into or exchangeable for, or having option rights to
purchase, any shares of any other class or series of stock of the Company having
any preference or priority as to dividends or assets superior to or on a parity
with any such preference or priority of the Preferred Stock;
8.3 reclassify any Junior Stock into shares having any preference or
priority' as to dividends or assets superior to or on a parity with any such
preference or priority of the Preferred Stock:
8.4 make any dividend payment (other than dividend payments in shares
of Common Stock or Preferred Stock) in respect of any shares of any class of
stock of the Company so long as any Preferred Stock remaining outstanding; or
-16-
8.5 amend or repeal any provision of this Section 8.
---------
IN WITNESS WHEREOF, the Company has caused this Certificate to be signed by
Xxxxx X. Xxxxx, its President, and attested by Xxxxxxx X. Xxxxxx, its Assistant
Secretary, this 30th day of March, 1995.
LATEX RESOURCES, INC.
By:/s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx, President
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx, Assistant Secretary
[SEAL]
-17-
EXHIBIT C
NO. 94-049766
NORTHERN NATURAL GAS (S) IN THE DISTRICT COURT OF
COMPANY (S)
(S)
V. (S) XXXXXX COUNTY, TEXAS
(S)
LATEX RESOURCES, INC. (S) 152ND JUDICIAL DISTRICT
JOINT MOTION FOR ENTRY OF AGREED JUDGMENT
-----------------------------------------
COMES NOW Northern Natural Gas Company and LaTex Resources, Inc. and
present their Joint Motion for Entry of Agreed Judgment and in support thereof
would should the Court as follows:
I.
Both Northern Natural Gas Company, Plaintiff, and LaTex Resources, Inc.,
Defendant, have executed an Agreed Judgment which is enclosed herewith.
WHEREFORE PREMISES CONSIDERED Northern Natural Gas Company and LaTex
Resources, Inc. pray that upon consideration hereof the Court grant the Agreed
Judgment filed herewith.
Respectfully submitted,
ENRON LITIGATION UNIT
By:
----------------------------------------
Xxxxxxx X. Xxxxx
State Bar No.04171800
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
X.X. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
COUNSEL FOR PLAINTIFF
MCDADE & XXXXXX, L.L.P.
By:
-------------------------------------
Xxxxxx Xxxxxx
State Bar No.07207300
Two Houston Center
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
COUNSEL FOR DEFENDANT
EXHIBIT C
NO.94-049766
NORTHERN NATURAL GAS (S) IN THE DISTRICT COURT OF
COMPANY (S)
(S)
V. (S) XXXXXX COUNTY, TEXAS
(S)
LATEX RESOURCES, INC. (S) 152ND JUDICIAL DISTRICT
AGREED JUDGMENT
---------------
This Agreed Judgment is by and between Plaintiff, Northern Natural Gas
Company, and Defendant, LaTex Resources, Inc.
Plaintiff and Defendant have agreed to settle the above styled and numbered
cause of action.
The Court, after considering the agreement of the parties, is of the
opinion that such Agreed Judgment should be entered and that Plaintiff, Northern
Natural Gas Company, is entitled to recover of and from Defendant, LaTex
Resources, Inc., the sum of $465,000.00.
IT IS, THEREFORE, ORDERED, ADJUDGED AND DECREED that Plaintiff, Northern
Natural Gas Company, have and recover from Defendant, LaTex Resources, Inc., the
sum of $465,000.00.
IT IS FURTHER ORDERED that the judgment hereby rendered shall bear interest
at a rate of 6% per annum from the date of issuance of a writ of execution until
the judgment is satisfied thereunder.
IT IS FURTHER ORDERED that all costs of Court expended or incurred in this
case are to be borne by the party incurring same.
All writs and processes for the enforcement and collection of this judgment
may issue as necessary. All other relief not expressly granted herein is denied.
Signed this ______ day of _______________, 1996.
-----------------------------------
Judge Presiding
APPROVED AS TO FORM:
ENRON LITIGATION UNIT XXXXXX & XXXXXX, L.L.P.
By: By:
----------------------------- -------------------------------
Xxxxxxx X. Xxxxx Xxxxxx Xxxxxx
State Bar No.04171500 State Bar No.07207300
0000 Xxxxx Xxxxxx, Xxxxx 0000 Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000 000 Xxxxxx, Xxxxx 0000
X.X. Xxx 0000 Xxxxxxx, Xxxxx 00000-0000
Xxxxxxx, Xxxxx 00000-0000
Tel: (000) 000-0000 Tel: (000) 000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
COUNSEL FOR PLAINTIFF COUNSEL FOR DEFENDANT
EXHIBIT D
NO.94-049766
NORTHERN NATURAL GAS (S) IN THE DISTRICT COURT OF
COMPANY (S)
(S)
V. (S) XXXXXX COUNTY, TEXAS
(S)
LATEX RESOURCES, INC. (S) 152ND JUDICIAL DISTRICT
SATISFACTION AND RELEASE OF JUDGMENT
------------------------------------
Plaintiff, Northern Natural Gas Company, was awarded, on June __ 1996, in
the above captioned and numbered cause, a monetary judgment against Defendant,
LaTex Resources, Inc.
LaTex Resources, Inc. has now satisfied the monetary judgment. Accordingly,
Northern Natural Gas Company hereby acknowledges payment of this monetary
judgment and releases any and all liens and claims of whatsoever type and
nature, whether in rem or in personam, which it may own or hold, in whole or in
part, against LaTex Resources, Inc. as regards the monetary judgment entered in
the above captioned and numbered cause.
NORTHERN NATURAL GAS COMPANY
By:
----------------------------------------
(signature)
----------------------------------------
(printed name)
Date:
----------------------------------------
