SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
COMMISSION FILE NUMBER: 1-11675
TRITON ENERGY LIMITED
(Exact name of registrant as specified in its charter)
CAYMAN ISLANDS NONE
- ------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
Organization)
CALEDONIAN HOUSE, MARY STREET, P.O. BOX 1043, GEORGE TOWN, GRAND CAYMAN, CAYMAN
ISLANDS
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (345) 949-0050
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Number of Shares
Title of Each Class Outstanding at November 2, 1998
Ordinary Shares, par value $0.01 per share 36,636,452
-------------------------------
TRITON ENERGY LIMITED AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Statements of Operations -
Three and nine months ended September 30, 1998 and 1997 2
Condensed Consolidated Balance Sheets -
September 30, 1998 and December 31, 1997 3
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 1998 and 1997 4
Condensed Consolidated Statement of Shareholders' Equity -
Nine months ended June 30, 1998 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 31
Item 2. Changes in Securities and use of Proceeds 31
Item 5. Other Information 32
Item 6. Exhibits and Reports on Form 8-K 34
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ---------------------
1998 1997 1998 1997
----------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Sales and other operating revenues:
Oil and gas sales $ 42,625 $ 36,993 $ 115,178 $ 99,244
Gain on sale of oil and gas assets 63,237 --- 63,237 4,077
----------- ----------- ---------- ---------
105,862 36,993 178,415 103,321
----------- ----------- ---------- ---------
Costs and expenses:
Operating 18,299 13,119 55,067 35,252
General and administrative 6,405 6,631 20,589 20,123
Depreciation, depletion and amortization 13,812 9,291 38,695 24,746
Writedown of assets --- --- 182,672 ---
Non-recurring charges 15,000 --- 15,000 ---
----------- ----------- ---------- ---------
53,516 29,041 312,023 80,121
----------- ----------- ---------- ---------
Operating income (loss) 52,346 7,952 (133,608) 23,200
Gain on sale of Triton Pipeline Colombia --- --- 50,227 ---
Interest income 838 1,038 2,330 4,354
Interest expense, net (6,785) (5,697) (17,105) (17,946)
Other income, net 3,595 8,018 6,623 8,324
----------- ----------- ---------- ---------
(2,352) 3,359 42,075 (5,268)
----------- ----------- ---------- ---------
Earnings (loss) before income taxes
and extraordinary item 49,994 11,311 (91,533) 17,932
Income tax expense (benefit) 2,786 5,110 (31,591) 8,553
----------- ----------- ---------- ---------
Earnings (loss) before extraordinary item 47,208 6,201 (59,942) 9,379
Extraordinary item - extinguishment of debt --- --- --- (14,491)
----------- ----------- ---------- ---------
Net earnings (loss) 47,208 6,201 (59,942) (5,112)
Dividends on preference shares 181 187 368 400
----------- ----------- ---------- ---------
Earnings (loss) applicable to ordinary shares $ 47,027 $ 6,014 $ (60,310) $ (5,512)
=========== =========== ========== =========
Average ordinary shares outstanding 36,634 36,534 36,599 36,448
=========== =========== ========== =========
Basic earnings (loss) per ordinary share:
Earnings (loss) before extraordinary item $ 1.28 $ 0.16 $ (1.65) $ 0.25
Extraordinary item - extinguishment of debt --- --- --- (0.40)
----------- ----------- ---------- ---------
Basic earnings (loss) $ 1.28 $ 0.16 $ (1.65) $ (0.15)
=========== =========== ========== =========
Diluted earnings (loss) per ordinary share:
Earnings (loss) before extraordinary item $ 1.28 $ 0.16 $ (1.65) $ 0.24
Extraordinary item - extinguishment of debt --- --- --- (0.39)
----------- ----------- ---------- ---------
Diluted earnings (loss) $ 1.28 $ 0.16 $ (1.65) $ (0.15)
=========== =========== ========== =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, DECEMBER 31,
<S> <C> <C>
1998 1997
------------- -----------
(UNAUDITED)
Current assets:
Cash and equivalents $ 59,332 $ 13,451
Trade receivables, net 17,754 12,963
Other receivables 46,247 52,162
Inventories, prepaid expenses and other 3,086 5,219
Assets held for sale --- 58,178
------------- -----------
Total current assets 126,419 141,973
Property and equipment, at cost, less accumulated depreciation
and depletion of $296,237 for 1998 and $89,014 for 1997 667,961 835,506
Deferred taxes and other assets 116,633 120,560
------------- -----------
$ 911,013 $1,098,039
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current maturities of long-term debt $ 18,650 $ 184,975
Accounts payable and accrued liabilities 52,051 36,964
Deferred income 35,254 35,254
------------- -----------
Total current liabilities 105,955 257,193
Long-term debt, excluding current maturities 413,769 443,312
Deferred income taxes 10,328 50,968
Deferred income and other 25,342 49,946
Convertible debentures due to employees --- ---
Shareholders' equity:
5% Preference shares 7,214 7,511
8% Preference shares 127,575 ---
Ordinary shares, par value $0.01 366 365
Additional paid-in capital 580,117 588,454
Accumulated deficit (357,523) (297,581)
Accumulated other non-owner changes in shareholders' equity (2,126) (2,126)
------------- -----------
355,623 296,623
Less cost of ordinary shares in treasury 4 3
------------- -----------
Total shareholders' equity 355,619 296,620
Commitments and contingencies (note 11) --- ---
------------- -----------
$ 911,013 $1,098,039
============= ===========
</TABLE>
The Company uses the full cost method to account for its oil and gas producing
activities.
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (59,942) $ (5,112)
Adjustments to reconcile net loss to net cash provided (used)
by operating activities:
Depreciation, depletion and amortization 38,695 24,746
Amortization of deferred income (26,440) (19,653)
Gain on sale of oil and gas assets (63,237) (4,077)
Gain on sale of Triton Pipeline Colombia (50,227) ---
Writedown of assets 182,672 ---
Non-recurring charges 11,802 ---
Payment of accreted interest on extinguishment of debt --- (124,794)
Extraordinary loss on extinguishment of debt, net of tax --- 14,491
Amortization of debt discount --- 7,943
Deferred income taxes (34,250) 5,582
Gain on sale of other assets (6,905) (1,409)
Other 1,863 (457)
Changes in working capital pertaining to operating activities 12,369 14,421
---------- ----------
Net cash provided (used) by operating activities 6,400 (88,319)
---------- ----------
Cash flows from investing activities:
Capital expenditures and investments (140,417) (169,461)
Proceeds from sale of oil and gas assets 142,527 4,077
Proceeds from sale of Triton Pipeline Colombia 97,656 ---
Proceeds from sales of other assets 21,170 1,707
Other (2,421) 25,146
---------- ----------
Net cash provided (used) by investing activities 118,515 (138,531)
---------- ----------
Cash flows from financing activities:
Proceeds from revolving lines of credit and long-term debt 152,531 558,531
Payments on revolving lines of credit and long-term debt (350,178) (321,515)
Short-term notes payable, net --- 9,600
Issuances of 8% preference shares, net 116,825 ---
Issuances of ordinary shares 2,485 4,987
Other (369) (390)
---------- ----------
Net cash provided (used) by financing activities (78,706) 251,213
---------- ----------
Effect of exchange rate changes on cash and equivalents (328) (355)
---------- ----------
Net increase in cash and equivalents 45,881 24,008
Cash and equivalents at beginning of period 13,451 11,048
---------- ----------
Cash and equivalents at end of period $ 59,332 $ 35,056
========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
5% Preference shares:
Balance at December 31, 1997 $ 7,511
Conversion of 5% preference shares (297)
----------
Balance at September 30, 1998 7,214
----------
8% Preference shares:
Balance at December 31, 1997 ---
Issuances of 1,822,500 shares at $70 per share 127,575
----------
Balance at September 30, 1998 127,575
----------
Ordinary shares:
Balance at December 31, 1997 365
Issuances under stock plans 1
----------
Balance at September 30, 1998 366
----------
Additional paid-in capital:
Balance at December 31, 1997 588,454
Transaction costs for issuance of 8% preference shares (10,750)
Cash dividends, 5% preference shares (368)
Conversion of 5% preference shares 297
Issuances under stock plans 2,484
----------
Balance at September 30, 1998 580,117
----------
Treasury shares:
Balance at December 31, 1997 (3)
Purchase of treasury shares (1)
----------
Balance at September 30, 1998 (4)
----------
Accumulated deficit:
Balance at December 31, 1997 (297,581)
Net loss (59,942)
----------
Balance at September 30, 1998 (357,523)
----------
Accumulated other non-owner changes in
shareholders' equity:
Balance at December 31, 1997 (2,126)
Other non-owner changes in shareholders' equity ---
----------
Balance at September 30, 1998 (2,126)
----------
Total shareholders' equity at September 30, 1998 $ 355,619
==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
<PAGE>
TRITON ENERGY LIMITED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(AMOUNTS IN TABLES IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
1. GENERAL
Triton Energy Limited ("Triton") is an international oil and gas exploration and
production company. The term "Company" when used herein means Triton and its
subsidiaries and other affiliates through which the Company conducts its
business. The Company's principal properties, operations, and oil and gas
reserves are located in Colombia and Malaysia-Thailand. The Company is actively
exploring for oil and gas in these areas, as well as in Southern Europe, Africa,
and the Middle East. All sales currently are derived from oil and gas
production in Colombia.
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements of the Company contain all adjustments of a normal
recurring nature necessary to present fairly the Company's financial position as
of September 30, 1998, and the results of its operations for the three and nine
months ended September 30, 1998 and 1997, its cash flows for the nine months
ended September 30, 1998 and 1997, and shareholders' equity for the nine months
ended September 30, 1998. The results for the three and nine months ended
September 30, 1998, are not necessarily indicative of the final results to be
expected for the full year.
The condensed consolidated financial statements should be read in conjunction
with the Notes to Consolidated Financial Statements, which are included as part
of the Company's Annual Report on Form 10-K for the year ended December 31,
1997.
Certain other previously reported financial information has been reclassified to
conform to the current period's presentation.
2. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued Statement No. 130
("SFAS 130"), "Reporting Comprehensive Income." SFAS 130 established standards
for the reporting and display of comprehensive income and its components,
specifically net income and all other changes in shareholders' equity except
those resulting from investments by and distributions to shareholders. The
Company, which adopted the standard beginning January 1, 1998, has elected to
display comprehensive income (or non-owner changes in shareholders' equity) in
the Condensed Consolidated Statement of Shareholders' Equity. This statement
does not have any effect on the Company's results of operations or financial
position.
3. ASSET DISPOSITIONS
In July 1998, the Company and Atlantic Richfield Company ("ARCO") signed an
agreement providing financing for the development of the Company's gas reserves
on Block A-18 of the Malaysia-Thailand Joint Development Area. Under terms of
the agreement, consumated in August 1998, the Company sold to a subsidiary of
ARCO for $150 million one-half of the shares of the subsidiary through which the
Company owned its 50% share of Block A-18. The agreements also require ARCO to
pay all future exploration and development costs attributable to the Company's
and ARCO's collective interest in Block A-18, up to $377 million or until first
production from a gas field, at which time the Company and ARCO would each pay
50% of such costs. Additionally, the agreements require ARCO to pay the Company
an additional $65 million each at July 1, 2002 and July 1, 2005, if certain
specific development objectives are met by such dates, or $40 million each if
the objectives are met within one year thereafter.
The agreements provide that the Company will recover its investment in
recoverable costs in the project, approximately $101 million, and that ARCO will
recover its investment in recoverable costs, on a first-in, first-out basis from
the cost recovery portion of future production. The sale resulted in an
aftertax gain of $63.2 million in the third quarter of 1998.
In February 1998, the Company sold Triton Pipeline Colombia, Inc. ("TPC"), a
wholly owned subsidiary that held the Company's 9.6% equity interest in the
Colombian pipeline company, Oleoducto Central S. A. ("OCENSA"), to an unrelated
third party (the "Purchaser") for $100 million. Net proceeds were approximately
$97.7 million after $2.3 million of expenses. The sale resulted in an aftertax
gain of $50.2 million. TPC's investment in OCENSA, totaling $47.4 million at
December 31, 1997, was included in assets held for sale.
In conjunction with the sale of TPC, the Company entered into an equity swap
with a creditworthy financial institution (the "Counterparty"). The equity swap
has a notional amount of $97 million and requires the Company to make floating
LIBOR-based payments on the notional amount to the Counterparty. In exchange,
the Counterparty is required to make payments to the Company equivalent to 97%
of the dividends TPC receives in respect of its equity interest in OCENSA. Upon
a sale by the Purchaser of the TPC shares, the Company will receive from the
Counterparty, or make a cash payment to the Counterparty, an amount equal to the
excess or deficiency, as applicable, of the difference between 97% of the net
proceeds from the Purchaser's sale of the TPC shares and the notional amount.
The equity swap is carried in the Company's financial statements at fair
value during its time which, as amended, will expire December 31, 1999.
Fluctuations in the fair value of the equity swap will affect other income as
noncash adjustments.
In June 1997, the Company sold its Argentine subsidiary for cash proceeds of
$4.1 million and recognized a gain of $4.1 million.
<PAGE>
4. WRITEDOWN OF ASSETS
Writedown of assets is summarized as follows:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1998
-------------------
<S> <C>
Evaluated oil and gas properties $ 105,354
Unevaluated oil and gas properties 73,890
Other assets 3,428
-------------------
$ 182,672
===================
</TABLE>
In June 1998, the carrying amount of the Company's evaluated oil and gas
properties in Colombia were written down by $105.4 million ($68.5 million, net
of tax) through application of the full cost ceiling limitation as prescribed by
the Securities and Exchange Commission ("SEC"), principally as a result of a
decline in oil prices. The SEC ceiling test was calculated using the June 30,
1998, West Texas Intermediate ("WTI") oil price of $14.18 per barrel that, after
a differential for Cusiana crude delivered at the port of Covenas in Colombia,
resulted in a net price of approximately $13 per barrel.
In conjunction with a plan to restructure operations and scale back exploration
related expenditures, the Company assessed its investments in exploration
licenses and determined that certain investments were impaired. As a result,
unevaluated oil and gas properties and other assets totaling $77.3 million
($72.6 million, net of tax) were expensed in June 1998. The writedown included
$27.2 million and $22.5 million related to exploration activity in Guatemala and
China, respectively. The remaining writedowns related to the Company's
exploration projects in certain other areas of the world.
5. NON-RECURRING CHARGES
In July 1998, the Company commenced a plan to restructure the Company's
operations, reduce overhead costs and substantially scale back exploration
related expenditures. As a result of the restructuring, the Company recognized
non-recurring charges totaling $15 million in the third quarter. The major
component of the non-recurring charges related to the elimination of
approximately 105 positions or 41% of the Company's worldwide workforce. An
accrual of $11.2 million was included in non-recurring charges related to the
reduction in workforce for severence, benefit continuation and outplacement
costs. Additionally, the Company has closed or is in the process of closing
branch offices in four countries which resulted in a $2.1 million non-recurring
charge related to the termination of office leases and the write-down of related
assets to their fair market value. The Company expects to complete the closing
of its branch offices by the third quarter of 1999. The remaining non-recurring
charges of $1.7 million primarily related to the write-off of surplus fixed
assets resulting from the reduction in workforce.
<PAGE>
6. OTHER INCOME, NET
For the three months ended September 30, 1998 and 1997, other income, net
included foreign exchange gains of $.8 million and $5.8 million, respectively,
primarily related to noncash adjustments to deferred tax liabilities in Colombia
associated with devaluation of the Colombian peso versus the U.S. dollar.
During the same three month period in 1998 and 1997, the Company recognized
gains of $5.3 million and $1.4 million, respectively, on the sale of
non-operating assets. These gains were offset by an unrealized loss of $2.1
million on the change in the fair value of the equity swap in the third quarter
of 1998.
For the nine months ended September 30, 1998 and 1997, other income, net
included foreign exchange gains of $2.5 million and $8.7 million, respectively,
primarily related to noncash adjustments to deferred tax liabilities in Colombia
associated with devaluation of the Colombian peso versus the U.S. dollar.
During the same nine month period in 1998 and 1997, the Company recognized gains
of $6.8 million and $1.5 million, respectively, on the sale of non-operating
assets. Additionally, an unrealized gain (loss) of $.5 million and ($3.4
million) was recognized in 1998 and 1997, respectively, representing the change
in the fair market value of call options purchased in anticipation of a forward
oil sale in 1995. These gains were offset by a realized loss of $2.9 million on
the change in the fair market value of the equity swap during 1998.
7. EXTRAORDINARY ITEM
In May and June 1997, the Company completed a tender offer and consent
solicitation with respect to its Senior Subordinated Discount Notes due November
1, 1997 ("1997 Notes") and 9 3/4% Senior Subordinated Discount Notes due
December 15, 2000 ("9 3/4% Notes") that resulted in the retirement of the 1997
Notes and substantially all of the 9 3/4% Notes. The Company's results of
operations for the nine months ended September 30, 1997, included an
extraordinary expense of $14.5 million, net of a $7.8 million tax benefit,
associated with the extinguishment of the 1997 Notes and 9 3/4% Notes. The
remainder of the 9 3/4% Notes were retired in 1998.
8. DEBT
During the nine months ended September 30, 1998, the Company used proceeds from
the sale of assets and the issuance of equity securities (see note 9) to repay
borrowings under unsecured credit facilities and fund other capital
requirements.
9. SALE OF 8% PREFERENCE SHARES
On August 31, 1998, the Company entered into a Stock Purchase Agreement (the
"Purchase Agreement") with HM4 Triton, L.P. ("HM4 Triton"), an affiliate of
Hicks, Muse, Tate & Furst Incorporated. The First Closing, as contemplated by
the Purchase Agreement, occurred on September 30, 1998, pursuant to which the
Company issued to HM4 Triton 1,822,500 shares of 8% convertible preference
shares ("8% preference shares") for $70.00 per share, or total proceeds of
$127.6 million (before expenses of $10.8 million). Each 8% preference share is
convertible at any time at the option of the holder into four ordinary shares of
the Company (subject to certain antidilution protections). Holders of 8%
preference shares are entitled to receive, when and if declared by the Board of
Directors, cumulative dividends at a rate per annum equal to 8% of the
liquidation preference of $70.00 per share, payable for each semi-annual period
ending June 30 and December 30, commencing June 30, 1999. At the Company's
option, dividends may be paid in cash or by the issuance of additional whole
shares of 8% preference shares. Holders of 8% preference shares will be entitled
to vote with the holders of ordinary shares on all matters submitted to the
shareholders of the Company for a vote, with each share of 8% preference share
entitling its holder to a number of votes equal to the number of ordinary shares
into which it could be converted at that time. The 8% preference shares can be
redeemed by the Company commencing September 30, 2001, but only if the market
value of the ordinary shares meets certain targets at the time of redemption
(but if the Company redeems any shares, it must redeem all of the shares).
Under the provisions of the Company's Articles of Association, the terms of the
8% preference shares can be amended with the approval of the holders of at
least two-thirds of the 8% preference shares voting separately as a class.
The Purchase Agreement requires the Company to conduct a rights offering (the
"Rights Offering") pursuant to which the Company would distribute to each record
holder of ordinary shares, 5% convertible preference shares and 8% preference
shares, as of a record date to be established by the Company's Board of
Directors, the transferable right (the "Rights") to purchase, at $70.00 per
share, a pro-rata portion (determined based on the number of ordinary shares
into which such shares are convertible as of the record date) of approximately
3,177,500 8% preference shares for an aggregate purchase price of approximately
$222 million. The Purchase Agreement provides that following the Rights
Offering, subject to the terms and conditions set forth in the Purchase
Agreement, HM4 Triton would be required to purchase at a second closing (the
"Second Closing") a number of 8% preference shares equal to (i) the number of
shares it could purchase upon exercise of Rights it receives in respect of the
8% preference shares it holds as of the record date and (ii) any 8% preference
shares not subscribed for in the Rights Offering; provided that HM4 Triton is
not required to purchase more than 3,177,500 8% preference shares at the Second
Closing. If all 3,177,500 8% preference shares are issued, the total number of
8% preference shares outstanding (on an as-converted basis) would represent
approximately 35% of the Company's pro forma ordinary shares outstanding. HM4
Triton's obligations to purchase any additional 8% preference shares at the
Second Closing is subject to customary closing conditions. On November 10,
1998, the Company announced that the Rights Offering, as previously announced,
would be delayed and could possibly be restructured or cancelled, following
consideration by the Company of additional capital raising alternatives.
In connection with the issuance of the 1,822,500 shares of 8% preference shares
to HM4 Triton in September 1998, the Company and HM4 Triton entered into a
Shareholders Agreement (the "Shareholders Agreement") pursuant to which, among
other things, the size of the Company's Board of Directors was set at ten, and
HM4 Triton exercised its right to designate four out of such ten directors. The
Shareholders Agreement provides that, in general, for so long as the entire
Board of Directors consists of ten members, HM4 Triton (and its designated
transferees, collectively) may designate four nominees for election to the Board
(with such number of designees increasing or decreasing proportionately with any
change in the total number of members of the Board and with any fractional
directorship rounded up to the next whole number). The right of HM4 Triton (and
its designated transferees) to designate nominees for election to the Board will
be reduced if the number of ordinary shares held by HM4 Triton and its
affiliates (assuming conversion of 8% preference shares into ordinary shares)
represents less than certain specified percentages of the number of ordinary
shares (assuming conversion of 8% preference shares into ordinary shares)
purchased by HM4 Triton pursuant to the Purchase Agreement.
The Shareholders Agreement provides that, for so long as HM4 Triton and its
affiliates continue to hold a certain minimum number of ordinary shares
(assuming conversion of 8% preference shares into ordinary shares), the Company
may not take certain actions without the consent of HM4 Triton, including (i)
entering into any merger or sale of substantial assets, (ii) issuing a class of
preference shares that would rank equal to or senior to the 8% preference
shares, (iii) paying dividends on ordinary shares or other shares ranking junior
to the 8% preference shares, other than regular dividends on the Company's 5%
convertible preference shares, or (iv) incurring indebtedness (other than
certain permitted indebtedness), or issuing preference shares, unless the
Company's leverage ratio at the time, after giving pro forma effect to such
incurrence or issuance and to the use of the proceeds, is less than 2.5 to 1.
As a result of HM4 Triton's ownership of 8% preference shares and ordinary
shares and the rights conferred upon HM4 Triton and its designees pursuant to
the above-described agreements, HM4 Triton has significant influence over the
actions of the Company and will be able to influence, and in some cases,
determine the outcome of matters submitted for approval of the shareholders. The
existence of HM4 Triton as a shareholder of the Company may make it more
difficult for a third party to acquire, or discourage a third party from seeking
to acquire, a majority of the outstanding ordinary shares. A third party would
be required to negotiate any such transaction with HM4 Triton, and the interests
of HM4 Triton as a shareholder may be different from the interests of the other
shareholders of the Company.
<PAGE>
10. EARNINGS PER ORDINARY SHARE
For the nine months ended September 30, 1998, the computation of diluted net
loss per ordinary share was antidilutive, and therefore, the amounts reported
for basic and diluted net loss per ordinary share were the same.
The following table reconciles the numerators and denominators of the basic and
diluted earnings per ordinary share computation for earnings from continuing
operations for the three months ended September 30, 1998 and the three and nine
months ended September 30, 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
THREE MONTHS ENDED SEPTEMBER 30, 1998:
Net earnings $47,208
Less: 5% Preference share dividends (181)
--------
Earnings available to ordinary shareholders 47,027
Basic earnings per ordinary share 36,634 $1.28
=====
Effect of dilutive securities:
8% Preference shares --- 79
Stock options --- 59
5% Preference shares 181 212
-------- ------
Earnings available to ordinary shareholders
and assumed conversions $47,208
========
Diluted earnings per ordinary share 36,984 $1.28
====== =====
</TABLE>
THREE MONTHS ENDED SEPTEMBER 30, 1997:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net earnings $ 6,201
Less: 5% Preference share dividends (187)
--------
Earnings available to ordinary shareholders 6,014
Basic earnings per ordinary share 36,534 $0.16
=====
Effect of dilutive securities:
Stock options --- 449
Convertible debentures --- 87
-------- ------
Earnings available to ordinary shareholders
and assumed conversions $ 6,014
========
Diluted earnings per ordinary share 37,070 $0.16
========= =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
NINE MONTHS ENDED SEPTEMBER 30, 1997:
Earnings before extraordinary item $ 9,379
Less: 5% Preference share dividends (400)
--------
Earnings before extraordinary item
available to ordinary shareholders 8,979
Basic earnings per ordinary share 36,448 $0.25
========= =====
Effect of dilutive securities:
Stock options --- 485
Convertible debentures --- 86
-------- ---------
Earnings before extraordinary item
available to ordinary shareholders and
assumed conversions $ 8,979
========
Diluted earnings before extraordinary
item per ordinary share 37,019 $0.24
======== =====
</TABLE>
On September 30, 1998, 1,822,500 shares of 8% preference shares were issued to
HM4 Triton. Each preference share is convertible any time into four ordinary
shares, subject to adjustment in certain events. The number of 8% preference
shares included in the computation of weighted average shares outstanding for
purposes of diluted earnings per ordinary share for the three months ended
September 30, 1998, was significantly lower than it will be in future periods as
these shares were outstanding for only one day during the three month period.
Additionally, the Purchase Agreement requires the Company to conduct the Rights
Offering for approximately 3,177,500 8% preference shares, which, if
consummated, would affect diluted earnings per share in future periods. See
note 9 - Sale of 8% Preference Shares.
11. COMMITMENTS AND CONTINGENCIES
Development of the Cusiana and Cupiagua fields (the "Fields"), including
drilling and construction of additional production facilities, will require
further capital outlays. The Company's capital budget for the year ending
December 31, 1998, was approximately $176 million, excluding capitalized
interest, of which approximately $103 million related to the Fields, $23 million
related to Block A-18, and $50 million related to the Company's activities in
other parts of the world. See note 3 - Asset Dispositions.
During the normal course of business, the Company is subject to the terms of
various operating agreements and capital commitments associated with the
exploration and development of its oil and gas properties. It is management's
belief that such commitments, including capital requirements in Colombia and
Block A-18 in the Gulf of Thailand discussed above, will be met without any
material, adverse effect on the Company's operations or consolidated financial
condition. See Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Requirements.
GUARANTEES
At September 30, 1998, the Company had guaranteed loans of approximately $2.1
million for a Colombian pipeline company in which the Company has an ownership
interest. The Company also guaranteed performance of $27.9 million in future
exploration expenditures in various countries. These commitments are backed
primarily by unsecured letters of credit.
LITIGATION
In July through October 1998, several lawsuits were filed against the Company
and a former and a present officer of the Company. Each case was filed on
behalf of a putative class of persons and/or entities who purchased the
Company's securities between March 30, 1998 and July 17, 1998, inclusive, and
seeks recovery of compensatory damages, fees and costs. The cases allege
violations of securities laws in connection with disclosures concerning the
Company's properties, operations, and value relating to a prospective sale of
the Company or of all or a part of its assets. Additionally, one case alleges
negligent misrepresentation and seeks recovery of punitive damages. On September
21, 1998, a motion for consolidation and for appointment as lead plaintiffs and
for approval of selection of lead counsel was filed with respect to the cases.
That motion is presently pending.
The Company believes it has meritorious defenses to these claims and intends to
vigorously defend these actions. No discovery has been taken at this time, and
the ultimate outcome is not currently predictable. There can be no assurance
that the litigation will be resolved in the Company's favor. An adverse result
could have a material adverse effect on the Company's financial position or
results of operations.
The Company is subject to certain other litigation matters, none of which is
expected to have a material, adverse effect on the Company's operations or
consolidated financial condition.
12. CERTAIN FACTORS THAT COULD AFFECT FUTURE OPERATIONS
Certain statements in this report, including expectations, intentions, plans and
beliefs of the Company and management, including those contained in or implied
by "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and these Notes to Condensed Consolidated Financial Statements, are
forward-looking statements, as defined in Section 21E of the Securities Exchange
Act of 1934, as amended, that are dependent on certain events, risks and
uncertainties that may be outside the Company's control. These forward-looking
statements include statements of management's plans and objectives for the
Company's future operations and statements of future economic performance;
information regarding schedules for the completion of production facilities; the
closing of branch offices; changes in gross general and administrative expense
and the portion that will be capitalized; expected or planned production or
transportation capacity; when the Fields might become self-financing; future
production of the Fields; the negotiation of a gas-sales contract in
Malaysia-Thailand; the Company's capital budget and future capital requirements;
the Company's meeting its future capital needs; the Company's realization of its
deferred tax asset; the level of future expenditures for environmental costs;
the outcome of regulatory and litigation matters; the impact of Year 2000
issues; and the assumptions described in this report underlying such
forward-looking statements. Actual results and developments could differ
materially from those expressed in or implied by such statements due to a number
of factors, including those described in the context of such forward-looking
statements, as well as those presented below.
CERTAIN FACTORS RELATING TO THE OIL AND GAS INDUSTRY
The Company's strategy is to focus its exploration activities on what the
Company believes are relatively high-potential prospects. No assurance can be
given that these prospects contain significant oil and gas reserves or that the
Company will be successful in its exploration activities thereon. The Company
follows the full cost method of accounting for exploration and development of
oil and gas reserves whereby all acquisition, exploration and development costs
are capitalized. Costs related to acquisition, holding and initial exploration
of licenses in countries with no proved reserves are initially capitalized,
including internal costs directly identified with acquisition, exploration and
development activities. The Company's exploration licenses are periodically
assessed for impairment on a country-by-country basis. If the Company's
investment in exploration licenses within a country where no proved reserves are
assigned is deemed to be impaired, the licenses are written down to estimated
recoverable value. If the Company abandons all exploration efforts in a country
where no proved reserves are assigned, all exploration costs associated with the
country are expensed. The Company's assessments of whether its investment
within a country is impaired and whether exploration activities within a country
will be abandoned are made from time to time based on its review and assessment
of drilling results, seismic data and other information it deems relevant. Due
to the unpredictable nature of exploration drilling activities, the amount and
timing of impairment expense are difficult to predict with any certainty.
Financial information concerning the Company's assets at December 31, 1997,
including capitalized costs by geographic area, is set forth in note 21 of Notes
to Consolidated Financial Statements in Triton's Annual Report on Form 10-K for
the year ended December 31, 1997.
The markets for oil and natural gas historically have been volatile and are
likely to continue to be volatile in the future. Oil and natural-gas prices
have been subject to significant fluctuations during the past several decades in
response to relatively minor changes in the supply of and demand for oil and
natural gas, market uncertainty and a variety of additional factors that are
beyond the control of the Company. These factors include the level of consumer
product demand, weather conditions, domestic and foreign government regulations,
political conditions in the Middle East and other production areas, the foreign
supply of oil and natural gas, the price and availability of alternative fuels,
and overall economic conditions. It is impossible to predict future oil and gas
price movements with any certainty.
The Company's oil and gas business is also subject to all of the operating risks
normally associated with the exploration for and production of oil and gas,
including, without limitation, blowouts, cratering, pollution, earthquakes,
labor disruptions and fires, each of which could result in substantial losses to
the Company due to injury or loss of life and damage to or destruction of oil
and gas wells, formations, production facilities or other properties. In
accordance with customary industry practices, the Company maintains insurance
coverage limiting financial loss resulting from certain of these operating
hazards. Losses and liabilities arising from uninsured or underinsured events
would reduce revenues and increase costs to the Company. There can be no
assurance that any insurance will be adequate to cover losses or liabilities.
The Company cannot predict the continued availability of insurance, or its
availability at premium levels that justify its purchase.
The Company's oil and gas business is also subject to laws, rules and
regulations in the countries where it operates, which generally pertain to
production control, taxation, environmental and pricing concerns, and other
matters relating to the petroleum industry. Many jurisdictions have at various
times imposed limitations on the production of natural gas and oil by
restricting the rate of flow for oil and natural-gas wells below their actual
capacity. There can be no assurance that present or future regulation will not
adversely affect the operations of the Company.
The Company is subject to extensive environmental laws and regulations. These
laws regulate the discharge of oil, gas or other materials into the environment
and may require the Company to remove or mitigate the environmental effects of
the disposal or release of such materials at various sites. The Company does
not believe that its environmental risks are materially different from those of
comparable companies in the oil and gas industry. Nevertheless, no assurance
can be given that environmental laws and regulations will not, in the future,
adversely affect the Company's consolidated results of operations, cash flows or
financial position. Pollution and similar environmental risks generally are not
fully insurable.
CERTAIN FACTORS RELATING TO INTERNATIONAL OPERATIONS
The Company derives substantially all of its consolidated revenues from
international operations. Risks inherent in international operations include
loss of revenue, property and equipment from such hazards as expropriation,
nationalization, war, insurrection and other political risks; trade protection
measures; risks of increases in taxes and governmental royalties; and
renegotiation of contracts with governmental entities; as well as changes in
laws and policies governing operations of other companies. Other risks inherent
in international operations are the possibility of realizing economic
currency-exchange losses when transactions are completed in currencies other
than U.S. dollars and the Company's ability to freely repatriate its earnings
under existing exchange control laws. To date, the Company's international
operations have not been materially affected by these risks.
CERTAIN FACTORS RELATING TO COLOMBIA
The Company is a participant in significant oil and gas discoveries in the
Fields, located approximately 160 kilometers (100 miles) northeast of Bogota,
Colombia. Development of reserves in the Fields is ongoing and will require
additional drilling and completion of the production facilities currently under
construction. The Company expects that the production facilities will be
completed during 1998 and that drilling will continue at least into 1999.
Pipelines connect the major producing fields in Colombia to export facilities
and to refineries.
From time to time, guerrilla activity in Colombia has disrupted the operation of
oil and gas projects causing increased costs. Such activity increased over the
last year, causing delays in the development of the Cupiagua Field. Although
the Colombian government, the Company and its partners have taken steps to
maintain security and favorable relations with the local population, there can
be no assurance that attempts to reduce or prevent guerrilla activity will be
successful or that guerrilla activity will not disrupt operations in the future.
Colombia is among several nations whose progress in stemming the production and
transit of illegal drugs is subject to annual certification by the President of
the United States. In 1998, the President of the United States announced that
Colombia would not be certified, but was granted a national interest waiver.
There can be no assurance that, in the future, Colombia will receive
certification or a waiver. The consequences of the failure to receive
certification or a national interest waiver generally include the following:
all bilateral aid, except anti-narcotics and humanitarian aid, would be
suspended; the Export-Import Bank of the United States and the Overseas Private
Investment Corporation would not approve financing for new projects in Colombia;
U.S. representatives at multilateral lending institutions would be required to
vote against all loan requests from Colombia, although such votes would not
constitute vetoes; and the President of the United States and Congress would
retain the right to apply future trade sanctions. Each of these consequences
could result in adverse economic consequences in Colombia and could further
heighten the political and economic risks associated with the Company's
operations in Colombia. Any changes in the holders of significant government
offices could have adverse consequences on the Company's relationship with the
Colombian national oil company and the Colombian government's ability to control
guerrilla activities and could exacerbate the factors relating to foreign
operations discussed above.
CERTAIN FACTORS RELATING TO MALAYSIA-THAILAND
The Company is a partner in a significant gas exploration project located in the
upper Malay Basin in the Gulf of Thailand approximately 450 kilometers northeast
of Kuala Lumpur and 750 kilometers south of Bangkok as a contractor under a
production-sharing contract covering Block A-18 of the Malaysia-Thailand Joint
Development Area. Test results to date indicate that significant gas and oil
deposits lie within the block. Development of gas production is in the early
planning stages but is expected to take several years and require the drilling
of additional wells and the installation of production facilities, which will
require significant additional capital expenditures, the ultimate amount of
which cannot be predicted. Pipelines also will be required to be connected
between Block A-18 and ultimate markets. The terms under which any gas produced
from the Company's contract area in Malaysia-Thailand is sold may be affected
adversely by the present monopoly, gas-purchase and transportation conditions in
both Malaysia and Thailand. In connection with the sale to a subsidiary of ARCO
of one-half of the shares of the Company's subsidiary that held its interest in
Block A-18, ARCO agreed to pay all future exploration and development costs
attributable to the Company's and ARCO's collective interest in Block A-18, up
to $377 million or until first production from a gas field, at which time the
Company and ARCO would each pay 50% of such costs. See note 3- Asset
Dispositions.
COMPETITION
The Company encounters strong competition from major oil companies (including
government-owned companies), independent operators and other companies for
favorable oil and gas concessions, licenses, production-sharing contracts and
leases, drilling rights and markets. Additionally, the governments of certain
countries where the Company operates may from time to time give preferential
treatment to their nationals. The oil and gas industry as a whole also competes
with other industries in supplying the energy and fuel requirements of
industrial, commercial and individual consumers.
MARKETS
Crude oil, natural gas, condensate, and other oil and gas products generally are
sold to other oil and gas companies, government agencies and other industries.
The availability of ready markets for oil and gas that might be discovered by
the Company and the prices obtained for such oil and gas depend on many factors
beyond the Company's control, including the extent of local production and
imports of oil and gas, the proximity and capacity of pipelines and other
transportation facilities, fluctuating demands for oil and gas, the marketing of
competitive fuels, and the effects of governmental regulation of oil and gas
production and sales. Pipeline facilities do not exist in certain areas of
exploration and, therefore, any actual sales of discovered oil or gas might be
delayed for extended periods until such facilities are constructed.
LITIGATION
The outcome of litigation and its impact on the Company are difficult to predict
due to many uncertainties, such as jury verdicts, the application of laws to
various factual situations, the actions that may or may not be taken by other
parties and the availability of insurance. In addition, in certain situations,
such as environmental claims, one defendant may be responsible, or potentially
responsible, for the liabilities of other parties. Moreover, circumstances could
arise under which the Company may elect to settle claims at amounts that exceed
the Company's expected liability for such claims in order to avoid costly
litigation. Judgments or settlements could, therefore, exceed any reserves.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL REQUIREMENTS
----------------------------------
Cash and cash equivalents totaled $59.3 million and $13.5 million at
September 30, 1998, and December 31, 1997, respectively. Working capital
(deficit) was $20.5 million at September 30, 1998, compared with ($115.2
million) at December 31, 1997. Current liabilities included deferred income
totaling $35.3 million at September 30, 1998 and at December 31, 1997 related to
a forward oil sale consummated in 1995. The following summary table reflects
cash flows for the Company for the nine months ended September 30, 1998 (in
thousands):
<TABLE>
<CAPTION>
<C> <S> <C>
Net cash provided (used) by operating activities $ 6,400
Net cash provided (used) by investing activities $118,515
Net cash provided (used) by financing activities $(78,706)
</TABLE>
Operating Activities
--------------------
The Company's cash flows provided by operating activities for the nine
months ended September 30, 1998, benefited from increased production from the
Cusiana and Cupiagua fields (the "Fields") in Colombia. Gross production from
the Fields averaged 324,000 barrels per day ("BPD") during the first nine months
of 1998. The increased production was partially offset by a lower average
realized oil price. See "Results of Operations - Sales and Other Operating
Revenues" below.
Investing Activities
---------------------
The Company's capital expenditures and other capital investments were
$140.4 million ($120.6 million excluding capitalized interest) for the nine
months ended September 30, 1998, primarily for development of the Fields.
Development of the Fields, including drilling and construction of additional
production facilities, will require further capital outlays. The Company's
capital budget for the year ending December 31, 1998, was approximately $176
million, excluding capitalized interest, of which approximately $103 million
related to the Fields ($75.3 million incurred through September 30), $23 million
related to Block A-18 ($13.2 million incurred through September 30), and $50
million related to the Company's activities in other parts of the world ($32.1
million incurred through September 30).
In February 1998, the Company sold Triton Pipeline Colombia, Inc., a wholly
owned subsidiary that held the Company's 9.6% equity interest in the Colombian
pipeline company, Oleoducto Central S. A. ("OCENSA"), to an unrelated third
party for $100 million. Net proceeds were approximately $97.7 million after
$2.3 million of expenses.
In July 1998, the Company and a subsidiary of Atlantic Richfield Company
("ARCO") signed an agreement providing financing for the development of the
Company's gas reserves on Block A-18 of the Malaysia-Thailand Joint Development
Area. Under terms of the agreement, consumated in August 1998, the Company sold
to a subsidiary of ARCO for $150 million one-half of the shares of the
subsidiary through which the Company owned its 50% share of Block A-18. The
agreements also require ARCO to pay all future exploration and development costs
attributable to the Company's and ARCO's collective interest in Block A-18, up
to $377 million or until first production from a gas field, at which time the
Company and ARCO would each pay 50% of such costs. Additionally, the agreements
require ARCO to pay the Company an additional $65 million each at July 1, 2002
and July 1, 2005, if certain specific development objectives are met by such
dates, or $40 million each if the objectives are met within one year thereafter.
Financing Activities
---------------------
During the nine months ended September 30, 1998, the Company used
proceeds from the sale of assets and issuance of equity securities (see below)
to repay borrowings under unsecured credit facilities and fund other capital
requirements.
