EXECUTION VERSION
VOTING AGREEMENT
VOTING AGREEMENT (this "Agreement") dated as of January 7, 2007, by and
among Forest Oil Corporation, a New York corporation ("Parent"), MJCO
Corporation, a Delaware corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and XXXX Master Fund, Ltd., a Cayman Islands exempted company,
and XXXX Piranha Master Fund, Ltd., a Cayman Islands exempted company (the
"Stockholders").
WHEREAS, the Stockholders desire that The Houston Exploration Company, a
Delaware corporation (the "Company"), Parent and Merger Sub enter into an
Agreement and Plan of Merger dated the date hereof (the "Merger Agreement";
undefined capitalized terms herein are defined in the Merger Agreement)
providing for the merger of Merger Sub with and into the Company, with the
Company continuing as the surviving corporation, and immediately thereafter, the
merger of the Company with and into Parent, with Parent continuing as the
surviving corporation, upon the terms and subject to the conditions set forth in
the Merger Agreement (the "Mergers"); and
WHEREAS, the Stockholders are executing this Agreement as an inducement to
Parent and Merger Sub to enter into and execute the Merger Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by Parent of
the Merger Agreement and the mutual covenants, conditions and agreements
contained herein and therein, the parties agree as follows:
1. Representations and Warranties.
(a) Each Stockholder represents and warrants to Parent as follows:
(i) The Stockholder is the record or beneficial owner of that number
of shares of capital stock of the Company set forth opposite the
Stockholder's name on SCHEDULE A (such shares, whether owned by the
Stockholder or a permitted transferee pursuant to SECTION 5(a), referred to
herein as the "Subject Shares"). The Subject Shares constitute the only
shares, with respect to which the Stockholder is the record or beneficial
owner, of capital stock of the Company or options, warrants or other rights
(whether or not contingent) to acquire such shares of capital stock of the
Company that are or may be entitled to vote on the Mergers or the Merger
Agreement at any meeting of the Company's stockholders called to vote upon
the Mergers or the Merger Agreement. The Stockholder has the sole right to
vote and Transfer (as defined herein) the Subject Shares set forth opposite
its name on SCHEDULE A, and none of such Subject Shares is subject to any
voting trust or other agreement, arrangement or restriction with respect to
the voting or the Transfer of the Subject Shares, except (A) as provided by
this Agreement (it being understood that any pledge of the Pledged Shares
(as defined below) shall not be a breach of this representation) and (B)
those arising under applicable securities laws. The Stockholder has all
requisite power and authority to enter into this Agreement and to perform
its obligations hereunder. The Stockholder is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization. The execution and delivery of this Agreement by the
Stockholder and the performance by the Stockholder of
its obligations hereunder have been duly authorized by all necessary action
on the part of the Stockholder. This Agreement has been duly executed and
delivered by, and (assuming due authorization, execution and delivery by
Parent and Merger Sub) constitutes a valid and binding agreement of, the
Stockholder, enforceable against the Stockholder in accordance with its
terms, except as such enforcement may be subject to or limited by (i)
bankruptcy, insolvency, reorganization, moratorium or other Laws, now or
hereafter in effect, affecting creditors' rights generally and (ii) the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity)
(collectively, the "Enforceability Exceptions").
(ii) Neither the execution and delivery of this Agreement nor the
performance by the Stockholder of its obligations hereunder will result in
a violation of, or a default under, or conflict with, (A) if the
Stockholder is an entity, any provision of its certificate of
incorporation, bylaws, partnership agreement, limited liability company
agreement or similar organizational documents or (B) any contract, trust,
commitment, agreement, understanding, arrangement or restriction of any
kind (other than as may relate to the Pledged Shares) to which the
Stockholder is a party or bound or to which the Subject Shares are subject,
except, in the case of clause (B), as would not prevent, delay or otherwise
materially impair the Stockholder's ability to perform its obligations
hereunder. Execution, delivery and performance of this Agreement by the
Stockholder will not violate, or require any consent, approval or notice
under, any provision of any judgment, order, decree, statute, law, rule or
regulation applicable to the Stockholder or the Subject Shares, except (x)
for any reports under Sections 13(d) and 16 of the Exchange Act as may be
required in connection with this Agreement and the transactions
contemplated hereby or (y) as would not reasonably be expected to prevent,
delay or otherwise materially impair the Stockholder's ability to perform
its obligations hereunder.
(iii) The Subject Shares are held by the Stockholder, or by a nominee
or custodian for the benefit of the Stockholder, free and clear of all
liens, claims, security interests, proxies, voting trusts or agreements,
understandings or arrangements or any other encumbrances whatsoever, except
for (A) any such encumbrances arising hereunder, or (B) any such
encumbrances arising pursuant to the pledge of any Subject Shares by the
Stockholder to a financial institution or a brokerage firm (the "Pledged
Shares"); provided, however, that the Stockholder represents that any such
arrangement regarding such Pledged Shares shall not prevent, delay or
otherwise materially impair the Stockholder's ability to execute and
deliver this Agreement or perform its obligations hereunder.