On August 31, 1998, the Company entered into a Stock Purchase Agreement
(the "Purchase Agreement") with HM4 Triton, L.P. ("HM4 Triton"), an
affiliate of Hicks, Muse, Tate & Furst Incorporated. The First Closing, as
contemplated by the Purchase Agreement, occurred on September 30, 1998,
pursuant to which the Company issued to HM4 Triton 1,822,500 shares of 8%
convertible preference shares ("8% preference shares") for $70.00 per
share, or total proceeds of $127.6 million (before expenses of $10.8 million).
Each 8% preference share is convertible at any time at the option of the holder
into four ordinary shares of the Company (subject to certain antidilution
protections). Holders of 8% preference shares are entitled to receive, when
and if declared by the Board of Directors, cumulative dividends at a rate
per annum equal to 8% of the liquidation preference of $70.00 per share,
payable for each semi-annual period ending June 30 and December 30,
commencing June 30, 1999. At the Company's option, dividends may be paid
in cash or by the issuance of additional whole shares of 8% preference
shares.
The Purchase Agreement requires the Company to conduct a rights offering
(the "Rights Offering") pursuant to which the Company would distribute to each
record holder of ordinary shares, 5% convertible preference shares and 8%
preference shares, as of a record date to be established by the Company's Board
of Directors, the transferable right (the "Rights") to purchase, at $70.00 per
share, a pro-rata portion (determined based on the number of ordinary shares
into which such shares are convertible as of the record date) of approximately
3,177,500 8% preference shares, for an aggregate purchase price of approximately
$222 million. The Purchase Agreement provides that following the Rights
Offering, subject to the terms and conditions set forth in the Purchase
Agreement, HM4 Triton would be required to purchase at a second closing (the
"Second Closing") a number of 8% preference shares equal to (i) the number of
shares it could purchase upon exercise of Rights it receives in the Rights
Offering in respect of the 8% preference shares it holds as of the record date
and (ii) any 8% preference shares not subscribed for in the Rights Offering;
provided that HM4 Triton is not required to purchase more than 3,177,500 8%
preference shares at the Second Closing. If all 3,177,500 8% preference shares
are issued, the total number of 8% preference shares outstanding (on an
as-converted basis) would represent approximately 35% of the Company's pro forma
ordinary shares outstanding. HM4 Triton's obligations to purchase any additional
8% preference shares at the Second Closing is subject to customary closing
conditions. On November 10, 1998, the Company announced that the Rights
Offering, as previously announced, would be delayed, and could possibly be
restructured or cancelled, following consideration by the Company of additional
capital raising alternatives.
Future Capital Needs
----------------------
The Company is continuing its efforts to reduce its general and
administrative expenses and exploration expenditures. Nevertheless, the Company
expects that cash from operating activities in 1999 will not be sufficient to
cover all of its capital needs for 1999. For internal planning purposes, the
Company is assuming that the West Texas Intermediate oil price will average
$14.00 per barrel in 1999, that average daily oil production from the Cusiana
and Cupiagua fields in 1999 will average approximately 430,000 barrels per day,
that the Company's share of capital expenditures in Colombia will be
approximately $85 million to $90 million (as currently estimated by the
operator) and that the Company will be successful in reducing its exploration
commitments by approximately one-half. Based on these assumptions, the Company
expects that it would spend at least $100 to $125 million more in cash in 1999
than it generates from operating activities. The Company expects to fund the
shortfall by a combination of cash on hand and, either proceeds from the Rights
Offering and the issuance of additional 8% preference shares to HM4 Triton
pursuant to the Purchase Agreement or other capital raising alternatives. These
assumptions may not prove to be valid or other factors may materially adversely
impact the Company's cash position. If the Rights Offering and the issuance of
the additional 8% preference shares to HM4 are not consummated, the Company
expects that it will be required to seek alternative sources of capital in early
1999.
In connection with the issuance of the 1,822,500 shares of 8% preference
shares to HM4 Triton in September 1998, the Company and HM4 Triton entered into
a Shareholders Agreement (the "Shareholders Agreement") pursuant to which, among
other things, HM4 Triton (and its designated transferees, collectively) may
designate a certain number of nominees for election to the Board. In addition,
the Shareholders Agreement provides that, for so long as HM4 Triton and its
affiliates continue to hold a certain minimum number of ordinary shares
(assuming conversion of 8% preference shares into ordinary shares), the Company
may not take certain actions without the consent of HM4 Triton, including (i)
entering into any merger or sale of substantial assets, (ii) issuing a class of
preference shares that would rank equal to or senior to the 8% preference
shares, (iii) paying dividends on ordinary shares or other shares ranking junior
to the 8% preference shares, other than regular dividends on the Company's 5%
convertible preference shares, or (iv) incurring indebtedness (other than
certain permitted indebtedness), or issuing preference shares, unless the
Company's leverage ratio at the time, after giving pro forma effect to such
incurrence or issuance and to the use of the proceeds, is less than 2.5 to 1. As
a result of HM4 Triton's ownership of 8% preference shares and ordinary shares
and the rights conferred upon HM4 Triton and its designees pursuant to the
Shareholders Agreement, HM4 Triton has significant influence over the actions of
the Company and will be able to influence, and in some cases, determine the
outcome of matters submitted for approval of the shareholders. The existence of
HM4 Triton as a shareholder of the Company may make it more difficult for a
third party to acquire, or discourage a third party from seeking to acquire, a
majority of the outstanding ordinary shares. A third party would be required to
negotiate any such transaction with HM4 Triton, and the interests of HM4 Triton
as a shareholder may be different from the interests of the other shareholders
of the Company.
RESULTS OF OPERATIONS
---------------------
Sales volumes and average prices realized were as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- ------------------
1998 1997 1998 1997
-------- ------ ------ ------
<S> <C> <C> <C> <C>
Sales volumes
Oil (MBbls), excluding forward oil sale 2,620 1,374 6,585 3,805
Forward oil sale (1) (MBbls delivered) 762 762 2,287 1,700
-------- ------- ------- -------
Total 3,382 2,136 8,872 5,505
======== ======= ======= =======
Gas (MMcf) 109 277 376 481
Weighted average price realized:
Oil (per Bbl) $ 12.57 $ 17.18 $ 12.94 $ 17.93
Gas (per Mcf) $ 0.91 $ 1.06 $ 1.01 $ 1.14
</TABLE>
(1) Commencing April 1, 1997, the delivery requirements under the forward
oil sale increased by 195,711 barrels of oil per month.
THREE MONTHS ENDED SEPTEMBER 30, 1998,
COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 1997
Sales and Other Operating Revenues
- --------------------------------------
Oil and gas sales for the third quarter of 1998 totaled $42.6 million, a
15% increase from the third quarter of 1997, due to higher production which was
partially offset by lower average realized oil prices. Oil production,
including production related to barrels delivered under the forward oil sale,
increased 58% in third quarter 1998, compared to the prior-year quarter,
resulting in an increase in revenues of $21.4 million. Gross production from
the Fields averaged 359,000 BPD for the third quarter 1998, compared to 220,000
BPD for the prior-year quarter. The increased production was primarily due to
the start-up in late 1997 of two new 80,000 BPD oil-production units at the
Cusiana central processing facility. In addition, a 100,000 BPD oil-production
unit at the Cupiagua central processing facility began production during the
latter-half of the third quarter. The average realized oil price decreased
$4.61 per barrel, or 27%, resulting in a decrease in revenues of $15.6 million
compared to the same period in 1997. The lower average realized oil price
resulted from a significant decrease in the 1998 average West Texas Intermediate
("WTI") oil price, compared with the prior-year quarter.
In August 1998, the Company sold to a subsidiary of ARCO for $150 million,
one-half of the shares of the subsidiary through which the Company owned its 50%
share of Block A-18 in the Malaysia-Thailand Joint Development Area. The sale
resulted in an aftertax gain of $63.2 million.
Costs and Expenses
- --------------------
Operating expenses increased $5.2 million in 1998, and depreciation,
depletion and amortization increased $4.5 million, primarily due to higher
production volumes, including barrels delivered under the forward oil sale. The
Company pays lifting costs, production taxes and transportation costs to the
Colombian port of Covenas for barrels to be delivered under the forward oil
sale.
The Company's operating costs per equivalent-barrel were $5.76 and $6.58 in
1998 and 1997, respectively. Operating expenses on a per equivalent-barrel
basis were lower primarily due to higher production volumes and a decrease in
production taxes of $1.7 million. Beginning in 1998, no production taxes are
assessed on production from the Cusiana Field. The Company will be required to
pay production taxes on production from the Cupiagua Field equating to
approximately 5.5%, 4% and 2.5% of gross realized oil prices during 1998, 1999
and 2000, respectively. These improvements to operating cost were partially
offset by an increase in OCENSA pipeline tariffs which totaled $12.6 million or
$3.99 per barrel, and $7.2 million or $3.72 per barrel in 1998 and 1997,
respectively. OCENSA imposes a tariff on shippers from the Fields (the "Initial
Shippers"), which is estimated to recoup: the total capital cost of the project
over a 15-year period; its operating expenses, which include all Colombian
taxes; interest expense; and the dividend to be paid by OCENSA to its
shareholders. Any shippers of crude oil who are not Initial Shippers are
assessed a premium tariff on a per-barrel basis, and OCENSA will use revenues
from such tariffs to reduce the Initial Shippers' tariff.
In July 1998, the Company commenced a plan to restructure the Company's
operations, reduce overhead costs and substantially scale back exploration
related expenditures. As a result of the restructuring, the Company recognized
non-recurring charges totaling $15 million in the third quarter. The major
component of the non-recurring charges relates to the elimination of
approximately 105 positions or 41% of the Company's worldwide workforce. An
accrual of $11.2 million was included in non-recurring charges related to the
reduction in workforce for severence, benefit continuation and outplacement
costs. Additionally, the Company has closed or is in the process of closing
branch offices in four countries which resulted in a $2.1 million non-recurring
charge related to the termination of office leases and the write-down of related
assets to their fair market value. The Company expects to complete the closing
of its branch offices by the third quarter of 1999. The remaining non-recurring
charges of $1.7 million primarily related to the write-off of surplus fixed
assets resulting from the reduction in workforce.
General and administrative expense before capitalization decreased $5.5
million to $10.9 million in 1998. Capitalized general and administrative costs
were $4.5 million and $9.7 million in 1998 and 1997, respectively. General and
administrative expenses, and the portion capitalized, decreased as a result of
restructuring activities undertaken in the third quarter. The Company is
continuing its efforts to reduce its general and administrative expenses and
exploration expenses. As a result, the Company expects that gross general and
administrative expense and the portion of general and administrative expense
that will be capitalized will decrease in future periods.
Other Income and Expenses
- ----------------------------
Gross interest expense for 1998 and 1997 totaled $11.9 million and $12.3
million, respectively, while capitalized interest for 1998 decreased $1.4
million to $5.2 million. The decrease in capitalized interest is primarily due
to the writedown of unevaluated property totaling $73.9 million in June 1998 and
a sale of 50% of the Company's Block A-18 project in August 1998. On September
30 and October 1, 1998, the Company repaid a total of $81.9 million under
unsecured bank credit facilities which constitutes all of the Company's
outstanding borrowings under bank credit facilities.
Other income, net included foreign exchange gains of $.8 million and $5.8
million in 1998 and 1997, respectively, primarily related to noncash adjustments
to deferred tax liabilities in Colombia associated with devaluation of the
Colombian peso versus the U.S. dollar. In 1998 and 1997, the Company recognized
gains of $5.3 million and $1.4 million, respectively, on the sale of
non-operating assets. These gains were offset by an unrealized loss of $2.1
million on the change in the fair value of the equity swap in 1998.
Fluctuations in the fair value of the equity swap will continue to affect other
income as noncash adjustments, the magnitude of which cannot be predicted with
any certainty. See Item 1. Notes to Condensed Consolidated Financial
Statements, note 3 - Asset Dispositions.
Income Taxes
- -------------
Statement of Financial Accounting Standards No. 109 ("SFAS 109"),
"Accounting for Income Taxes," requires that the Company make projections about
the timing and scope of certain future business transactions in order to
estimate recoverability of deferred tax assets primarily resulting from the
expected utilization of net operating loss carryforwards. Changes in the timing
or nature of actual or anticipated business transactions, projections and
income tax laws can give rise to significant adjustments to the Company's
deferred tax expense or benefit that may be reported from time to time. For
these and other reasons, compliance with SFAS 109 may result in significant
differences between tax expense for income statement purposes and taxes actually
paid.
The income tax provisions for 1998 and 1997 included deferred tax expense
of $1.5 million and $3.9 million, respectively. Current taxes related to the
Company's Colombian operations totaled $1.3 million and $1.4 million in 1998 and
1997, respectively.
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1998
COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 1997
Sales and Other Operating Revenues
- --------------------------------------
Oil and gas sales in 1998 totaled $115.2 million, a 16% increase from the
prior year, due to higher production which was offset partially by lower average
realized oil prices. Oil production, including production related to barrels
delivered under the forward oil sale, increased 61% in 1998 compared to the
prior year, resulting in increased revenues of $60.5 million. Gross production
from the Fields averaged 324,000 BPD in 1998, compared to 195,000 BPD in 1997.
The increased production was primarily due to the start-up in late 1997 of two
new 80,000 BPD oil-production units at the Cusiana central processing facility.
In addition, a 100,000 BPD oil-production unit at the Cupiagua central
processing facility began production in the latter-half of the third quarter of
1998. The average realized oil price decreased $4.99 per barrel, or 28%,
resulting in a decrease in revenues of $44.4 million compared to 1997. The
lower average realized oil price primarily resulted from a significant decrease
in the 1998 average WTI oil price, compared with the prior-year period and
increased deliveries under the forward oil sale. In April 1997, the Company's
delivery requirements under the forward oil sale increased from 58,425 barrels
per month to 254,136 barrels per month.
Costs and Expenses
- --------------------
Operating expenses increased $19.8 million in 1998, and depreciation,
depletion and amortization increased $13.9 million, primarily due to higher
production volumes, including barrels delivered under the forward oil sale. The
Company's operating costs per equivalent-barrel were $6.44 and $6.75 in 1998 and
1997, respectively. OCENSA pipeline tariffs totaled $38.2 million or $4.51 per
barrel, and $19.6 million or $3.83 per barrel in 1998 and 1997, respectively.
The increase in OCENSA pipeline tariffs was partially offset by a decrease in
production taxes of $5.6 million.
General and administrative expense before capitalization decreased $6.5
million in 1998 to $38.1 million. Capitalized general and administrative costs
were $17.5 million and $24.4 million in 1998 and 1997, respectively. General and
administrative expense and the portion capitalized, decreased as a result of
restructuring activities undertaken in the third quarter.
In June 1998, the carrying amount of the Company's evaluated oil and gas
properties in Colombia were written down by $105.4 million ($68.5 million, net
of tax) through application of the full cost ceiling limitation as prescribed by
the SEC, principally as a result of a decline in oil prices. The SEC ceiling
test was calculated using the June 30, 1998 WTI oil price of $14.18 per barrel
that, after a differential for Cusiana crude delivered at the port of Covenas in
Colombia, resulted in a net price of approximately $13 per barrel. An
additional writedown may be required if oil prices fall below this level at
later quarter end dates.
In conjunction with the plan to restructure operations and scale back
exploration related expenditures, the Company assessed its investments in
exploration licenses and determined that certain investments were impaired. As
a result, unevaluated oil and gas properties and other assets totaling $77.3
million ($72.6 million, net of tax) were expensed. The writedown included $27.2
million and $22.5 million related to exploration activity in Guatemala and
China, respectively. The remaining writedowns related to the Company's
exploration projects in certain other areas of the world.
Other Income and Expense
- ---------------------------
In 1998, the Company sold Triton Pipeline Colombia, Inc., a wholly owned
subsidiary that held the Company's 9.6% equity interest in the Colombian
pipeline company, OCENSA, for $100 million. Net proceeds were approximately
$97.7 million after $2.3 million of expenses. The sale resulted in an aftertax
gain of $50.2 million.
Other income, net included foreign exchange gains of $2.5 million and $8.7
million in 1998 and 1997, respectively, primarily related to noncash adjustments
to deferred tax liabilities in Colombia associated with devaluation of the
Colombian peso versus the U.S. dollar. In 1998 and 1997, the Company recognized
gains of $6.8 million and $1.5 million, respectively, on the sale of
non-operating assets. An unrealized gain (loss) of $.5 million and ($3.4
million) was recognized in 1998 and 1997, respectively, representing the change
in the fair market value of call options purchased in anticipation of a forward
oil sale in 1995. These gains were offset by an unrealized loss of $2.9 million
on the change in the fair market value of the equity swap in 1998. See Item 1.
Notes to Condensed Consolidated Financial Statements, note 3 - Asset
Dispositions.
Income Taxes
- -------------
The income tax provisions for 1998 and 1997 included deferred tax expense
(benefit) of ($34.3 million) and $5.6 million, respectively. The benefit
recognized in 1998 primarily resulted from the writedown of oil and gas
properties. Current taxes related to the Company's Colombian operations totaled
$2.6 million and $3.2 million in 1998 and 1997, respectively.
Extraordinary Item
- -------------------
In May and June 1997, the Company completed a tender offer and consent
solicitation with respect to its Senior Subordinated Discount Notes due November
1, 1997 ("1997 Notes") and 9 3/4% Senior Subordinated Discount Notes due
December 15, 2000 ("9 3/4% Notes") that resulted in the retirement of the 1997
Notes and substantially all of the 9 3/4% Notes. The Company's results of
operations for the nine months ended September 30, 1997, included an
extraordinary expense of $14.5 million, net of a $7.8 million tax benefit,
associated with the extinguishment of the 1997 Notes and 9 3/4% Notes. The
remainder of the 9 3/4% Notes were retired in 1998.
<PAGE>
Recent Accounting Pronouncements
--------------------------------
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133 ("SFAS 133"), "Accounting for Derivative Instruments and
Hedging Activities." SFAS 133 establishes accounting and reporting standards
for derivative instruments and for hedging activities. It requires enterprises
to recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value. The requisite accounting for
changes in the fair value of a derivative will depend on the intended use of the
derivative and the resulting designation. The Company must adopt SFAS 133
effective January 1, 2000. Based on the Company's outstanding derivatives
contracts, the impact of adopting this standard would not have a material
adverse effect on the Company's operations or consolidated financial condition.
However, no assurances can be given with regards to the level of the Company's
derivatives activities at the time SFAS 133 is adopted or the resulting effect
on the Company's operations or consolidated financial condition.
Information Systems and the Year 2000
-------------------------------------
The Year 2000 issue involves circumstances where a computerized system may
not properly recognize or process date-sensitive information on or after January
1, 2000. The Company began a formal process in 1998 to identify those internal
computerized systems that are not Year 2000 compliant, prioritize those
business-critical computerized systems that need remediation or replacement,
test compliance once the appropriate corrective measures have been implemented,
and develop any contingency plans where considered necessary. In addition, the
Company intends to conduct a survey of partners, vendors and customers that the
Company believes could have an impact on the Company's material business
operations.
The Company's information technology infrastructure consists of desktop
Pentium class Intel based PC systems, servers and Sparc UNIX based computers and
off-the-shelf software packages. The systems are networked via Microsoft NT 4.0
and other telecommunications equipment. The Company does not use mini or
mainframe computer systems and uses only off-the-shelf software products. The
PBX and phone system is a standard off-the-shelf phone system with voice mail
capability. Additionally, telefax and copier machines are additional business
tools used by the Company in conducting its day to day activities.
The Company has substantially completed its assessment of Year 2000
readiness of its internal computerized systems. The next phase will include
installing upgrades to its off-the-shelf financial and operational software
applications, hardware and telecommunications equipment. The Company expects
that such remediation procedures will be completed by the second quarter of
1999. The last phase will include testing of newly upgraded systems to ensure
compliance with Year 2000 date recognition and the development of contingency
plans. The Company expects to complete this last phase by the third quarter of
1999.
All of the Company's sales are derived from oil and gas production
from the Fields, which is heavily dependent upon the operation of the Fields
by British Petroleum Colombia (the "Operator") and the transportation of
oil through OCENSA, the Colombian pipeline company. The Company is monitoring
progress of the Operator of the Fields and OCENSA on their activities related
to the Year 2000. At this time, the Company expects that field operations
will not be interrupted due to improper recognition of the Year 2000 by
computerized systems of the Operator of the Fields or OCENSA. There can be
no assurance that the Operator of the Fields or OCENSA will not experience
problems with the Year 2000, or that contingency plans will resolve any
problems experienced, or the timeliness of implementing such contingency plans.
The Company also relies on other oil and gas partners, vendors, and financial
institutions in its daily operations. The Company believes it has identified
those third-party relationships that could have a material adverse effect on the
Company's results of operations and financial position should their computerized
systems not be compliant for the Year 2000. The Company intends to survey the
identified third parties on their readiness for the Year 2000 and establish
appropriate alternatives, if needed, where noncompliance may pose a risk to the
Company's operations.
The Company does not believe that the costs to resolve any Year 2000 issues will
be material. To date, the Company has spent less than $100,000 on Year 2000
matters and it expects that the total cost, primarily consulting fees, will not
exceed $700,000.
The failure to correct a material Year 2000 problem by the Company, its
partners or other vendors could result in an interruption of the Company's
normal business activities or operations, including production in the Fields or
transportation of the Company's crude oil to the port of Covenas. Any
interruptions could result in a material adverse effect on the Company's results
of operations, cash flows and financial condition. Due to the inherent
uncertainties relating to the effect of the Year 2000 on the Company's
operations, it is difficult to predict what impact, if any, noncompliance with
the Year 2000 issue will have on the Company's results of operations, cash flows
and financial condition.
As the Company progresses further through its Year 2000 analysis, it
intends to develop contingency plans for risks that could cause a material
adverse effect on the Company's results of operations, cash flows and financial
condition.
Certain Factors That Could Affect Future Operations
---------------------------------------------------
Certain statements in this report, including expectations, intentions,
plans and beliefs of the Company and management, are forward-looking statements,
as defined in Section 21E of the Securities Exchange Act of 1934, as amended,
that are dependent on certain events, risks and uncertainties that may be
outside the Company's control. These forward-looking statements include
statements of management's plans and objectives for the Company's future
operations and statements of future economic performance; information regarding
schedules for the completion of production facilities; the closing of branch
offices; changes in gross general and administrative expense and the portion
that will be capitalized; expected or planned production or transportation
capacity; when the Fields might become self-financing; future production of the
Fields; the negotiation of a gas-sales contract in Malaysia-Thailand; the
Company's capital budget and future capital requirements; the Company's meeting
its future capital needs; the Company's realization of its deferred tax asset;
the level of future expenditures for environmental costs; the outcome of
regulatory and litigation matters; the impact of Year 2000 issues; and the
assumptions described in this report underlying such forward-looking statements.
Actual results and developments could differ materially from those expressed in
or implied by such statements due to a number of factors, including those
described in the context of such forward-looking statements and in notes to
Notes to Condensed Consolidated Financial Statements.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
LITIGATION
In July through October 1998, eight lawsuits were filed against the Company and
Thomas G. Finck, the former Chairman and Chief Executive Officer of the Company,
seven of which also are brought against Peter Rugg, the Chief Financial Officer
of the Company. Each case was filed on behalf of a putative class of persons
and/or entities who purchased the Company's securities between March 30, 1998
and July 17, 1998, inclusive, and seeks recovery of compensatory damages, fees
and costs. The cases allege violations of Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated
thereunder in connection with disclosures concerning the Company's properties,
operations, and value relating to a prospective sale of the Company or of all or
a part of its assets. Additionally, one case alleges negligent misrepresentation
and seeks recovery of punitive damages. Each lawsuit was filed in the United
States District Court for the Eastern District of Texas, Texarkana Division, as
follows: D.H. Lee, Jr., et al. v. Triton Energy Limited, et al.; Richard
Strauss, et al. v. Triton Energy Limited, et al.; Birdie Capital Corp., et al.
v. Triton Energy Limited, et al.; North River Trading Co., LLC, et al. v. Triton
Energy Limited, et al.; Ken Bortner, et al. v. Triton Energy Limited, et al.;
Richard Zorn, et al. v. Triton Energy Limited, et al.; Elizabeth Clofine, et al.
v. Triton Energy Limited, et al.; and Sarah Schreiber, et al. v. Triton Energy
Limited, et al. On September 21, 1998, a motion for consolidation and for
appointment as lead plaintiffs and for approval of selection of lead counsel was
filed with respect to the cases filed in the Texarkana Division. That motion is
presently pending.
The Company believes it has meritorious defenses to these claims and intends to
vigorously defend these actions. No discovery has been taken at this time, and
the ultimate outcome is not currently predictable. There can be no assurance
that the litigation will be resolved in the Company's favor. An adverse result
could have a material adverse effect on the Company's financial position or
results of operations
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On September 30, 1998, the Company issued to HM4 Triton, an affiliate of Hicks,
Muse, Tate & Furst Incorporated, 1,822,500 shares of 8% preference shares for
$70.00 per share, or total proceeds of $127.6 million (before expenses of $10.8
million). The Company issued the shares to HM4 Triton in a private offering
without registration under the Securities Act of 1933 (the "Act"), as amended,
in reliance on the exemption from registration provided by Section 4(2) of the
Act. Each 8% preference share is convertible at any time at the option of the
holder into four ordinary shares of the Company (subject to certain antidilution
protections). Pursuant to the Shareholders Agreement between the Company and
HM4 Triton, L.P., for so long as HM4 Triton and its affiliates continue to hold
a certain minimum number of ordinary shares (assuming conversion of 8%
preference shares into ordinary shares), the Company may not take certain
actions without the consent of HM4 Triton, including paying dividends on
ordinary shares or other shares ranking junior to the 8% preference shares,
other than regular dividends on the Company's 5% convertible preference shares.
In addition, the terms of the 8% preference shares prohibit the payment of
dividends on the ordinary shares unless full cumulative dividends on all such
outstanding shares have been paid in full or set aside for payment. Under
the provisions of the Company's Articles of Association, the terms of the 8%
preference shares can be amended with the approval of the holders of at
least two-thirds of the 8% preference shares voting separately as a class.
See Item 1. Notes to Condensed Consolidated Financial Statements - note 9 Sale
of 9% Preference Shares and Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Requirements.
ITEM 5. OTHER INFORMATION.
In July 1998, Thomas G. Finck resigned from his positions as Chairman of the
Board and Chief Executive Officer of the Company, Sheldon R. Erikson was elected
Chairman of the Board, Robert B. Holland, III, was elected Interim Chief
Executive Officer and Nick De'Ath resigned from his position as Senior Vice
President Exploration of the Company.
Pursuant to the Shareholders Agreement, on September 30, 1998, the size of the
Company's Board of Directors was set at ten, and HM4 Triton exercised its right
to designate four out of such ten directors. The Company's Board of Directors
now consists of the following individuals: Sheldon R. Erikson, Chairman,
President and Chief Executive Officer of Cooper Cameron Corporation; Jack D.
Furst, a Managing Director and Principal of Hicks, Muse, Tate & Furst
Incorporated; Thomas O. Hicks, Chairman and Chief Executive Officer of Hicks,
Muse, Tate & Furst Incorporated; Fitzgerald S. Hudson, a General Partner of
Hudson Group Partners; John R. Huff, Chairman and Chief Executive Officer of
Oceaneering International, Inc.; Michael E. McMahon, Principal of Rockport
Partners; James C. Musselman, Chairman, President and Chief Executive Officer of
Avia Energy Development, LLC, and currently the President and Interim Chief
Executive Officer of the Company; Lamar Norsworthy, Chairman and Chief Executive
Officer of The Holly Corporation; C. Richard Vermillion, Chairman of Gammaloy
Holdings L.P.; and J. Otis Winters, Chairman-Director of Pate, Winters & Stone,
Inc. Messrs. Furst, Hicks, Vermillion and Winters are new to the Board, while
Messrs. Erikson, Hudson, Huff, McMahon, Musselman and Norsworthy had previously
been serving as members of the Board. Effective September 30, 1998, Messrs.
Ernest E. Cook, Jesse E. Hendricks, Thomas P. Kellogg, Jr., John P. Lewis, and
Edwin D. Williamson resigned from the Board.
In October 1998, the Board of Directors of the Company elected Mr. Thomas O.
Hicks Chairman of the Board of the Company, James C. Musselman President and
Interim Chief Executive Officer, and Robert B. Holland, III Chief Operating
Officer. The Board is continuing its search for a permanent Chief Executive
Officer.
In connection with the July 1998 change in management, in an effort to retain
the remaining members of the senior management team, the Company entered into
amended and restated employment agreements with Robert B. Holland, III, then the
Interim Chief Executive Officer of the Company, Peter Rugg, Senior Vice
President and Chief Financial Officer, and Al E. Turner, Senior Vice President,
Operations. The new employment agreements did not change the benefits previously
provided under the prior employment agreements with respect to a change in
control (although the definition of change in control was amended to reduce the
percentage of outstanding securities required to be purchased in order for a
change of control to be triggered from 25% to 15%), except that the new
agreements provide that, (i) rather than the officer being entitled to a cash
payment in lieu of issuing shares in respect of any options held by the officer,
such options would remain outstanding and be exercisable for one year from the
date of termination, and (ii) the officer would be entitled to the lump sum
payment under the Company's Supplemental Executive Retirement Plan in the event
of a change in control as defined in that plan. The new agreements also added a
severance benefit in the event the officer were terminated without cause, or for
good reason, prior to a change in control. In the event of a termination prior
to a change in control, the officer would be entitled to the following benefits:
(i) salary for eighteen months following the date of termination and (ii) any
stock options would become fully vested and remain exercisable for one year. As
a result of the sale of the 1,822,500 8% preference shares to the Purchaser, a
change in control has been deemed to have occurred for the purposes of these
amended and restated agreements. Therefore, if any of Messrs. Holland, Rugg or
Turner is terminated without cause, or if any such officer terminates his
employment for good reason, then such officer will be entitled to the benefits
provided in the agreements. For purposes of these agreements, "good reason"
includes (i) the assignment to the officer of duties inconsistent with his
positions, responsibilities and status with the Company, or a change in his
reporting responsibilities, titles or offices with the Company, as in effect
immediately prior to the change in control, (ii) a reduction in the officer's
base salary, (iii) the officer being required based anywhere other than the
Company's offices immediately prior to the change in control and (iv) the
failure by the Company to continue in effect any benefit plan. In addition, Mr.
Holland's agreement was amended to include within the definition of good reason
the appointment of a new President or Chief Executive Officer.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following documents are filed as part of this Quarterly
Report on Form 10-Q:
1. Exhibits required to be filed by Item 601 of Regulation S-K. (Where the
amount of securities authorized to be issued under any of Triton Energy
Limited's and any of its subsidiaries' long-term debt agreements does not exceed
10% of the Company's assets, pursuant to paragraph (b)(4) of Item 601 of
Regulation S-K, in lieu of filing such as exhibits, the Company hereby agrees to
furnish to the Commission upon request a copy of any agreement with respect to
such long-term debt.)
<TABLE>
<CAPTION>
<C><C> <S>
3.1 Memorandum of Association. (1)
3.2 Articles of Association. (1)
4.1 Specimen Share Certificate of Ordinary Shares, $.01 par value, of the Company. (2)
4.2 Rights Agreement dated as of March 25, 1996, between Triton and Chemical Bank, as
Rights Agent, including, as Exhibit A thereto, Resolutions establishing the Junior
Preference Shares. (1)
4.3 Resolutions Authorizing the Company's 5% Convertible Preference Shares. (3)
4.4 Amendment No. 1 to Rights Agreement dated as of August 2, 1996, between Triton and
Chemical Bank, as Rights Agent. (4)
4.5 Unanimous Written Consent of the Board of Directors authorizing a Series of
Preference Shares. (26)
10.1 Amended and Restated Retirement Income Plan. (5)
10.2 Amended and Restated Supplemental Executive Retirement Income Plan. (6)
10.3 1981 Employee Non-Qualified Stock Option Plan. (7)
10.4 Amendment No. 1 to the 1981 Employee Non-Qualified Stock Option Plan. (8)
10.5 Amendment No. 2 to the 1981 Employee Non-Qualified Stock Option Plan. (7)
10.6 Amendment No. 3 to the 1981 Employee Non-Qualified Stock Option Plan. (5)
10.7 1985 Stock Option Plan. (9)
10.8 Amendment No. 1 to the 1985 Stock Option Plan. (7)
10.9 Amendment No. 2 to the 1985 Stock Option Plan. (5)
10.10 Amended and Restated 1986 Convertible Debenture Plan. (5)
10.11 1988 Stock Appreciation Rights Plan. (10)
10.12 1989 Stock Option Plan. (11)
10.13 Amendment No. 1 to 1989 Stock Option Plan. (7)
10.14 Amendment No. 2 to 1989 Stock Option Plan. (5)
10.15 Second Amended and Restated 1992 Stock Option Plan. (13)
10.16 Form of Amended and Restated Employment Agreement with Triton Energy Limited
and its executive officers. (6)
10.17 Form of Amended and Restated Employment Agreement with Triton Energy Limited
and certain officers. (6)
10.18 Amended and Restated 1985 Restricted Stock Plan. (5)
10.19 First Amendment to Amended and Restated 1985 Restricted Stock Plan. (12)
10.20 Second Amendment to Amended and Restated 1985 Restricted Stock Plan. (13)
10.21 Executive Life Insurance Plan. (14)
10.22 Long Term Disability Income Plan. (14)
10.23 Amended and Restated Retirement Plan for Directors. (9)
10.24 Amended and Restated Indenture dated as of March 25, 1996 between Triton and
Chemical Bank, with respect to the issuance of Senior Subordinated Discount Notes
due 1997. (13)
10.25 Amended and Restated Senior Subordinated Indenture by and between the Company and
United States Trust Company of New York, dated as of March 25, 1996. (13)
10.26 Contract for Exploration and Exploitation for Santiago de Atalayas I with an effective
date of July 1, 1982, between Triton Colombia, Inc., and Empresa Colombiana
De Petroleos. (9)
10.27 Contract for Exploration and Exploitation for Tauramena with an effective date of July
4, 1988, between Triton Colombia, Inc., and Empresa Colombiana De Petroleos. (10)
10.28 Summary of Assignment legalized by Public Instrument No. 1255 dated September 15,
1987 (Assignment is in Spanish language). (10)
10.29 Summary of Assignment legalized by Public Instrument No. 1602 dated June 11, 1990
(Assignment is in Spanish language). (10)
10.30 Summary of Assignment legalized by Public Instrument No. 2586 dated September 9,
1992 (Assignment is in Spanish language). (10)
10.31 401(K) Savings Plan. (5)
10.32 Contract between Malaysia-Thailand and Joint Authority and Petronas Carigali
SDN.BHD. and Triton Oil Company of Thailand relating to Exploration and Production
of Petroleum for Malaysia-Thailand Joint Development Area Block A-18.(15)
10.33 Triton Crude Purchase Agreement between Triton Colombia, Inc. and Oil Co., LTD.
dated May 25, 1995. (16)
10.34 Credit Agreement among Triton Colombia, Inc., Triton Energy Corporation,
NationsBank, N.A. (Carolinas) and Export-Import Bank of the United States. (12)
10.35 Amendment No. 1 to Credit Agreement among Triton Colombia, Inc., Triton Energy
Corporation, NationsBank, N.A. (Carolinas) and Export-Import Bank of the United
States. (12)
10.36 Amendment No. 2 to Credit Agreement among Triton Colombia, Inc., Triton Energy
Corporation, NationsBank, N.A. (Carolinas) and Export-Import Bank of the United
States. (13)
10.37 Amendment No. 3 to Credit Agreement among Triton Colombia, Inc., Triton Energy
Limited, NationsBank, N.A. (Carolinas) and Export-Import Bank of the United
States. (24)
10.38 Agreement and Plan of Merger among Triton Energy Corporation, Triton Energy
Limited and TEL Merger Corp. (12)
10.39 Credit Agreement among Triton Energy Limited and Triton Energy Corporation, as
Borrowers, and NationsBank of Texas, N.A., Barclays Bank PLC, Meespierson N.V.,
The Chase Manhattan Bank and Societe Generale, Southwest Agency dated
August 30, 1996. (17)
10.40 Form of Indemnity Agreement entered into with each director and officer of the
Company. (26)
10.41 Restated Employment Agreement between John Tatum and the Company. (20)
10.42 Description of Performance Goals for Executive Bonus Compensation. (20)
10.43 Stock Purchase Agreement dated September 2, 1997 between the Strategic
Transaction Company and Triton International Petroleum, Inc. (6)
10.44 Fourth Amendment to Stock Purchase Agreement dated February 2, 1998 between
The Strategic Transaction Company and Triton International Petroleum, Inc. (6)
10.45 Supplemental Indenture dated April 17, 1997 among Triton Energy Corporation, Triton
Energy Limited and The Chase Manhattan Bank (formerly known as Chemical Bank)
amending Amended and Restated Indenture dated as of March 25, 1996 relating to
the Senior Subordinated Discount Notes due 1997. (21)
10.46 Supplemental Indenture dated April 17, 1997 among Triton Energy Corporation, Triton
Energy Limited and United States Trust Company of New York amending Amended
and Restated Senior Subordinated Indenture dated as of March 25, 1996 relating to the
9 3/4% Senior Subordinated Discount Notes due 2000. (21)
10.47 Senior Indenture dated April 10, 1997 among Triton Energy Corporation, Triton
Energy Limited and The Chase Manhattan Bank. (21)
10.48 First Supplemental Indenture dated April 10, 1997 among Triton Energy Corporation,
Triton Energy Limited and The Chase Manhattan Bank amending Senior Indenture
dated as of April 10, 1997 relating to the 8 3/4% Senior Notes due 2002. (21)
10.49 Second Supplemental Indenture dated April 10, 1997 among Triton Energy Corporation,
Triton Energy Limited and The Chase Manhattan Bank amending Senior Indenture
dated as of April 10, 1997 relating to the 9 1/4% Senior Notes due 2005. (21)
10.50 First Amendment to Credit Agreement dated as of April 4, 1997 among Triton Energy
Limited and Triton Energy Corporation, as Borrowers, and NationsBank of Texas, N.A.,
Barclays Bank PLC, Meespierson N.V., The Chase Manhattan Bank and Societe
Generale, Southwest Agency. (21)
10.51 1997 Share Compensation Plan. (21)
10.52 First Amendment to 1997 Share Compensation Plan. (6)
10.53 First Amendment to Amended and Restated Retirement Plan for Directors. (6)
10.54 First Amendment to Second Amended and Restated 1992 Stock Option Plan. (21)
10.55 Second Amendment to Second Amended and Restated 1992 Stock Option Plan. (6)
10.56 Agreement to Release Triton Energy Corporation and Second Amendment to Credit
Agreement dated as of July 21, 1997 among Triton Energy Limited and Triton Energy
Corporation, as Borrowers, and NationsBank of Texas, N.A., Barclays Bank PLC,
MeesPierson N.V., The Chase Manhattan Bank and Societe Generale, Southwest
Agency. (22)
10.57 Amended and Restated Indenture dated July 25, 1997 between Triton Energy Limited
and The Chase Manhattan Bank. (22)
10.58 Amended and Restated First Supplemental Indenture dated July 25, 1997 between Triton
Energy Limited and The Chase Manhattan Bank relating to the 8 3/4% Senior Notes
due 2002. (22)
10.59 Amended and Restated Second Supplemental Indenture dated July 25, 1997 between
Triton Energy Limited and The Chase Manhattan Bank relating to the 9 1/4% Senior
Notes due 2005. (22)
10.60 Third Amendment to Credit Agreement dated as of September 30, 1997 among Triton
Energy Limited, NationsBank of Texas, N.A., Barclays Bank PLC, MeesPierson N.V.,
The Chase Manhattan Bank and Societe Generale, Southwest Agency. (23)
10.61 Amendment to Amended and Restated Retirement Income Plan dated
December 31, 1996. (24)
10.62 Amendment to 401(K) Savings Plan dated December 31, 1996. (24)
10.63 Share Purchase Agreement dated July 17, 1998 among Triton Energy Limited, Triton
Asia Holdings, Inc., Atlantic Richfield Company and ARCO JDA Limited. (25)
10.64 Shareholders Agreement dated August 3, 1998 among Triton Energy Limited, Triton
Asia Holdings, Inc., Atlantic Richfield Company, and ARCO JDA Limited. (25)
10.65 Amendment to the Triton Exploration Services, Inc. Retirement Income Plan dated
August 1, 1998. (25)
10.66 Amendment to the Triton Exploration Services, Inc. 401(k) Savings Plan dated
August 1, 1998. (25)
10.67 Stock Purchase Agreement dated as of August 31, 1998 between Triton Energy
Limited and HM4 Triton, L.P. (26)
10.68 Shareholders Agreement dated as of September 30, 1998 between Triton Energy
Limited and HM4 Triton, L.P. (26)
10.69 Financial Advisory Agreement dated as of September 30, 1998 between Triton Energy
Limited and Hicks, Muse & Co. Partners, L.P. (26)
10.70 Monitoring and Oversight Agreement dated as of September 30, 1998 between Triton
Energy Limited and Hicks, Muse & Co. Partners, L.P. (26)
10.71 Amended and Restated Employment Agreement among Triton Energy Limited, Triton
Exploration Services, Inc. and Robert B. Holland, III. (26)
10.72 Form of Amended and restated Employment Agreement among Triton Energy Limited,
Triton Exploration Services, Inc. and each of Peter Rugg and Al E. Turner. (26)
10.73 Second Amendment to 1997 Share Compensation Plan. (26)
10.74 Severance Agreement dated as of July 15, 1998 between Thomas G. Finck and Triton
Energy Limited. (26)
12.1 Computation of Ratio of Earnings to Fixed Charges. (26)
12.2 Computation of Ratio of Earnings to Combined Fixed Charges and Preference
Dividends. (26)
27.1 Financial Data Schedule.(26)
99.1 Heads of Agreement for the Supply of Gas from the Block A-18 of the Malaysia-
Thailand Joint Development Area. (24)
99.2 Rio Chitamena Association Contract. (19)
99.3 Rio Chitamena Purchase and Sale Agreement. (19)
99.4 Integral Plan - Cusiana Oil Structure. (19)
99.5 Letter Agreements with co-investor in Colombia. (19)
99.6 Colombia Pipeline Memorandum of Understanding. (19)
99.7 Amended and Restated Oleoducto Central S.A. Agreement dated as of March 31,
1995. (18)
_______________________________
(1) Previously filed as an exhibit to the Company's Registration Statement on Form S-3
(No 333-08005) and incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Registration Statement on Form 8-A
dated March 25, 1996 and incorporated herein by reference.
(3) Previously filed as an exhibit to the Company's and Triton Energy Corporation's
Registration Statement on Form S-4 (No. 333-923) and incorporated herein
by reference.
(4) Previously filed as an exhibit to the Company's Registration Statement on Form 8-A/A
(Amendment No. 1) dated August 14, 1996 and incorporated herein by reference.
(5) Previously filed as an exhibit to Triton Energy Corporation's Quarterly Report on Form
10-Q for the quarter ended November 30, 1993 and incorporated by reference herein.
(6) Previously filed as an exhibit to the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 and incorporated herein by reference.
(7) Previously filed as an exhibit to Triton Energy Corporation's Annual Report on Form
10-K for the fiscal year ended May 31, 1992 and incorporated herein by reference.
(8) Previously filed as an exhibit to Triton Energy Corporation's Annual Report on Form
10-K for the fiscal year ended May 31, 1989 and incorporated by reference herein.
(9) Previously filed as an exhibit to Triton Energy Corporation's Annual Report on Form
10-K for the fiscal year ended May 31, 1990 and incorporated herein by reference.
(10) Previously filed as an exhibit to Triton Energy Corporation's Annual Report on Form
10-K for the fiscal year ended May 31, 1993 and incorporated by reference herein.
(11) Previously filed as an exhibit to Triton Energy Corporation's Quarterly Report on Form
10-Q for the quarter ended November 30, 1988 and incorporated herein by reference.
(12) Previously filed as an exhibit to Triton Energy Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and incorporated herein by
reference.
(13) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996 and incorporated herein by reference.
(14) Previously filed as an exhibit to Triton Energy Corporation's Annual Report on Form
10-K for the fiscal year ended May 31, 1991 and incorporated herein by reference.
(15) Previously filed as an exhibit to Triton Energy Corporation's current report on Form
8-K dated April 21, 1994 and incorporated by reference herein.
(16) Previously filed as an exhibit to Triton Energy Corporation's Current Report on Form
8-K dated May 26, 1995 and incorporated herein by reference.
(17) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1996 and incorporated herein by reference.
(18) Previously filed as an exhibit to Triton Energy Corporation's Quarterly Report on Form
10-Q for the quarter ended June 30, 1995 and incorporated herein by reference.
(19) Previously filed as an exhibit to Triton Energy Corporation's current report on Form
8-K/A dated July 15, 1994 and incorporated by reference herein.
(20) Previously filed as an exhibit to Triton Energy Limited's Annual Report on Form 10-K
For the fiscal year ended December 31, 1996 and incorporated herein by reference.
(21) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997 and incorporated herein by reference.
(22) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 and incorporated herein by reference.
(23) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997 and incorporated herein by reference.
(24) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998 and incorporated herein by reference.
(25) Previously filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 and incorporated herein by reference.
(26) Filed herewith.
</TABLE>
(b) Reports on Form 8-K
On August 17, 1998, the Company filed a Current Report on Form 8-K reporting the
sale to ARCO of one-half of the shares of the subsidiary through which the
Company owned its 50% share of Block A-18.
On September 9, 1998, the Company filed a Current Report on Form 8-K reporting
the execution of the Stock Purchase Agreement with HM4 Triton.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRITON ENERGY LIMITED
By: /s/ Peter Rugg
----------------------
Peter Rugg
Senior Vice President and Chief
Financial Officer
Date: November 13, 1998
EXHIBIT 4.5
UNANIMOUS WRITTEN CONSENT
OF
BOARD OF DIRECTORS
OF
TRITON ENERGY LIMITED
AUTHORIZING A SERIES OF PREFERENCE SHARES
The undersigned, constituting all of the directors of Triton Energy
Limited, a Cayman Islands company (the "Company"), hereby consent in writing to
-------
the taking of the following actions and the adoption of the following
resolutions without the holding of, and waive any notices required for, a
meeting of directors for the purposes of considering the same:
WHEREAS, the Board of Directors of the Company has determined that it is
beneficial to and in the best interests of the Company to create a series of
preference shares as set forth herein for the purpose of issuing such preference
shares pursuant to and in accordance with the terms of the Stock Purchase
Agreement (as herein defined); now therefore be it
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Company in accordance with the provisions of its Memorandum of
Association and Articles of Association, as amended, the Board of Directors does
hereby create, authorize and provide for the issuance of a series of preference
shares consisting of 11,000,000 shares, par value $.01 per share, out of the
existing authorized but unissued share capital of the Company with the following
rights, terms, preferences and voting powers:
Section 1. Number of Shares and DesignationSection.
------------------------------------------
This series of preference shares shall be designated as
"8% Convertible Preference Shares" and the number of shares which shall
- ---------------------------------
constitute such series shall not be more than 11,000,000 shares, par value $.01
per share, which number may be decreased (but not below the number thereof then
outstanding plus the number required to fulfill the Company's obligations under
options, warrants or similar rights issued by the Company) from time to time by
the Board of Directors.
Section 2. Definitions. For purposes of this
-----------
Unanimous Written Consent (the "Consent"), the following terms shall have the
-------
meanings indicated:
"5% Convertible Preference Shares" shall mean the 5% Convertible Preference
--------------------------------
Shares, par value $.01 per share, of the Company.
<PAGE>
"8% Convertible Preference Shares" shall have the meaning set forth in
-----------------------------------
Section 1.
"Additional Shares" shall have the meaning set forth in subsection 3(b).
------------------
"Affiliate" shall have the meaning as such term has under Rule 12b-2 of the
---------
United States Securities Exchange Act of 1934, as amended.
"Average Market Value" shall mean, with respect to any referenced security
---------------------
for a particular date, the average of the daily Current Market Price per share
of such security for the twenty Trading Days immediately preceding the
referenced date.
"Board of Directors" shall mean the Board of Directors of the Company.
--------------------
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
------------
which state or federally chartered banking institutions in New York City, New
York or Dallas, Texas are not required to be opened.
"Capital Stock" shall mean (i) with respect to any Person that is a
--------------
corporation or company, any and all shares, interests, participations or other
equivalents (however designated) of capital or capital stock of such Person and
(ii) with respect to any Person that is not a corporation or company, any and
all partnership or other equity interests of such Person.
"Charter" shall mean, collectively, the Company's Memorandum of Association
-------
and Articles of Association, as amended.
"Commission" shall mean the United States Securities and Exchange
----------
Commission.
"Common Shares" shall mean any Ordinary Shares, par value $.01 per share,
--------------
of the Company and any Capital Stock for or into which such Common Shares
hereafter are exchanged, converted, reclassified or recapitalized by the Company
or pursuant to an agreement to which the Company is a party.
"Company" shall mean Triton Energy Limited, a Cayman Islands company.
-------
"Constituent Person" shall have the meaning set forth in subsection 5(d).
-------------------
<PAGE>
"Conversion Price" shall mean the conversion price per Common Share for
-----------------
which the 8% Convertible Preference Shares are convertible, as such Conversion
Price may be adjusted pursuant to Section 5. The initial conversion price shall
be $17.50 (equivalent to a conversion rate of four Common Shares for each 8%
Convertible Preference Share).
"Current Market Price" of Common Shares or any other class of stock or
----------------------
other security of the Company or any other issuer for any day shall mean the
last reported sales price, regular way on such day, or, if no sale takes place
on such day, the average of the reported closing bid and asked prices on such
day, regular way, in either case as reported on the New York Stock Exchange
("NYSE") or, if such security is not listed or admitted for trading on the
----
NYSE, on the principal national securities exchange on which such security is
listed or admitted for trading or, if not listed or admitted for
trading on any national securities exchange, on The Nasdaq Stock Market or, if
such security is not quoted on The Nasdaq Stock Market, the average of the
closing bid and asked prices on such day in the over-the-counter market as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System ("NASDAQ") or, if bid and asked prices for such security on
------
such day shall not have been reported through NASDAQ, the average of the bid
and asked prices on such day as furnished by any NYSE member firm regularly
making a market in such security selected for such purpose by the Board of
Directors or, if no such market is regularly made, as determined by a
majority of the Board of Directors upon the advice of an independent
appraiser selected by a majority of the Board of Directors.
"Dividend Payment Date" shall mean a date fixed by the Board of Directors
-----------------------
which date shall not be more than 5 days following the end of the applicable
Dividend Period; provided, however, that if any Dividend Payment Date falls on
-------- -------
any day other than a Business Day, the dividend payment due on such Dividend
Payment Date shall be paid on the Business Day immediately following such
Dividend Payment Date.
"Dividend Periods" shall mean semi-annual dividend periods commencing on
-----------------
January 1 and July 1 of each year and ending on and including June 30 and
December 31 of such year, respectively (other than the initial Dividend Period,
which shall commence on the first Issue Date and end on and include June 30,
1999).
"Dollar" or "$" shall mean lawful currency of the United States of America.
------ -
"First Issue Date" shall mean the first date on which a share of 8%
------------------
Convertible Preference Shares is issued.
"Investor" shall mean the Person named as the Purchaser in the Stock
--------
Purchase Agreement or any assignee of such Person's rights under the Stock
Purchase Agreement who purchases the 8% Convertible Preference Shares pursuant
to the Stock Purchase Agreement and any assignee of such Person in accordance
with the terms of the Shareholders Agreement.
<PAGE>
"Issue Date" shall mean, with respect to a share of 8% Convertible
-----------
Preference Shares, the date on which such share of the 8% Convertible Preference
Shares is issued and sold.
"Junior Dividend Shares" shall have the meaning set forth in Section 3(i).
-----------------------
"Junior Liquidation Shares" shall have the meaning set forth in Section
---------------------------
3(j).
"Junior Shares" shall mean the Common Shares and any other class or series
--------------
of Capital Stock of the Company now or hereafter issued and outstanding over
which the 8% Convertible Preference Shares have preference or priority in both
(i) the payment of dividends and (ii) the distribution of assets on any
liquidation, dissolution or winding up of the Company; the 5% Convertible
Preference Shares shall be deemed Junior Shares for purposes of this Consent.
"Liquidation Preference" shall have the meaning set forth in subsection
-----------------------
4(a).
"Majority in Interest of the 8% Convertible Preference Shares" shall mean
--------------------------------------------------------------
Persons holding of record, in the aggregate, in excess of fifty percent of the
then outstanding 8% Convertible Preference Shares.
"Non-Electing Share" shall have the meaning set forth in subsection 5(d).
-------------------
"Parity Dividend Shares" shall have the meaning set forth in subsection
------------------------
3(g).
"Parity Liquidation Shares" shall have the meaning set forth in subsection
--------------------------
3(h).
"Parity Shares" shall have the meaning set forth in subsection 8(b).
--------------
"Person" shall mean any individual, firm, partnership, company or other
------
entity, and shall include any successor (by merger or otherwise) of such entity.
"Preferred Stock" of any Person shall mean any Capital Stock of such Person
---------------
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Purchased Shares" shall have the meaning set forth in subsection 5(c)(v).
-----------------
"Second Closing" shall have the meaning set forth in the Stock Purchase
---------------
Agreement.
<PAGE>
"Securities" and "Security" shall have the meanings set forth in subsection
---------- --------
5(c)(iv).
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Senior Shares" shall have the meaning set forth in subsection 8(a).
--------------
"set apart for payment" shall be deemed to include, without any action by
-----------------------
the Company other than the following, the recording by the Company in its
accounting ledgers of any accounting or bookkeeping entry which indicates,
pursuant to an authorization of dividends or other distribution by the Board of
Directors, the allocation of funds to be so paid on any series or class of stock
of the Company; provided, however, that if any funds for any class or series of
-------- -------
Junior Shares or any class or series of stock ranking on a parity with the 8%
Convertible Preference Shares as to the payment of dividends are placed in a
separate account of the Company or delivered to a disbursing, paying or other
similar agent, then set apart for payment with respect to the 8% Convertible
Preference Shares shall mean placing such funds in a separate account or
delivering such funds to a disbursing, paying or other similar agent.
"Shareholders Agreement" means the Shareholders Agreement to be entered
-----------------------
into between the Company and Investor as provided by the Stock Purchase
Agreement.
"Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement
------------------------
by and between the Company and HM4 Triton, L.P., a Cayman Islands exempted
limited partnership, dated as of August 31, 1998.
"Subsidiary" shall mean (i) a corporation or company, a majority of whose
----------
Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by the Company, by a
Subsidiary of the Company or by the Company and another Subsidiary or (ii) any
other Person (other than a corporation or company) in which the Company, one or
more Subsidiaries of the Company or the Company and one or more Subsidiaries of
the Company, directly or indirectly, at the date of determination thereof has or
have at least a majority ownership interest. For purposes hereof, Triton
International Oil Corporation and its Subsidiaries shall be deemed Subsidiaries
of the Company.
<PAGE>
"Trading Day" shall mean any day on which the securities in question are
------------
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on The Nasdaq Stock Market, or if such
securities are not quoted on The Nasdaq Stock Market, in the applicable
securities market in which the securities are traded.
"Transaction" shall have the meaning set forth in subsection 5(d).
-----------
"Transfer Agent" shall have the meaning set forth in Section 11, or such
---------------
other agent or agents of the Company as may be designated by the Board of
Directors or their designee as the transfer agent for the 8% Convertible
Preference Shares.
Section 3. Dividends.
---------
(a) The registered holders of 8% Convertible Preference Shares shall be
entitled to receive, when, as and if authorized or declared by the Board of
Directors out of funds legally available for that purpose, distributions in the
form of cash dividends on each share of 8% Convertible Preference Shares, at a
rate per annum equal to 8.0% of the Liquidation Preference per share of the 8%
Convertible Preference Shares, payable for each Dividend Period after the Issue
Date of such share of 8% Convertible Preference Shares. Such dividends with
respect to each share of 8% Convertible Preference Shares shall begin to
accumulate and shall be fully cumulative on a daily basis from the Issue Date of
such share of 8% Convertible Preference Shares, whether or not authorized or
declared by the Board of Directors and whether or not in any Dividend Period or
Dividend Periods there shall be funds of the Company legally available for the
payment of such dividends, and shall be payable semi-annually in cash Dollars,
when, as and if authorized or declared by the Board of Directors, in arrears on
Dividend Payment Dates or such other dates as provided herein, commencing on the
first Dividend Payment Date after the Issue Date of such share of 8% Convertible
Preference Shares.
<PAGE>
(b) At the option of the Company, dividends may be paid, instead of in
cash, on declaration by the Board of Directors, by the issuance of additional
fully paid whole shares of 8% Convertible Preference Shares (the "Additional
----------
Shares"), to the extent authorized but unissued shares of 8% Convertible
Preference Shares are legally available therefor, in respect of any and all
---
Dividend Payment Dates; provided that, if any dividend payable on any Dividend
--------
Payment Date is not declared or authorized and paid in full in cash on such
Dividend Payment Date, the amount payable as dividends on such Dividend Payment
Date that is not paid in cash on such Dividend Payment Date shall be paid in
Additional Shares to the extent authorized but unissued shares of 8% Convertible
Preference Shares are legally available therefor. If a dividend is to be paid
in Additional Shares, the number of Additional Shares to be issued in payment of
the dividend with respect to each outstanding share of 8% Convertible Preference
Shares shall be determined by dividing (a) the amount of the accumulated
dividend payable to each registered holder of 8% Convertible Preference Shares
on the basis of all shares held of record by such holder as of the record date
for such dividend, whether evidenced by one or more certificates, by (b) $70.00,
with amounts in respect of any partial shares to be paid in cash by the Company,
and upon payment in Additional Shares as herein provided the dividend shall be
deemed paid in full and shall not accumulate.
(c) Each dividend shall be payable in arrears to the holders of record
of 8% Convertible Preference Shares, as they appear on the register of members
of the Company at the close of business on such record dates, not more than 15
days preceding such Dividend Payment Dates thereof, as shall be fixed by the
Board of Directors. All dividends paid with respect to shares of 8% Convertible
Preference Shares pursuant to Sections 3(a) and 3(b) shall be paid pro rata to
the holders entitled thereto.
(d) Dividends on the 8% Convertible Preference Shares that are in
arrears and unpaid (in cash or Additional Shares) as of any Dividend Payment
Date for any Dividend Period (a "Dividend Arrearage") will cumulate as if such
------------------
dividends had been paid in Additional Shares as provided in Section 3(b) and
such Additional Shares were outstanding on each succeeding Dividend Payment Date
until such accumulated semi-annual dividends shall have been declared and paid
in cash or in Additional Shares by the Board of Directors. Any such declaration
may be for a portion, or all, of the then accumulated dividends. In the event
dividends on the 8% Convertible Preference Shares are in arrears and unpaid for
three or more Dividend Periods (whether or not consecutive), holders of 8%
Convertible Preference Shares shall be entitled to certain voting rights as
provided in subsection 9(c).
(e) Accumulated and unpaid dividends for any past Dividend Periods may
be authorized or declared and paid at any time and for such interim periods,
without reference to any regular Dividend Payment Date, to holders of record on
such date, not more than 15 days preceding the payment date thereof, as may be
fixed by the Board of Directors. Dividend payments shall be aggregated per
holder and shall be made to the nearest cent (with $.005 being rounded upward).
(f) The amount of dividends payable per share of 8% Convertible
Preference Shares for each Dividend Period shall be computed by dividing the
annual dividend amount by two. The amount of dividends payable for the initial
Dividend Period, or any other period shorter or longer than a full Dividend
Period, on the 8% Convertible Preference Shares shall be computed on the basis
of twelve 30-day months and a 360-day year. Except as expressly provided
herein, holders of 8% Convertible Preference Shares shall not be entitled to any
dividends, whether payable in cash, property, shares or stock, in excess of
cumulative dividends (including dividends that cumulate as a result of a
Dividend Arrearage as provided in subsection 3(d)) as herein provided on the 8%
Convertible Preference Shares.
<PAGE>
(g) So long as any 8% Convertible Preference Shares are outstanding, no
full dividends shall be authorized, declared, paid or set apart for payment on
any class or series of Parity Shares or any other class or series of the Company
s Capital Stock currently outstanding or hereafter issued ranking, as to
dividends, on a parity with the 8% Convertible Preference Shares (the Parity
Shares and any such other class or series of the Company's Capital Stock being
herein referred to as "Parity Dividend Shares") unless full cumulative dividends
----------------------
on all outstanding 8% Convertible Preference Shares for all Dividend Periods
terminating on or prior to the dividend payment date on such class or series of
Parity Dividend Shares have been or contemporaneously are paid or declared and a
sum of cash Dollars or Additional Shares sufficient for the payment thereof set
apart for such payment. If full dividends are not so paid, all dividends
declared upon shares of the 8% Convertible Preference Shares and any other
Parity Dividend Shares shall be declared pro rata so that the amount of
dividends declared per share on the 8% Convertible Preference Shares and such
Parity Dividend Shares shall in all cases bear to each other the same ratio that
accumulated and unpaid dividends per share on the 8% Convertible Preference
Shares and such Parity Dividend Shares bear to each other. No dividends may be
paid on Parity Dividend Shares except on dates on which dividends are paid on
the 8% Convertible Preference Shares for any period.
(h) So long as any 8% Convertible Preference Shares are outstanding,
the Company shall not, directly or indirectly through any Affiliate of the
Company controlled by the Company, make any payment on account of, or set apart
for payment money for a sinking or other similar fund for, the redemption,
purchase, retirement or other acquisition of any Parity Dividend Shares or any
other class or series of the Company's Capital Stock ranking on a parity with
the 8% Convertible Preference Shares as to distributions of assets upon
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary (the Parity Shares and any such other class or series of the Company
s Capital Stock being herein referred to as "Parity Liquidation Shares"), and,
-------------------------
other than dividends to the extent permitted by subsection 3(g), no
distributions shall be declared, paid or set apart for payment on shares of
Parity Dividend Shares or Parity Liquidation Shares, unless full cumulative
dividends on all outstanding 8% Convertible Preference Shares for all Dividend
Periods ending on or before such payment for or setting apart for payment on
account of, or the payment date of such distributions on, such Parity Dividend
Shares or Parity Liquidation Shares have been or contemporaneously are paid or
declared and a sum of cash Dollars or Additional Shares sufficient for the
payment therefor set apart for payment.
(i) So long as any 8% Convertible Preference Shares are outstanding, no
dividends shall be authorized, declared, paid or set apart for payment or other
distribution authorized or made upon Junior Shares or any other Capital Stock of
the Company ranking junior as to dividends to the 8% Convertible Preference
Shares (the Junior Shares and any such other class or series of the Company s
Capital Stock being herein referred to as "Junior Dividend Shares"), unless full
----------------------
cumulative dividends on the 8% Convertible Preference Shares for all Dividend
Periods ending on or before the dividend payment date of such dividends on
Junior Dividend Shares have been or contemporaneously are paid or declared and a
sum of cash Dollars or Additional Shares sufficient for the payment therefor set
apart for payment.
<PAGE>
(j) So long as any 8% Convertible Preference Shares are outstanding,
the Company shall not, directly or indirectly through any Affiliate of the
Company controlled by the Company, make any payment on account of, or set apart
for payment money for a sinking or other similar fund for, the redemption,
purchase, retirement or other acquisition of any Junior Dividend Shares or any
other class or series of the Company's Capital Stock ranking junior to the 8%
Convertible Preference Shares as to distributions of assets upon liquidation,
dissolution or winding up of the Company, whether voluntary or involuntary (the
Junior Dividend Shares and any such other class or series of the Company s
Capital Stock ranking junior to the 8% Convertible Preference Shares as to such
distributions being herein referred to as "Junior Liquidation Shares") unless
-------------------------
(i) full cumulative dividends on all outstanding 8% Convertible Preference
Shares and any other Parity Dividend Shares shall have been or contemporaneously
are paid or declared and a sum of cash Dollars or Additional Shares sufficient
for the payment thereof set apart for payment for all Dividend Periods with
respect to the 8% Convertible Preference Shares terminating on or before such
payment for, or the setting apart for payment on account of, such class or
series of Junior Liquidation Shares and all dividend periods with respect to
such Parity Dividend Shares terminating on or before such payment for, or the
setting apart for payment on account of, such class or series of Junior
Liquidation Shares and (ii) cash Dollars or Additional Shares sufficient for the
payment of the dividend for the current Dividend Period with respect to the 8%
Convertible Preference Shares and the current dividend period with respect to
such Parity Dividend Shares shall have been paid or set apart for the payment
thereof; provided, however, that the restrictions set forth in this subsection
-------- -------
3(j) shall not apply to the purchase or other acquisition of Junior Liquidation
Shares either (A) pursuant to any employee or director incentive or benefit plan
or arrangement of the Company or any Subsidiary of the Company heretofore or
hereafter adopted or (B) in exchange solely for Junior Shares.
(k) Any reference to "distribution" contained in this Section 3 shall
not be deemed to include any distribution made in connection with any
liquidation, dissolution or winding up of the Company, whether voluntary or
involuntary.
Section 4. Liquidation Preference.
-----------------------
<PAGE>
(a) In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, before any payment or distribution of
the assets of the Company shall be made to or set apart for the holders of
Junior Shares, the holders of the 8% Convertible Preference Shares shall be
entitled to be paid, out of the assets of the Company available for distribution
to its stockholders, in immediately available funds, $70.00 for each outstanding
8% Convertible Preference Share (including outstanding Additional Shares) (the
"Liquidation Preference"), plus an amount equal to all dividends (whether or not
- -----------------------
authorized) accumulated and unpaid thereon to the date of final distribution to
such holders; but such holders shall not be entitled to any further payment.
If, upon any liquidation, dissolution or winding up of the Company, the assets
of the Company, or proceeds thereof, distributable among the holders of the 8%
Convertible Preference Shares shall be insufficient to pay in full the
Liquidation Preference, plus an amount equal to all dividends (whether or not
authorized) accumulated and unpaid thereon to the date of final distribution to
such holders, and liquidating payments on any other shares of any class or
series of Parity Shares, then such assets, or the proceeds thereof, shall be
distributed among the holders of 8% Convertible Preference Shares and any such
other Parity Liquidation Shares ratably in accordance with the respective
amounts that would be payable on such 8% Convertible Preference Shares and any
such other Parity Liquidation Shares if all amounts payable thereon were paid in
full. The holders of 8% Convertible Preference Shares shall be entitled to
notice in advance of any liquidation, dissolution or winding up of the Company
as provided in subsection 5(e). For the purposes of this Section 4, (i) a
consolidation, merger or scheme of arrangement of the Company with one or more
entities, (ii) a sale or transfer of all or substantially all of the Company s
assets, or (iii) a statutory share exchange shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary, of the
Company.
(b) Subject to the rights of the holders of any Parity Liquidation
Shares or any shares of any series or class or classes of stock ranking prior to
the 8% Convertible Preference Shares upon liquidation, dissolution or winding up
of the Company, after payment shall have been made in full to the holders of the
8% Convertible Preference Shares, as provided in this Section 4, any other
series or class or classes of Junior Shares shall, subject to the respective
terms and provisions (if any) applying thereto, be entitled to receive any and
all assets remaining to be paid or distributed, and the holders of the 8%
Convertible Preference Shares shall not be entitled to share therein.
Section 5. Conversion. 8% Convertible
----------
Preference Shares shall be subject to conversion, at the option of the holder,
into Common Shares, as follows:
(a) Conversion Right. Subject to and upon compliance with the
-----------------
provisions of this Section 5, a holder of 8% Convertible Preference Shares shall
have the right, at his, her or its option, at any time prior to the close of
business on the fifth Business Day prior to the date fixed for redemption of
such shares as herein provided, to convert all or any part of such shares into
the number of fully paid and non-assessable Common Shares obtained by dividing
the aggregate Liquidation Preference of such shares by the Conversion Price (as
in effect at the time and on the date provided for in the last paragraph of this
subsection 5(a)). In the event the shares of 8% Convertible Preference Shares
are called for redemption pursuant to Section 6, the right of conversion
provided herein shall terminate at the close of business on the fifth Business
Day prior to the date fixed for redemption unless the Company shall default in
making the payment due upon redemption thereof.
<PAGE>
In order to exercise such conversion right, the holder of each 8%
Convertible Preference Share to be converted shall surrender the certificate
representing such share, duly endorsed or assigned to the Company or in blank,
at the office of the Transfer Agent, accompanied by written notice to the
Company that the holder thereof elects to convert such 8% Convertible Preference
Shares. Unless the Common Shares issuable on conversion are to be issued in the
same name as the name in which such 8% Convertible Preference Share is
registered, each share surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the Company, duly executed by
the holder or such holder's duly authorized attorney and an amount sufficient to
pay any transfer or similar tax (or evidence reasonably satisfactory to the
Company demonstrating that such taxes have been paid).
Holders of 8% Convertible Preference Shares at the close of business on a
dividend payment record date shall be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion thereof following such dividend payment record date on or prior to
such Dividend Payment Date.
As promptly as practicable after the surrender of certificates for 8%
Convertible Preference Shares as aforesaid, the Company shall issue and shall
deliver at such office to such holder, or on his or her written order, a
certificate or certificates for the number of full Common Shares issuable upon
the conversion of such shares in accordance with provisions of this Section 5,
and any fractional interest in respect of a Common Share arising upon such
conversion shall be settled as provided in subsection 5(b).
Upon the conversion of any 8% Convertible Preference Shares as provided in
this subsection 5(a), the holder of each 8% Convertible Preference Share
converted also shall be entitled to receive an amount, in cash Dollars, equal to
all dividends (whether or not authorized or declared) accumulated and unpaid on
each share of 8% Convertible Preference Share converted by such holder,
including dividends accrued pursuant to subsection 3(d) as a result of a
Dividend Arrearage, up to and including the effective date of conversion as
provided in the last paragraph of this subsection 5(a). Such cash amount shall
be paid to the holder of the 8% Convertible Preference Shares to which such
dividends relate on or before the fifth Business Day after the effective date of
such conversion.
Each conversion shall be deemed to have been effected immediately following
the close of business on the date on which the certificates for 8% Convertible
Preference Shares shall have been surrendered and such notice received by the
Company as aforesaid, and the person or persons in whose name or names any
certificate or certificates for Common Shares shall be issuable upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby at such time on such date and such conversion shall
be at the Conversion Price in effect at such time on such date unless the
register of members of the Company shall be closed for transfer on that date, in
which event such person or persons shall be deemed to have become such holder or
holders of record at the close of business on the next succeeding day on which
such register of members is open, but such conversion shall be at the Conversion
Price in effect on the date on which such shares shall have been surrendered and
such notice received by the Company.
<PAGE>
(b) No Fractional Shares. No fractional shares or scrip representing
----------------------
fractions of Common Shares shall be issued upon conversion of the 8% Convertible
Preference Shares. Instead of any fractional interest in a Common Share that
would otherwise be deliverable upon the conversion of a 8% Convertible
Preference Share, the Company shall pay to the holder of such share an amount in
cash based upon the Current Market Price of Common Shares on the Trading Day
immediately preceding the date of conversion. If more than one share shall be
surrendered for conversion at one time by the same holder, the number of full
Common Shares issuable upon conversion thereof shall be computed on the basis of
the aggregate number of 8% Convertible Preference Shares so surrendered.
(c) Conversion Price Adjustments. The Conversion Price shall be
------------------------------
adjusted from time to time as follows:
(i) If at any time after the first Issue Date, the Company shall issue
for cash or other consideration Common Shares or any security convertible into
or exchangeable or exercisable for Common Shares at a price per Common Share,
calculated by including the aggregate proceeds to the Company upon issuance and
any additional consideration payable to the Company upon any such conversion,
exchange or exercise (in each case before deduction of any discounts,
commissions, fees and other expenses of issuance and marketing), that is less
than the Current Market Price of Common Shares as of the opening of business on
the date of issuance, then the Conversion Price in effect at the close of
business on the day immediately preceding such issuance shall be adjusted,
effective as of the time of such issuance, to equal the price determined by
multiplying (A) the Conversion Price in effect at the close of business on the
day immediately preceding such issuance by (B) a fraction, the numerator of
which shall be the sum of (1) the number of Common Shares outstanding
immediately prior to such issuance and (2) the number of shares that the
aggregate proceeds to the Company from such issuance (including any additional
consideration per Common Share payable to the Company upon any such conversion,
exchange or exercise (before deduction of any discounts, commissions, fees and
other expenses of issuance and marketing)) would purchase at such Current Market
Price, and the denominator of which shall be the sum of (1) the number of Common
Shares outstanding immediately prior to such issuance and (2) the number of
additional Common Shares issued or subject to issuance upon the conversion,
exchange or exercise of such securities issued.
<PAGE>
For the purposes of this subsection 5(c)(i), the issuance by the Company of
securities convertible into or exchangeable or exercisable for Common Shares
shall be deemed to involve the immediate issuance of the maximum number of
Common Shares issuable upon the conversion, exchange or exercise of such
securities for a consideration equal to the minimum aggregate consideration
receivable by the Company upon such conversion, exchange or exercise. In the
event that securities are issued by the Company that result in an adjustment to
the Conversion Price pursuant to this subsection 5(c)(i) and such securities are
not converted, exchanged or exercised prior to the expiration of the right of
the holders of such securities to effect any such action, then immediately upon
such expiration the Conversion Price shall be recomputed (but such
redetermination shall not affect the Conversion Price of any 8% Convertible
Preference Shares that have been converted prior to such expiration) and
effective immediately upon such expiration shall be increased to the price which
it would have been (but reflecting any other adjustments in the Conversion Price
made pursuant to the other provisions of this subsection 5(c) after the issuance
of such securities) had such adjustment to the Conversion Price not been made.
For purposes of this subsection 5(c)(i), if shares are issued for consideration
all or part of which is other than cash, the amount of such non-cash
consideration shall be deemed to be the value thereof as determined by a
majority of the Board of Directors based on the advice of an independent
appraiser selected by a majority of the Board of Directors. The provisions of
this subsection 5(c)(i) shall not be applicable to: (i) any issuance for which
an adjustment to the Conversion Price is provided under any other subclause of
this subsection 5(c), (ii) any issuance of Common Shares upon actual exercise,
exchange or conversion of any securities if the Conversion Price was fully and
properly adjusted at the time such securities were issued or if no such
adjustment was required hereunder at the time such securities were issued ,
(iii) the issuance of Additional Shares, the issuance of additional 8%
Convertible Preference Shares at a per share price equal to or greater than the
Liquidation Preference or the issuance of Common Shares upon conversion of
outstanding 8% Convertible Preference Shares, (iv) the issuance of options,
warrants or restricted shares of Common Shares to members of the management of
the Company or its Subsidiaries pursuant to management incentive plans or
employee stock compensation plans as in effect prior to the First Closing Date
or approved by the affirmative vote of a majority of the Board of Directors
after the first Issue Date or the issuance of any Common Shares upon the
exercise of such stock options or warrants or upon the exercise of any other
options or warrants of the Company outstanding as of the date of the Stock
Purchase Agreement in accordance with the terms thereof as in effect as of the
date of the Stock Purchase Agreement or (v) the issuance of any 8% Convertible
Preference Share purchase rights as contemplated by Section 4.2 of the Stock
Purchase Agreement. All Common Shares issued and all Common Shares reserved for
issuance pursuant to any outstanding convertible securities (including the 8%
Convertible Preference Shares), warrants, rights or options deemed not to
constitute an issuance pursuant to the previous sentence shall nevertheless be
deemed to be outstanding for all computations pursuant to this Section 5(c)
until such shares are no longer outstanding or such convertible securities,
warrants, rights or options shall expire, as applicable.
<PAGE>
(ii) If the Company shall after the first Issue Date pay a dividend or
make a distribution on any class or series of its shares or Capital Stock in the
form of an issue of Common Shares or any security convertible into or
exercisable or exchangeable for Common Shares, then the Conversion Price in
effect at the opening of business on the Business Day next following the date
fixed for the determination of stockholders entitled to receive such dividend or
distribution shall be adjusted to equal the price determined by multiplying (A)
the Conversion Price in effect immediately prior to the opening of business on
the Business Day next following the date fixed for such determination by (B) a
fraction, the numerator of which shall be the number of Common Shares
outstanding on the close of business on the date fixed for such determination
and the denominator of which shall be the sum of (1) the number of Common Shares
outstanding on the close of business on the date fixed for such determination
and (2) the number of Common Shares constituting such dividend or distribution,
including the number of additional Common Shares issuable pursuant to such
convertible, exercisable or exchangeable securities. Such adjustment shall
become effective immediately after the opening of business on the day next
following such record date (except as provided in subsection 5(f) below).
(iii) If the Company shall after the first Issue Date (A) subdivide its
outstanding Common Shares into a greater number of shares, (B) combine its
outstanding Common Shares into a smaller number of shares or (C) issue any
Capital Stock by reclassification of its Common Shares, the Conversion Price in
effect at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or distribution
or at the opening of business on the Business Day next following the day on
which such subdivision, combination or reclassification becomes effective, as
the case may be, shall be adjusted so that the holder of any 8% Convertible
Preference Share thereafter surrendered for conversion shall be entitled to
receive the number of such securities that such holder would have owned or have
been entitled to receive after the happening of any of the events described
above as if such 8% Convertible Preference Shares had been converted immediately
prior to the effective date of such subdivision, combination or
reclassification. An adjustment made pursuant to this subparagraph (iii) shall
become effective immediately prior to the opening of business on the Business
Day next following the record date (except as provided in subsection 5(f) below)
in the case of a dividend or distribution and shall become effective immediately
prior to the opening of business on the Business Day next following the
effective date in the case of a subdivision, combination or reclassification.
<PAGE>
(iv) If the Company shall after the first Issue Date issue rights,
options, warrants or other instruments to all holders of Common Shares or any
other class or series of Capital Stock of the Company entitling them to
subscribe for or purchase Common Shares at a price per share less than the
Current Market Price per Common Share on the record date for the determination
of shareholders entitled to receive such rights, options, warrants or
instruments, then the Conversion Price in effect at the opening of business on
the Business Day next following such record date shall be adjusted to equal the
price determined by multiplying (A) the Conversion Price in effect immediately
prior to the opening of business on the Business Day next following the date
fixed for such determination by (B) a fraction, the numerator of which shall be
the sum of (1) the number of Common Shares outstanding on the close of business
on the date fixed for such determination and (2) the number of shares that the
aggregate proceeds to the Company from the exercise of such rights, options,
warrants or instruments for Common Shares would purchase at such Current Market
Price, and the denominator of which shall be the sum of (1) the number of Common
Shares outstanding on the close of business on the date fixed for such
determination and (2) the number of additional Common Shares offered for
subscription or purchase pursuant to such rights, options, warrants or other
instruments. Such adjustment shall become effective immediately after the
opening of business on the day next following such record date (except as
provided in subsection 5(f) below). In determining whether any rights, options,
warrants or instruments entitle the holders of Common Shares to subscribe for or
purchase Common Shares at such Current Market Price, there shall be taken into
account any consideration received by the Company upon issuance and upon
exercise of such rights, options, warrants or instruments, the value of such
consideration, if other than cash, to be determined by a majority of the Board
of Directors based on the advice of an independent appraiser selected by a
majority of the Board of Directors. In case any rights or warrants referred to
in this subsection 5(c)(iv) in respect of which an adjustment shall have been
made shall expire unexercised after the same shall have been distributed or
issued by the Company, the Conversion Price shall be readjusted at the time of
such expiration to the Conversion Price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of such
expired rights or warrants (but such redetermination shall not affect the
Conversion Price of any 8% Convertible Preference Shares that have been
converted prior to such expiration).
<PAGE>
(v) If the Company shall distribute to all holders of its Common Shares
evidence of its indebtedness, any shares of any class or series of Capital Stock
of the Company, cash or assets (including all rights, options, warrants or any
other instrument entitling such holders to subscribe for or purchase any
securities of the Company, but excluding Common Shares or any securities the
distribution of which would require an adjustment under subsection(s) 5(c)(ii),
(iii) or (iv)) (collectively, "Securities" and, individually, a "Security"),
---------- --------
then in each case the Conversion Price shall be adjusted so that it shall equal
the price determined by multiplying (A) the Conversion Price in effect
immediately prior to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution by (B) a
fraction, the numerator of which shall be the Current Market Price per Common
Share on the record date mentioned below less the then fair market value (as
determined by a majority of the Board of Directors based on the advice of an
independent appraiser selected by a majority of the Board of Directors) of the
portion of the shares or assets or evidences of indebtedness so distributed or
of such rights or warrants applicable to one Common Share, and the denominator
of which shall be the Current Market Price per Common Share on the record date
mentioned below. Such adjustment shall become effective immediately prior to
the opening of business on the Business Day next following (except as provided
in subsection 5(f) below) the record date for the determination of shareholders
entitled to receive such distribution. For the purposes of this subsection
5(c)(v), the distribution of a Security which is distributed not only to the
holders of the Common Shares on the date fixed for the determination of
shareholders entitled to such distribution of such Security, but also is
distributed with each Common Share delivered to a Person converting a 8%
Convertible Preference Share after such determination date, shall not require an
adjustment of the Conversion Price pursuant to this subsection 5(c)(v); provided
--------
that on the date, if any, on which a Person converting a 8% Convertible
Preference Share would no longer be entitled to receive such Security with a
Common Share (other than as a result of the termination of all such Securities),
a distribution of such Securities shall be deemed to have occurred and the
Conversion Price shall be adjusted as provided in this subsection 5(c)(v) (and
such day shall be deemed to be the date fixed for the determination of the
shareholders entitled to receive such distribution and the record date within
the meaning of the two preceding sentences).
(vi) No adjustment in the Conversion Price pursuant to any provision of
this Section 5 shall be required unless such adjustment would require a
cumulative increase or decrease of at least 1% in such price; provided, however,
-------- -------
that any adjustments that by reason of this subsection 5(c)(vi) are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment until made; and provided, further, that any adjustment shall be
-------- -------
required and made in accordance with the provisions of this Section 5 (other
than this subsection 5(c)(vi)) not later than such time as may be required in
order to preserve the tax-free nature of a distribution to the holders of Common
Shares. Notwithstanding any other provisions of this Section 5, the Company
shall not be required to make any adjustment of the Conversion Price for the
issuance of any Common Shares pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the Company and
the investment of additional optional amounts in Common Shares under such plan.