(iv) No broker, investment banker, financial advisor or other person
is entitled to any broker's, finder's, financial advisor's or other similar
fee or commission based upon arrangements made by or on behalf of the
Stockholder in connection with its entering into this Agreement.
(v) The Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon the Stockholder's
execution and delivery of this Agreement.
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(b) Parent represents and warrants to the Stockholders that the execution
and delivery of this Agreement by Parent and the consummation by Parent of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Parent.
2. Voting Agreements. During the Term (as defined below) of this
Agreement, at any meeting of stockholders of the Company or at any adjournment
thereof or in any other circumstances upon which a vote, consent or other
approval (including by written consent) is sought therefor, each Stockholder
shall, including by executing a written consent solicitation if requested by
Parent, vote (or cause to be voted) the Subject Shares: (a) in favor of the
Mergers, the adoption by the Company of the Merger Agreement and the approval of
the terms thereof and each of the other transactions contemplated thereby and
(b) against any transaction, agreement, matter or any Acquisition Proposal that
would impede, interfere with, delay, postpone or attempt to discourage the
Mergers and the Merger Agreement. Notwithstanding anything to the contrary in
this Agreement, if for any reason prior to Closing, Parent's entry into this
Agreement would result in Parent becoming an "interested stockholder" within the
meaning of Section 203 of the DGCL, the number of Subject Shares automatically
shall be reduced and shall be deemed to be one share less than the number of
shares of capital stock of the Company that, if subject to this Agreement, would
cause Parent to be deemed to be an "interested person" within the meaning of
Section 203 of the DGCL. The parties agree that the Stockholders have reserved
all of their rights with respect to, and have no agreement, arrangement or
understanding with Parent or Merger Sub relating to, the shares of capital stock
of the Company other than the Subject Shares (as defined herein and as adjusted
by operation of the immediately preceding sentence).
3. Irrevocable Proxy. Each Stockholder hereby appoints Parent as its
proxy during the Term to vote all of the Stockholder's Subject Shares at any
meeting of stockholders of the Company (including any adjournments and
postponements thereof) on the matters described in SECTION 2, and to execute and
deliver any written consents to fulfill the Stockholder's obligations under this
Agreement, in each case to the extent, but only to the extent, such Subject
Shares are not voted by the Stockholder in accordance with SECTION 2. This proxy
is coupled with an interest and is irrevocable until the end of the Term;
provided that the Stockholder may grant revocable proxies voting its shares in
accordance with SECTION 2.
4. Revocation of Other Proxies. To the extent inconsistent with the other
provisions of this Agreement or the Merger Agreement, each Stockholder hereby
revokes any and all previous proxies with respect to the Stockholder's Subject
Shares.
5. Other Covenants. Each Stockholder agrees with, and covenants to,
Parent as follows:
(a) During the Term, the Stockholder shall not after the date hereof (i)
sell, transfer, pledge, assign or otherwise dispose of (including by gift)
(collectively, "Transfer"), or consent to any Transfer of, any Subject Shares or
any interest therein, except pursuant to the Mergers, (ii) enter into any
contract, option or other agreement with respect to any Transfer of any or all
of the Subject Shares or any interest therein, (iii) except as expressly
permitted by this Agreement, grant any proxy, power-of-attorney or other
authorization in or with respect to the Subject Shares or (iv) deposit the
Subject Shares into a voting trust or enter into a voting agreement or voting
arrangement with respect to the Subject Shares; provided, that the
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Stockholder may Transfer any of the Subject Shares to any Person (provided that
the transferee of such Subject Shares evidences in a writing reasonably
satisfactory to the other parties hereto such transferee's agreement to the
terms hereof, including the voting obligations with respect to such Subject
Shares set forth in SECTION 2), unless such Person is then a party to this
Agreement; provided, further, that a pledge of Pledged Shares made in accordance
with Section 1(a) shall not be deemed to be a violation of the restrictions in
this SECTION 5.
(b) During the Term, the Stockholder shall not take any action prohibited
by Section 5.3 of the Merger Agreement that would be prohibited if it were a
Representative of the Company.
6. Certain Events. This Agreement and the obligations hereunder shall
attach to each Stockholder's Subject Shares and shall be binding upon any Person
to which legal or beneficial ownership of such Subject Shares shall pass,
whether by operation of law or otherwise. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Subject Shares, the number of
Subject Shares listed on SCHEDULE A beside the name of each Stockholder shall be
adjusted appropriately and this Agreement and the obligations hereunder shall
attach to any such additional Subject Shares.