All calculations under this Section 5 shall be made to the nearest cent (with
$.005 being rounded upward) or to the nearest one-tenth of a share (with .05 of
a share being rounded upward), as the case may be. Anything in this subsection
5(c) to the contrary notwithstanding, the Company will, to the extent permitted
by law, make such reductions in the Conversion Price, in addition to those
required by this subsection 5(c), as the Board of Directors in its good faith
discretion shall determine to be necessary in order that any subdivision of
shares, reclassification or combination of shares, distribution of rights or
warrants to purchase shares or securities, or a distribution of other assets
(other than cash dividends) hereafter made by the Company to its shareholders
shall not be taxable.
<PAGE>
(vii) Any direct or indirect reduction in the exercise or conversion
price of any outstanding option, warrant, right or other instrument entitling
the holder thereof to subscribe for or purchase, by exercise, exchange,
conversion or otherwise, any Common Shares shall be deemed a new issuance of
such derivative security to the extent of such reduction; provided, however,
-------- -------
that any adjustment to the exercise or conversion price of (A) convertible or
exchangeable securities (including the 5% Convertible Preference Shares of the
Company), warrants, rights or options outstanding as of the date of the Stock
Purchase Agreement as a result of the exercise or conversion adjustment
provisions contained in the instruments governing the terms of such securities
as in effect as of the date of the Stock Purchase Agreement or (B) convertible
or exchangeable securities, warrants, rights or options issued after the date of
the Stock Purchase Agreement (x) as a result of the exercise or conversion
adjustment provisions contained in the instruments governing the terms of such
Securities or (y) in the case of any options or warrants described in clause
(iv) of subsection 5.1(c)(i), upon approval of a majority of the Board of
Directors, in any case shall not be deemed a new issuance of such securities and
shall not require an adjustment to the Conversion Price pursuant to this Section
5.
(viii) In the event that, at any time after the first Issue Date, any
adjustment is made to the Conversion Price of the 8% Convertible Preference
Shares pursuant to this Section 5, such adjustment to the Conversion Price shall
be applicable with respect to all then outstanding 8% Convertible Preference
Shares and all 8% Convertible Preference Shares issued after the date of the
event causing such adjustment to the Conversion Price (including all Additional
Shares).
<PAGE>
(d) If the Company shall be a party to any transaction (including
without limitation a merger, consolidation, statutory share exchange, self
tender offer for or scheme of arrangement involving or relating to all or
substantially all Common Shares, a sale of all or substantially all of the
Company's assets or a recapitalization or reclassification of the Common Shares
and excluding any transaction as to which subparagraph (c)(ii) of this Section 5
applies) (each of the foregoing being referred to herein as a "Transaction"), in
-----------
each case as a result of which all or substantially all Common Shares are
converted into the right to receive shares, securities or other property
(including cash or any combination thereof), each 8% Convertible Preference
Share, which is not converted into the right to receive shares, securities or
other property prior to such Transaction, shall thereafter be convertible into
the kind and amount of shares, securities and other property (including cash or
any combination thereof) receivable upon the consummation of such Transaction by
a holder of that number of Common Shares into which one 8% Convertible
Preference Share was convertible immediately prior to such Transaction, assuming
such holder of Common Shares (i) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be ("Constituent
-----------
Person"), or an affiliate of a Constituent Person or (ii) failed to exercise his
- -----
rights of election, if any, as to the kind or amount of shares, securities and
other property (including cash) receivable upon such Transaction (provided if
the kind or amount of shares, securities and other property (including cash)
receivable upon such Transaction is not the same for each Common Share held
immediately prior to such Transaction by other than a Constituent Person or an
affiliate thereof and in respect of which such rights of election shall not have
been exercised ("Non-Electing Share"), then for the purpose of this subsection
------------------
5(d) the kind and amount of shares, securities and other property (including
cash) receivable upon such Transaction by each holder of a Non-Electing Share
shall be deemed to be the kind and amount so receivable per share by holders of
a plurality of the Non-Electing Shares). The Company shall not be a party to
any Transaction unless the terms of such Transaction are consistent with the
provisions of this subsection 5(d), and it shall not consent or agree to the
occurrence of any Transaction until the Company has entered into an agreement
with the successor or purchasing entity, as the case may be, for the benefit of
the holders of the 8% Convertible Preference Shares that will contain provisions
enabling the holders of the 8% Convertible Preference Shares that remain
outstanding after such Transaction to convert into the consideration (determined
as provided in this subsection 5(d)) received by holders of Common Shares at the
Conversion Price in effect immediately prior to such Transaction. The
provisions of this subsection 5(d) shall similarly apply to successive
Transactions.
(e) If, subject to the limitations set forth in Section 3 above:
(i) the Company shall (1) declare any dividend (or any other
distribution) on Common Shares, other than (A) a dividend payable in Common
Shares or (B) a dividend payable in cash out of its retained earnings other than
any special or nonrecurring or other extraordinary dividend or (2) declare or
authorize a redemption or repurchase of in excess of 10% of the then-outstanding
Common Shares; or
(ii) the Company shall authorize the granting to the holders of Common
Shares of rights, options or warrants to subscribe for or purchase any shares of
any class or series or of any other rights, options or warrants; or
(iii) there shall be any recapitalization or reclassification of the
Common Shares (other than an event to which subsection (c)(ii) of this Section 5
applies) or any consolidation or merger to which the Company is a party and for
which approval of any shareholders of the Company is required, or a statutory
share exchange by the Company for all or substantially all of its outstanding
Common Shares or the sale or transfer of all or substantially all of the assets
of the Company as an entirety; or
(iv) there shall occur the voluntary or involuntary liquidation,
dissolution or winding up of the Company,
<PAGE>
then the Company shall cause to be filed with the Transfer Agent and shall cause
to be mailed to the holders of the 8% Convertible Preference Shares at the
addresses of such holders as shown on the register of members of the Company, as
promptly as possible, but at least 10 Business Days prior to the applicable date
hereinafter specified, a notice stating (A) the date on which a record is to be
taken for the purpose of such dividend, distribution or granting of rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of Common Shares of record to be entitled to such dividend,
distribution or rights, options or warrants are to be determined or (B) the date
on which such reclassification, consolidation, merger, statutory share exchange,
sale, transfer, liquidation, dissolution or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Shares
of record shall be entitled to exchange their Common Shares for securities or
other property, if any, deliverable upon such reclassification, consolidation,
merger, statutory share exchange, sale, transfer, liquidation, dissolution or
winding up. Failure to give or receive such notice or any defect therein shall
not affect the legality of validity of the proceedings described in this Section
5.
(f) In any case in which subsection 5(c) provides that an adjustment
shall become effective on the day next following the record date for an event,
the Company may defer until the occurrence of such event (A) issuing to the
holder of any 8% Convertible Preference Share converted after such record date
and before the occurrence of such event the additional Common Shares issuable
upon such conversion by reason of the adjustment required by such event over and
above the Common Shares issuable upon such conversion before giving effect to
such adjustment and (B) paying to such holder any amount of cash in lieu of any
fraction pursuant to subsection 5(b).
(g) There shall be no adjustment of the Conversion Price in case of the
issuance of any shares of the Company in a reorganization, acquisition or other
similar transaction except as specifically set forth in this Section 5. If any
action or transaction would require adjustment of the Conversion Price pursuant
to more than one paragraph of this Section 5, only one adjustment shall be made
and such adjustment shall be the amount of adjustment that has the highest
absolute value.
(h) The Company covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued Common Shares, for the purpose of effecting conversion of the 8%
Convertible Preference Shares, the full number of Common Shares deliverable upon
the conversion of all outstanding 8% Convertible Preference Shares not
theretofore converted. For purposes of this subsection 5(h), the number of
Common Shares that shall be deliverable upon the conversion of all outstanding
8% Convertible Preference Shares shall be computed as if at the time of
computation all such outstanding shares were held by a single holder.
The Company covenants that any Common Shares issued upon conversion of the
8% Convertible Preference Shares shall be validly issued, fully paid and
non-assessable. Before taking any action that would cause an adjustment
reducing the Conversion Price below the then-par value of the Common Shares
deliverable upon conversion of the 8% Convertible Preference Shares, the Company
will take any corporate or other action that, in the opinion of its counsel, may
be necessary in order that the Company may validly and legally issue fully paid
and (subject to any customary qualification based upon the nature of a business
trust) non-assessable Common Shares at such adjusted Conversion Price.
The Company shall use all commercially reasonable efforts to list the
Common Shares required to be delivered upon conversion of the 8% Convertible
Preference Shares, prior to such delivery, upon each national securities
exchange, if any, upon which the outstanding Common Shares are listed at the
time of such delivery.
<PAGE>
Prior to the delivery of any securities that the Company shall be obligated
to deliver upon conversion of the 8% Convertible Preference Shares, the Company
shall use its best efforts to comply with all federal and state laws and
regulations thereunder requiring the registration of such securities with, or
any approval of or consent to the delivery thereof by, any governmental
authority.
(i) The Company will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of Common Shares
or other securities or property on conversion of the 8% Convertible Preference
Shares pursuant hereto; provided, however, that the Company shall not be
-------- -------
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of Common Shares or other securities or property in a
name other than that of the holder of the 8% Convertible Preference Shares to be
converted, and no such issue or delivery shall be made unless and until the
person requesting such issue or delivery has paid to the Company the amount of
any such tax or established, to the reasonable satisfaction of the Company, that
such tax has been paid.
Section 6. Redemption at the Option of the Company.
---------------------------------------------
(a) Right of Redemption. The 8% Convertible Preference Shares may not
--------------------
be redeemed by the Company prior to the third anniversary of the initial Issue
Date (the "First Redemption Date"). From and after the First Redemption Date,
----------------------
the Company shall have the right and option (provided it has sufficient funds
legally available therefor), but not the obligation, to elect to redeem all, but
not less than all, of the then outstanding shares of 8% Convertible Preference
Shares at any time that the Average Market Value per Common Share is equal to or
greater than the Average Market Value per Common Share which corresponds to the
date on which notice of such redemption is given as set forth on Schedule A
----------
attached hereto. Any redemption of the 8% Convertible Preference Shares
pursuant to this Section 6 shall be for an amount payable in immediately
available funds equal to $70.00 per share plus an amount in immediately
available funds equal to all per share accumulated and unpaid dividends on the
8% Convertible Preference Shares, whether or not authorized or declared, to and
including the date fixed for redemption, such sum being hereinafter referred to
as the "Redemption Price"). Such election shall be made by the Company giving
-----------------
written notice thereof (the "Redemption Notice") to each holder of record of 8%
-----------------
Convertible Preference Shares. The date of the Redemption Notice is referred to
herein as the "Call Date".
----------
(b) Redemption Procedures.
----------------------
<PAGE>
(i) The Redemption Notice shall be given by first class mail, postage
prepaid, to each holder of record of the 8% Convertible Preference Shares at its
last address as shown up on the register of members of the Company, and shall
specify the date fixed for redemption (which shall be no less than 30 nor more
than 60 days after the date of the Redemption Notice), the Redemption Price, the
place or places of payment, that payment will be made upon presentation and
surrender of the certificates representing the 8% Convertible Preference Shares,
that after the date fixed for redemption dividends will cease to accumulate on
such shares, the Conversion Price in effect on the Call Date, and that the right
of holders to convert 8% Convertible Preference Shares shall terminate at the
close of business on the fifth Business Day prior to the date fixed for
redemption (unless the Company defaults in the payment of the Redemption Price).
Any notice that is mailed as herein provided shall be conclusively presumed to
have been duly given, whether or not the holder of 8% Convertible Preference
Shares receives such notice.
(ii) On or after the date fixed for redemption as stated in the
Redemption Notice, each holder of the shares called for redemption shall
surrender the certificate representing such shares to the Company at the place
designated in such notice and shall thereupon be entitled to receive payment of
the Redemption Price.
(iii) Redemption Notice having been given as aforesaid, if, on the date
fixed for redemption, funds necessary for the redemption shall be available
therefor and shall have been deposited with a bank or trust company with
irrevocable instructions and authority to pay the Redemption Price to the
holders of the 8% Convertible Preference Shares, then, notwithstanding that the
certificates representing any such shares called for redemption shall not have
been surrendered, dividends with respect to the shares so called shall cease to
accumulate after the date fixed for redemption, such shares shall no longer be
deemed outstanding, the holders thereof shall cease to be shareholders of the
Company, and all rights whatsoever with respect to the shares so called for
redemption (except the right of the holders to receive the Redemption Price
without interest upon surrender of their certificates therefor) shall terminate.
(iv) Any defect in the Redemption Notice, or any failure to give such
notice by mail to any holder of 8% Convertible Preference Shares, shall not
affect the validity of the proceedings for the redemption of any other 8%
Convertible Preference Shares, and the Company shall be obligated to redeem the
shares of 8% Convertible Preference Shares of those holders to whom defective or
no Redemption Notice was given upon presentment and surrender of the
certificates representing their 8% Convertible Preference Shares on or after the
date fixed for redemption.
(v) In the event that any shares of 8% Convertible Preference Shares
shall be converted into Common Shares pursuant to Section 5, then (A) the
Company shall not have the right to redeem such shares and (B) any funds which
shall have been deposited for the payment of the Redemption Price for such
shares shall be returned to the Company immediately after such conversion.
<PAGE>
Section 7. Shares to Be Retired.
--------------------
All 8% Convertible Preference Shares which shall have been issued and reacquired
in any manner by the Company shall be restored to the status of authorized but
unissued shares of the capital of the Company, without designation as to class
or series.
Section 8. Ranking. Any class or series of
-------
Capital Stock of the Company shall be deemed to rank:
(a) prior to the 8% Convertible Preference Shares, as to the payment of
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
8% Convertible Preference Shares ("Senior Shares");
--------------
(b) on a parity with the 8% Convertible Preference Shares, as to the
payment of dividends and as to distribution of assets upon liquidation,
dissolution or winding up, whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share thereof be different from
those of the 8% Convertible Preference Shares, if the holders of such class or
series of Capital Stock and the 8% Convertible Preference Shares shall be
entitled to the receipt of dividends and of amounts distributable upon
liquidation, dissolution or winding up in proportion to their respective amounts
of accumulated and unpaid dividends per share or Liquidation Preferences,
without preference or priority one over the other ("Parity Shares");
--------------
(c) junior to the 8% Convertible Preference Shares, as to the payment
of dividends, if such class or series of Capital Stock shall be Junior Dividend
Shares; and
(d) junior to the 8% Convertible Preference Shares, as to the
distribution of assets upon liquidation, dissolution or winding up, if such
class or series of Capital Stock shall be Junior Liquidation Shares.
Section 9. Voting.
------
(a) General. For purposes of the provisions of this Section 9, each 8%
-------
Convertible Preference Share shall have one (1) vote per share, except that when
the 8% Convertible Preference Shares and the Common Shares shall vote together
as a single class, then each holder of the 8% Convertible Preference Shares
shall be entitled to the number of votes with respect to such holder's 8%
Convertible Preference Shares equal to the number of whole shares of Common
Stock into which such shares would have been converted at the Conversion Price
in effect on the record date for determining shareholders entitled to vote on
such matters.
<PAGE>
(b) Voting Rights. The holders of 8% Convertible Preference Shares
--------------
shall vote together as a single class with the holders of the Common Shares on
an as converted basis as provided in subsection 9(a) on all matters submitted to
a vote of the holders of the Common Shares. Except as provided in the
immediately preceding sentence and in subsections 9(c) and 9(e), holders of 8%
Convertible Preference Shares shall have no voting rights except as required by
the Charter and applicable law.
(c) Class Directors. If and whenever three or more semi-annual
----------------
dividends (whether or not consecutive) payable on the 8% Convertible Preference
Shares shall be in arrears (which shall, with respect to any such semi-annual
dividend, mean that any such dividend has not been paid in full), whether or not
authorized, the number of directors then constituting the Board of Directors
shall be increased by two and the holders of the 8% Convertible Preference
Shares, voting separately as a class, shall be entitled to elect two additional
directors to serve on the Board of Directors at any annual meeting of
shareholders or extraordinary meeting held for the purpose of electing
directors, or at an extraordinary meeting of the holders of the 8%Convertible
Preference Shares called as hereinafter provided for the purpose of electing
directors. At the next annual meeting of shareholders of the Company following
any such election and each succeeding annual meeting, for so long as all arrears
in dividends on the 8% Convertible Preference Shares then outstanding have not
been paid and the holders of 8% Convertible Preference Shares elect to exercise
such right, the holders of 8% Convertible Preference Shares, voting separately
as a class, shall have the right to elect two directors to the Board of
Directors. Whenever all arrears in dividends on the 8% Convertible Preference
Shares then outstanding shall have been paid, then the right of the holders of
the 8% Convertible Preference Shares to elect such additional directors shall
cease (but subject always to the same provision for the vesting of such voting
rights in the case of any similar future arrearages in three or more semi-annual
dividends), and the terms of office of all persons elected as directors to the
two directorships created as provided in this subsection 9(c) shall forthwith
terminate and the number of the Board of Directors shall be reduced accordingly.
The directors elected pursuant to this subsection 9(c) shall hold office until
the earlier of (i) the next annual meeting of the shareholders or extraordinary
meeting held for the purpose of electing directors, (ii) the next extraordinary
meeting of the holders of the 8% Convertible Preference shares called as
hereinafter provided for the purpose of electing directors, (iii) the
resignation, death or removal of such 8% Preferred Director or (iv) the date on
which such office shall terminate as above provided. If any vacancy shall occur
among the directors elected by the holders of the 8% Convertible Preference
Shares pursuant to this Section 9(c), a successor may be elected by the Board of
Directors in accordance with the Articles of Association to serve for the term
of such Person's predecessor.
<PAGE>
(d) Procedure; Action Without Meeting. At any time the power to elect
----------------------------------
directors as representatives of the holders of the 8% Convertible Preference
Shares shall have been vested in the holders of 8% Convertible Preference Shares
as provided in subsection 9(c), the Secretary of the Company may, and upon the
written request of a holder or holders of 8% Convertible Preference Shares
representing at least 10% of the then outstanding 8% Convertible Preference
Shares (addressed to the Secretary at the principal office of the Company)
shall, call an extraordinary meeting of the holders of the 8% Convertible
Preference Shares for the election of the director or directors to be elected
pursuant to subsections 9(c), such call to be made by notice similar to that
provided in the Articles of Association for an extraordinary meeting of the
shareholders or as required by law. If any such extraordinary meeting required
to be called as above provided shall not be called by the Secretary within 10
days after receipt of any such request, then any holder or holders of 8%
Convertible Preference Shares representing at least 10% of the then outstanding
8% Convertible Preference Shares may call such meeting, upon the notice above
provided, and for that purpose shall have access to the register of members of
the Company.
(e) Vote Required for Certain Actions. So long as any 8% Convertible
-----------------------------------
Preference Shares are outstanding, in addition to any other vote or consent of
shareholders required by law or by the Charter,
(i) without the affirmative vote of the holders of at least a Majority
in Interest of the 8% Convertible Preference Shares at the time outstanding,
given in person or by proxy, the Company shall not (other than out of the
Company's authorized shares existing as of the date of this Consent, excluding
the Company's Ordinary Shares, par value $.01 per share):
(A) Increase the authorized amount of the 8% Convertible Preference
Shares; or
(B) Authorize or create, or increase the authorized amount of, any
class or series of Parity Shares.
(ii) without the affirmative vote of the holders of at least two-thirds
(2/3) of the 8% Convertible Preference Shares at the time outstanding, given in
person or by proxy, the Company shall not (other than out of the Company s
authorized shares existing as of the date of this Consent, excluding the Company
s Ordinary Shares, par value $.01 per share):
(A) Authorize or create any class or series of Senior Shares; or
(B) Adopt any amendment to its Certificate of Incorporation or Charter
that would materially adversely affect the existing terms of the 8% Convertible
Preference Shares.
<PAGE>
Section 10. Record Holders. The Company
--------------
and the Transfer Agent shall deem and treat the record holder of any 8%
Convertible Preference Shares as the true and lawful owner thereof for all
purposes, and neither the Company nor the Transfer Agent shall be affected by
any notice to the contrary.
Section 11. Transfer Agent. The Company initially shall be the
--------------
Transfer Agent for the 8% Convertible Preference Shares.
AND BE IT FURTHER RESOLVED, that any documents heretofore executed or
lawful actions heretofore taken by any of the officers of the Company in
connection with the transactions herein described are hereby ratified, confirmed
and approved in all respects; and further
RESOLVED, that these resolutions may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
<PAGE>
EXECUTED as of the ________ day of _________________, 1998.
/s/ Ernest E. Cook
- --------------------------------
Ernest E. Cook
/s/ Jesse E. Hendricks
- --------------------------------
Jesse E. Hendricks
/s/ John R. Huff
- --------------------------------
John R. Huff
/s/ John P. Lewis
- --------------------------------
John P. Lewis
/s/ James C. Musselman
- --------------------------------
James C. Musselman
/s/ Edwin D. Williamson
- --------------------------------
Edwin D. Williamson
/s/ Sheldon R. Erickson
- --------------------------------
Sheldon R. Erickson
/s/ Fitzgerald S. Hudson
- --------------------------------
Fitzgerald S. Hudson
/s/ Thomas P. Kellog, Jr.
- --------------------------------
Thomas P. Kellogg, Jr.
/s/ Michael E. McMahon
- --------------------------------
Michael E. McMahon
/s/ Lamar Norsworthy
- --------------------------------
Lamar Norsworthy
<PAGE>
A-1
SCHEDULE A
-----------
Redemption Date Average Market Value
- ----------------------------- ----------------------
September 30, 2001
through March 31, 2002 $ 28.54
April 1, 2002 through
September 30, 2002 $ 31.14
October 1, 2002 through
March 31, 2003 $ 34.20
April 1, 2003 through
September 30, 2003 $ 37.58
October 1, 2003 through
March 31, 2004 $ 32.57
April 1, 2004 through
September 30, 2004 $ 34.97
October 1, 2004 through
March 31, 2005 $ 37.60
From and after April 1, 2005, for so long as any 8% Convertible Preference
Shares are outstanding, the Average Market Value shall be increased as of each
six month anniversary of such date occurring thereafter, which Average Market
Value shall be in effect from and after such date until the Average Market Value
is recalculated as of the next six month anniversary of such date, and shall be
calculated using the same methodologies as the Average Market Value was
calculated as set forth on this Schedule A so that each Average Market Value, as
----------
of the date of determination, would result in a holder purchasing a share of 8%
Convertible Preference Shares as of the First Issue Date recognizing an internal
rate of return of 20% if such share were redeemed by the Company as of such date
of determination.
Average Market Value will be subject to equitable proportionate adjustments in
the event of any event described in subsection 5.1(c)(iii) or similar event.
EXHIBIT 10.40
INDEMNITY AGREEMENT
This Indemnity Agreement ("Agreement"), made as of ______________, 199__,
by and between Triton Energy Limited, a Cayman Islands company (the "Company"),
and __________________, a director and/or officer of the Company ("Indemnitee"),
W I T N E S S E T H:
-------------------
WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available; and
WHEREAS, service as a director or officer of a company, particularly a
company the securities of which are publicly held, may subject a person to
substantial litigation and other risks; and
WHEREAS, it is now and has always been the express policy of the Company to
indemnify its directors and officers so as to provide to them the maximum
protection permitted by law; and
WHEREAS, Indemnitee considers that the protection available under the
Company's Articles of Association may not be adequate in the present
circumstances and the Company desires to ensure that Indemnitee serve or
continue to serve the Company as a director or officer;
NOW, THEREFORE, the Company and Indemnitee hereby agree as follows:
1. Agreement to Serve. Indemnitee agrees to serve or continue to serve
as a director and/or officer of the Company until his or her death, or his or
her resignation or removal from office, or the election or appointment and
qualification of his or her successor, whichever shall first occur.
2. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any threatened, pending or
completed, claim, action, suit or proceeding, whether of a civil, criminal,
administrative or investigative nature (including all appeals therefrom)
(including, without limitation, any such claim, action, suit or proceeding by or
in the right of the Company), in which Indemnitee may be or may have been or may
be threatened to be made to become involved as a party or otherwise, by reason
of the fact that Indemnitee is or was a director, officer, employee or agent of,
or his acting in any other capacity for or on behalf of the Company (including
his serving as an officer of or director of any direct or indirect subsidiaries
of the Company or for, on behalf of or at the request of the Company as a
director, officer, employee or agent of another corporation, company,
partnership, joint venture, limited liability company, joint operating company,
trust or other enterprise, or in a fiduciary or other capacity with respect to
any employee benefit plan maintained by the Company), or by reason of anything
actually or allegedly done or not done by Indemnitee in any such capacity,
whether or not Indemnitee is serving in such capacity at the time any liability
or expense is incurred for which indemnification or reimbursement can be
provided under this Agreement.
(b) The term "Expenses" shall include, without limitation thereto, all
costs, expenses and obligations (including by way of example and not by way of
limitation attorneys' fees, court costs, travel expenses and fees of experts)
incurred or paid in connection with (i) investigating, defending, being a
witness in or otherwise participating in, or preparing to defend, be a witness
in or participate in any Proceeding, (ii) establishing Indemnitee's right to
indemnification under this Agreement and (iii) obtaining recovery under any
directors' and officers' liability or similar insurance policy or policies
purchased or maintained at any time by the Company. Without limiting in any way
the rights of Indemnitee hereunder or under the Company's Articles of
Association, the term Expenses is intended expressly to include the fees and
expenses of counsel of Indemnitee's own choosing (i) in the event a change of
control of the Company shall have occurred and/or (ii) where the named parties
to any Proceeding include both Indemnitee and the Company and Indemnitee has
been advised by Indemnitee's counsel that there may be one or more legal
defenses available to Indemnitee that are different from or additional to those
available to the Company (in which case, however, the Company shall not, in
connection with any one Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for the Indemnitee
(provided that if such Proceeding is brought in a jurisdiction other than the
State of Texas the Company shall also provide for the fees and expenses of local
counsel in such jurisdiction), which firm(s) shall be designated in writing by
Indemnitee).
(c) References to "other enterprise" shall include employee benefit
plans; references to "fines" shall include any excise tax assessed with respect
to any employee benefit plan; references to "serving at the request of the
Company" shall include any service as a director, officer, employee, or agent of
the Company, including at the request of the Board of Directors or another
officer of the Company, that imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit plan,
its participants or beneficiaries; and a person who is determined to have acted
in good faith and in a manner he reasonably believed to be in the interest of
the participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "he reasonably believed to be in or not opposed to the
best interests of the Company" for purposes of this Agreement.
(d) A "change in control of the Company" shall mean the occurrence of
any of the following events: (i) there shall be consummated (x) any merger,
amalgamation or consolidation of the Company pursuant to which the Company's
Ordinary Shares would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Company's
Ordinary Shares immediately prior to the merger have the same proportionate
ownership of common stock or ordinary shares of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer
(excluding transfer by way of pledge or hypothecation), in one transaction or a
series of related transactions, of all, or substantially all, of the assets of
the Company, (ii) the shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company, (iii) any "person" (as such
term is defined in Section 3(a)(9) or Section 13(d)(3) under the Securities
Exchange Act of 1934, as amended (the "1934 Act)) or any "group" (as such term
is used in Rule 13d-5 promulgated under the 1934 Act), other than the Company or
any successor of the Company or any subsidiary of the Company or any employee
benefit plan of the Company or any subsidiary (including such plan's trustee),
becomes, without the prior approval of the Board of Directors of the Company
(the "Board"), a beneficial owner for purposes of Rule 13d-3 promulgated under
the 1934 Act, directly or indirectly, of securities of the Company representing
25.0% or more of the Company's then outstanding securities having the right to
vote in the election of directors of the Company, or (iv) during any period of
two consecutive years, individuals who, at the beginning of such period
constituted the entire Board, cease for any reason (other than death) to
constitute a majority of the directors of the Company, unless the election, or
the nomination for election, by the Company's shareholders, of each new director
of the Company was approved by a vote of at least two-thirds of the directors of
the Company then still in office who were directors of the Company at the
beginning of the period.
3. Indemnity in Third Party Proceedings. The Company shall indemnify
Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is
or was a party to, or is or was threatened to be made a party to, or is
otherwise involved in any manner (as a witness or otherwise) in any Proceeding
(other than a Proceeding by or in the right of the Company to procure a judgment
in its favor in which Indemnitee is a party defendant) against any and all
Expenses, and any and all judgments, fines and penalties entered or assessed
against Indemnitee and any and all amounts reasonably paid or payable in
settlement by Indemnitee, in connection with such Proceeding, but only if
Indemnitee acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Company and, in the case of a
criminal proceeding, in addition, had no reasonable cause to believe that his
conduct was unlawful.
4. Indemnity in Proceedings By or In the Right of the Company. The
Company shall indemnify Indemnitee in accordance with the provisions of this
Section 4 if and to the extent that Indemnitee is a party to, or is or was
threatened to be made a party to, or is otherwise involved in any manner (as a
witness or otherwise) in any Proceeding by or in the right of the Company to
procure a judgment in its favor in which Indemnitee is a party defendant,
against any and all Expenses, but only if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the Company, except that no indemnification for Expenses shall be
made under this Section 4 in respect of any claim, issue or matter as to which
Indemnitee shall have been finally adjudged to be liable to the Company unless,
and only to the extent that, any court in which such Proceeding was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, Indemnitee is fairly and
reasonably entitled to indemnity for such Expenses as such court shall deem
proper.
5. Indemnification of Expenses of Successful Party; No Adverse
Presumption. Notwithstanding any other provisions of this Agreement, to the
extent that Indemnitee has been successful on the merits or otherwise in defense
of any Proceeding or in defense of any claim, issue or matter therein, including
the dismissal of an action without prejudice, Indemnitee shall be indemnified
against all Expenses incurred in connection therewith. The termination of any
such Proceeding by judgment, order of court, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption for purposes of any provision of this Agreement that Indemnitee did
not act in good faith in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
proceeding, that such person had reasonable cause to believe that his or her
conduct was unlawful.
6. Advances of Expenses. The Expenses incurred by Indemnitee in
connection with any Proceeding shall be paid by the Company in advance of a
final disposition of such Proceeding, promptly upon the written request of
Indemnitee, if Indemnitee shall undertake in writing (without the need for
security therefor) to repay such amount if and to the extent that it is
ultimately determined that Indemnitee is not entitled to indemnification for
such Expenses.
7. Right of Indemnitee to Indemnification Upon Application; Procedure
Upon Application. Without limiting Indemnitee's rights, and the Company's
obligations, under Section 6, any indemnification under Sections 3 and/or 4
shall be made or paid by the Company no later than 30 days after receipt by the
Company of the written request of Indemnitee therefor, unless a determination is
made within such 30-day period by (i) the Board of Directors of the Company by a
vote of an affirmative majority of directors who are not and were not parties to
such Proceedings, or (ii) if at least a majority of the directors are or were
parties to such Proceedings, then by independent legal counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld) in a written opinion that Indemnitee has not met the relevant
standards for indemnification set forth in Sections 3 and/or 4 (in the case of
(i) or (ii), referred to herein as the "Reviewing Party"). The burden of
proving that indemnification is not appropriate shall be on the Company.
Indemnitee's expenses reasonably incurred in connection with successfully
establishing his or her right to indemnification, in whole or in part, in any
such Proceeding shall also be indemnified by the Company regardless of the
outcome of such process.
8. Indemnification Hereunder Not Exclusive. The indemnification
provided by this Agreement shall not be deemed exclusive of and shall be in
addition to any other rights to which Indemnitee may be entitled under the laws
of the Cayman Islands, the Articles of Association of the Company or any other
company, the certificate or articles of incorporation of any other entity, any
other agreement, any and all insurance policies, any vote of stockholders or
disinterested directors, or otherwise, either as to action in his or her
official capacity or as to action in another capacity. To the extent that
Indemnitee otherwise would have any greater right to indemnification from the
Company, whether under the laws of the Cayman Islands or the Articles of
Association of the Company as in effect on the date hereof or otherwise,
Indemnitee will be deemed to have such greater right hereunder, and to the
extent that any change is made to the laws of the Cayman Islands and/or the
Articles of Association of the Company which permits any greater right to
indemnification than that provided by this Agreement as of the date hereof,
Indemnitee will be deemed to have such greater right hereunder.
The rights to indemnification and advancement of expenses under this
Agreement shall continue as to Indemnitee even though he or she may have ceased
to be a director or officer or to serve in any capacity the Company or any other
enterprise and shall inure to the benefit of the heirs, executors,
administrators and personal representatives of Indemnitee.
9. Partial Indemnification. In the event that Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for a
portion but less than the entire amount of any Expenses, judgments, fines,
penalties and/or amounts paid or payable in settlement, the Company shall fully
indemnify Indemnitee in accordance with this Agreement for such portion of such
Expenses, judgments, fines, penalties and/or amounts paid in settlement.
10. Contribution.
(a) Contribution Payment. To the extent the indemnification provided
---------------------
for under any provision of this Agreement is determined (in the manner
hereinabove provided) not to be permitted under applicable law, the Company, in
lieu of indemnifying Indemnitee, shall, to the extent permitted by law,
contribute to the amount of any and all Expenses incurred or paid by Indemnitee
for which such indemnification is not permitted. The amount the Company
contributes shall be in such proportion as is appropriate to reflect the
relative fault of Indemnitee, on the one hand, and of the Company and any and
all other parties (collectively, including the Company, the "Third Parties"), on
the other hand.
(b) Relative Fault. The relative fault of the Third Parties and the
---------------
Indemnitee shall be determined (1) by reference to the relative fault of
Indemnitee as determined by a court or other governmental agency or (2) to the
extent such court or other governmental agency does not apportion relative
fault, by the Reviewing Party after giving effect to, among other things, the
relative intent, knowledge, access to information, and opportunity to prevent or
correct the relevant events, of each party, and other relevant equitable
considerations. The Company and Indemnitee agree that it would not be just and
equitable if contribution were determined by pro rata allocation or by any other
method of allocation that does not take account of the equitable considerations
referred to in this Section 10(b).
11. Subrogation. In the event that the Company provides any
indemnification or makes any payment to Indemnitee in respect of any matter in
respect of which indemnification or the advancement of expenses is provided for
herein, the Company shall be subrogated to the extent of such indemnification or
other payment to all of the related rights of recovery of Indemnitee against
other persons or entities. Indemnitee shall execute all papers reasonably
required and shall do everything that may be reasonably necessary to secure such
rights and enable the Company effectively to bring suit to enforce such rights
(with all of Indemnitee's reasonable costs and expenses, including attorneys'
fees and disbursements, to be reimbursed by or, at the option of Indemnitee,
advanced by the Company).
12. No Duplication of Payments. The Company shall not be obligated
under this Agreement to provide any indemnification or make any payment to which
Indemnitee is otherwise entitled hereunder to the extent, but only to the
extent, that such indemnification or payment hereunder would be duplicative of
any amount actually received by Indemnitee pursuant to any insurance policy, the
laws of the Cayman Islands, the Articles of Association or otherwise.
13. Saving Clause. If any provision of this Agreement or the
application of any provision hereof to any circumstance is held illegal, invalid
or otherwise unenforceable, the remainder of this Agreement and the application
of such provision to any other circumstance shall not be affected, and the
provision so held to be illegal, invalid or otherwise unenforceable shall be
reformed to the extent (but only to the extent) necessary to make it legal,
valid and enforceable.
14. Notice. Indemnitee shall give to the Company notice in writing as
soon as practicable of any claim made against him or her for which
indemnification will or could be sought under this Agreement, provided, however,
that any failure to give such notice to the Company will not relieve the Company
from its obligations hereunder unless, and only to the extent that, such failure
results in the forfeiture of substantial rights and defenses. Notice to the
Company shall be directed to the Company (to the attention of the Chief
Executive Officer, with a copy to the General Counsel) at its principal
executive office or such other address as the Company shall designate in writing
to Indemnitee. Notice shall be deemed received when hand delivered or
dispatched by electronic facsimile transmission, or three calendar days after
having been mailed by United States registered or certified mail, return receipt
requested, postage prepaid, or one business day after having been sent for
next-day delivery by a nationally recognized overnight courier. In addition,
Indemnitee shall give the Company such information and cooperation as it may
reasonably require and shall be within Indemnitee's power.
15. Successors. This Agreement shall be binding upon the Indemnitee
and his or her spouse, heirs and personal representatives and the Company and
its successors, including without limitation any person acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, amalgamation, continuation, consolidation,
reorganization or otherwise (and such successor will thereafter be deemed the
"Company" for purposes of this Agreement), but will not otherwise be assignable,
transferable or delegatable by the Company. The Company shall require any
successor (whether direct or indirect, by purchase, merger, amalgamation,
continuation, consolidation, reorganization or otherwise) to all or
substantially all of the business or assets of the Company, to assume and agree
in writing to perform this Agreement, expressly for the benefit of Indemnitee,
in the same manner and to the same extent the Company would be required to
perform if no such succession had taken place.
16. Consent to Jurisdiction. The Company hereby irrevocably submits to
the jurisdiction of any Texas State or Federal court sitting in the Northern
District of Texas over any action or proceeding arising out of or relating to
this Agreement and the Company hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and determined in such Texas
State or Federal court.
17. Counterparts. This Agreement may be executed in any number of
counterparts, and upon the execution hereof by all parties hereto, in
counterparts or otherwise, each executed counterpart shall constitute an
original.
18. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE SUBSTANTIVE LAWS (BUT NOT THE RULES GOVERNING CONFLICTS OF LAWS) OF THE
CAYMAN ISLANDS.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
TRITON ENERGY LIMITED
By _______________________________
INDEMNITEE
_______________________________
EXHIBIT 10.67
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
TRITON ENERGY LIMITED
AND
HM4 TRITON, L.P.
8% CONVERTIBLE PREFERENCE SHARES
(PAR VALUE $.01 PER SHARE)
AUGUST 31, 1998
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions 1
-----------
Section 1.2 References and Titles 10
---------------------
ARTICLE II
PURCHASE OF 8% PREFERENCE SHARES
--------------------------------
Section 2.1 Purchase of Shares 11
------------------
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.1 Representations and Warranties of the Company 12
---------------------------------------------
Section 3.2 Representations and Warranties of Purchaser 29
-------------------------------------------
ARTICLE IV
COVENANTS
---------
Section 4.1 Furnishing of Information 32
-------------------------
Section 4.2 Rights Offering 32
---------------
Section 4.3 Stock Exchange Listing 33
----------------------
Section 4.4 Registration Statement 33
----------------------
Section 4.5 Affirmative Covenants of the Company 34
------------------------------------
Section 4.6 Negative Covenants of the Company 35
---------------------------------
Section 4.7 Approvals 37
---------
Section 4.8 Shareholders Agreement 37
----------------------
Section 4.9 Preferred Stock Authorization 37
-----------------------------
Section 4.10 HSR Act Notification 37
--------------------
Section 4.11 Indemnification of Directors and Officers; Insurance 37
----------------------------------------------------
Section 4.13 Notification of Certain Matters 40
-------------------------------
Section 4.14 Board of Directors 40
------------------
Section 4.15 Financial Advisory Agreement; Commitment Fee 41
--------------------------------------------
<PAGE>
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
Section 5.1 Conditions Precedent to Each Party's Obligation 41
-----------------------------------------------
Section 5.2 Conditions Precedent to Obligation of Purchaser
at the First Closing 41
-----------------------------------------------
Section 5.3 Conditions Precedent to Obligations of Company
at the First Closing 43
-----------------------------------------------
Section 5.4 Conditions Precedent to Obligation of Purchaser
at the Second Closing 43
-----------------------------------------------
Section 5.5 Conditions Precedent to Obligations of Company
at the Second Closing 45
-----------------------------------------------
ARTICLE VI
CLOSINGS
--------
Section 6.1 Closings 46
--------
Section 6.2 Actions to Occur at the First Closing 46
-------------------------------------
Section 6.3 Actions to Occur at the Second Closing 47
--------------------------------------
ARTICLE VII
TERMINATION
-----------
Section 7.1 Termination 48
-----------
Section 7.2 Effect of Termination 50
---------------------
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.1 Indemnification of Purchaser 50
----------------------------
Section 8.2 Indemnification of Company 50
--------------------------
Section 8.3 Defense of Third-Party Claims 50
-----------------------------
Section 8.4 Direct Claims 52
-------------
Section 8.5 Special Provisions Regarding Indemnity 52
--------------------------------------
Section 8.6 Tax Related Adjustments 52
-----------------------
ARTICLE IX
MISCELLANEOUS
---------------
Section 9.1 Survival of Provisions 53
----------------------
Section 9.2 No Waiver; Modification in Writing 53
----------------------------------
Section 9.3 Specific Performance 54
--------------------
Section 9.4 Severability 54
------------
Section 9.5 Fees and Expenses 54
-----------------
Section 9.6 Parties in Interest 56
-------------------
Section 9.7 Notices 56
-------
Section 9.8 Counterparts 57
------------
Section 9.9 Entire Agreement 57
----------------
Section 9.10 Governing Law 57
-------------
Section 9.11 Public Announcements 58
--------------------
Section 9.12 Assignment 58
----------
Section 9.13 Director and Officer Liability 58
------------------------------
Section 9.14 Headings 58
--------
<PAGE>
EXHIBITS
Exhibit A Form of Financial Advisory Agreement
Exhibit B Form of Monitoring and Oversight Agreement
Exhibit C Form of Preferred Stock Authorization
Exhibit D Form of Shareholders Agreement
Exhibit E Form of Indemnification Agreement
Exhibit F-1 Form of Legal Opinion of Robert Holland, General Counsel
to the Company
Exhibit F-2 Form of Legal Opinion of W. S. Walker & Co.
Exhibit F-3 Form of Legal Opinion of Hunter & Hunter
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of August 31, 1998, by and between
Triton Energy Limited, a Cayman Islands company (the "Company"), and HM4 Triton,
-------
L.P., a Cayman Islands exempted limited partnership (together with its permitted
assigns, "Purchaser").
---------
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1 Definitions. As used in this Agreement,
-----------
and unless the context requires a different meaning, the following terms have
the meanings indicated:
"5% Preference Shares" has the meaning set forth in Section 3.1(c)(i).
"5% Preference Shares Authorization" has the meaning set forth in Section
3.1(c)(iii).
"8% Preference Shares" means the Company's 8% Convertible Preference
Shares, par value $.01 per share.
"Additional D&O Policies" has the meaning set forth in Section 4.11(b).
"Affiliate" means, with respect to any Person, any other Person directly,
or indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person. For purposes of this definition and this
Agreement, the term "control" (and correlative terms) means the power, whether
by contract, equity ownership or otherwise, to direct the policies or management
of a Person.
"Agreement" means this Stock Purchase Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
"Approval" means any approval, authorization, grant of authority, consent,
order, qualification, permit, license, variance, exemption, franchise,
concession, certificate, filing or registration or any waiver of the foregoing,
or any notice, statement or other communication required to be filed with,
delivered to or obtained from any Governmental Entity or any other Person.
"Articles of Association" means the Company's Articles of Association, as
amended from time to time.
<PAGE>
"Asset Value" shall mean the consideration to be paid for such asset by the
acquiring Person in a bona fide arms-length transaction with a non-Affiliate
third party, including all debt assumed as part of such transaction or to which
the assets subject to such transaction remain subject and which remains
outstanding immediately following such transaction; provided, however, that if
-------- -------
the consideration is payable in whole or in part in property (which term shall
include the securities of any issuer other than the Company) other than cash,
the fair market value of such property shall be determined as follows: (i) if
such property consists of securities, such value shall be the Current Market
Price of such securities and (ii) such value of property other than securities
shall be determined by the Company and HMCo in good faith or, if the Company and
HMCo do not agree on the fair market value of such property within five (5)
Business Days after HMCo's receipt of a copy of the written offer to purchase
such assets describing and quantifying the non-cash consideration to be paid for
such assets, then the Company and HMCo shall select one nationally recognized
independent appraiser (with each of the Company and HMCo bearing one-half of the
expense of such appraiser) to determine the fair market value of that property
and the appraised fair market value of that property as determined by such
appraiser shall be deemed the fair market value of that property.
"Authorized Preferred Stock" has the meaning set forth in Section
3.1(c)(i).
"Benefit Plan" has the meaning set forth in Section 3.1(o).
"Board" means the Board of Directors of the Company.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in New York, New
York or Dallas, Texas generally are authorized or required by law or other
government actions to close.
"Capital Stock" means (i) with respect to any Person that is a corporation
or company, any and all shares, interests, participations or other equivalents
(however designated) of capital or capital stock of such Person and (ii) with
respect to any Person that is not a corporation or company, any and all
partnership or other equity interests of such Person.
"Closings" has the meaning provided therefor in Section 6.1.
"Code" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations thereunder as in effect on the date hereof.
"Common Stock" means the Company's ordinary shares, par value $.01 per
share, and any Capital Stock for or into which such Common Stock hereafter is
exchanged, converted, reclassified or recapitalized by the Company or pursuant
to an agreement to which the Company is a party.
"Company" has the meaning set forth in the introductory paragraph hereof.
"Company Disclosure Schedule" has the meaning set forth in Section 3.1.
<PAGE>
"Company Indemnified Costs" means (i) any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable legal fees and expenses incurred in investigating and
preparing for any litigation or proceeding) that any of the Company Indemnified
Parties incurs and that arise out of or result from any breach or default by
Purchaser of any of the representations or warranties under this Agreement or
any other Transaction Documents and (ii) any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable legal fees and expenses incurred in investigating and
preparing for any litigation or proceeding) that any of the Company Indemnified
Parties incurs and that arise out of or result from any breach by Purchaser of
any of the covenants or agreements under this Agreement or any other Transaction
Documents.
"Company Interests" means:
(a) all rights, titles, interests, tenements, hereditaments,
appurtenances, benefits and privileges of the Company or any of its Subsidiaries
in, to and under the Concession Area, the Material Oil and Gas Contracts, the
other Contract Interests and all material personal property, improvements, lease
and well equipment, easements, permits, servitudes, rights of way and surface
rights associated therewith, if any; and
(b) all material files, records and data owned by, or in the actual or
constructive possession of, the Company or any of its Subsidiaries relating to
the Company, any of its Subsidiaries, the Concession Area, the Material Oil and
Gas Contracts, the Contract Interests or any other Company Interest, including
all material title records, geological, geophysical and seismic records, data
and information, production records, electric logs, core data, pressure data and
other related matters of a non-interpretive nature associated therewith.
"Company Options" has the meaning set forth in Section 3.1(c)(iv).
"Company SEC Documents" has the meaning set forth in Section 3.1(e)(i).
"Concession Area" means the geographic areas or regions covered by or
subject to the Material Oil and Gas Contracts.
"Contract Interests" means the Material Oil and Gas Contracts and any and
all existing oil and gas processing contracts, casinghead gas contracts, joint
venture agreements, seismic exploration agreements, area of mutual interest
agreements, saltwater disposal agreements, commingling agreements, sales
agreements, transportation agreements, pipeline agreements, and other contracts,
agreements and instruments (including the penalty provisions thereof and future
interests, reversionary rights and deferred interests) and orders relating
thereto, to which the Company or any Subsidiary is a party or otherwise bound
which relate to the Concession Area or to the exploration for or development,
production or transportation of oil, gas or petroleum from or attributable to
the Concession Area.
<PAGE>
"Contracts" means all agreements, contracts, or other binding commitments,
arrangements or plans, written or oral (including any amendments and other
modifications thereto), to which the Company or any of its Subsidiaries is a
party or is otherwise bound.
"Credit Agreements" means, collectively, (i) that certain Credit Agreement
between the Company and Soci t G n rale, Southwest Agency, dated October 8,
1997, as amended, (ii) that certain Credit Agreement between the Company and
Barclays Bank PLC, dated November 26, 1997, as amended, (iii) that certain
Credit Agreement between the Company and Toronto Dominion (Texas), Inc., dated
November 26, 1997, as amended, (iv) that certain Credit Agreement between the
Company and Union Bank of California, N.A., dated December 31, 1997, as amended,
(v) that certain Credit Agreement between the Company and Credit Suisse First
Boston, dated February 9, 1998, as amended, and (vi) that certain Demand
Promissory Note with Banque Paribas dated September 15, 1997.
"Cure Period" has the meaning set forth in Section 7.1(b)(i).
"Current Market Price" of Common Stock or any other class of stock or other
security of the Company or any other issuer for any day shall mean the last
reported sales price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the New York Stock Exchange ("NYSE")
----
or, if such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on The Nasdaq Stock Market or, if such security is not
quoted on The Nasdaq Stock Market, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
------
or, if bid and asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board of Directors or, if no such market is
regularly made, as determined by a majority of the Board of Directors based on
advice of an independent appraiser selected by a majority of the Board of
Directors.
<PAGE>
"Debt", without duplication, means (a) all indebtedness (including the
principal amount thereof or, if applicable, the accreted amount thereof and the
amount of accrued and unpaid interest thereon) of the Company or its
Subsidiaries, whether or not represented by bonds, debentures, notes or other
securities, for the repayment of money borrowed, (b) all deferred indebtedness
of the Company or its Subsidiaries for the payment of the purchase price of
property or assets purchased, (c) all obligations of the Company or its
Subsidiaries to pay rent or other payment amounts under a lease of real or
personal property which is required to be classified as a capital lease or a
liability on the face of a balance sheet prepared in accordance with GAAP, (d)
any outstanding reimbursement obligation of the Company or its Subsidiaries with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company or its Subsidiaries, (e) any payment obligation
of the Company or its Subsidiaries under any interest rate swap agreement,
forward rate agreement, interest rate cap or collar agreement or other financial
agreement or arrangement entered into for the purpose of limiting or managing
interest rate risks, (f) all indebtedness for borrowed money secured by any Lien
existing on property owned by the Company or its Subsidiaries, whether or not
indebtedness secured thereby shall have been assumed, (g) all guaranties,
endorsements, assumptions and other contingent obligations of the Company or its
Subsidiaries in respect of, or to purchase or to otherwise acquire, indebtedness
for borrowed money of others, (h) all other short-term and long-term liabilities
of the Company or its Subsidiaries of any nature and (i) all premiums, penalties
and change of control payments required to be paid or offered in respect of any
of the foregoing as a result of the consummation of the transactions
contemplated by the Transaction Documents regardless if any of such are actually
paid.
"Environmental Laws" has the meaning set forth in Section 3.1(r)(A).
"ERISA" has the meaning set forth in Section 3.1(o).
"Excess Shares" has the meaning set forth in Section 4.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Financial Advisory Agreement" means that certain Financial Advisory
Agreement between the Company and HMCo in the form of Exhibit A hereto.
"First Closing" has the meaning set forth in Section 6.1.
"First Closing Date" has the meaning set forth in Section 6.1.
"GAAP" has the meaning set forth in Section 3.1(e)(ii).
"Governmental Entity" means any agency, bureau, commission, court,
authority, department, official, political subdivision, tribunal or other
instrumentality of any government, whether (i) regulatory, administrative or
otherwise, (ii) federal, state or local, or (iii) domestic or foreign.
"Hazardous Materials" has the meaning set forth in Section 3.1(r)(B).
"HMCo" has the meaning set forth in Section 4.16.
"HSR Act" has the meaning set forth in Section 3.1(d)(iii) of this
Agreement.
"Indemnification Agreement" has the meaning set forth in Section 4.11(a).
"Indemnified Parties" means the Purchaser Indemnified Parties or the
Company Indemnified Parties, as the case may be.
<PAGE>
"Indemnifying Party" means any person who is obligated to provide
indemnification hereunder.
"Indenture" means that certain Amended and Restated Senior Indenture
between the Company and The Chase Manhattan Bank, as Trustee, dated as of July
25, 1997, together with the Amended and Restated First Supplemental Indenture,
dated as of July 25, 1997, with respect to $200,000,000 aggregate principal
amount of 8 % Senior Notes due 2002, and the Amended and Restated Second
Supplemental Indenture, dated as of July 25, 1997, with respect to $200,000,000
aggregate principal amount of 9 % Senior Notes due 2005.
"Initial Shares" means the 1,822,500 Shares to be purchased and sold at the
First Closing.
"Intangible Property" has the meaning set forth in Section 3.1(q).
"knowledge" has the meaning set forth in Section 3.1(j)(v).
"Law" means any constitutional provision, statute or other law, ordinance,
rule, regulation or interpretation of any thereof and any Order of any
Governmental Entity (including environmental laws).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Litigation" has the meaning set forth in Section 3.1(k).
"Material Adverse Effect" or "Material Adverse Change" means any effect,
change, event or occurrence that is materially adverse to the business,
operations, properties, condition (financial or otherwise), results of
operations, assets, liabilities or prospects of the Company and its Subsidiaries
taken as a whole , but excluding any such effect, change, event or occurrence
resulting from or relating to (i) changes in general economic conditions or (ii)
effects, changes, events or occurrences in the Company's industry generally
(including without limitation any regulatory changes or changes in prices for
oil or gas), in each case which do not have a materially disproportionate effect
on the business, operations or properties of the Company or its Subsidiaries as
compared to general economic conditions or the Company's industry as a whole,
respectively.
"Material Contracts" has the meaning given it in Section 3.1(l)(ii).
<PAGE>
"Material Oil and Gas Contracts" means the following agreements as in
effect on the date hereof and as the same may hereafter be modified, amended,
supplemented or restated: (A) Contract for Exploration and Exploitation for
Santiago de Atalayas I with an effective date of July 1, 1982, between Triton
Columbia, Inc. ("TCI") and Empressa Colombiana De Petroleos; (B) Contract for
---
Exploration and Exploitation for Tauramena with an effective date of July 4,
1988, between TCI and Empressa Colombiana De Petroleos; (C) Rio Chitamena
Association Contract between Empressa Colombiana De Petroleos and Total
Exploration En Produktie Maatschappij B.V., dated December 3, 1990; (D) Contract
between Malaysia-Thailand Joint Authority and Petronas Carigali (JDA) SDN. BHD.
and Triton Oil Company of Thailand dated as of April 21, 1994, relating to
Exploration and Exploitation of Petroleum for Malaysia-Thailand Joint
Development Area Block A-18; and (E) the joint operating agreements relating to
the foregoing (A) through (D).
"Memorandum of Association" means the Company's Memorandum of Association,
as amended from time to time.
"Monitoring Agreement" means that certain Monitoring and Oversight
Agreement to be entered into between the Company and HMCo in the form of Exhibit
-------
B hereto.
"NYSE" means the New York Stock Exchange.
"NYSE Approval" has the meaning set forth in Section 4.3.
"Oil and Gas Properties" means leasehold and other interests in oil, gas
and other mineral properties owned or otherwise held in the name of the Company
or any of its Subsidiaries.
"Order" means any decree, injunction, judgment, order, ruling, assessment
or writ.
"Permitted Liens" has the meaning set forth in Section 3.1(n).
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Preferred Stock Authorization" means the unanimous written consent of the
Board creating, authorizing and providing for the issuance of the 8% Preference
Shares, in the form of Exhibit C.
----------
"Purchase Price" has the meaning set forth in Section 2.1(b).
"Purchaser" has the meaning set forth in the introductory paragraph hereto.
"Purchaser Designees" has the meaning set forth in Section 4.11(a).
<PAGE>
"Purchaser Indemnified Costs" means any and all damages, losses, claims,
liabilities, demands, charges, suits, penalties, costs and expenses (including
court costs and reasonable legal fees and expenses incurred in investigating and
preparing for any litigation or proceeding) that any of the Purchaser
Indemnified Parties incurs and that arise out of or result from (i) any breach
or default by the Company of any of the representations or warranties under this
Agreement or any other Transaction Documents, (ii) any breach by the Company of
any of the covenants or agreements (other than breaches of covenants to be
performed by the Company after the Closing) of the Company under this Agreement
or any other Transaction Documents or (iii) any litigation or proceedings
brought by any shareholder of the Company (whether such action is brought in
such shareholder's name or derivatively on behalf of the Company) in respect of
the transactions contemplated by this Agreement or any other Transaction
Documents.
"Purchaser Indemnified Parties" means Purchaser and each officer, director,
employee, stockholder, partner, member and Affiliate of Purchaser.
"Purchaser's Expenses" means all reasonable out-of-pocket fees, costs and
expenses incurred by Purchaser in connection with its due diligence efforts or
the transactions contemplated by this Agreement and the other Transaction
Documents, including (i) fees, costs and expenses of its accountants, counsel,
financial advisors and other similar advisors and (ii) fees paid to any
Governmental Entity but excluding any commitment, underwriting fee or similar
fees paid by Purchaser to any third party lender or underwriter in connection
with any debt financing obtained by Purchaser with respect to the transactions
contemplated by this Agreement.
"Registration Statement" has the meaning set forth in Section 4.4.
"Release" has the meaning set forth in Section 3.1(r)(C).
"Remaining Shares" means the Shares purchased and sold at the Second
Closing, including 8% Preference Shares purchased by Purchaser pursuant to
Rights held by Purchaser.
"Remedial Action" has the meaning set forth in Section 3.1(r)(D).
"Reserve Report" means the Appraisal Report as of December 31, 1997 on
Certain Properties owned by Triton Colombia Incorporated in Colombia prepared by
DeGolyer and MacNaughton with respect to the Cusiana and Cupiagua Fields in
Colombia and the End-1997 Reserves Report of Carigali-Triton Operating Company
with respect to Block A-18 in the Malaysia-Thailand Joint Development Area
estimating the proved reserves attributable to the Cakirawala, Suriya, Bulan,
Bumi East, Senja, Samudra and Wira fields as of December 31, 1997 and described
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
"Rights" has the meaning set forth in Section 4.2(a).
"Rights Agreement" has the meaning set forth in Section 3.1(u).
"Rights Offering" has the meaning set forth in Section 4.2(a).
"Rights Offering Documents" has the meaning set forth in Section 4.2(b).
"Rule 144" means Rule 144 under the Securities Act of 1933, as amended, and
any successor rule thereto.
<PAGE>
"Sale Transaction" means (a) the acquisition (by direct issuance from the
Company, from existing securityholders or otherwise) by any Person or group of
Persons deemed a "person" under Section 13(a)(3) of the Exchange Act of
beneficial ownership of securities representing a majority of the combined
voting power of the outstanding securities of the Company entitled to vote ,
generally or as a separate class or series or together with one or more class or
series of shares or stock, in the election of directors of the Company, the
result of which would result in such Person or Persons (or group) having the
ability to elect a majority of the Board of Directors, (b) a reorganization,
recapitalization, merger, consolidation or similar business combination or
transaction involving the Company (unless the holders of the outstanding
securities of the Company entitled to vote in the election of directors prior to
such transaction continue to own securities of the entity resulting from or
surviving such transaction (a "Surviving Entity") entitled to vote in the
-----------------
election of directors sufficient to allow holders to elect a majority of the
board of directors of the Surviving Entity upon the completion of such
transaction) or (c) a sale or other disposition (in a single transaction or a
series of related transactions) of assets with an Asset Value in excess of 50%
of the market value of the assets of the Company and its Subsidiaries as a
whole; provided, however, such term shall not include the transactions
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contemplated by this Agreement or any other Transaction Documents.
"SEC" means the Securities and Exchange Commission.
"Second Closing" has the meaning set forth in Section 6.1.
"Second Closing Date" has the meaning set forth in Section 6.1.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Notes" means, collectively, (i) $200,000,000 in aggregate principal
amount of 8 % Senior Notes due 2002, and (ii) $200,000,000 in aggregate
principal amount of 9 % Senior Notes due 2005.
"Shareholder Litigation" means each of the pending class action proceedings
styled as Birdie Capital Corporation and Jonathan Schwartz v. Triton Energy,
Limited., et al., Ken Bortner v. Triton Energy, Limited., et al., D. H. Lee, Jr.
v. Triton Energy, Limited, et al., North River Trading Co. L.L.C. v. Triton
Energy, Limited, et al., Richard Strauss and Michael Brown v. Triton Energy,
Limited., et al., Richard L. Zorn v. Triton Energy, Limited., et al., and any
and all additional claims, actions, suits or proceedings relating to the same
set of facts or circumstances, or otherwise containing substantially the same
allegations, as such proceedings.
"Shareholders Agreement" means the Shareholders Agreement between the
Company and Purchaser, substantially in the form attached hereto as Exhibit D.
---------
"Shares" means the shares of 8% Preference Shares purchased by Purchaser
pursuant to this Agreement.
<PAGE>
"Stock Plans" means the Company's (i) 1981 Employee Non-Qualified Stock
Option Plan, as amended, (ii) 1985 Stock Option Plan, as amended, (iii) 1988
Stock Appreciation Rights Plan, (iv) 1989 Stock Option Plan, as amended, (v)
Second Amended and Restated 1992 Stock Option Plan, (vi) Amended and Restated
1985 Restricted Stock Plan, as amended, (vii) 1997 Share Compensation Plan and
(viii) Triton Resources (UK) Limited Share Option Scheme.
"Subsidiary" means, (i) a corporation, a majority of whose stock with
voting power, under ordinary circumstances, to elect directors is at the time,
directly or indirectly, owned by the Company, by a Subsidiary of the Company or
by the Company and another Subsidiary, or (ii) any other Person (other than a
corporation) in which the Company, a Subsidiary or the Company and a Subsidiary,
directly or indirectly, at the date of determination thereof has at least a
majority ownership interest. For purposes of this Agreement, Triton
International Oil Corporation shall be deemed a Subsidiary of the Company.
"Tax" or "Taxes" has the meaning set forth in Section 3.1(n).
"Tax Return" has the meaning set forth in Section 3.1(n) hereof.
"Termination Fee" has the meaning set forth in Section 9.5(c).
"Transaction Documents" means this Agreement, the Preferred Stock
Authorization, the Shareholders Agreement and any other documents executed in
connection herewith or therewith.
"Transfer" has the meaning set forth in Section 3.2(e).
"Underlying Shares" means the shares of Common Stock issuable upon
conversion or exchange of the Shares.
"Unsubscribed Shares" shall mean the number of shares of 8% Preference
Shares for which the holders of Rights shall not have subscribed, either
pursuant to their basic or oversubscription privileges, during the period of
time in which holders of Rights may exercise Rights to purchase 8% Preference
Shares in the Rights Offering.
<PAGE>
Section 1.2 References and Titles.
---------------------
All references in this Agreement to Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions refer to the corresponding Exhibits,
Schedules, Articles, Sections, subsections, and other subdivisions of this
Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any Articles, Sections, subsections, or other subdivisions of this
Agreement are for convenience only, do not constitute any part of such Articles,
Sections, subsections or other subdivisions, and shall be disregarded in
construing the language contained therein. The words "this Agreement,"
"herein," "hereby," "hereunder," and "hereof," and words of similar import,
refer to this Agreement as a whole and not to any particular subdivision unless
expressly so limited. The words "this Section," "this subsection," and words of
similar import, refer only to the Sections or subsections hereof in which such
words occur. The word "including" (in its various forms) means "including
without limitation." Pronouns in masculine, feminine, or neuter genders shall
be construed to state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and disjunctive
forms of such defined terms.
<PAGE>
ARTICLE II
PURCHASE OF 8% PREFERENCE SHARES
------------------------------------
Section 2.1 Purchase of Shares.
--------------------
(a) Subject to the terms and conditions herein set forth, the Company
will sell to Purchaser, and Purchaser will purchase from the Company, at the
times indicated below, a number of shares of 8% Preference Shares equal to the
sum of the following:
(i) at the First Closing, 1,822,500 Shares; and
(ii) at the Second Closing, a number of 8% Preference Shares equal to
the sum of (A) Purchaser's pro rata portion of 8% Preference Shares offered in
the Rights Offering and (B) all Unsubscribed Shares; provided that Purchaser
--------
shall not be required to purchase more than 3,177,500 8% Preference Shares at
the Second Closing.
(b) The aggregate purchase price payable for the 8% Preference Shares
at each Closing shall be equal to $70.00 multiplied by the total number of 8%
Preference Shares purchased by the Purchaser at such Closing (the "Purchase
--------
Price").
- -----
(c) Delivery of the Shares shall be made at each Closing by delivery to
Purchaser, against payment of the Purchase Price therefor as provided herein, of
a share certificate representing the total number of Shares to be purchased at
such Closing by Purchaser hereunder.
(d) Payment of the Purchase Price for the Shares to be purchased
hereunder shall be made by or on behalf of Purchaser by wire transfer of
immediately available funds to an account of the Company (the number for which
account shall have been furnished to Purchaser at least two Business Days prior
to the applicable Closing Date).
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
--------------------------------
Section 3.1 Representations and Warranties of the Company
--------------------------------------------------
The Company represents and warrants to Purchaser as follows (in each case as
qualified by matters reflected on the disclosure schedule dated as of the date
of this Agreement and delivered by the Company to Purchaser on or prior
to the date of this Agreement (the "Company Disclosure Schedule") and made
-----------------------------
a part hereof by reference):
(a) Organization, Standing and Power
-----------------------------------
Each of the Company and each of its Subsidiaries is a corporation or
other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated or organized and has the
requisite corporate or other such entity power and authority to carry on its
business as now being conducted. Each of the Company and each of its
Subsidiaries is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed or to be in good standing, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material Adverse Effect. The
Company has delivered (or, in the case of the Company's Subsidiaries, made
available) to Purchaser prior to the execution of this Agreement complete and
correct copies of its Memorandum of Association and Articles of Association, as
in effect on the date of this Agreement.
(b) Subsidiaries. Schedule 3.1(b)(i) of the Company Disclosure
------------ -------------------
Schedule sets forth a true and complete list, as of the date hereof, of each
Subsidiary of the Company, together with the jurisdiction of incorporation or
organization and the percentage of each Subsidiary's outstanding share capital
(or other voting or equity securities or interests, as applicable) owned by the
Company or another Subsidiary of the Company. Except as set forth in Schedule
--------
3.1(b)(ii) of the Company Disclosure Schedule, all the outstanding shares of
---------
share capital (or other voting or equity securities or interests, as applicable)
of each Subsidiary of the Company have been validly issued and (with respect to
corporate Subsidiaries) are fully paid and nonassessable and are owned directly
or indirectly by the Company, free and clear of all Liens except for Permitted
liens. Except for the shares or capital stock of its Subsidiaries and the
partnership interests listed in Schedule 3.1(b)(iii) of the Company Disclosure
--------------------
Schedule, as of the date hereof, the Company does not own, directly or
indirectly, any share or capital stock (or other voting or equity securities or
interests, as applicable) of any corporation, limited liability company,
partnership, joint venture or other entity which is material to the business of
the Company and its Subsidiaries taken as a whole.
(c) Capital Structure.
------------------
(i) The authorized shares of Company consists of 200,000,000 shares of
Common Stock and 20,000,000 shares of other classes to be determined upon the
creation thereof by the Board (the "Authorized Preferred Stock"), of which, as
--------------------------
of the date of this Agreement, (A) 36,636,452 shares of Common Stock are issued
and outstanding, (B0 420,000 shares of Authorized Preferred Stock are designated
as 5% Convertible Preference Shares, par value $.01 per share (the "5%
--
Preference Shares"), each of which is convertible into one share of Common
- ------------------
Stock, 209,639 shares of which are issued and outstanding, (C) 200,000 shares of
the Authorized Preferred Stock are designated as Series A Junior Participating
Preference Shares, no shares of which are issued and outstanding, (D) 91 shares
of Common Stock are held by the Company in its treasury and (E) no shares of
Common Stock are held by any of the Company's Subsidiaries. Except as described
above in this Section 3.1(c)(i), the Company has no authorized, issued or
outstanding shares or Capital Stock.
(ii) As of the date hereof, there are no bonds, debentures, notes or
other indebtedness issued or outstanding having the right to vote on any matters
on which holders of Common Stock or Authorized Preferred Stock may vote,
including without limitation the transactions contemplated by this Agreement and
the other Transaction Documents.
(iii) Giving effect to the applicable provisions of the Articles of
Association, the Preferred Stock Authorization, the unanimous written consent of
the Board authorizing the 5% Preference Shares (the "5% Preference Shares
--------------------
Authorization") and all other instruments affecting the rights of holders of
- -------------
shares or capital stock of the Company to which the Company is a party or is
bound (which, if any, other than the Articles of Association, the Preferred
Stock Authorization. the 5% Preference Shares Authorization and the other
Transaction Documents, are set forth in Schedule 3.1(c)(iii) or Schedule
--------------------- --------
3.1(c)(vi) of the Company Disclosure Schedule), upon issuance each outstanding
- ----------
Share will be convertible into four shares of Common Stock; there are no
restrictions or limitations, contractual or otherwise, binding upon the Company
or to which the Company is subject that prohibit or limit the enforceability of
the terms and provisions of the Preferred Stock Authorization or, except as set
forth in the Preferred Stock Authorization, will prohibit or limit the right of
a holder of Shares to convert Shares into shares of Common Stock; and the
conversion of any Shares into shares of Common Stock will not violate or result
in or constitute a default under any loan or credit agreement, note, bond,
mortgage, indenture, lease, permit, concession, franchise, license or any other
contract, agreement, arrangement or understanding to which the Company is a
party or by which it or any of its properties or assets are bound;
<PAGE>
(iv) There are no outstanding warrants, share or stock options, share
or stock appreciation rights or other rights to receive any shares or capital
stock of the Company or any of its Subsidiaries granted under the Stock Plans or
otherwise, except as set forth in Schedule 3.1(c)(iv) of the Company Disclosure
-------------------
Schedule (such warrants, share or stock options, shares or stock appreciation
rights or other rights disclosed thereon, collectively, the "Company Options").
---------------
Except for the Company Options and 5% Preference Shares (as to which no more
than 209,639 shares of Common Stock and no shares or stock of any other class or
series of the Company are issuable upon exercise or conversion thereof) and,
except as set forth above or in Schedule 3.1(c)(iv) of the Company Disclosure
-------------------
Schedule, there are no outstanding securities, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares or stock (or other
voting or equity securities or interests, as applicable) of the Company or of
any of its Subsidiaries or obligating the Company or any of its Subsidiaries to
issue, grant, extend or enter into any such security, option, warrant, call,
right, commitment, agreement, arrangement or undertaking. Except as set forth
in the 5% Preference Shares Authorization and in Schedule 3.1(c)(iv) of the
-------------------
Company Disclosure Schedule, there are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares or stock (or other voting or equity securities or interests,
as applicable) of the Company or any of its Subsidiaries.
(v) All outstanding shares (or other voting or equity securities or
interests, as applicable) of the Company and its Subsidiaries are, and all
shares which may be issued upon conversion of the 8% Preference Shares will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive or similar rights.
(vi) Except as contemplated hereby or in the other Transaction
Documents or as set forth in Schedule 3.1(c)(vi) of the Company Disclosure
-------------------
Schedule, there are not as of the date hereof and there will not be at the time
of either Closing any shareholder agreements, voting agreements or trusts,
proxies or other agreements or contractual obligations to which the Company or
any Subsidiary is a party or bound with respect to the voting or disposition of
any shares or stock (or other voting or equity securities or interests, as
applicable) of the Company or any of its Subsidiaries and, to the Company's
knowledge, as of the date hereof, there are no other shareholder agreements,
voting agreements or trusts, proxies or other agreements or contractual
obligations among the shareholders of the Company with respect to the voting or
disposition of any shares or stock (or other voting or equity securities or
interests, as applicable) of the Company or any of its Subsidiaries.
(d) Authority; No Violations; Approvals
-------------------------------------
<PAGE>
(i) The Board of Directors has approved this Agreement, the other
Transaction Documents and the transactions contemplated hereby and thereby, and
declared this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby to be in the best interests of the Company. The
Company has all requisite corporate power and authority to enter into this
Agreement and each of the other Transaction Documents and to consummate each of
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and each of the other Transaction Documents and the consummation
of each of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company. This
Agreement and each of the other Transaction Documents has been duly executed and
delivered by the Company and the Preferred Stock Authorization has been duly
adopted by the Board of Directors in accordance with applicable law. Each of
the Preferred Stock Authorization and, assuming this Agreement and each of the
other Transaction Documents to which Purchaser is a party constitute the valid
and binding obligations of Purchaser, this Agreement and each of the other
Transaction Documents constitutes a valid and binding obligation of Company
enforceable in accordance with its terms, subject, as to enforceability, to
bankruptcy, insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(ii) Except as set forth in Schedule 3.1(d)(ii) of the Company
--------------------
Disclosure Schedule, the execution and delivery of this Agreement and each of
the other Transaction Documents does not, and the consummation of the
transactions contemplated hereby and thereby and compliance with the provisions
hereof and thereof will not, conflict with, require the consent of any other
party to or result in any violation of, or default (with or without notice or
lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to the loss of a
material benefit under, or give rise to a right of purchase under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
of its Subsidiaries under, or otherwise result in a material detriment to the
Company or any of its Subsidiaries under, any provision of (A) the Memorandum of
Association and Articles of Association or any provision of the comparable
charter or organizational documents of any of its Subsidiaries, (B) any loan or
credit agreement, note, bond, mortgage, indenture, lease, or other agreement
(including the Material Oil and Gas Contracts) to which the Company or any of
its Subsidiaries is a party or otherwise is bound or by which any of them or
their respective properties are bound or any Approval applicable to the Company
or any of its Subsidiaries, (C) any joint venture or other ownership arrangement
to which the Company or any of its Subsidiaries is a party or otherwise is bound
or by which any of them or their respective properties are bound or (D0 assuming
the Approvals referred to in Section 3.1(d)(iii) are duly and timely obtained or
made, any Law or Order applicable to the Company or any of its Subsidiaries or
any of their respective properties or assets, other than, in the case of clause
(B) (other than with respect to any material loan or credit agreement, note,
bond, mortgage or indenture or any Material Oil and Gas Contract), (C) or (D),
any such conflicts, violations, defaults, rights, Liens, detriments, Laws or
Orders that, individually or in the aggregate, (x) have not had and could not
reasonably be expected to have a Material Adverse Effect, (y) have not impaired
and could not reasonably be expected to impair the ability of the Company to
perform its obligations under any of the Transaction Documents in any material
respect, or (z) could not reasonably be expected to delay in any material
respect or prevent the consummation of any of the transactions contemplated by
any of the Transaction Documents.
<PAGE>
(iii) No Approval from any Governmental Entity is required by or with
respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or any other Transaction Document by
the Company or the consummation by the Company of the transactions contemplated
hereby or thereby, except for: (A) if applicable, the filing of a notification
report by Company under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and the expiration or termination of the
--------
applicable waiting period with respect thereto; (B) the filing with the SEC of
(x) the Registration Statement and the declaration of the effectiveness of the
Registration Statement by the SEC, (y) such reports under Section 13(a) of the
Exchange Act and such other compliance with the Exchange Act and the rules and
regulations thereunder, as may be required in connection with this Agreement,
the other Transaction Documents and the transactions contemplated hereby and
thereby; (C) such Approvals as may be required by any applicable state
securities or "blue sky" laws; (D) such Approvals as may be required by any
foreign securities, corporate or other Laws; and (E) any such Approval the
failure of which to be made or obtained (1) has not had and could not reasonably
be expected to have a Material Adverse Effect, (2) has not impaired and could
not reasonably be expected to impair the ability of the Company to perform its
obligations under any of the Transaction Documents in any material respect and
(3) could not reasonably be expected to delay in any material respect or prevent
the consummation of any of the transactions contemplated by any of the
Transaction Documents.
<PAGE>
(e) SEC Documents
--------------
(i) The Company has made available to Purchaser a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by the Company with the SEC since December 31, 1996 and prior to
or on the date of this Agreement (the "Company SEC Documents"), which are all
---------------------
the documents (other than preliminary materials) that the Company was required
to file with the SEC between December 31, 1996 and the date of this Agreement.
As of their respective dates, the Company SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such Company SEC Documents, and none of the Company SEC Documents contained
when filed any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(ii) The financial statements of the Company included in the Company
SEC Documents, including the notes and schedules thereto, complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
----
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited statements, as permitted by Rule 10-01 of Regulation S-X
of the SEC) and fairly present in accordance with applicable requirements of
GAAP (subject, in the case of the unaudited statements, to normal, recurring
adjustments, none of which are material) the consolidated financial position of
the Company and its consolidated Subsidiaries as of their respective dates and
the consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.
<PAGE>
(iii) Except as disclosed in the Company SEC Documents, there are no
agreements, arrangements or understandings between the Company and any party who
is or was at any time prior to the date hereof but after December 31, 1996 an
Affiliate of the Company that are required to be disclosed in the Company SEC
Documents.
(f) Information Supplied. None of the
---------------------
information included or incorporated by reference in the Registration Statement
will, at the date such Registration Statement is declared effective by the SEC
or any time from and after such date through and including the date of the
Second Closing, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not misleading. Notwithstanding the foregoing, no representation is made by the
Company in this Section 3.1(f) with respect to statements made or incorporated
by reference in the Registration Statement in conformity with information
supplied by or on behalf of Purchaser specifically for use in the Registration
Statement.
<PAGE>
(g) Absence of Certain Changes or Events
--------------------------------------
<PAGE>
(i) Except as disclosed in, or reflected in Schedule 3.1(g) or the
---------------
Company SEC Documents filed with the SEC after December 31, 1997, and prior to
the date of this Agreement, or except as contemplated by this Agreement, since
December 31, 1997, to the date of this Agreement each of the Company and its
Subsidiaries have conducted their business only in the ordinary course
consistent with past practice, and there has not been: (i any declaration,
setting aside or payment of any dividend or other distribution (whether in cash,
stock or property) with respect to any shares or stock (or other voting or
equity securities or interests, as applicable) of the Company or any of its
Subsidiaries (other than the declaration and payment of (A) regular cash
dividends with respect to the Company's first and third fiscal quarters at the
required annual 5% rate per share on the 5% Preferences Shares, with usual
record and payment dates and (B) any dividends or distributions by wholly owned
Subsidiaries); (ii) any split, combinations, reclassification or amendment of
any material term of any outstanding equity security of the Company or any
Subsidiary of the Company or (other than issuance of Common Stock upon the
exercise of any Company Options and/or issuances of Common Stock upon conversion
after the date hereof of 5% Preference Shares outstanding on December 31, 1997)
any issuance or the authorization of the issuance of any other securities in
respect of, or in lieu of or in substitution for shares or stock (or other
voting or equity securities or interests, as applicable) of the Company or any
of its Subsidiaries, other than in connection with the transactions contemplated
hereby; (iii) any repurchase, redemption or other acquisition by the Company or
any Subsidiary of the Company of any outstanding shares or stock (or other
voting or equity securities or interests, as applicable) of the Company or any
Subsidiary of the Company, except as contemplated by the Stock Plans; (iv) (A)
any granting by the Company or any of its Subsidiaries to any executive officer
of the Company or any of its Subsidiaries of any increase in compensation,
except for increases in the ordinary course of business consistent with past
practice or as required under employment or other agreements or benefit
arrangements in effect as of December 31, 1997, or (B) any granting by the
Company or any of its Subsidiaries to any such executive officer of any increase
in severance or termination pay, except as was required under any employment,
severance, termination or other agreements or benefit arrangements in effect as
of December 31, 1997; (v) except as required by a change in GAAP, any change in
accounting methods, principles or practices by the Company or any of its
Subsidiaries materially affecting its assets, liabilities or business; or (vi)
any material casualties affecting the Company and its Subsidiaries, taken as a
whole, or any material loss, damage or destruction to any of their properties or
assets, including the Company Interests (other than to the extent covered by
insurance, subject to applicable deductible thresholds).
(ii) Except as disclosed in, or reflected in Schedule 3.1(g) of the
---------------
Company Disclosure Schedule or the Company's consolidated financial statements
included in the Company's Quarterly Report on Form 10-Q for the six months ended
June 30, 1998, and the notes thereto, or except as contemplated by this
Agreement, since December 31, 1997, there has not been any event, circumstance
or fact that (x) has had or could reasonably be expected to have a Material
Adverse Effect, (y) has impaired or could reasonably be expected to impair the
ability of the Company to perform its obligations under any of the Transaction
Documents in any material respect, or (z) could reasonably be expected to delay
in any material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents.
(h) No Undisclosed Material Liabilities
--------------------------------------
Except as disclosed in Schedule 3.1(h) of the Company Disclosure
---------------
Schedule or the Company's financial statements included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, and the notes thereto,
there are no material liabilities or obligations of the Company or any of its
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise, other than: (i) liabilities adequately
provided for on the balance sheet of the Company dated as of June 30, 1998
(including the notes thereto) contained in the Company's Quarterly Report on
Form 10-Q for the six months ended June 30, 1998; (ii) liabilities incurred in
the ordinary course of business consistent with past practice since December 31,
1997, which liabilities, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect; (iii) liabilities arising under
or in connection with the Transaction Documents; (iv) liabilities reflected in
the pro forma financial statements included in the Company's Current Report on
Form 8-K dated August 17, 1998, and (v) liabilities not required by GAAP to be
recognized or disclosed on a consolidated balance sheet of the Company and its
consolidated Subsidiaries or in the notes thereto, which liabilities,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
<PAGE>
(i) No Default. Neither the Company nor any of its
-----------
Subsidiaries is in default or violation (and no event has occurred which, with
notice or the lapse of time or both, would constitute a default or violation) of
any term, condition or provision of (i) the Memorandum of Association or
Articles of Association of the Company or the comparable charter or
organizational documents of any of its Subsidiaries, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease, instrument, permit,
concession, franchise, license or any other contract, agreement, arrangement or
understanding to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective
properties or assets is bound, or (iii) any Order or Law applicable to the
Company or any of its Subsidiaries, except in the case of clause (ii) and (iii),
for violations or defaults that, individually or in the aggregate, (x) have not
had and could not reasonably be expected to have a Material Adverse Effect, (y)
have not impaired and could not reasonably be expected to impair the ability of
the Company to perform its obligations under any of the Transaction Documents in
any material respect, or (z) could not reasonably be expected to delay in any
material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents. The Company (i) is not in
breach of or default under any financial covenant under the Credit Agreements,
the Indentures or the Senior Notes and (ii) except as disclosed in Schedule
--------
3.1(i) of the Company Disclosure Schedule, does not believe that it is
- ------
reasonably likely that it will be in breach of or default under any financial
covenant under the Credit Agreement or the Indentures as of the next date on
which the Company is required to be in compliance with any such financial
covenants.