7. Stockholder Capacity. No affiliate of any Stockholder who is or
becomes during the Term a director of the Company makes any agreement or
understanding herein in his or her capacity as such director. Each Stockholder
signs solely in its capacity as the record or beneficial owner of, or the
trustee of a trust whose beneficiaries are the beneficial owners of, such
Stockholder's Subject Shares.
8. Further Assurances. Each Stockholder shall, upon request and at the
expense of Parent, execute and deliver any additional documents and take such
further actions as may reasonably be deemed by Parent to be necessary or
desirable to carry out the provisions hereof.
9. Termination. This Agreement, and all rights and obligations of the
parties hereunder, shall terminate upon (and shall only be effective from the
date hereof until) the first to occur of (a) the Merger I Effective Time, (b)
the date upon which the Merger Agreement is terminated in accordance with its
terms, (c) the date of a Company Adverse Recommendation Change, (d) the date of
any material amendment to the Merger Agreement that is adverse to the Company or
its stockholders (including, without limitation, any decrease in or change in
the form of the consideration to be paid to stockholders or the addition of any
material obligation or liability on the part of the Company or its stockholders)
or waiver of any material condition in the Merger Agreement to the Company's
obligation to close the transactions contemplated thereby, or (e) September 30,
2007 (such period from the date hereof until such termination is referred to
herein as the "Term"); provided, however, that (x) SECTION 10 shall survive any
termination of this Agreement and (y) termination of this Agreement pursuant to
clauses (b), (c) or (e) above shall not relieve any party hereto from liability
for any willful and knowing breach hereof prior to such termination.
10. Miscellaneous
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(a) All notices, requests, claims, demands and other communications under
this Agreement shall be in writing and shall be deemed given if delivered
personally or sent by overnight courier (providing proof of delivery) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice): (i) if to Parent, to the appropriate address
set forth in Section 8.4 of the Merger Agreement; and (ii) if to a Stockholder,
to the appropriate address set forth on Schedule A.
(b) Each party submits to the jurisdiction of any state or federal court
sitting in the State of Delaware in any dispute or action arising out of or
relating to this Agreement and agrees that all claims in respect of such dispute
or action may be heard and determined in any such court. Each party also agrees
not to bring any dispute or action arising out of or relating to this Agreement
in any other court. Each party agrees that a final judgment in any dispute or
action so brought will be conclusive and may be enforced by action on the
judgment or in any other manner provided at law (common, statutory or other) or
in equity. Each party waives any defense of inconvenient forum to the
maintenance of any dispute or action so brought and waives any bond, surety, or
other security that might be required of any other party with respect thereto.
(c) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(d) This Agreement may be executed in two or more counterparts, all of
which shall be considered one and the same agreement and shall become effective
as to any Stockholder when one or more counterparts have been signed by each of
Parent, Merger Sub and such Stockholder and delivered to Parent, Merger Sub and
such Stockholder.
(e) This Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement, and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to the
subject matter hereof, and this Agreement is not intended to confer upon any
other person (other than Parent) any rights or remedies hereunder.
(f) This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except by laws of descent or as expressly provided
by SECTION 5(a). Any assignment in violation of the foregoing shall be void.
(h) As between the Stockholders and Parent, each of such parties agrees
that irreparable damage to the other, non-breaching party would occur and that
such non-breaching party would not have any adequate remedy at law in the event
that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed
that the non-breaching party shall be entitled to an injunction or injunctions
to prevent breaches by the other party of this Agreement and to enforce
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specifically the terms and provisions of this Agreement, this being in addition
to any other remedy to which it may be entitled at law or in equity.
(i) If any term, provision, covenant or restriction herein, or the
application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(j) No amendment, modification or waiver in respect of this Agreement
shall be effective against any party unless it shall be in writing and signed by
such party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Parent, Merger Sub and each Stockholder party hereto
have caused this Agreement to be duly executed and delivered as of the date
first written above.
FOREST OIL CORPORATION
By: /s/ X. Xxxxx C1ark
--------------------------------------
Name: X. Xxxxx C1ark
Title: President and Chief Executive Officer
MJCO Corporation
By: /s/ Cyrus X. Xxxxxx XX
--------------------------------------
Name: Cyrus X. Xxxxxx XX
Title: Vice President and Secretary
XXXX MASTER FUND, LTD.
By: XXXX Partners LLC, its Investment Manager
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Managing Partner
XXXX PIRANHA MASTER FUND, LTD.
By: XXXX Partners LLC, its Investment Manager
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Managing Partner
[Signature Page to Voting Agreement]
SCHEDULE A
STOCKHOLDER NAME AND ADDRESS COMMON STOCK OTHER SECURITIES
XXXX Master Fund, Ltd. 3,559,400 0
c/o XXXX Partners LLC
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
XXXX Piranha Master Fund, Ltd. 572,500 0
c/o XXXX Partners LLC
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
A-1