<PAGE>
(j) Compliance with Applicable Laws.
-------------------------------
(i) The Company and each of its Subsidiaries has in effect all
Approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses, and there has occurred no default or violation (and no
event has occurred which, with notice or the lapse of time or both, would
constitute a default or violation) under any such Approval, except for failures
to obtain, or for defaults or violations under, Approvals which failures,
defaults or violations, individually or in the aggregate, (i) have not had and
could not reasonably be expected to have a Material Adverse Effect, (ii) have
not impaired and could not reasonably be expected to impair the ability of the
Company to perform its obligations under any of the Transaction Documents in any
material respect, or (iii) could not reasonably be expected to delay in any
material respect or prevent the consummation of any of the transactions
contemplated by any of the Transaction Documents.
(ii) Except as disclosed in the Company SEC Documents, the businesses
of the Company and its Subsidiaries are in compliance with all applicable Laws
and Orders, except for possible noncompliance, which, individually or in the
aggregate, (i) have not had and could not reasonably be expected to have a
Material Adverse Effect, (ii) have not impaired and could not reasonably be
expected to impair the ability of the Company to perform its obligations under
any of the Transaction Documents in any material respect, or (iii) could not
reasonably be expected to delay in any material respect or prevent the
consummation of any of the transactions contemplated by any of the Transaction
Documents.
<PAGE>
(iii) No investigation or review by any Governmental Entity with
respect to the Company, any of its Subsidiaries, the transactions contemplated
by this Agreement and the other Transaction Documents, or the Contract Interest,
to the knowledge of the Company, is pending or threatened, nor has any
Governmental Entity notified the Company or any of its Subsidiaries in writing
or, to the Company's knowledge, otherwise of any intention to conduct the same,
other than those the outcome of which, individually or in the aggregate, (i)
have not had and could not reasonably be expected to have a Material Adverse
Effect, (ii) have not impaired and could not reasonably be expected to impair
the ability of the Company to perform its obligations under any of the
Transaction Documents in any material respect, or (iii) could not reasonably be
expected to delay in any material respect or prevent the consummation of any of
the transactions contemplated by any of the Transaction Documents.
(iv) Each operator under the Material Oil and Gas Contracts which is
the Company or a Subsidiary of the Company, and, to the Company's knowledge,
each other operator under the Material Oil and Gas Contracts, has complied in
all material respects with any applicable Laws and Orders of Governmental
Entities in respect to its operation in the Concession Area and its performance
under the Material Oil and Gas Contracts.
(v) For purposes of this Agreement, the terms "knowledge of the
-----------------
Company," "to the Company's knowledge" and other references qualified by
- ------- -----------------------------
knowledge of the Company and/or its executive officers means the actual
knowledge of the executive officers and directors of the Company and each of the
individuals listed on Schedule 3.1(j)(v) of the Company Disclosure Schedule
-------------------
after reasonable inquiry.
(k) Litigation.
----------
(i) Except as disclosed in the Company SEC Documents or Schedule 3.1(k)
---------------
of the Company Disclosure Schedule, there is no suit, action, proceeding or
indemnification claim, at law or in equity, pending before any Governmental
Entity, or, to the knowledge of the Company, threatened, against or affecting
the Company, any Subsidiary of the Company, or the Contract Interests
("Litigation"), and the Company is not a party to any Litigation, and the
----------
Company and its Subsidiaries have no knowledge of any facts that could
reasonably be expected to give rise to any Litigation, that (in any case) (i)
has had or could reasonably be expected to have a Material Adverse Effect, (ii)
has impaired or reasonably could be expected to impair the ability of the
Company to perform its obligations under any of the Transaction Documents in any
material respect, or (iii) reasonably could be expected to delay in any material
respect or prevent the consummation of any of the transactions contemplated by
any of the Transaction Documents, nor is there any Order of any Governmental
Entity or arbitrator outstanding against or, to the Company's knowledge, binding
upon the Company, any Subsidiary of the Company or the Contract Interests which
(i) has had or could reasonably be expected to have a Material Adverse Effect,
(ii) has impaired or reasonably could be expected to impair the ability of the
Company to perform its obligations under any of the Transaction Documents in any
material respect, or (iii) reasonably could be expected to delay in any material
respect or prevent the consummation of any of the transactions contemplated by
any of the Transaction Documents.
(ii) Schedule 3.1(k) of the Company Disclosure Schedule contains an
----------------
accurate and complete list of all Orders restricting or limiting in any material
respect, the business or operations of the Company or any of its Subsidiaries,
in each case that is not disclosed in the Company SEC Documents, to which the
Company or any of its Subsidiaries is a party or, to the Company's knowledge, by
which the Company or any of its Subsidiaries or any of their respective assets
or properties are bound.
<PAGE>
(l) Certain Agreements; Contract Interests.
-----------------------------------------
(i) Material Oil and Gas Contracts.
----------------------------------
(a) With respect to the Material Oil and Gas Contracts, (i) all such
Material Oil and Gas Contracts are in full force and effect and are the valid
and legally binding obligations of the Company and each of its Subsidiaries to
the extent a party thereto and, to the Company's knowledge, each other party
thereto and are enforceable in accordance with their respective terms; (ii)
neither the Company nor, to the knowledge of the Company, any other party to any
such Material Oil and Gas Contract is in material breach or default with respect
to its obligations thereunder; and (iii) no party to any such Material Oil and
Gas Contract has given notice of any action to terminate, cancel, rescind or
procure a judicial or arbitral reformation thereof.
(b) There are no material outstanding calls for payments by the Company
or any of its Subsidiaries under the Material Oil and Gas Contracts that are due
that have not been made, and all royalties, rentals and other payments due under
any of the Contract Interests or otherwise due and relating to any Material Oil
and Gas Contract have been paid to the proper person in the proper amount.
(c) Except for the Material Oil and Gas Contracts, there are no
Contract Interests to which the Company or any Subsidiary is a party pursuant to
which the Company and its Subsidiaries received or were entitled to receive
revenues of $1,000,000 or more in any one of the three years ending December 31,
1996, 1997 or 1998, or that otherwise is material to the business, operations or
financial condition of the Company and its Subsidiaries as a whole.
<PAGE>
(ii) Except for the Material Oil and Gas Contracts and except as
disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, the Company's Quarterly Report on Form 10-Q for the six
months ended June 30, 1998 and Schedule 3.1(l)(ii) of the Company Disclosure
-------------------
Schedule, there are no (A) employment or consulting Contracts (unless such
employment or consulting Contracts are terminable without liability or penalty
on 30 days or less notice) under or pursuant to which the Company is obligated
to make payments in excess of $200,000 per annum, (B) other Contracts that are
material to the Company and its Subsidiaries, taken as a whole, or their
respective business, (C) Contracts relating to material leasehold interests or
(D) Contracts with Affiliates under or pursuant to which the Company is
obligated to make payments in excess of $60,000 per annum (excluding agreements
solely by and among the Company and one or more of its Subsidiaries), in any
such case, to which the Company or any Subsidiary is a party or to which the
Company or any Subsidiary or their respective assets is bound (such Contracts
disclosed or required to be disclosed, the "Material Contracts"). Each Material
------------------
Contract is a valid and binding obligation of the Company or one of its
Subsidiaries and, to the knowledge of the Company, of each party thereto other
than the Company or its respective Subsidiary and is in full force and effect.
(iii) The Company or the relevant Subsidiary and, to the knowledge of the
Company, each other party to the Material Contracts, has performed in all
material respects the obligations required to be performed by it under the
Material Contracts and is not (with or without lapse of time or the giving of
notice, or both) in breach or default thereunder.
(iv) A complete copy of each Material Oil and Gas Contract and each
written Material Contract and a written description of each oral Material
Contract has been made available to Purchaser prior to the date of this
Agreement.
(v) Except as disclosed in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, or in any other Company SEC Document filed
with the SEC after December 31, 1997, and prior to the date of this Agreement or
in Schedule 3.1(l)(v) of the Company Disclosure Schedule, none of the Company or
------------------
of its Subsidiaries is a party to any oral or written agreement, plan or
arrangement with any employee (whether an employee, consultant or an independent
contractor) of the Company or its Subsidiary (A) the benefits of which are
contingent, or the terms of which are materially altered, upon, or result from,
the occurrence of a transaction involving the Company or its Subsidiary of the
nature of any of the transactions contemplated by this Agreement or (B) any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or any other Transaction Documents or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Schedule 3.1(l)(v) of the Company Disclosure
Schedule lists each oral and written agreement, plan or arrangement with any
employee (whether an employee, consultant or an independent contractor) of the
Company or any of its Subsidiaries which provides for aggregate benefits or
other amounts payable by the Company or any of its Subsidiaries in excess of
$200,000 which are contingent upon, or will be accelerated by, or which
otherwise will become payable upon the termination of any such employee's
employment by or any other service with the Company or any of its Subsidiaries
after, the occurrence of the transactions contemplated by this Agreement or any
of the other Transaction Documents.
(vi) The Company has made available to Purchaser (A) true and correct
copies of all material loan or credit agreements (including the Credit
Agreements), notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any Debt of the Company or any of its Subsidiaries
is outstanding or may be incurred and (B) accurate information regarding the
respective principal amounts currently outstanding thereunder to the extent
materially different than as set forth in the financial statements included in
the Company's quarterly report on Form 10-Q for the six months ended June 30,
1998.
<PAGE>
(m) Status of Shares. The issuance and sale of the Shares and the
------------------
reservation and issuance of the Underlying Shares have been duly authorized by
all necessary corporate action on the part of the Company and such Shares, when
delivered to Purchaser at the Closing against payment therefor as provided
herein, will be validly issued, fully paid and non-assessable and the issuance
and sale of the Shares and the issuance of the Underlying Shares is not and will
not be subject to preemptive rights of any other shareholder of the Company.
(n) Tax Returns and Tax Payments. The Company, each of its
--------------------------------
Subsidiaries and any affiliated, consolidated, combined, unitary or similar
group of which the Company or any of its Subsidiaries is or was a member has
timely filed all material returns, reports or statements required to be filed
with any Governmental Entity with respect to Taxes ("Tax Returns") required to
-----------
be filed by it, and all such Tax Returns are true, correct and complete in all
material respects, and all Taxes shown thereon to be due have been paid, except
where the failure to so have timely filed, to be true, correct or complete or to
have paid such Taxes has not had and could not reasonably be expected to have a
Material Adverse Effect. The Company has established reserves, to the extent
required by GAAP, with respect to the payment of all material Taxes not yet due
and payable with respect to the result of operations of the Company and its
Subsidiaries through the date hereof. No claim for unpaid Taxes has been
asserted in writing by a tax authority or has become a Lien (except for
Permitted Liens) against the property of the Company or any of its Subsidiaries,
which claim or Lien has had or reasonably could be expected to have a Material
Adverse Effect. No audit of any Tax Return of the Company or any of its
Subsidiaries or any affiliated, consolidated, combined, unitary or similar group
in which the Company or any of its Subsidiaries is or has been a member is being
conducted by a tax authority, which audit reasonably could be expected to have a
Material Adverse Effect, and no extension of the statute of limitations on the
assessment of any material Taxes has been granted by the Company or any of its
Subsidiaries and currently is in effect. Neither the Company nor any of its
Subsidiaries is a party to, is bound by, or has any obligation under any tax
sharing or allocation agreement or similar agreement or arrangement (other than
among the Company and its Subsidiaries). For purposes of this Agreement "Tax"
---
means any federal, state, local or foreign income, gross receipts, property,
sales, use, license, excise, franchise, employment, payroll, premium,
withholding, alternative or added minimum, ad valorem, transfer or excise tax,
or any other tax, custom, duty, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty, imposed by
any Governmental Entity. For purposes of this Agreement "Permitted Lien" means
--------------
(a) liens, pledges, security interests, claims or other encumbrances
("Encumbrances") securing Taxes, assessments, governmental charges or levies,
---
all of which are not yet due and payable or as to which adequate reserves have
been established in the Company's financial statements and that may thereafter
be paid without penalty, (b) mechanics', carriers', workmen's, repairmen's, and
other similar Encumbrances incurred in the ordinary course of business
consistent with past practice, or (c) such other liens which, individually and
in the aggregate, do not and will not materially detract from the value of any
of the property or assets of the Company or its Subsidiaries or materially
interfere with the use thereof.
<PAGE>
(o) Employee Benefit Plans. All employee
-----------------------
benefit plans covering employees of the Company and its Subsidiaries
(collectively, the "Benefit Plans") are listed in the Company SEC Documents or
-------------
the Company Disclosure Schedule and complete copies of all material Benefit
Plans, including all amendments, have been made available to Purchaser. To the
extent applicable, the Benefit Plans comply, in all material respects, with the
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code, and any Benefit Plan intended to be qualified under
-----
Section 401(a) of the Code has been determined by the Internal Revenue Service
to be so qualified and has not, since such determination, been amended or, to
the knowledge of the Company, operated in a way which would adversely affect
such qualified status. Other than the Triton Exploration Services, Inc.
Retirement Income Plan, neither the Company nor any corporation, trade, business
or entity under common control with the Company within the meaning of Section
414(b), (c) or (m) of the Code maintains, sponsors or contributes to or has,
within the six years prior to the First Closing Date, maintained, sponsored or
contributed to any employee benefit plan that is covered by Title IV of ERISA or
is subject to the funding requirements of Section 412 of the Code or Section 302
of ERISA, or a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
Neither a Benefit Plan nor the Company has incurred any liability or penalty
under Section 4975 of the Code or Section 502(i) of ERISA. Each Benefit Plan
has been maintained and administered in all material respects in compliance with
its terms and with ERISA and the Code to the extent applicable thereto. There
are no pending nor, to the knowledge of the executive officers of the Company,
any threatened material claims against or otherwise involving any Benefit Plan
and no suit, action or other litigation (excluding claims for benefits incurred
in the ordinary course of Benefit Plan activities) has been brought against or
with respect to any Benefit Plan. All contributions required to be made as of
the date hereof to the Benefit Plans have been made. No employees of the
Company or any of its Subsidiaries are covered by any severance plan or similar
arrangement, other than payments pursuant to foreign law. Except as disclosed
in Schedule 3.1(o) of the Company Disclosure Schedule, the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby will not (1) require the Company to make a larger contribution to, or pay
greater benefits under, any Benefit Plan than it otherwise would, (2) create or
give rise to additional vested rights or service credits under any Benefit Plan,
or (3) result in all or any part of any payments made, or that may become
payable as a result of the transactions contemplated by the Agreement, by the
Company not to be deductible by the payor under sections 280G or 162(m) of the
Code. Except as disclosed in Schedule 3.1(o) of the Company Disclosure
Schedule, no Benefit Plan provides retiree medical or retiree life insurance
benefits to any person and the Company is not contractually obligated to provide
any person with medical benefits or life insurance upon retirement or
termination of employment, except as required by sections 601 through 608 of
ERISA and section 4980B of the Code.
(p) Labor Matters. Except as set forth in Schedule
-------------- --------
3.1(p) of the Company Disclosure Schedule or in the Company SEC Documents:
- -----
(i) there is no unfair labor practice charge or grievance arising out
of a collective bargaining agreement or other grievance procedure against the
Company or any of its Subsidiaries pending, or, to the knowledge of the Company
or any of its Subsidiaries, threatened, that, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect;
<PAGE>
(ii) there is no strike, dispute, slowdown, work stoppage or lockout
pending, or, to the knowledge of the Company or any of its Subsidiaries,
threatened, against or involving the Company or any of its Subsidiaries that,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect; or
(iii) To the knowledge of the Company, there is no proceeding, claim,
suit, action or governmental investigation pending or threatened, in respect to
which any current or former director, officer, employee or agent of the Company
or any of its Subsidiaries is or may be entitled to claim indemnification from
the Company or any of its Subsidiaries pursuant to (a) the Memorandum of
Association and Articles of Association of the Company, (b) any provision of the
comparable charter or organizational documents of any of its Subsidiaries, (c)
any indemnification agreement to which the Company or any Subsidiary of the
Company is a party or (d) applicable Law.
(q) Intangible Property. The Company and its
--------------------
Subsidiaries possess or have adequate rights to use all material trademarks,
trade names, patents, service marks, brand marks, brand names, computer
programs, databases, industrial designs and copyrights necessary for the
operation of the businesses of each of the Company and its Subsidiaries
(collectively, the "Intangible Property"), except where the failure to possess
-------------------
or have adequate rights to use such properties, individually or in the
aggregate, has not had and could not reasonably be expected to have a Material
Adverse Effect. All of the Intangible Property is owned or licensed by the
Company or its Subsidiaries free and clear of any and all Liens, except those
that, individually or in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect, and neither the Company nor any such
Subsidiary has forfeited or otherwise relinquished any Intangible Property which
forfeiture, individually or in the aggregate, has had or could reasonably be
expected to have a Material Adverse Effect. To the knowledge of the Company,
the use of the Intangible Property by the Company or its Subsidiaries does not,
in any material respect, conflict with, infringe upon, violate or interfere with
or constitute an appropriation of any right, title, interest or goodwill,
including any intellectual property right, trademark, trade name, patent,
service mark, brand mark, brand name, computer program, database, industrial
design, copyright or any pending application therefor of any other person and
there have been no claims made and neither the Company nor any of its
Subsidiaries has received any notice of any claim or otherwise knows that any of
the Intangible Property is invalid or conflicts with the asserted rights of any
other person or has not been used or enforced or has failed to have been used or
enforced in a manner that would result in the abandonment, cancellation or
unenforceability of any of the Intangible Property, except for any such
conflict, infringement, violation, interference, claim, invalidity, abandonment,
cancellation or unenforceability that, individually or in the aggregate, has not
had and could not reasonably be expected to have a Material Adverse Effect.
(r) Environmental Matters.
----------------------
For purposes of this Agreement:
<PAGE>
(A) "Environmental Laws" means all federal, state and local laws,
-------------------
rules, regulations, ordinances, orders and decrees of any Governmental Entity,
whether now in existence or hereafter enacted and in effect at the time of
either Closing, relating to pollution or the protection of human health, safety
or the environment of any jurisdiction in which the applicable party hereto owns
or operates assets or conducts business or owned or operated assets or conducted
business (whether or not through a predecessor entity) (including ambient air,
surface water, groundwater, land surface, subsurface strata, natural resources
or wildlife), including laws and regulations relating to Releases or threatened
Releases of Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of solid waste or Hazardous Materials, and any similar laws, rules,
regulations, ordinances, orders and decrees of any foreign jurisdiction in which
the applicable party hereto owns or operates assets or conducts business;
(B) "Hazardous Materials" means (x) any petroleum or petroleum
--------------------
products, radioactive materials (including naturally occurring radioactive
materials), asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, polychlorinated biphenyls or transformers or other
equipment that contain dielectric fluid containing polychlorinated biphenyls,
(y) any chemicals, materials or substances which are now defined as or included
in the definition of "solid wastes," "hazardous substances," "hazardous wastes,"
"hazardous materials," "extremely hazardous substances," "restricted hazardous
wastes," "toxic substances" or "toxic pollutants," or words of similar import,
under any Environmental Law and (z) any other chemical, material, substance or
waste, exposure to which is now prohibited, limited or regulated under any
Environmental Law in a jurisdiction in which the Company or any of its
Subsidiaries operates (for purposes of this Section 3.1(t)).
(C) "Release" means any spill, effluent, emission, leaking, pumping,
-------
pouring, emptying, escaping, dumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor environment, or into
or out of any property owned, operated or leased by the Company or its
Subsidiaries; and
(D) "Remedial Action" means all actions, including any capital
----------------
expenditures, required by a Governmental Entity or required under any
Environmental Law, or voluntarily undertaken to (w) clean up, remove, treat, or
in any other way ameliorate or address any Hazardous Materials or other
substance in the indoor or outdoor environment; (x) prevent the Release or
threat of Release, or minimize the further Release of any Hazardous Material so
it does not endanger or threaten to endanger the public or employee health or
welfare of the indoor or outdoor environment; (y) perform pre-remedial studies
and investigations or post-remedial monitoring and care pertaining or relating
to a Release; or (z) bring the Company or its Subsidiaries into compliance with
any Environmental Law.
Except as disclosed in the Company SEC Documents or on Schedule 3.1(r) of
---------------
the Company Disclosure Schedule:
<PAGE>
(i) The operations of the Company and its Subsidiaries have been
conducted are, and as of each Closing Date will be, in compliance with all
Environmental Laws, except where the failure to so comply, individually or in
the aggregate, has not had and could not reasonably be expected to have a
Material Adverse Effect;
(ii) Neither the Company nor any of its Subsidiaries has caused the
generation, treatment, manufacture, processing, distribution, use, storage,
discharge, Release, transport or handling of any Hazardous Materials at any of
its properties or facilities, except as has not had and could not reasonably be
expected to have a Material Adverse Effect;
(iii) Neither the Company nor any of its Subsidiaries has received any
written notice from any Governmental Entity or other third party alleging any
violation by the Company or any of its Subsidiaries of, or responsibility or
liability of the Company or any of its Subsidiaries under, any Environmental Law
or for personal injuries, Remedial Action or property damages, which has had or
could reasonably be expected to have a Material Adverse Effect;
(iv) The Company and its Subsidiaries are not subject to any
outstanding written orders issued by, or contracts with, any Governmental Entity
or other person respecting (A) Environmental Laws, (B) Remedial Action, (C) any
Release or threatened Release of a Hazardous Material or (D) an assumption of
responsibility for environmental liabilities of another person, except such
orders or contracts the compliance with which, individually or in the aggregate,
has not had and could not reasonably be expected to have a Material Adverse
Effect;
(v) Neither the Company nor any of its Subsidiaries has any contingent
liability in connection with the Release of any Hazardous Material into the
indoor or outdoor environment (whether on-site or off-site) or employee or third
party exposure to Hazardous Materials that, individually or in the aggregate,
has had or could reasonably be expected to have a Material Adverse Effect.
(s) Insurance. Schedule 3.1(s) of the Company Disclosure
--------- ---------------
Schedule sets forth an insurance schedule of the Company's and each of its
Subsidiaries' directors' and officers' liability insurance. The Company
maintains insurance in such amounts and covering such risks as are in accordance
with normal industry practice for companies engaged in businesses similar to
those of the Company and each of its Subsidiaries (taking into account the cost
and availability of such insurance).
(t) Vote. There are no approvals required of the holders of any class
----
or series of shares or stock of the Company necessary to approve this Agreement
or any other Transaction Documents and the transactions contemplated hereby or
thereby.
<PAGE>
(u) Amendment to Rights Agreement. The Board has taken all necessary
-------------------------------
action to amend the Rights Agreement, dated as of March 25, 1996, as amended
(the "Rights Agreement"), between the Company and Chemical Bank, as Rights
-----------------
Agent, so that none of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will cause (i) the rights
issued pursuant to the Rights Agreement to become exercisable under the Rights
Agreement or (ii) the distribution of Rights Certificates (as defined in the
Rights Agreement).
(v) Prepayments. Neither the Company nor any Subsidiary is obligated,
-----------
by virtue of a prepayment arrangement, make-up right under a production sales
Contract containing a "take or pay" or similar provision, production payment or
any other arrangement, to deliver hydrocarbons, or proceeds from the sale
thereof, attributable to any of its properties at some future time without then
or thereafter being entitled to received payment of the contract price therefor,
except where any such arrangement could not reasonably be expected to have a
Material Adverse Effect.
(w) Gas Imbalances. Except as disclosed in the Company SEC Documents,
---------------
neither the Company nor any Subsidiary has (i) any obligation to deliver gas
from the Oil and Gas Properties (or cash in lieu thereof) to other owners of
interests in those properties as a result of past production by the Company, any
Subsidiary or any of their predecessors in excess of the share to which they
were entitled nor (ii) any right to receive deliveries of gas from the Oil and
Gas Properties (or cash in lieu thereof) from other owners of interests in those
properties as a result of past production by the company, any Subsidiary or any
of their predecessors of less than the share to which they were entitled in
either case where any such gas imbalance could reasonably be expected to have a
Material Adverse Effect.
(x) Reserve Report. A true, correct and complete copy of the Reserve
---------------
Report has been provided to Purchaser. The Company's and each Subsidiary's
ownership of the Oil and Gas Properties described in the Reserve Report entitle
the respective owner to receive a percentage of the oil, gas and other
hydrocarbons produced from each well or unit equal to not less than the
percentage set forth in the Reserve Report as the "Net Revenue Interest" for
such well or unit and cause the respective owner to be obligated to bear a
percentage of the cost of operation of such well or unit not greater than the
percentage set forth in the Reserve Report as the "Working Interest" for such
well or unit, and to the extent such percentages of production which the
respective owner is entitled to receive, and shares of expenses which the
respective owner is obligate to bear, may change after the date of such report,
such changes were properly reflected (based on reasonable assumptions) in
preparing such report. The underlying historical information used for
preparation of the Reserve Report was, at the time of delivery, true and correct
in all material respects.
(y) Nonconsent Operations. Except as set forth in Schedule 3.1(y) of
---------------------- ---------------
the Company Disclosure Schedule, there are no operations on the Oil and Gas
Properties in which the Company's or any Subsidiary's commitment would have
exceeded $5,000,000, being conducted as of January 1, 1998, or any time
thereafter, in which the Company or any Subsidiary was entitled to participate
and did not participate.
<PAGE>
(z) Information Provided. Neither this Agreement, the Schedules and
---------------------
Exhibits hereto, the other Transaction Documents, nor any other document
provided by the Company to Purchaser contain any untrue statement of a material
fact or omit any material fact necessary to make the statements herein or
therein, as the case may be, not misleading.
(aa) No Brokers or Finders. No agent, broker, finder or investment or
-----------------------
commercial banker, or other Person or firm engaged by or acting on behalf of the
Company or its Subsidiaries in connection with the negotiation, execution or
performance of this Agreement is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this Agreement, the
other Transaction Documents or the transactions contemplated hereby or thereby,
other than any such fees or commissions that have been disclosed to Purchaser
and as to which the Company shall have full responsibility.
Section 3.2 Representations and Warranties of Purchaser.
-----------------------------------------------
(a) Organization, Standing and Power. Purchaser is a Cayman Islands
-----------------------------------
exempted limited partnership duly organized, validly existing, and in good
standing under the laws of the Cayman Islands and has all requisite partnership
power and authority to own, lease, and operate its properties and to carry on
its business as now being conducted and to execute and deliver this Agreement
and the other Transaction Documents to which Purchaser is a party and consummate
the transactions contemplated hereby and thereby.
(b) Authority; Approvals.
---------------------
(i) Purchaser represents and warrants to the Company that (a) the
execution and delivery of this Agreement and the other Transaction Documents to
which it is a party and the purchase of the Shares to be purchased by it have
been duly and properly authorized, (b) this Agreement and the other Transaction
Documents to which it is a party have been duly executed and delivered by it or
on its behalf and, assuming the accuracy of the representations and warranties
of the Company in Section 3.1(d) hereof, constitute the valid and legally
binding obligations of Purchaser, enforceable against it in accordance with
their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of equity;
(c) the purchase of the Shares to be purchased by it does not conflict with or
violate (1) its partnership agreement or (2) any law applicable to it in a
manner that could materially hinder or impair the completion of any of the
transactions contemplated hereby; and (d) the purchase of Shares to be purchased
by it does not impose any penalty or other onerous condition on Purchaser that
could materially hinder or impact the completion of any of the transactions
contemplated hereby.
<PAGE>
(ii) No Approval from any Governmental Entity is required by or with
respect to Purchaser in connection with the execution and delivery by Purchaser
of this Agreement or any other Transaction Document to which it is a party or
the consummation by Purchaser of the transactions contemplated hereby or
thereby, except for: (C) if applicable, the filing of a notification report by
Purchaser under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), and the expiration or termination of the applicable
--------
waiting period with respect thereto; (D) such Approvals as may be required by
any foreign securities, corporate or other Laws; and (E) any such Approval the
failure of which to be made or obtained (1) has not impaired and could not
reasonably be expected to impair the ability of Purchaser to perform its
obligations under any of the Transaction Documents in any material respect or
(2) could not reasonably be expected to delay in any material respect or prevent
the consummation of any of the transactions contemplated by any of the
Transaction Documents.
(c) Litigation. As of the time of execution of this Agreement, there
----------
is no claim, action, suit, inquiry, judicial or administrative proceeding
pending or, to the knowledge of Purchaser, threatened against it relating to any
of the transactions contemplated by this Agreement or any other Transaction
Document.
(d) Investment Intent. Purchaser represents and warrants to the
------------------
Company that the Shares to be acquired by it hereunder and any Underlying Shares
to be acquired upon the conversion or exchange of such Shares are being acquired
for its own account for investment and with no intention of distributing or
reselling such Shares or Underlying Shares or any part thereof or interest
therein in any transaction which would be in violation of the securities Laws of
the United States of America or any state or any foreign country or
jurisdiction.
(e) Transfer Restrictions. If Purchaser should decide to dispose of
----------------------
any of the Shares to be purchased by it or any Underlying Shares to be issued to
it upon the conversion or exchange of such Shares, Purchaser understands and
agrees that it may do so only subject to the transfer restrictions set forth in
the Shareholders Agreement and pursuant to an effective registration statement
under the Securities Act or pursuant to an exemption from registration under the
Securities Act. In connection with any offer, resale, pledge or other transfer
(individually and collectively, a "Transfer") of any Shares or Underlying Shares
--------
other than pursuant to an effective registration statement, the Company may
require that the transferor of such Shares or Underlying Shares provide to the
Company an opinion of counsel which opinion shall be reasonably satisfactory in
form and substance to the Company, to the effect that such Transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any State or foreign
securities Laws. Purchaser agrees to the imprinting, so long as appropriate, of
substantially the following legend on certificates representing the Shares and
any Underlying Shares:
<PAGE>
THE [8% CONVERTIBLE PREFERENCE SHARES/ORDINARY SHARES] (THE "SHARES")
------
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
---------------
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER AGREES THAT IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER
(INDIVIDUALLY AND COLLECTIVELY, A "TRANSFER") THE SHARES EVIDENCED HEREBY,
--------
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
SUCH AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE OTHER THAN PURSUANT TO
CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
COMPANY AND THE TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR ANY STATE OR FOREIGN
SECURITIES LAW.
THE SHARES EVIDENCED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A
SHAREHOLDERS AGREEMENT DATED _______________, 1998, WHICH CONTAINS CERTAIN
RESTRICTIONS ON THE TRANSFER OF THE SHARES. A COPY OF THE SHAREHOLDERS
AGREEMENT IS AVAILABLE AT THE REGISTERED OFFICE OF THE COMPANY.
The legends set forth above may be removed if and when the Shares or
Underlying Shares, as the case may be, represented by such certificate are no
longer subject to the transfer restrictions set forth in the Shareholders
Agreement and are disposed of pursuant to an effective registration statement
under the Securities Act or the opinion of counsel referred to above has been
provided to the Company. The share certificates shall also bear any additional
legends required by applicable federal, state or foreign securities Laws, which
legends may be removed when, in the opinion of counsel to the Company, the same
are no longer required under the Memorandum of Association, the Articles of
Association or the applicable requirements of such securities Laws. Purchaser
agrees that, in connection with any Transfer of Shares by it pursuant to an
effective registration statement under the Securities Act, Purchaser will comply
with all prospectus delivery requirements of the Securities Act. The Company
makes no representation, warranty or agreement as to the availability of any
exemption from registration under the Securities Act with respect to any resale
of Shares or Underlying Shares.
(f) Purchaser Status. Purchaser represents and warrants to, and
-----------------
covenants and agrees with the Company that (i) at the time it was offered the
Shares, it was, (ii) at the date hereof, it is, and (iii) at each Closing Date,
it will be, an accredited investor as defined in Rule 501(a) under the
Securities Act, and has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company and
an investment in the Shares, and is able to bear the economic risk of such
investment.
<PAGE>
(g) Information Supplied. None of the information, if any, supplied by
--------------------
or on behalf of Purchaser specifically for inclusion in the Registration
Statement and which is included or incorporated by reference in the Registration
Statement will, at the date such Registration Statement is declared effective by
the SEC or any time from and after such date through and including the date of
the Second Closing, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. No representation is made by Purchaser in connection with
any of the foregoing except with respect to statements made or incorporated by
reference in the Registration Statement in conformity with information supplied
by or on behalf of Purchaser specifically for use in the Registration Statement.
(h) No Brokers or Finders. No agent, broker, finder or investment or
-----------------------
commercial banker, or other Person or firm engaged by or acting on behalf of
Purchaser in connection with the negotiation, execution or performance of this
Agreement is or will be entitled to any brokerage or finder's or similar fee or
other commission as a result of this Agreement, other than any such fees or
commissions that have been disclosed to the Company and as to which Purchaser
shall have full responsibility.
(i) Ownership of Shares. Neither the Purchaser nor any of its
---------------------
Affiliates is the beneficial owner of any shares of or stock of the Company.
(j) Financing. Upon the terms and subject to the conditions of this
---------
Agreement, the Purchaser has available to it and at the Closings will have all
funds necessary to satisfy its obligations to purchase Shares hereunder.
ARTICLE IV
COVENANTS
---------
Section 4.1 Furnishing of Information.
--------------------------
As long as Purchaser owns Shares or Underlying Shares representing
at least 5% of the aggregate number of shares of Common Stock then outstanding
(determined after giving effect to the full conversion of all outstanding Shares
owned by Purchaser at the conversion price then in effect), from and after the
First Closing Date the Company will promptly furnish to Purchaser all reports
filed by it pursuant to Section 13(a) or 15(d) of the Exchange Act (or if the
Company is not at the time required to file reports pursuant to said Section
13(a) or 15(d), annual and quarterly reports comparable to those required by
Sections 13(a) or 15(d) of the Exchange Act).
Section 4.2 Rights Offering.
----------------
<PAGE>
(a) Promptly following the First Closing, the Company shall conduct a
distribution to each record holder of Common Stock, 5% Preference Shares and 8%
Preference Shares, as of a record date after the First Closing to be set by the
Company, of the transferable right (the "Rights") to purchase, at $70.00 per
------
share, a pro-rata portion (with the pro rata portion relating to outstanding 5%
Preference Shares and 8% Preference Shares determined based on the number of
shares of Common Stock into which such shares are convertible as of such record
date) of 3,177,500 shares (subject to rounding as set forth below) of 8%
Preference Shares (the "Rights Offering"). Based on the current outstanding
----------------
shares of the Company, in the Rights Offering (i) the Company will distribute
.072 transferrable Rights with respect to each share of Common Stock and 5%
Preference Shares and .288 transferable Rights with respect to each 8%
Preference Share outstanding as of the record date for the Rights Offering, at
no cost to the record holders; (ii) one Right plus $70.00 in cash will entitle
the holder to purchase one share of 8% Preference Shares; (iii) the Rights will
be evidenced by transferable subscription certificates; (iv) no fractional
Rights or cash in lieu thereof will be issued or paid, and the number of Rights
distributed to each holder of Common Stock, 5% Preference Shares and 8%
Preference Shares will be rounded up to the nearest whole number of Rights; (v)
brokers, dealers and other nominees holding shares of Common Stock, 5%
Preference Shares or 8% Preference Shares on the record date for more than one
beneficial owner will be entitled to obtain separate subscription certificates
for their beneficial owners so that they may each receive the benefit of
rounding; and (vi) each Right will also carry the right to subscribe at the
$70.00 subscription price for additional shares of 8% Preference Shares for
which the other holders of Rights did not subscribe through the exercise of the
basic subscription privileges (the "Excess Shares"), provided that (A) only
--------------
Rights holders who exercise their basic subscription privilege in full will be
entitled to exercise the oversubscription privilege, (B) if the Excess Shares
are not sufficient to satisfy all oversubscriptions, the Excess Shares will be
allocated pro rata (subject to the elimination of fractional shares) among those
Rights holders exercising the oversubscription privilege and (C) Purchaser shall
not purchase any 8% Preference Shares pursuant to its oversubscription privilege
under Rights held by Purchaser.
(b) The Company shall promptly prepare and submit to Purchaser for
review, a form of subscription agreement, subscription certificate and all other
documents and instruments required in connection with the Rights Offering, all
of which shall be in form and substance reasonably satisfactory to Purchaser
(the "Rights Offering Documents"). The Rights Offering Documents shall provide,
-------------------------
among other things, that the Rights Offering shall be generally conducted in the
manner described in Section 4.2(a).
Section 4.3 Stock Exchange Listing.
-----------------------
The Company shall submit a listing application to the NYSE with respect to the
8% Preference Shares, the Underlying Shares and the Rights within ten business
days after the date hereof and Purchaser shall be entitled to review and
reasonably comment on such listing application and the submission of any other
materials to the NYSE in connection with the listing of the 8% Preference
Shares, the Underlying Shares and the Rights. The Company shall use all
commercially reasonable efforts to cause, prior to the First Closing Date, the
8% Preference Shares, the Underlying Shares and the Rights to be approved for
listing on the NYSE, subject to official notice of issuance, upon issuance in
accordance with the terms of this Agreement (including as provided in Section
2.1(a)) and the Rights Offering Documents (and, in the case of the 8% Preference
Shares, generally, satisfactory distribution and, in the case of the Rights, the
8% Preference Shares to be issued in the Rights Offering and the Underlying
Shares to be issued pursuant to such 8% Preference Shares, the effectiveness of
the Registration Statement) (collectively, the "NYSE Approval").
--------------
<PAGE>
Section 4.4 Registration Statement.
----------------------
As promptly as practicable after the date hereof, the Company shall prepare and
file with the SEC a registration statement on Form S-3, or shall file a
post-effective amendment to an existing shelf registration statement of the
Company currently effective under the Securities Act and in proper form to
effect the Rights Offering (including the issuance of the 8% Preference Shares
to be issued pursuant thereto and the Underlying Shares to be issued upon
conversion of such 8% Preference Shares), for the purpose of registering under
the Securities Act the offering, sale and delivery of the securities issuable in
the Rights Offering, including the Underlying Shares with respect to the shares
of 8% Preference Shares offered thereby. The term "Registration Statement," as
----------------------
used herein, means such registration statement and all amendments and
supplements thereto, if any. The Company shall use all commercially reasonable
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after the First Closing. The Company
shall notify Purchaser promptly of the receipt of any comments on, or any
requests for amendments or supplements to, the Registration Statement by the
SEC, and the Company shall supply Purchaser with copies of all correspondence
between it and its representatives, on the one hand, and the SEC or members of
its staff, on the other, with respect to the Registration Statement. The
Company, after consultation with Purchaser, shall use commercially reasonable
efforts to respond promptly to any comments made by the SEC with respect to the
Registration Statement. The Company and Purchaser each agrees promptly to
correct any information provided by it for use in the Registration Statement if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company further agrees to take all steps necessary
to cause the Registration Statement (or the prospectus contained therein) as so
corrected to be filed with the SEC and to be disseminated to the extent required
by applicable Law. The Company shall also take any action (other than
qualifying to do business in any jurisdiction in which it is not now so
qualified) reasonably required to be taken under any applicable state securities
Laws in connection with the issuance of securities pursuant to the Registration
Statement.
Section 4.5 Affirmative Covenants of the Company.
-------------------------------------
The Company hereby covenants and agrees that, until
the earlier of the Second Closing or the termination of this Agreement, unless
otherwise expressly contemplated by this Agreement or consented to in writing by
Purchaser (such consent not to be unreasonably withheld), the Company will and
will cause each of its Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices except as contemplated by this Agreement or as provided in
or contemplated by the Company Disclosure Schedule, consistent with the
Company's restructuring as announced or disclosed in the Company SEC Documents
filed prior to the date of this Agreement or disclosed in press releases
released prior to the date of this Agreement (the "Announced Restructuring");
-----------------------
(b) use commercially reasonable efforts to maintain and keep its
properties and assets in as good a repair and condition as at present, ordinary
wear and tear excepted; and
(c) use all reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that currently
maintained, consistent with the Announced Restructuring.
<PAGE>
Section 4.6 Negative Covenants of the Company.
-------------------------------------
(a) Except as expressly contemplated by this Agreement or otherwise
consented to in writing by Purchaser, from the date of this Agreement until
earlier of the First Closing or the termination of this Agreement, the Company
shall not do, and shall not permit any of its Subsidiaries to do, any of the
following:
(i) except as set forth in Schedule 4.6(a)(i) of the Company Disclosure
------------------
Schedule, acquire or agree to acquire (whether pursuant to a definitive
agreement, a non-binding letter of intent or otherwise), by merging or
consolidating with, by purchasing an equity interest in or a portion of the
assets of (including by a "farm-in" of any properties or interests), or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets of any other Person (other than from a Subsidiary of the
Company or the purchase of assets from suppliers or vendors in the ordinary
course of business and other than assets which, individually or in the
aggregate, are not material to the business or operations of the Company or any
of its Subsidiaries);
(ii) except as set forth in Schedule 4.6(a)(ii) of the Company
--------------------
Disclosure Schedule or as permitted under Section 4.12, sell, lease, exchange,
mortgage, pledge, transfer or otherwise dispose of, or agree to sell, lease,
exchange, mortgage, pledge, transfer or otherwise dispose of (including by a
"farm-out" of any properties or interests), any of its assets or any assets of
any of its Subsidiaries, except for pledges or dispositions of assets in the
ordinary course of business or consistent with the Announced Restructuring and
except for assets which, individually or in the aggregate, are not material to
the business or operations of the Company or any of its Subsidiaries;
(iii) except as set forth in Schedule 4.6(a)(iii) of the Company
---------------------
Disclosure Schedule, adopt or propose to adopt any amendments to the Company's
Memorandum of Association or Articles of Association or similar charter
documents; other than transactions between the Company and one or more of its
Subsidiaries or among one or more of its Subsidiaries, adopt resolutions
authorizing a liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization of the Company or any Subsidiary; or
make any other material changes in the Company's capital structure;
(iv) (i) except as set forth in Schedule 4.7(a)(iv) of the Company
-------------------
Disclosure Schedule change any of its significant accounting methods,
principles, practices or policies or (ii) make or rescind any express or deemed
election relating to Taxes, settle or compromise any claim, action, suit,
Litigation, audit or controversy relating to Taxes, or change any of its methods
of reporting income or deductions for federal or other income Tax purposes from
those employed in the preparation of the federal or other income Tax Returns or
other Tax Returns for the taxable year ending December 31, 1997, except, in the
case of either clause (i) or clause (ii), as may be required by Law or GAAP;
<PAGE>
(v) other than borrowings in the ordinary course under the Credit
Facilities, incur any obligation for borrowed money or purchase money
indebtedness, whether or not evidenced by a note, bond, debenture or similar
instrument or under any financing lease, whether pursuant to a
sale-and-leaseback transaction or otherwise;
(vi) except as set forth in Schedule 4.6(a)(vi) of the Company
--------------------
Disclosure Schedule, make any loans or advances to any Person, other than (i)
advances to employees in the ordinary and usual course of business and (ii)
transactions among or between the Company and its Subsidiaries in the ordinary
and usual course of the Company's business;
(vii) declare or pay any dividend or make any other distribution with
respect to its shares or capital stock, other than dividends paid by any
Subsidiary to the Company or another Subsidiary in the ordinary and usual course
of the Company's business and regular dividends on the 5% Preference Shares in
accordance with the terms as in effect on the date hereof;
(viii) except as set forth in Schedule 4.6(a)(viii) of the Company
---------------------
Disclosure Schedule, enter into, adopt, or (except as may be required by law)
amend or terminate any Benefit Plan; approve or implement any employment
severance arrangements (other than payments made under the Company's severance
policy in accordance with past practice) or discharge or, except to replace any
officer or executive management personnel who have departed on substantially the
same or lesser terms as the departed Person, hire any officers or executive
management personnel; authorize or enter into any employment, severance,
consulting services or other agreement with any officers or executive management
personnel; or except as set forth in Section 4.6(a)(viii) of the Company
Disclosure Schedule, change the compensation or benefits provided to any
director, officer, or employee as of June 30, 1998; or
(ix) agree in writing or otherwise to do any of the foregoing.
(b) Except as expressly contemplated by this Agreement or otherwise
consented to in writing by Purchaser, from the date of this Agreement until
earlier of the Second Closing or the termination of this Agreement, the Company
shall not do, and shall not permit any of its Subsidiaries to do, any of the
following:
(i) materially amend, terminate or fail to use all commercially
reasonable efforts to maintain in full force and effect and, if applicable,
renew any Material Oil and Gas Contract or any Material Contract (provided that
the Company and its Subsidiaries shall not be required to renew any Material
Contract on terms that are less favorable to the Company or its Subsidiaries),
or fail to use all commercially reasonable efforts to prevent a default in any
material respect (or take or omit to take any action that, with or without the
giving of notice or passage of time, would constitute a material default) under
any Material Oil and Gas Contract or any Material Contract;
<PAGE>
(ii) split, combine, reclassify or amend any term of any of its shares
or capital stock; or
(iii) Except as set forth in Schedule 4.6(b)(iii) of the Company
---------------------
Disclosure Schedule, (A) issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase,
or otherwise) any of its shares or capital stock or other securities other than
(1) as contemplated herein or (2) pursuant to awards issued and outstanding as
of the date hereof under the Stock Plans or as required under the terms of any
other security of the Company outstanding as in effect as of the date of this
Agreement, or (B) purchase or otherwise acquire any of its shares or capital
stock, employee or director stock options, warrants or other equity securities
or debt securities other than pursuant to the terms thereof as in effect as of
the date of this Agreement.
Section 4.7 Approvals. The Company and Purchaser
---------
each agree to cooperate and use all commercially reasonable efforts to obtain
(and will promptly prepare all registrations, filings and applications, requests
and notices preliminary to all) Approvals that may be necessary or which may be
reasonably requested by the Company or Purchaser to consummate the transactions
contemplated by this Agreement and the other Transaction Documents.
Section 4.8 Shareholders Agreement.
-----------------------
On or before the First Closing Date, the Company and Purchaser shall enter into
the Shareholders Agreement.
Section 4.9 Preferred Stock Authorization.
-------------------------------
On or before the First Closing Date, the Company shall take, or
cause to be taken, all action necessary to authorize and approve the Preferred
Stock Authorization in accordance with the relevant provisions of the Companies
Law of the Cayman Islands.
Section 4.10 HSR Act Notification.
---------------------
To the extent the HSR Act will be applicable to the acquisition of the Shares by
Purchaser, each of the parties hereto shall (a) file or cause to be filed, as
promptly as practicable after the execution and delivery of this Agreement and
in no event later than ten Business Days after the date of this Agreement, with
the Federal Trade Commission and the United States Department of Justice, all
reports and other documents required to be filed by such party under the HSR Act
concerning the transactions contemplated hereby and (b) promptly comply with or
cause to be complied with any requests by the Federal Trade Commission or the
United States Department of Justice for additional information concerning the
Transaction, in each case so that the waiting period applicable to this
Agreement and the Transaction contemplated hereby under the HSR Act shall expire
as soon as practicable after the execution and delivery of this Agreement. Each
party hereto agrees to request, and to cooperate with the other party or parties
in requesting, early termination of any applicable waiting period under the HSR
Act.
Section 4.11 Indemnification of Directors and Officers; Insurance.
----------------------------------------------------
<PAGE>
(a) At the later of (i) the First Closing or (ii) such date on which
such individuals are elected to the Board of Directors, the Company shall enter
into indemnification agreements with each of the directors designated by the
Purchaser pursuant to the Shareholders Agreement ("Purchaser Designees")
--------------------
substantially in the form of Exhibit E hereto with such changes thereto as may
---------
be agreed upon by Purchaser and the Company (each an "Indemnification
---------------
Agreement").
- ---------
(b) At or prior to the First Closing Date, the Company shall obtain
directors' and officers' liability insurance policies providing an aggregate of
$25,000,000 in additional coverage to the coverage provided by the Company's
current directors' and officers' insurance policy (the "Additional D&O
---------------
Policies"). The Company shall use all commercially reasonable efforts to ensure
- --------
that the Additional D&O Policies shall, in addition to customary coverage,
provide coverage for Purchaser and any of its Affiliates with respect to any
claims brought against Purchaser or any of its Affiliates arising out of or
relating to any act or omission of any director of the Company in his or her
capacity as a director of the Company; provided, however, that in the event the
-------- -------
Additional D&O Policies are not available to provide coverage as described in
this sentence, the Company shall use commercially reasonable efforts to obtain a
separate insurance policy (the "Alternative Policy") providing such coverage in
------------------
such amounts as can be obtained by the Company upon the payment of annual
premiums that, when aggregated with the annual premiums paid for the Additional
D&O Policies, do not exceed 200% of the annual premiums related to the Company's
existing director and officer liability policies aggregating $30,000,000 in
coverage. The Company shall maintain in effect the Additional D&O Policies and
the Alternative Policy for so long as Purchaser is entitled to nominate members
to the Board of Directors pursuant to the Shareholders Agreement.
(c) The Company shall, from and after the date of this Agreement and
until the later of (i) four years from the First Closing Date or (ii) the final
resolution of all Shareholder Litigation, maintain in effect the current
directors' and officers' liability insurance policies maintained by the Company
(provided that the Company may substitute therefor policies no less favorable in
terms and amounts of coverage so long as substitution does not result in gaps of
lapses in coverage) with respect to matters occurring prior to the Second
Closing Date; provided, however, that in no event shall the Company be required
to expend pursuant to this Section more than an amount per year equal to 150% of
current annual premiums paid by the Company for such insurance.
(d) The Company shall amend its existing insurance coverage under the
Company's current policies of directors' and officers' liability insurance, or
obtain comparable replacement policies on terms no less favorable in terms of
coverage and amounts than those in effect on the date hereof, so that
Purchaser's purchase of the Shares pursuant to this Agreement shall not
constitute a "change of control" of the Company or otherwise cause any of the
Purchaser Designees or any of persons who become officers, directors or
employees of the Company on or after the First Closing Date to be excluded from
the coverage provided by such insurance policies.
<PAGE>
(e) In the event the Company or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
Person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Company shall assume the obligations set forth in
this Section 4.11. The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, the parties hereto and each person
entitled to indemnification or insurance coverage pursuant to this Section, his
heirs, and his representatives. The rights provided such persons under this
Section shall be in addition to, and not in lieu of, any rights to indemnity
that such persons may have under the Articles of Association of the Company or
any other provisions herein or in other agreements.
Section 4.12 No Solicitation.
----------------
(a) From and after the date hereof until the earlier of the Second
Closing Date or the termination of this Agreement, neither the Company nor any
of its Subsidiaries, nor any of their respective officers, directors,
representatives, agents or Affiliates (including, without limitation, any
investment banker, attorney or accountant retained by the Company or any of its
Subsidiaries) (collectively, "Representatives") will, and the Company will cause
---------------
the employees and Representatives of the Company and its Subsidiaries not to,
directly or indirectly, (i) solicit, initiate or encourage the submission of any
proposal for a Sale Transaction, (ii) enter into any agreement with respect to
any Sale Transaction or give any approval with respect to any Sale Transaction,
(iii) participate in any discussions or negotiations regarding, or furnish to
any Person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Sale Transaction or any proposal for a
Sale Transaction or (iv) release any third party from its obligations under any
existing standstill agreement or arrangement relating to a proposed Sale
Transaction or otherwise under any confidentiality or other similar agreement
relating to information material to the Company or any of its Subsidiaries;
provided, however, that if at any time prior to the First Closing, the Board of
- -------- -------
Directors of the Company determines in good faith, based on the advice of
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the Company
(and its Representatives) may, in response to a proposal for a Sale Transaction
not solicited on or after the date hereof, subject to compliance with Section
4.12(c), (x) furnish information with respect to the Company pursuant to a
customary confidentiality agreement to any Person making such proposal and (y)
participate in negotiations regarding such proposal. The Company shall
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any parties
conducted heretofore by the Company or any Representatives with respect to any
Sale Transaction existing on the date hereof. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in the
preceding sentence by any Representative of the Company or any of its
Subsidiaries, whether or not such Person is purporting to act on behalf of the
Company or any of its Subsidiaries or otherwise, shall be deemed to be a breach
of this Section 4.12(a) by the Company.
<PAGE>
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (x) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Purchaser, the approval (including, without limitation, the
Board of Directors' resolution providing for such approval) of this Agreement,
the Preference Share Authorization or the transactions contemplated hereby or
thereby or (y) approve or recommend, or propose to approve or recommend, any
Sale Transaction, except in the case of clause (x) or (y), if the Board of
Directors of the Company determines in good faith, based on the advice of
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties under applicable law and then only at or after the termination
of this Agreement pursuant to Section 7.1(c).
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.12, the Company promptly shall advise
Purchaser orally and in writing of any request for information or of any
proposed Sale Transaction or any inquiry with respect to or which could
reasonably be expected to lead to any proposed Sale Transaction, the identity of
the Person making any such request, proposed Sale Transaction or inquiry and all
the terms and conditions thereof. The Company will keep Purchaser fully informed
of the status and details (including amendments or proposed amendments) of any
such request, proposed Sale Transaction or inquiry, and Purchaser shall keep
confidential such information provided to it by the Company pursuant to this
Section 4.12(c), subject to any judicial or other legal order, directions or
obligation to disclose such information.
(d) Nothing contained in this Section 4.12 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rule
14d-9 or Rule 14e-2 promulgated under the Exchange Act; provided, however,
neither the Company nor its Board of Directors nor any committee thereof shall,
except as permitted by Section 4.12(b), withdraw or modify, or propose to
withdraw or modify, its approval or recommendation with respect to this
Agreement, the Preference Share Authorization or the transactions contemplated
hereby or thereby (including, without limitation, the Board of Directors'
resolution providing for such approval) or approve or recommend, or propose to
approve or recommend, a Sale Transaction.
Section 4.13 Notification of Certain Matters.
----------------------------------
The Company shall give prompt notice to
Purchaser, and Purchaser shall give prompt notice to the Company, of (a) the
occurrence, or failure to occur, of any event that causes any representation or
warranty contained in any Transaction Document to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to either Closing
Date and (b) any failure of the Company or Purchaser to comply with or satisfy,
in any material respect, any covenant, condition or agreement to be complied
with or satisfied by it under any Transaction Document.
Section 4.14 Board of Directors.
--------------------
The Company shall take, or cause to be taken, such action as may be necessary
or advisable to ensure that simultaneously with the First Closing the Board
shall consist of ten directorships, six of which shall be held by the
individuals listed in Schedule 4.14 of the Company's Disclosure Schedule and
-------------
four of which shall be vacant pending designation by Purchaser of four
individuals to serve as members of the Board of Directors pursuant to the
Shareholders Agreement and, as of the First Closing Date, the Company will
comply with its obligations under Section 4.1 of the Shareholders Agreement.
The Company shall take, or cause to be taken, such action as may be
necessary or advisable to ensure that simultaneously with the First
Closing each of the audit and compensation committees and the executive
committee, if any, of the Board of Directors shall include one of the directors
designated by Purchaser. The right of Purchaser to continue to designate
nominees for election to the Board of Directors shall be subject to the
conditions set forth in the Shareholders Agreement.
<PAGE>
Section 4.15 Financial Advisory Agreement; Commitment Fee.
-----------------------------------------------
Simultaneously with the
execution and delivery of this Agreement by the parties hereto, the Company
shall execute and deliver to Hicks, Muse & Co. Partners, L.P. ("HMCo")
----
counterparts of the Financial Advisory Agreement and Purchaser shall cause HMCo
to execute and deliver to the Company counterparts of the Financial Advisory
Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
----------------------------------
Section 5.1 Conditions Precedent to Each Party's Obligation.
----------------------------------------------------
The respective obligations of Purchaser and the Company to effect the
transactions contemplated hereby are subject to the satisfaction on or
prior to each Closing Date of the following conditions:
(a) Approvals. All Approvals of, or expirations of waiting periods
---------
imposed by, any Governmental Entity necessary for the consummation of the
transactions contemplated by this Agreement shall have been filed, occurred, or
been obtained, including the expiration or termination of any applicable waiting
period under the HSR Act.
(b) No Injunctions or Restraints. No temporary restraining order,
-------------------------------
preliminary or permanent injunction, or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any statute, rule,
----------
or regulation shall have been enacted by any Governmental Entity that makes the
consummation of the transactions contemplated hereby illegal.
(d) NYSE Listing. The Company shall have obtained the NYSE Approval.
-------------
Section 5.2 Conditions Precedent to Obligation of Purchaser at the
----------------------------------------------------------
First Closing. The obligation of Purchaser to effect the transactions
- --------------
contemplated by this Agreement to be consummated at the First Closing is subject
to the satisfaction of the following conditions unless waived, in whole or in
part, by Purchaser:
<PAGE>
(a) Representations and Warranties. The representations and warranties
------------------------------
of the Company set forth in this Agreement shall be true and correct in all
respects (provided that, for purposes of this Section 5.2(a), any representation
or warranty of the Company contained herein that is qualified by a materiality
standard or a Material Adverse Effect qualification shall be read without regard
to any such qualifications as if such qualifications were not contained therein)
as of the date of this Agreement and as of the First Closing Date as though made
on and as of the First Closing Date except for such failures which, individually
or in the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect, and Purchaser shall have received a certificate to the
foregoing effect signed on behalf of the Company and its Subsidiaries by the
chief executive officer or by the chief financial officer of the Company.
(b) Performance of Obligations. The
----------------------------
Company shall have performed in all respects (provided that, for purposes of
this Section 5.2(b), any covenant or agreement that is qualified by a
materiality standard or Material Adverse Effect qualification shall be read
without regard to any such qualification as if such qualification was not
contained therein) all obligations required to be performed by it or them under
this Agreement prior to the First Closing Date (it being understood that the
Registration Statement need not have become effective as of such date) except
for such failures which, individually or in the aggregate, have not had and
could not reasonably be expected to have a Material Adverse Effect, and
Purchaser shall have received a certificate to such effect signed on behalf of
the Company and its Subsidiaries by the chief executive officer or by the chief
financial officer of the Company.
(c) Consents Under Agreements. Purchaser shall have been furnished
---------------------------
with evidence of (i) the consent or approval of each person that is a party to a
Material Oil and Gas Contract (including evidence of the payment or any required
payment) and whose consent or approval shall be required in order to permit the
consummation of each of the transactions contemplated by this Agreement or to
prevent a breach of such Contract or the creation of a right to terminate such
Contract, (ii) all consents or approvals required under the Credit Agreements,
the Indenture and the Senior Notes with respect to the consummation of each of
the transactions contemplated by this Agreement or necessary to prevent a breach
of any such Contracts or instruments and (iii) all other consents or approvals
required to be obtained by the Company or any of its Subsidiaries with respect
to the consummation of each of the transactions contemplated by this Agreement
the failure of which to obtain reasonably could be expected to result in a
Material Adverse Effect, and each such consent or approval shall be
unconditioned.
(d) Legal Opinions. Purchaser shall have received (i) from Robert
---------------
Holland, general counsel of the Company and its Subsidiaries, an opinion dated
the First Closing Date, in substantially the form attached as Exhibit F-1
-----------
hereto, (ii) from W. S. Walker & Co., Cayman counsel to the Company and its
Subsidiaries, or other counsel to the Company and its Subsidiaries reasonably
acceptable to Purchaser an opinion dated the First Closing Date, in
substantially the form attached as Exhibit F-2 hereto, (iii) from Vinson &
------------
Elkins L.L.P., corporate counsel to the Purchaser, or other counsel to Purchaser
reasonably acceptable to Purchaser an opinion dated the First Closing Date, as
to the enforceability of this Agreement and the Shareholders Agreement, in form
and substance reasonably satisfactory to Purchaser and (iv) from Hunter &
Hunter, Cayman counsel to Purchaser, an opinion dated the First Closing Date, in
substantially the form attached as Exhibit F-3 hereto, each of which opinions,
-----------
if requested by Purchaser, shall expressly provide that they may be relied upon
by Purchaser's lenders, underwriters, or other sources of financing with respect
to the transactions contemplated hereby.
(e) Closing Deliveries. All documents, instruments, certificates or
-------------------
other items required to be delivered by the Company pursuant to Section 6.2(b)
shall have been delivered.
<PAGE>
(f) No Issuance of Securities. The Company shall have complied in all
--------------------------
respects with the covenants set forth in Section 4.6(b)(iii).
(g) Preferred Stock Authorization. The Board shall have adopted and
-------------------------------
approved the Preferred Stock Authorization in accordance with the Companies Laws
of the Cayman Islands.
Section 5.3 Conditions Precedent to Obligations of Company at the First
-----------------------------------------------------------
Closing. The obligation of the Company to effect the transactions contemplated
- -------
by this Agreement to be consummated at the First Closing is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
the Company:
(a) Representations and Warranties. The representations and warranties
------------------------------
of Purchaser set forth in this Agreement shall be true and correct in all
respects (provided that, for purposes of this Section 5.3(a), any representation
or warranty of Purchaser contained herein that is qualified by a materiality
standard or a Material Adverse Effect qualification shall be read without regard
to any such qualifications as if such qualifications were not contained therein)
as of the date of this Agreement and as of the First Closing Date as though made
on and as of the First Closing Date except for such failures which, individually
or in the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect, and the Company shall have received a certificate to
the foregoing effect signed on behalf of Purchaser by the chief executive
officer or by the chief financial officer of Purchaser.
(b) Performance of Obligations of Purchaser.
-------------------------------------------
Purchaser shall have performed in all respects
(provided that, for purposes of this Section 5.3(b), any covenant or agreement
that is qualified by a materiality standard shall be read without regard to any
such qualification as if such qualification was not contained therein) the
obligations required to be performed by it under this Agreement prior to the
First Closing Date except for such failures which, individually or in the
aggregate, have not had and could not reasonably be expected to have a Material
Adverse Effect, and the Company shall have received a certificate to such effect
signed on behalf of Purchaser by the chief executive officer or by the chief
financial officer of Purchaser.
(c) Closing Deliveries. All documents, instruments, certificates or
-------------------
other items required to be delivered by Purchaser pursuant to Section 6.2(a)
shall have been delivered.
Section 5.4 Conditions Precedent to Obligation of Purchaser at the
----------------------------------------------------------
Second Closing. The obligation of Purchaser to effect the transaction
- ---------------
contemplated by this Agreement to be consummated at the Second Closing is
subject to the following conditions unless waived, in whole or in part, by
Purchaser:
(a) Consummation of First Closing. The First Closing shall have
--------------------------------
occurred prior to the Second Closing Date.
<PAGE>
(b) Completion of Rights Offering. The Rights Offering shall have
--------------------------------
commenced and the time periods for basic and oversubscription rights shall have
expired and the number of Unsubscribed Shares shall have been determined.
(c) Representations and Warranties. The representations and warranties
------------------------------
of the Company set forth in this Agreement shall be true and correct in all
respects (provided that, for purposes of this Section 5.4(c), any representation
or warranty of the Company contained herein that is qualified by a materiality
standard or a Material Adverse Effect qualification shall be read without regard
to any such qualifications as if such qualifications were not contained therein)
as of the date of this Agreement and as of the Second Closing Date as though
made on and as of the Second Closing Date except for such failures which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect, and Purchaser shall have received a
certificate to the foregoing effect signed on behalf of the Company and its
Subsidiaries by the chief executive officer or by the chief financial officer of
the Company.
(d) Performance of Obligations.
----------------------------
The Company shall have performed in all respects (provided that, for purposes of
this Section 5.4(d), any covenant or agreement that is qualified by a
materiality standard or Material Adverse Effect qualification shall be read
without regard to any such qualification as if such qualification was not
contained therein) all obligations required to be performed by it or them under
this Agreement prior to the Second Closing Date except for such failures which,
individually or in the aggregate, have not had and could not reasonably be
expected to have a Material Adverse Effect, and Purchaser shall have received a
certificate to such effect signed on behalf of the Company and its Subsidiaries
by the chief executive officer or by the chief financial officer of the Company.
(e) Legal Opinions. Purchaser shall have received (i) from Robert
---------------
Holland, general counsel of the Company and its Subsidiaries, an opinion dated
the Second Closing Date, in substantially the form attached as Exhibit F-1
-----------
hereto and (ii) from W. S. Walker & Co., Cayman counsel to the Company and its
Subsidiaries, or other counsel to the Company reasonably acceptable to
Purchaser, an opinion dated the Second Closing Date, in substantially the form
attached as Exhibit F-2 hereto, (iii) from Vinson & Elkins L.L.P., corporate
------------
counsel to the Company, or other counsel to Purchaser reasonably acceptable to
Purchaser, an opinion dated the Second Closing Date, as to the enforceability of
this Agreement and the Shareholders Agreement, in form and substance reasonably
satisfactory to Purchaser and (iv) from Hunter & Hunter, Cayman counsel to
Purchaser, an opinion dated the Second Closing Date, in substantially the form
attached as Exhibit F-3 hereto, each of which opinions, if requested by
------------
Purchaser, shall expressly provide that they may be relied upon by Purchaser's
lenders, underwriters, or other sources of financing with respect to the
transactions contemplated hereby.
(f) Closing Deliveries. All documents, instruments, certificates or
-------------------
other items required to be delivered by the Company pursuant to Section 6.3(b)
shall have been delivered.
<PAGE>
(g) Board Designees. Four individuals designated by Purchaser pursuant
---------------
to Section 4.1 of the Shareholders Agreement to serve as members of the Board of
Directors shall have been duly elected or appointed to the Board of Directors
and shall not have been removed other than at the direction of Purchaser.
Section 5.5 Conditions Precedent to Obligations of Company at the
----------------------------------------------------------
Second Closing. The obligation of the Company to effect the transactions
- ---------------
contemplated by this Agreement to be consummated at the Second Closing is
subject to the satisfaction of the following conditions unless waived, in whole
or in part, by the Company.
(a) Consummation of First Closing. The First Closing shall have
--------------------------------
occurred prior to the Second Closing Date.
(b) Completion of Rights Offering. The Rights Offering shall have
--------------------------------
commenced and expired and the number of Unsubscribed Shares shall have been
determined.
(c) Representations and Warranties. The representations and warranties
------------------------------
of Purchaser set forth in this Agreement shall be true and correct in all
material respects (provided that, for purposes of this Section 5.5(c), any
representation or warranty of Purchaser contained herein that is qualified by a
materiality standard or a Material Adverse Effect qualification shall be read
without regard to any such qualification as if such qualifications were not
contained therein) as of the date of this Agreement and as of the Second Closing
Date as though made on and as of the Second Closing Date except for such
failures which, individually or in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect, and the Company shall
have received a certificate to the foregoing effect signed on behalf of
Purchaser by the chief executive officer or by the chief financial officer of
Purchaser.
(d) Performance of Obligations of Purchaser.
-------------------------------------------
Purchaser shall have performed in all material
respects (provided that, for purposes of this Section 5.5(d), any covenant or
agreement that is qualified by a materiality standard shall be read without
regard to any such qualifications as if such qualification was not contained
therein) the obligations required to be performed by it under this Agreement
prior to the Second Closing Date except for such failures which, individually or
in the aggregate, have not had and could not reasonably be expected to have a
Material Adverse Effect, and the Company shall have received a certificate to
such effect signed on behalf of Purchaser by the chief executive officer or by
the chief financial officer of Purchaser.
(e) Closing Deliveries. All documents, instruments, certificates or
-------------------
other items required to be delivered by Purchaser pursuant to Section 6.3(a)
shall have been delivered.
<PAGE>
ARTICLE VI
CLOSINGS
--------
Section 6.1 Closings. Subject to the satisfaction or
--------
waiver of the conditions set forth in Article V, the purchase and sale of the
Shares to be purchased by Purchaser hereunder will take place at two closings
(the "Closings"). The closing of the purchase and sale of the Initial Shares
--------
pursuant to Section 2.1(a)(i) (the "First Closing") and the closing of the
--------------
purchase and sale of the Remaining Shares pursuant to Section 2.1(a)(ii) and the
Rights Offering (the "Second Closing") shall occur (a) at the offices of Vinson
--------------
& Elkins L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201, at 10:00
a.m., local time, on the third Business Day following the satisfaction or waiver
(subject to applicable Law) of each of the conditions to the obligations of the
parties to effect the transactions to occur at each such Closing as set forth in
Sections 5.1, 5.2, 5.3, 5.4 and 5.5, respectively; provided that Purchaser may,
--------
at Purchaser's option, extend either of the Closing Dates up to thirteen (13)
Business Days after such date or (b) at such other location and time as may be
mutually agreed upon by the parties hereto. The date on which the First Closing
is required to take place is herein referred to as the "First Closing Date" and
------------------
the date on which the Second Closing is required to take place is herein
referred to as the "Second Closing Date." All closing transactions at the First
-------------------
Closing shall be deemed to have occurred simultaneously, and all closing
transactions at the Second Closing shall be deemed to have occurred
simultaneously.
Section 6.2 Actions to Occur at the First Closing.
--------------------------------------
(a) At the First Closing, Purchaser shall deliver to the Company the
following:
(i) Purchase Price. An amount equal to the Purchase Price for the
---------------
Initial Shares in accordance with Article II hereof;
(ii) Shareholders Agreement. Counterparts of the Shareholders
-----------------------
Agreement executed by Purchaser;
(iii) Monitoring Agreement. Counterparts of the Monitoring Agreement
---------------------
executed by HMCo; and
(iv) Certificates. The certificates described in Sections 5.3(a) and
------------
5.3(b).
(b) At the First Closing, the Company shall pay to HMCo the amount of
$7,000,000 payable pursuant to the Financial Advisory Agreement as referred to
in Section 9.5(d) and shall deliver to Purchaser (or to its designee as
indicated otherwise) the following:
(i) Share Certificates. Certificates representing the Initial Shares,
-------------------
duly endorsed in blank or accompanied by stock powers duly endorsed in blank,
and otherwise in proper form for transfer;
<PAGE>
(ii) Shareholders Agreement. Counterparts of the Shareholders
-----------------------
Agreement executed by the Company;
(iii) Monitoring Agreement. Counterparts of the Monitoring Agreement
---------------------
executed by the Company;
(iv) Funding Fee. The amount of $2,551,500 payable pursuant to Section
-----------
9.5(d), paid to HMCo by wire transfer of immediately available funds to an
account of HMCo (the number for which account shall have been furnished to the
Company at least two Business Days prior to the Closing Date);
(v) Purchaser's Expenses. An amount equal to Purchaser's Expenses
---------------------
incurred through the First Closing Date in connection with the transactions
contemplated hereby as provided in Section 9.5(a), by wire transfer of
immediately available funds to an account of Purchaser (the amount of such costs
and expenses and the number for which account shall have been furnished to the
Company at least two Business Days prior to the Closing Date);
(vi) Certificates. The certificates described in Sections 5.2(a) and
------------
5.2(b);
(vii) Consents Under Agreements. The original of each consent or
---------------------------
approval, if any, pursuant to Section 5.2(c); and
(viii) Legal Opinions. The opinions of counsel referred to in Section
---------------
5.2(d).
Section 6.3 Actions to Occur at the Second Closing.
--------------------------------------
(a) At the Second Closing, Purchaser shall deliver to the Company the
following:
(i) Purchase Price. An amount equal to the Purchase Price for the
---------------
Remaining Shares in accordance with Article II hereof; and
(ii) Certificates. The certificates described in Sections 5.5(a) and
------------
5.5(b).
(b) At the Second Closing, the Company shall deliver to Purchaser (or
to its designee as indicated otherwise) the following:
(i) Share Certificates. Certificates representing the Remaining
-------------------
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in
blank, and otherwise in proper form for transfer;
<PAGE>
(ii) Funding Fee. The amount of 2% multiplied by the product of (A)
------------
$70.00 and (B) the number of Remaining Shares, as provided in Section 9.5(d),
paid to HMCo by wire transfer of immediately available funds to an account of
HMCo (the number for which account shall have been furnished to the Company at
least two Business Days prior to the Closing Date);
(iii) Purchaser's Expenses. An amount equal to Purchaser's Expenses
---------------------
incurred between the First Closing Date and the Second Closing Date as provided
in Section 9.5(a), by wire transfer of immediately available funds to an account
of Purchaser (the amount of such costs and expenses and the number for which
account shall have been furnished to the Company at least two Business Days
prior to the Closing Date);
(iv) Certificates. The certificates described in Sections 5.4(c) and
------------
5.4(d); and
(v) Legal Opinions. The opinions of counsel referred to in Section
---------------
5.4(e).
ARTICLE VII
TERMINATION
-----------
Section 7.1 Termination. This Agreement may be
-----------
terminated prior to either Closing:
(a) by mutual consent of Purchaser and the Company;
(b) by either Purchaser or the Company:
(i) in the event of a breach by the other party of any representation,
warranty, covenant or agreement contained in this Agreement which (A) would give
rise to the failure of a condition set forth in Section 5.2(a) or 5.2(b), with
respect to the First Closing, or Section 5.3(a) or 5.3(b), with respect to the
Second Closing, as applicable, and (B) cannot be cured or, if curable, has not
been cured within 20 days (the "Cure Period") following receipt by the breaching
-----------
party of written notice of such breach (it being acknowledged and agreed that
there shall not be a Cure Period for breaches of the covenants set forth in
Section 4.12);
(ii) if a court of competent jurisdiction or other Governmental Entity
shall have issued an order, decree, or ruling or taken any other action (which
order, decree, or ruling Purchaser and the Company shall use all commercially
reasonable efforts to lift), in each case permanently restraining, enjoining, or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling, or other action shall have become final and
nonappealable; provided, however, that the right to terminate this Agreement
-------- -------
under this clause (ii) shall not be available to any party whose breach of this
Agreement has been the cause of, or resulted in, such order, decree, ruling or
other action;
<PAGE>
(iii) if the First Closing shall not have occurred by the later of (A)
October 31, 1998, as such date may be extended by Purchaser pursuant to Section
6.1(a), and (B) the date to which the First Closing Date is extended pursuant to
Section 6.1(b); provided, however, that the right to terminate this Agreement
under this clause (iii) shall not be available to any party whose breach of this
Agreement has been the cause of, or resulted in, the failure of the First
Closing to occur on or before such date; or
(iv) if the Second Closing shall not have occurred by the later of (A)
50 Business Days after the date on which the Registration Statement is declared
effective under the Securities Act, but in no event later than February 1, 1999,
as such date may be extended by Purchaser pursuant to Section 6.1(a), and (B)
the date to which the Second Closing Date is extended pursuant to Section 6.1;
provided, however, that the right to terminate this Agreement under this clause
(iv) shall not be available to any party whose breach of this Agreement has been
the cause of, or resulted in, the failure of the Second Closing to occur on or
before such date;
(c) by the Company if (i) the Board of Directors of the Company shall
have determined in good faith, based on the advice of outside counsel, that it
is necessary, in order to comply with its fiduciary duties to the Company's
shareholders under applicable law, to terminate this Agreement and to enter into
an agreement with respect to or to consummate a transaction constituting a Sale
Transaction, and (ii) the Company shall have given at least five Business Days
prior written notice to Purchaser advising Purchaser that the Company has
received a bona fide proposal for a Sale Transaction from a third party,
specifying the material terms and conditions of such proposal (including the
identity of the third party) and the material terms and conditions of any
agreements or arrangements to be entered into in connection with a Sale
Transaction and that the Company intends to terminate this Agreement in
accordance with this Section 7.1(c); provided that the Company may not effect
--------
such termination pursuant to this Section 7.1(c) unless (i) the Company shall
not have breached Section 4.12 and (ii) the Company has contemporaneously with
such termination tendered payment to Purchaser, or its designee, of the
Termination Fee and the reimbursement of Purchaser's Expenses (if and to the
extent that Purchaser has provided to the Company documentation reasonably
acceptable to the Company in support of the amounts claimed) that is due
Purchaser or its designee pursuant to Section 9.5; or
(d) by Purchaser if:
(i) the Board shall have recommended to the shareholders of the Company
any Sale Transaction, other than a proposal or offer by Purchaser or any of its
Affiliates, or shall have resolved to do so; or
<PAGE>
(ii) a tender offer or exchange offer for 50% or more of the
outstanding shares of Common Stock or voting securities representing 50% or more
of the voting power of the outstanding capital stock of the Company (giving
effect to the conversion of outstanding 8% Preference Shares to Common Stock at
the rate which the 8% Preference Shares are then convertible into shares of
Common Stock) is commenced (other than by the Company or its Affiliates) and the
Board of Directors of the Company fails to timely recommend against the
stockholders of the Company tendering their shares into such tender offer or
exchange offer.
provided that Purchaser in exercising its termination rights hereunder may
condition the effectiveness of such termination upon receipt of the Termination
Fee and reimbursement of Purchaser's Expenses (if and to the extent that
Purchaser has provided to the Company documentation reasonably acceptable to the
Company in support of the amounts claimed) that are due Purchaser or its
designee pursuant to Section 9.5.
The right of any party hereto to terminate this Agreement pursuant to this
Section 7.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective officers, directors,
employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Section 7.2 Effect of Termination.
---------------------
In the event of the termination of this Agreement, written notice thereof shall
forthwith be given to the other party specifying the provision hereof pursuant
to which such termination is made, and this Agreement (except for the provisions
of this Section 7.2, Article VIII and Sections 9.4, 9.5, 9.6, 9.9, 9.10, 9.12
and 9.13, which shall survive such termination) shall forthwith become null and
void. Subject to the provisions of Section 9.5, in the event of a termination
of this Agreement by either the Company or Purchaser as provided above, there
shall be no liability on the part of the Company or Purchaser, except for
liability arising out of a wilful breach of, or misrepresentation under, this
Agreement (but in no event shall any party hereto be entitled to recover
punitive damages).
ARTICLE VIII
INDEMNIFICATION
---------------
Section 8.1 Indemnification of Purchaser.
----------------------------
Subject to the provisions of this Article VIII, from and after the First Closing
Date the Company agrees to indemnify and hold harmless the Purchaser Indemnified
Parties from and against any and all Purchaser Indemnified Costs.
Section 8.2 Indemnification of Company.
----------------------------
Subject to the provisions of this Article VIII, from and after the First Closing
Date Purchaser agrees to indemnify and hold harmless the Company from and
against any and all Company Indemnified Costs.
<PAGE>
Section 8.3 Defense of Third-Party Claims.
-------------------------------
An Indemnified Party shall give prompt written notice to any person who
is obligated to provide indemnification hereunder (an "Indemnifying Party") of
the commencement or assertion of any action, proceeding, demand, or claim by a
third party (collectively, a "third-party action") in respect of which such
Indemnified Party shall seek indemnification hereunder. Any failure so to
notify an Indemnifying Party shall not relieve such Indemnifying Party from any
liability that it, he, or she may have to such Indemnified Party under this
Section 8.3 unless the failure to give such notice materially and adversely
prejudices such Indemnifying Party. The Indemnifying Party shall have the right
to assume control of the defense of, settle, or otherwise dispose of such
third-party action on such terms as it deems appropriate; provided, however,
that:
(a) The Indemnified Party shall be entitled, at its own expense, to
participate in the defense of such third-party action (provided, however, that
the Indemnifying Party shall pay the attorneys' fees of one counsel (provided
that if any such third-party action is brought in a jurisdiction other than
Texas, the Indemnifying Party shall also pay the attorney's fees of one local
counsel) to the Indemnified Party if (i) the employment of separate counsel
shall have been authorized in writing by any such Indemnifying Party in
connection with the defense of such third-party action, (ii) the Indemnifying
Parties shall not have employed counsel reasonably satisfactory to the
Indemnified Party to have charge of such third-party action, (iii) counsel to
the Indemnified Party shall have advised the Indemnified Party that there are
defenses available to the Indemnified Party that are different from or
additional to those available to the Indemnifying Party and that it is advisable
to have those defenses asserted on behalf of Indemnified Party by separate
counsel, (iv) counsel to the Indemnified Party and the Indemnifying Party shall
have advised their respective clients in writing, with a copy delivered to the
other party, that there is a conflict of interest that could make it
inappropriate under applicable standards of professional conduct to have common
counsel), or (v) the third-party action is a proceeding brought by a shareholder
of the Company (in such shareholder's name or derivatively on behalf of the
Company) in respect of the transactions contemplated by this Agreement;
(b) The Indemnifying Party shall obtain the prior written approval of
the Indemnified Party (not to be unreasonably withheld) before entering into or
making any settlement, compromise, admission, or acknowledgment of the validity
of such third-party action or any liability in respect thereof if, pursuant to
or as a result of such settlement, compromise, admission, or acknowledgment,
injunctive or other equitable relief would be imposed against the Indemnified
Party or if, in the reasonable opinion of the Indemnified Party, such
settlement, compromise, admission, or acknowledgment could reasonably be
expected to have a material adverse effect on its business;
(c) No Indemnifying Party shall, without the consent of each
Indemnified Party (which consent shall not be unreasonably withheld), consent to
the entry of any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such third-party
action; and
<PAGE>
(d) The Indemnifying Party shall not be entitled to control (but shall
be entitled to participate at its own expense in the defense of), and the
Indemnified Party shall be entitled to have sole control over, the defense or
settlement, compromise, admission, or acknowledgment of any third-party action
(i) as to which the Indemnifying Party fails to assume the defense within a
reasonable length of time; or (ii) to the extent the third-party action seeks an
order, injunction, or other equitable relief against the Indemnified Party which
could reasonably be expected to materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article VIII and, in
connection therewith, shall furnish such records, information, and testimony and
attend such conferences, discovery proceedings, hearings, trials, and appeals as
may be reasonably requested.
Section 8.4 Direct Claims. In any case in which an
-------------
Indemnified Party seeks indemnification hereunder which is not subject to
Section 8.3 because no third-party action is involved, the Indemnified Party
shall notify the Indemnifying Party in writing of any Indemnified Costs which
such Indemnified Party claims are subject to indemnification under the terms
hereof. The failure of the Indemnified Party to exercise promptness in such
notification shall not amount to a waiver of such claim unless the resulting
delay materially prejudices the position of the Indemnifying Party with respect
to such claim.
Section 8.5 Special provisions Regarding Indemnity. Notwithstanding
-----------------------------------------
the other terms of this Agreement:
(a) Purchaser shall not be entitled to recover any Purchaser
Indemnified Costs and the Company shall not be entitled to recover any Company
Indemnified Costs as a result of any breach of any representation or warranty by
the other party unless, in either such case, the aggregate amount thereof
exceeds $2,500,000, in which event the party entitled to indemnification with
respect thereto shall be entitled to recover only the amount in excess of
$2,500,000; and provided, however, that the limitations of this Section 8.5(a)
-------- -------
shall not apply to any Purchaser Indemnified Cost resulting from or relating to
(i) any misrepresentation or breach of the representations and warranties
contained in Section 3.1(c) or (ii) the Company's knowing or willful
misrepresentations or breaches of representations or warranties made as a part
of or contained in this Agreement.
(b) For purposes of determining if there has been any inaccuracy or
breach of a representation or warranty for purposes of calculating Purchaser
Indemnified Costs or Company Indemnified Costs, the representations and
warranties contained herein that are qualified by a materiality standard or a
Material Adverse Effect or Material Adverse Change qualification shall be read
without regard to any such qualifications as if such qualifications were not
contained therein.
(c) The Company's maximum liability for Purchaser Indemnified Costs
shall be the Purchase Price
<PAGE>
Section 8.6 Tax Related Adjustments.
-----------------------
The Company and Purchaser agree that any payment of Indemnified Costs made
hereunder will be treated by the parties on their Tax Returns as an
adjustment to the Purchase Price. If, notwithstanding such treatment by the
parties, any payment of Indemnified Costs is determined to be taxable income
rather than adjustment to Purchase Price, then the Indemnifying Party shall
indemnify the Indemnified Party for any Taxes payable by the Indemnified Party
or any subsidiary by reason of the receipt of such payment (including any
payments under this Section 8.5), determined at an assumed marginal tax
rate equal to the highest marginal tax rate then in effect for corporate
taxpayers in the relevant jurisdiction.
ARTICLE IX
MISCELLANEOUS
-------------
Section 9.1 Survival of Provisions.
-----------------------
(a) The representations and warranties of the Company and Purchaser
made herein or in any other Transaction Document and the covenants of the
Company and Purchaser to be complied with on or prior to either Closing Date
shall remain operative and in full force and effect pursuant to their terms,
regardless of (x) any investigation made by or on behalf of Purchaser or the
Company, as the case may be, or (y) acceptance of any of the Shares and payment
by Purchaser therefor, until the first anniversary of the Second Closing Date.
(b) The covenants and agreements of the Company and Purchaser contained
in this Agreement to the extent that, by their terms, they are to be performed
or complied with after either of the Closing Dates, including without limitation
the Indemnification Agreement set forth in Article VIII hereof, will survive
until the later of (i) the first anniversary of the Second Closing Date or (ii)
the expiration of all applicable statute of limitations (including all periods
of extension, whether automatic or permissive) affecting or applicable to any
such covenant or agreement.
(c) Any claim for indemnification for a breach of a representation,
warranty or covenant hereunder shall be brought within the applicable survival
period specified in Section 9.1(a) or Section 9.1(b) hereof. If a claim for
indemnification is made in accordance with Article VIII hereof before the
expiration of the applicable survival period set forth in Section 9.1(a) or
Section 9.1(b), as applicable, then (not withstanding such survival period) the
representation, warranty, covenant or agreement applicable to such claim will
survive for purposes of such claim until the resolution of such claim by final,
nonappealable judgment or settlement, but only with respect to such claim.
<PAGE>
Section 9.2 No Waiver; Modification in Writing.
--------------------------------------
No failure or delay on the part of the Company or a
Purchaser in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. Without limiting the rights that any party
may have for fraud under common law, the remedies provided for herein are
cumulative and are the exclusive remedies available to the Company or Purchaser
at law or in equity. The provisions of this Agreement, including the provisions
of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given without the
written consent of the Company, on the one hand, and Purchaser or its permitted
assigns, on the other hand, provided that notice of any such waiver shall be
given to each party hereto as set forth below. Any amendment, supplement or
modification of or to any provision of this Agreement, or any waiver of any
provision of this Agreement, shall be effective only in the specific instance
and for the specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on any party
hereto in any case shall entitle the other party to any other or further notice
or demand in similar or other circumstances.
Section 9.3 Specific Performance.
---------------------
The parties recognize that in the event the Company should refuse to perform
under the provisions of this Agreement or any other Transaction Document,
monetary damages alone will not be adequate. Purchaser shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
In the event of any action to enforce this Agreement or any other
Transaction Document specifically, the Company hereby waive the defense
that there is an adequate remedy at law.
Section 9.4 Severability. If any term or other
------------
provision of this Agreement is invalid, illegal, or incapable of being enforced
by any rule of applicable law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
herein are not affected in any manner materially adverse to any party. Upon
such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated herein are consummated as originally contemplated to
the fullest extent possible.
Section 9.5 Fees and Expenses.
-------------------
(a) At each Closing pursuant to Sections 6.2(b)(v) and 6.3(b)(iii), the
Company shall pay to Purchaser an amount equal to the Purchaser's Expenses
through the applicable Closing Date in connection with the transactions
contemplated by this Agreement.
(b) Concurrently with a termination of this Agreement by the Company or
Purchaser pursuant to Sections 7.1(b)(ii), 7.1(b)(iii) or 7.1(b)(iv) (and as a
condition to any such termination by the Company), by the Company pursuant to
Section 7.1(c) (and as a condition to any such termination by the Company) or by
Purchaser pursuant to Section 7.1(b)(i) or 7.1(d), the Company shall pay to
Purchaser by wire transfer of immediately available funds an amount equal to the
Purchaser's Expenses. If the Company terminates this Agreement pursuant to
Section 7.1(b)(i), then Purchaser shall not be entitled to reimbursement of the
Purchaser's Expenses. The payment of Purchasers Expenses pursuant to this
Section 9.5(b) shall not in any way limit Purchasers rights against the Company
as permitted under Section 7.2 of this Agreement.
<PAGE>
(c) Concurrently with a termination of this Agreement by the Company
pursuant to Section 7.1(c), the Company shall pay to Purchaser by wire transfer
of immediately available funds an amount equal to $30,000,000 (the "Termination
-----------
Fee").
- ---
(d) If this Agreement is terminated by the Company or Purchaser
pursuant to Sections 7.1(b)(ii), 7.1(b)(iii) or 7.1(b)(iv) or by Purchaser
pursuant to Section 7.1(b)(i) as a result of non-willful breach of this
Agreement by the Company or pursuant to Section 7.1(d), and within one year
after such termination date (i) definitive documentation with respect to a Sale
Transaction has been entered into or (ii) 50% or more of the outstanding Common
Stock or voting securities representing 50% or more of the voting power of the
outstanding capital stock of the Company (giving effect to the conversion of
outstanding 8% Preference Shares to Common Stock at the rate at which the 8%
Preference Shares are then convertible into shares of Common Stock) has been
acquired pursuant to a tender or exchange offer in connection with a proposed
Sale Transaction or, if a tender or exchange offer in connection with a proposed
Sale Transaction has been commenced prior to but has not expired as of such date
that is one year after such termination of this Agreement, 50% or more of the
outstanding Common Stock or voting securities representing 50% or more of the
voting power of the outstanding capital stock of the Company (giving effect to
the conversion of outstanding 8% Preference Shares to Common Stock at the rate
at which the 8% Preference Shares are then convertible into shares of Common
Stock) is acquired pursuant to such tender or exchange offer, then the Company
shall pay or shall cause to be paid, contemporaneously with the consummation of
such Sale Transaction, to Purchaser, or its designee, an amount equal to the
Termination Fee by wire transfer of immediately available funds.
Notwithstanding the forgoing, Purchaser shall not be entitled to the Termination
Fee pursuant to this Section 9.5(d) if this Agreement is terminated pursuant to
Section 7.1(b)(iii) and the sole unsatisfied condition to Purchaser's obligation
to close shall have been the failure of the condition in Section 5.1(a) to have
been satisfied as a result of the failure to obtain approval under the HSR Act
or the failure of the expiration or termination of any applicable waiting period
under the HSR Act to have expired.
(e) Pursuant to the terms of the Financial Advisory Agreement, the
Company will pay to HMCo a transaction fee equal to $7,000,000 by wire transfer
of immediately available funds contemporaneously with the earlier to occur of
(i) the First Closing Date or (ii) the termination of this Agreement for any
reason. At the First Closing, the Company also shall pay to HMCo a transaction
fee in the amount of $2,551,500 by wire transfer of immediately available funds.
In addition, at the Second Closing, the Company shall pay HMCo a transaction fee
equal to two percent of the Purchase Price paid by Purchaser at such Second
Closing, including the Purchase Price paid by Purchaser for any Shares purchased
in the Rights Offering.
(f) The payment of Purchaser's Expenses and the Termination Fee shall
be paid by the Company without reservation of rights or protests and the Company
upon making such payment shall be deemed to have released and waived any and all
rights that it may have to recover such amounts. Nothing contained in this
Section 9.5 shall limit Purchasers rights against the Company in the event of
the termination of this Agreement by Purchaser pursuant to Section 7.1(b)(i) as
a result of a willful breach by the Company of this Agreement.
<PAGE>
Section 9.6 Parties in Interest.
-------------------
This Agreement shall be binding upon and, except as provided below, inure solely
to the benefit of each party hereto and their successors and assigns, and
nothing in this Agreement, except as set forth in Section 4.11 (which is
expressly intended for the benefit of the parties specified therein and shall be
enforceable by any of such parties or any of their respective heirs and
representatives) and Article VIII (which is intended for the benefit of all
Indemnified Parties), express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Agreement.
Section 9.7 Notices. All notices and other
-------
communications hereunder shall be in writing and shall be deemed given if
delivered personally or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to Purchaser, to:
HM 4 Triton, L.P.
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Facsimile: (214) 740-7313
with a copy to:
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attention: Michael D. Wortley
Facsimile: (214) 999-7732
(b) If to the Company, to:
Triton Energy Limited
c/o Triton Exploration Services, Inc.
6688 North Central Expressway
Suite 1400
Dallas, Texas 75206
Attention: Robert Holland
Facsimile: (214) 691-0198
<PAGE>
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert Friedman
Facsimile: (212) 455-2502
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices, requests or instructions
given in accordance herewith shall be deemed received on the date of delivery,
if hand delivered, on the date of receipt, if telecopied, three Business Days
after the date of mailing, if mailed by registered or certified mail, return
receipt requested, and one Business Day after the date of sending, if sent by
Federal Express or other recognized overnight courier.
Section 9.8 Counterparts. This Agreement may be
------------
executed and delivered (including by facsimile transmission) in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
Section 9.9 Entire Agreement. This Agreement
----------------
(which term shall be deemed to include the Exhibits and Schedules hereto and the
other certificates, documents and instruments delivered hereunder) and the other
Transaction Documents constitute the entire agreement of the parties hereto and
supersede all prior agreements, letters of intent and understandings, both
written and oral, among the parties with respect to the subject matter hereof.
There are no representations or warranties, agreements, or covenants other than
those expressly set forth in this Agreement and the other Transaction Documents.
<PAGE>
Section 9.10 Governing Law. THIS AGREEMENT
--------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICTS OF LAW PROVISIONS. Each of the
parties hereby (a) irrevocably submits to the exclusive jurisdiction of the
United States Federal District Court for the Northern District of Texas, sitting
in Dallas County, Texas, the United States of America, in the event such court
has jurisdiction or, if such court does not have jurisdiction, to any district
court sitting in Dallas County, Texas, the United States of America, for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement, including any claims for indemnity pursuant to Article VIII hereof,
(b) waives, and agrees not to assert in any such suit, acting or proceeding, any
claim that (i) it is not personally subject to the jurisdiction of such court or
of any other court to which proceedings in such court may be appealed, (ii) such
suit, action or proceeding is brought in an inconvenient forum or (iii) the
venue of such suit, action or proceeding is improper and (c) expressly waives
any requirement for the posting of a bond by the party bringing such suit,
action or proceeding. Each of the parties consents to process being served in
any such suit, action or proceeding by mailing, certified mail, return receipt
requested, a copy thereof to such party at the address in effect for notices
hereunder, and agrees that such services shall constitute good and sufficient
service of process and notice thereof. Nothing in this Section 9.10 shall
affect or limit any right to serve process in any other manner permitted by law.
Section 9.11 Public Announcements.
--------------------
The Company, on the one hand,and Purchaser, on the other, shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby, except for statements required by Law or by any listing agreements with
or rules of any national securities exchange or the National Association of
Securities Dealers, Inc., or made in disclosures reasonably determined as
required to be filed pursuant to the Securities Act of 1933 or the Securities
Exchange Act of 1934.
Section 9.12 Assignment. Neither this Agreement
----------
nor any of the rights, interests, or obligations hereunder shall be assigned by
any of the parties hereto, whether by operation of Law or otherwise; provided,
however, that upon notice to the Company, (a) Purchaser may assign or delegate
any or all of its rights or obligations under this Agreement to any Affiliate
thereof and (b) nothing in this Agreement shall limit Purchaser's ability to
make a collateral assignment of its rights under this Agreement to any
institutional lender that provides funds to Purchaser without the consent of the
Company. The Company shall execute an acknowledgment of such collateral
assignments in such forms as Purchaser's lenders may from time to time
reasonably request; provided, however, that unless written notice is given to
the Company that any such collateral assignment has been foreclosed upon, the
Company shall be entitled to deal exclusively with Purchaser as to any matters
arising under this Agreement or any of the other agreements delivered pursuant
hereto. In the event of such an assignment, the provisions of this Agreement
shall inure to the benefit of and be binding on Purchaser's assigns. Any
attempted assignment in violation of this Section shall be null and void.
Section 9.13 Director and Officer Liability.
---------------------------------
The directors, officers, partners, members and stockholders
of Purchaser, the Company and their respective Affiliates shall not have any
personal liability or obligation arising under this Agreement (including any
claims that the Company or Purchaser may assert) other than as an assignee of
this Agreement.
Section 9.14 Headings. The headings of this Agreement are for
--------
convenience of reference only and are not part of the substance of
this Agreement.
[The remainder of this page is intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by its duly authorized officer as of the date first written above.
TRITON ENERGY LIMITED
By:/s/ Robert B. Holland, III
Robert B. Holland, III
Interim Chief Executive Officer
and General Counsel
HM4 TRITON, L.P.
By: HM Triton G.P., LLC
its General Partner
By: /s/ Daniel S. Dross
Daniel S. Dross
Senior Vice President
EXHIBIT 10.68
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of September 30,
1998, is entered into by and between Triton Energy Limited, a Cayman Islands
company (the "Company"), and HM4 Triton, L.P., a Cayman Islands exempted limited
partnership (the "Purchaser").
In consideration of the obligations of the Company and Purchaser under the
Stock Purchase Agreement (as hereinafter defined), the premises, mutual
covenants and agreements hereinafter contained and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
-----------
"8% Preference Shares" means the 8% Convertible Preference Shares of the
Company, par value $.01 per share.
"8% Preference Shares Authorization" means the unanimous written consent of
the Board authorizing the 8% Preference Shares.
"Advice" shall have the meaning provided in Section 2.5 hereof.
"Affiliate" means, with respect to any Person, any Person who, directly or
indirectly, controls, is controlled by or is under common control with that
Person.
"Agreement" means this Shareholders Agreement, as such from time to time
may be amended.
"ARCO Shareholders Agreement" shall have the meaning provided in Section
4.3(ii) hereof.
"Asset Acquisition" shall mean (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged with
the Company or any Subsidiary of the Company or (ii) the acquisition by the
Company or any Subsidiary of the Company of assets of any Person comprising a
division, line of business or substantial portion of the assets of such Person.
<PAGE>
"Asset Sale" shall mean any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (excluding any Sale and Leaseback Transaction or any pledge of
assets or stock by the Company or any of its Subsidiaries) to any Person other
than the Company or a wholly owned Subsidiary of the Company of (i) any Capital
Stock of any Subsidiary of the Company or (ii) any other property or assets of
the Company or any Subsidiary of the Company other than in the ordinary course
of business.
"Board" means the board of directors of the Company.
"Business Day" shall mean any day other than a Saturday, Sunday or a day on
which state or federally chartered banking institutions in New York City, New
York or Dallas, Texas are not required to be opened.
"Class Directors" shall have the meaning provided in Section 4.1.8 hereof.
"Commodity Agreement" shall mean any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Subsidiaries designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodities actually used or
bought or sold in the ordinary course of business of the Company and its
Subsidiaries.
"Common Stock" means the ordinary shares, $0.01 par value per share, of the
Company, and any shares or capital stock for or into which such Common Stock
hereafter is exchanged, converted, reclassified or recapitalized by the Company
or pursuant to an agreement to which the Company is a party.
"Common Stock Equivalents" means, without duplication with any other Common
Stock or Common Stock Equivalents, any rights, warrants, options, convertible
securities or indebtedness, exchangeable securities or indebtedness, or other
rights, exercisable for or convertible or exchangeable into, directly or
indirectly, Common Stock of the Company and securities convertible or
exchangeable into Common Stock of the Company, whether at the time of issuance
or upon the passage of time or the occurrence of some future event.
"Company" shall have the meaning set forth in the introductory paragraph
hereof.
"Consolidated EBITDA" shall mean, with respect to any Person, for any
period, the sum (without duplication) of (i) Consolidated Net Income and (ii) to
the extent Consolidated Net Income has been reduced thereby, (A) all income
taxes of such Person and its Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary or
nonrecurring gains or losses), (B) Consolidated Interest Expense and (C)
Consolidated Non-Cash Charges, all as determined on a consolidated basis for
such Person and its Subsidiaries in conformity with GAAP.
<PAGE>
"Consolidated Interest Expense" shall mean, with respect to any Person for
any period, without duplication, the sum of (i) the interest expense of such
Person and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Swap Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers acceptance financing or
similar facilities, and (e) all accrued interest and (ii) the interest component
of Capitalized Lease Obligations paid or accrued by such Person and its
Subsidiaries during such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" of any Person shall mean, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided
--------
that there shall be excluded therefrom, without duplication, (a) gains and
losses from Asset Sales or abandonments or reserves relating thereto and the
related tax effects, (b) items classified as extraordinary or nonrecurring gains
and losses, and the related tax effects according to GAAP, (c) the net income
(or loss) of any Person acquired in a pooling of interests transaction accrued
prior to the date it becomes a Subsidiary of such first referred to Person or is
merged or consolidated with it or any of its Subsidiaries, (d) the net income of
any Subsidiary to the extent that the declaration of dividends or similar
distributions by that Subsidiary of that income is restricted by contract,
operation of law or otherwise, (e) the net income of any Person, other than a
Subsidiary, except to the extent of the lesser of (x) dividends or distributions
paid to such first referred to Person or its Subsidiary by such Person and (y)
the net income of such Person (but in no event less than zero), and the net loss
of such Person shall be included only to the extent of the aggregate Investment
of the first referred to Person or a consolidated Subsidiary of such Person and
(f) any non-cash expenses attributable to grants or exercises of employee stock
options.
"Consolidated Non-Cash Charges" shall mean, with respect to any Person for
any period, the aggregate depreciation, amortization and other non-cash expenses
of such Person and its Subsidiaries (excluding any such charges constituting an
extraordinary or nonrecurring item) reducing Consolidated Net Income of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP.
"Credit Agreements" means, collectively, (i) that certain Credit Agreement
between the Company and Soci t G n rale, Southwest Agency, dated October 8,
1997, as amended, (ii) that certain Credit Agreement between the Company and
Barclays Bank PLC, dated November 26, 1997, as amended, (iii) that certain
Credit Agreement between the Company and Toronto Dominion (Texas), Inc., dated
November 26, 1997, as amended, (iv) that certain Credit Agreement between the
Company and Union Bank of California, N.A., dated December 31, 1997, as amended,
(v) that certain Credit Agreement between the Company and Credit Suisse First
Boston, dated February 9, 1998, as amended, and (vi) that certain Demand
Promissory Note with Banque Paribas dated September 15, 1997.
<PAGE>
"Currency Agreement" shall mean any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Current Market Price" of Common Stock or any other class of stock or other
security of the Company or any other issuer for any day shall mean the last
reported sales price, regular way on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the New York Stock Exchange ( NYSE )
----
or, if such security is not listed or admitted for trading on the NYSE, on the
principal national securities exchange on which such security is listed or
admitted for trading or, if not listed or admitted for trading on any national
securities exchange, on The Nasdaq Stock Market or, if such security is not
quoted on The Nasdaq Stock Market, the average of the closing bid and asked
prices on such day in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System ( NASDAQ )
------
or, if bid and asked prices for such security on such day shall not have been
reported through NASDAQ, the average of the bid and asked prices on such day as
furnished by any NYSE member firm regularly making a market in such security
selected for such purpose by the Board or, if no such market is regularly made,
as determined by a majority of the Board based on advice of an independent
appraiser selected by a majority of the Board.
"Demand Registration" shall have the meaning set forth in Section 2.1.1
hereof.
"Demand Request" shall have the meaning set forth in Section 2.1.1. hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Excluded Registration" means a registration under the Securities Act of
(i) securities registered on Form S-8 or any similar successor form and (ii)
securities registered to effect the acquisition of all or a substantial portion
of the securities of a Person or a substantial portion of its assets or a merger
or other combination with another Person.
"GAAP" shall mean United States generally accepted accounting principles,
applied on a consistent basis for the periods involved.
"Holder" shall mean Purchaser and shall include all direct or indirect
transferees of Purchaser who shall become a party to this Agreement, and each
subsequent transferee of any such Holder who shall become a party to or
otherwise agree to be bound by this Agreement. Holders shall mean each Holder
collectively. If at any time there is more than one Holder, except as otherwise
specifically set forth in this Agreement, any notices, designations, consents,
or similar actions to be taken by the Holder or Holders hereunder shall be taken
as provided in Section 4.4.
"Immediate Family" means the spouse of an individual and the grandparents,
parents, siblings and children (and children and spouses of any of the
foregoing) of the individual or his or her spouse. An adopted child will be
treated as the child of his or her adoptive parent or parents if (but only if)
he or she was adopted before he or she reached 21 years of age.
<PAGE>
"Inspectors" shall have the meaning provided in Section 2.5(x) hereof.
"Indebtedness" shall mean with respect to any Person, without duplication,
any liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations, (iv) incurred or assumed as the deferred purchase price of
property, or pursuant to conditional sale obligations and title retention
agreements (but excluding trade accounts payable arising in the ordinary course
of business), (v) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) for Indebtedness of
others guaranteed by such Person, (vii) for Interest Swap Obligations, Commodity
Agreements and Currency Agreements and (viii) for Indebtedness of any other
Person of the type referred to in clauses (i) through (vii) which is secured by
any Lien on any property or asset of such first referred to Person, the amount
of such Indebtedness being deemed to be the lesser of the value of such property
or asset or the amount of the Indebtedness so secured. The amount of
Indebtedness of any Person at any date shall be (A) the outstanding principal
amount of all unconditional obligations described above, as such amount would be
reflected on a balance sheet prepared in accordance with GAAP, and (B) with
respect to all contingent obligations described above, the maximum liability as
of such date of such Person for any guarantees of Indebtedness for borrowed
money of any other Person and the amount required under GAAP to be accrued with
respect to any other contingent obligation.
"Interest Swap Obligations" shall mean the obligations of any Person under
any interest rate protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap or other interest rate hedge or
arrangement.
"Investment" shall mean (i) any transfer or delivery of cash, stock or
other property of value in exchange for Indebtedness, stock or other security or
ownership interest in any Person by way of loan, advance, capital contribution,
guarantee or otherwise and (ii) an investment deemed to have been made by the
Company at the time any entity which was a Subsidiary of the Company ceases to
be such a Subsidiary in an amount equal to the value of the loans and advances
made, and any remaining ownership interest in, such entity immediately following
such entity ceasing to be a Subsidiary of the Company. The amount of any
non-cash Investment shall be the fair market value of such Investment, as
determined conclusively in good faith by management of the Company unless the
fair market value of such Investment exceeds $1,000,000, in which case the fair
market value shall be determined conclusively in good faith by the Board of
Directors at the time such Investment is made.
"Issue Date" shall have the meaning ascribed to such term under the 8%
Convertible Preference Shares Authorization.
"Junior Shares" has the meaning provided in the 8% Preference Shares
Authorization.
<PAGE>
"Leverage Ratio" shall mean the ratio of (i) the aggregate outstanding
amount of Indebtedness of the Company and its Subsidiaries (including Permitted
Indebtedness) as of the date of calculation on a consolidated basis in
accordance with GAAP (subject to the terms described in the next paragraph) plus
(A) the aggregate liquidation preference on such date of (1) all outstanding
Preferred Stock of the Company's Subsidiaries (except Preferred Stock issued to
the Company or a wholly owned Subsidiary of the Company and except Preferred
Stock issued by Triton International Oil Corporation in respect of costs to
conduct petroleum operations pursuant to Section 8.3 of the Shareholders
Agreement with ARCO JDA Limited), (2) all Senior Shares, (3) all Parity
Liquidation Shares and (4) all other outstanding shares of Preferred Stock of
the Company the terms of which require, or permit the holder thereof to require,
the Company to redeem all or any portion thereof at a future date, but in the
case of clause (4), only with respect to the present value of such amount as
required to be redeemed or with respect to which the holders thereof could
require redemption, calculated at a discount rate equal to the weighted average
of the interest rates under the Credit Agreements (or any Refinancing
Indebtedness related thereto as from time to time in effect) (excluding in each
of cases (2), (3) and (4) such securities issued to a wholly-owned Subsidiary of
the Company) less (B) cash and the current market value of marketable securities
held by the Company and its Subsidiaries to (ii) the Consolidated EBITDA of the
Company for the four full fiscal quarters (the Four Quarter Period ) ending on
-------------------
or as of the most recent quarter end prior to the date of determination.
<PAGE>
For purposes of this definition, the amount of Indebtedness which is issued
at a discount shall be deemed to be the accreted value of such Indebtedness at
the end of the Four Quarter Period, whether or not such amount is the amount
then reflected on a balance sheet prepared in accordance with GAAP. In addition
to the foregoing, for purposes of this definition, Consolidated EBITDA shall
be calculated on a pro forma basis after giving effect to (i) the incurrence of
the Indebtedness of such Person and its Subsidiaries and the issuance of the
Preferred Stock of such Person and its Subsidiaries (and the application of the
proceeds therefrom) giving rise to the need to make such calculation and any
incurrence (and the application of the proceeds therefrom) or repayment of other
Indebtedness, other than the incurrence or repayment of Indebtedness pursuant to
working capital facilities, at any time subsequent to the beginning of the Four
Quarter Period and on or prior to the date of determination, as if such
incurrence or issuance (and the application of the proceeds thereof), or the
repayment, as the case may be, occurred on the first day of the Four Quarter
Period, (ii) any Asset Sales or Asset Acquisitions (including without limitation
any Asset Acquisition giving rise to the need to make such calculation as a
result of such Person or one of its Subsidiaries (including any Person that
becomes a Subsidiary as a result of such Asset Acquisition) incurring, assuming
or otherwise becoming liable for Indebtedness or issuing Preferred Stock) at any
time on or subsequent to the first day of the Four Quarter Period and on or
prior to the date of determination, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Indebtedness and
the issuance of such Preferred Stock and also including any Consolidated EBITDA
associated with such Asset Acquisition) occurred on the first day of the Four
Quarter Period and (iii) cost savings resulting from employee terminations,
facilities consolidations and closings, standardization of employee benefits and
compensation practices, consolidation of property, casualty and other insurance
coverage and policies, standardization of sales representation commissions and
other contract rates, and reductions in taxes other than income taxes
(collectively Cost Savings Measures ), which cost savings the Company
-----------------------
reasonably believes in good faith would have been achieved during the Four
Quarter Period as a result of such Asset Acquisitions (regardless of whether
such cost savings could then be reflected in pro forma financial statements
under GAAP, Regulation S-X promulgated by the Commission or any other regulation
or policy of the Commission), provided that both (A) such cost savings and Cost
Savings Measures were identified and such cost savings were quantified in an
officer's certificate delivered to the Board of Directors (with a copy delivered
to Purchaser) at the time of the consummation of the Asset Acquisition and such
officer 's certificate states that such officer believes in good faith that
actions will be commenced or initiated within 90 days of such Asset Acquisition
to effect such Cost Savings Measures and (B) with respect to each Asset
Acquisition completed prior to the 90th day preceding such date of
determination, actions were commenced or initiated by the Company within 90 days
of such Asset Acquisition to effect the Cost Savings Measures identified in such
officer's certificate (regardless, however, of whether the corresponding cost
savings have been achieved).
"Majority Interest" shall have the meaning provided in Section 4.4 hereof.
"Material Adverse Effect" shall have the meaning provided in Section 2.1.5
hereof.
"NASD" shall have the meaning provided in Section 2.5(xiv) hereof.
"Original Number" shall have the meaning provided in Section 4.1.6 hereof.
"Parity Shares" has the meaning provided in the 8% Preference Shares
Authorization.
"Parity Dividend Shares" has the meaning provided in the 8% Preference
Shares Authorization.
"Parity Liquidation Shares" has the meaning provided in the 8% Preference
Shares Authorization.
<PAGE>
"Permitted Indebtedness" shall mean, without duplication, (i) Indebtedness
outstanding on the First Closing Date, other than Indebtedness under the Credit
Facilities; (ii) Indebtedness of the Company or a Subsidiary incurred pursuant
to the Credit Agreements in an aggregate principal amount at any time
outstanding not to exceed $135 million; (iii) Interest Swap Obligations;
provided that such Interest Swap Obligations are entered into to protect the
-
Company from fluctuations in interest rates of its Indebtedness; (iv)
obligations under Commodity Agreements and Currency Agreements, provided that
--------
such Commodity Agreements and Currency Agreements are entered into to protect
the Company from fluctuations in commodity prices and currency values,
respectively; (v) Refinancing Indebtedness; (vi) Indebtedness owed by the
Company to any wholly owned Subsidiary of the Company or by any Subsidiary of
the Company to the Company or any wholly owned Subsidiary of the Company; (vii)
Indebtedness in respect of performance bonds, letters of credit, bankers
acceptances and surety or appeal bonds provided by the Company or any of its
Subsidiaries to their customers in the ordinary course of their business; (viii)
Indebtedness required to be incurred pursuant to the Shareholders' Agreement
between Triton International Oil Corporation and ARCO JDA Limited; and (ix)
Indebtedness represented by Capitalized Lease Obligations, mortgage financings
or purchase money obligations, in each case incurred for the purpose of
financing all or any part of the purchase price or cost of construction or
improvement of property used in a related business or incurred to refinance any
such purchase price or cost of construction or improvement, in each case
incurred no later than 365 days after the date of such acquisition or the date
of completion of such construction or improvement; provided, however, that the
-------- -------
principal amount of any Indebtedness incurred pursuant to this clause (ix) shall
not exceed $10,000,000 at any time outstanding.
"Permitted Transfer" means any Transfer (a) with respect to a Holder who is
an individual, to a member of the Immediate Family of the Holder or a trust
whose sole beneficiaries are the Holder and/or members of the Immediate Family
of the Holder, (b) with respect to a Holder that is a corporation, partnership
or other entity (other than a trust), to an owner of at least 10% of the equity
interest in the corporation, partnership or other legal entity or to a general
partner of any partnership, (c) with respect to a Holder that is a trust, to any
beneficiary of the trust or any member of the Immediate Family of a beneficiary
of the trust, (d) to any Affiliate of a Holder, (e) pursuant to a pledge to
secure indebtedness provided that the pledgee agrees in writing that the
Registrable Shares subject to such Transfer shall be subject to the terms
hereof, (f) to any charitable trust, foundation or other charitable or
non-profit organization or entity, (g) to a Holder pursuant to the provisions of
Section 3.3, (h) pursuant to a merger, consolidation, share exchange, scheme of
arrangement or other similar transaction by the Company or pursuant to an
agreement to which the Company is a party, (i) by a Holder in response to a
tender or exchange offer for all of the outstanding Common Stock of the Company
and (j) by a Holder pursuant to a public offering registered under the
Securities Act or pursuant to Rule 144 promulgated under the Securities Act;
provided that, in each of case (a) through (f), the transferee agrees to be
- --------
bound by the terms and provisions of this Agreement.
"Person" or "person" shall mean any individual, firm, partnership, company
or other entity, and shall include any successor (by merger or otherwise) of
such entity.
"Preferred Stock" of any Person shall mean any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"Records" shall have the meaning provided in Section 2.4(x) hereof.
"Refinancing Indebtedness" shall mean any refinancing by the Company of
Indebtedness of the Company or any of its Subsidiaries that does not (i) result
in an increase in the aggregate principal amount of Indebtedness (such principal
amount to include, for purposes of this definition, any premiums, penalties or
accrued interest paid with the proceeds of the Refinancing Indebtedness) of such
Person or (ii) create Indebtedness with (a) a Weighted Average Life to Maturity
that is less than the Weighted Average Life to Maturity of the Indebtedness
being refinanced or (b) a final maturity earlier than the final maturity of the
Indebtedness being refinanced.
<PAGE>
"Registrable Shares" means at any time the 8% Preference Shares of the
Company and Common Stock owned by the Holder or Holders, whether owned on the
date hereof or acquired hereafter, including upon the conversion of 8%
Preference Shares by the Holder thereof or otherwise; provided, however, that
-------- -------
Registrable Shares shall not include any shares (x) the sale of which has been
registered pursuant to the Securities Act and which shares have been sold
pursuant to such registration, or (y) which have been sold to the public
pursuant to Rule 144 promulgated under the Securities Act.
"Registration Expenses" shall have the meaning provided in Section 2.7
hereof.
"Replacement Shelf Registration Statement" shall have the meaning provided
in Section 2.2.3 hereof.
"Requesting Holder" shall have the meaning provided in Section 2.1.1(a)
hereof.
"Required Filing Date" shall have the meaning provided in Section 2.1.1(b)
hereof.
"Sale and Leaseback Transaction" shall mean any direct or indirect
arrangement with any Person or to which any such Person is a party, providing
for the leasing to the Company or a Subsidiary of any property, whether owned by
the Company or any Subsidiary at the Issue Date or later acquired, which has
been or is to be sold or transferred by the Company or such Subsidiary to such
Person or to any other Person from whom funds have been or are to be advanced by
such Person on the security of such property.
"SEC" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.
"Seller Affiliates" shall have the meaning provided in Section 2.8.1
hereof.
"Senior Shares" shall have the meaning provided in the 8% Convertible
Preference Shares Authorization.
"Stock Purchase Agreement" shall mean the Stock Purchase Agreement dated
August 31, 1998, between the Company and Purchaser.
"Subsidiary" of any Person means (i) a corporation a majority of whose
outstanding shares of capital stock or other equity interests with voting power,
under ordinary circumstances, to elect directors is at the time, directly or
indirectly, owned by such Person, by one or more subsidiaries of such Person or
by such Person and one or more subsidiaries of such Person, and (ii) any other
Person (other than a corporation) in which such Person, a subsidiary of such
Person or such Person and one or more subsidiaries of such Person, directly or
indirectly, at the date of determination thereof, has (x) at least a majority
ownership interest or (y) the power to elect or direct the election of the
directors or other governing body of such Person. For purposes hereof, Triton
International Oil Corporation shall be deemed a Subsidiary of the Company.
"Suspension Notice" shall have the meaning provided in Section 2.6 hereof.
"Third-Party Sale" means any Transfer other than a Permitted Transfer.
<PAGE>
"TIOC" shall have the meaning provided in Section 4.3(ii) hereof.
"Trading Day" shall mean any day on which the securities in question are
traded on the NYSE, or if such securities are not listed or admitted for trading
on the NYSE, on the principal national securities exchange on which such
securities are listed or admitted, or if not listed or admitted for trading on
any national securities exchange, on The Nasdaq Stock Market, or if such
securities are not quoted on The Nasdaq Stock Market, in the applicable
securities market in which the securities are traded.
"Transfer" means any direct or indirect sale, transfer, pledge or other
disposition of Registrable Shares.
"Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
Section 1.2 Rules of Construction. Unless the context otherwise
-----------------------
requires:
(1) a term has the meaning assigned to it;
(2) "or" is not exclusive;
(3) words in the singular include the plural, and words in the plural
include the singular;
(4) provisions apply to successive events and transactions; and
(5) "herein", "thereof" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE 2
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
--------------------
2.1.1 Request for Registration.
--------------------------
<PAGE>
(a) At any time after September 30, 1999, one or more Holders may
request the Company, in writing (a "Demand Request"), to effect the registration
--------------
under the Securities Act of all or part of its or their Registrable Shares (a
"Demand Registration"); provided that the Registrable Shares proposed to be sold
------------------- --------
by the Holders requesting a Demand Registration (the Requesting Holders, which
term shall include parties deemed Requesting Holders pursuant to Section 2.1.5
hereof) represent, in the aggregate, more than 20% of the total number of
Registrable Shares held by all Holders (a "Registrable Amount").
-------------------
(b) Each Demand Request shall specify the number of Registrable Shares
proposed to be sold (which shall represent, in the aggregate, more than 20% of
the total number of Registrable Shares held by all Holders) and the intended
method of disposition thereof. Subject to Section 2.1.6, the Company shall file
the Demand Registration within 45 days after receiving a Demand Request (the
"Required Filing Date") and shall use all commercially reasonable efforts to
----------------------
cause the same to be declared effective by the SEC as promptly as practicable
--
after such filing; provided, that the Company need effect only five Demand
-------- ----
Registrations; provided, further, that if any Registrable Shares requested to be
-------- -------
registered pursuant to a Demand Request under this Section 2.1 are excluded from
a registration pursuant to Section 2.1.4 below, the Holders shall have the
right, with respect to each such exclusion, to one additional Demand
Registration under this Section 2.1 with respect to such excluded Registrable
Shares; and provided, further, that the Company shall not be obligated to file a
-------- -------
registration statement relating to a registration request under this Section 2.1
more frequently than once in any nine month period or within a period of six
months after the effective date of any other registration statement of the
Company other than an Excluded Registration or any registration statement filed
at the request or on behalf of, or for the benefit of, another securityholder of
the Company (other than pursuant to this Section 2.1) in which Holders were not
entitled to include all Registrable Shares requested to be included therein.
<PAGE>
2.1.2 Effective Registration and Expenses. A registration will not
--------------------------------------
count as a Demand Registration until it has become effective (unless (i) (A) the
Requesting Holders shall have made a written request for a registration which is
subsequently withdrawn by the Requesting Holders with respect to a number of
Registrable Securities such that the number of Registrable Securities requested
to be included in such registration statement is less than a Registrable Amount
after the Company has filed a registration statement with the SEC in connection
therewith, (B) the Company has performed its obligations hereunder in all
material respects and (C) there has not been any event, change or effect which,
individually or in the aggregate, has had or would be reasonably likely to have
a material adverse effect on the business, operations, prospects, assets,
condition (financial or otherwise) or results of operations of the Company, or
(ii) such registration statement is not declared effective solely as a result of
the failure of the Requesting Holders to take all actions reasonably required in
order to have the registration and the related registration statement declared
effective by the SEC, in which case such demand will count as a Demand
Registration unless the Requesting Holders pay all Registration Expenses, as
hereinafter defined, in connection with such withdrawn registration); provided,
that if, after it has become effective, an offering of Registrable Shares
pursuant to a registration is interfered with by any stop order, injunction, or
other order or requirement of the SEC or other governmental agency or court,
such registration will be deemed not to have been effected and will not count as
a Demand Registration, unless such order, injunction or requirement shall have
been imposed solely as a result of the actions of the Requesting Holders or the
failure of the Requesting Holders to take all actions reasonably required in
order to prevent such imposition, in which case such registration shall be
counted as a Demand Registration without regard to whether it is so interfered
with . Subject to the following sentence, in the event that a Demand Request is
made by a Holder that is subsequently withdrawn by that Holder, all Registration
Expenses incurred in connection therewith shall be borne by that Holder and such
withdrawn Demand Request shall not be counted as a Demand Registration in
determining the number of Demand Registrations to which the Holders are entitled
pursuant to Section 2.1.1(b). In the event that a Demand Request is made by a
Holder that is subsequently withdrawn by that Holder, all Registration Expenses
shall be borne by the Company if (i) the Company has not performed its
obligations hereunder in all material respects or (ii) there has been any event,
change or effect which, individually or in the aggregate, has had or would be
reasonably likely to have a material adverse effect on the business, operations,
prospects, assets, condition (financial or otherwise) or results of operations
of the Company; and in such case a withdrawn Demand Request shall not be counted
as a Demand Registration in determining the number of Demand Registrations to
which the Holders are entitled pursuant to Section 2.1.1(b).
2.1.3 Selection of Underwriters. If requested by the Requesting
---------------------------
Holders, the offering of Registrable Shares pursuant to a Demand Registration
shall be in the form of a firm commitment underwritten offering. The
Requesting Holders of a majority of the Registrable Shares to be registered in a
Demand Registration shall determine whether the offering shall be in the form of
a firm commitment underwriting and, if so, shall select the investment banking
firm or firms to manage the underwritten offering; provided that such selection
shall be subject to the consent of the Company, which consent shall not be
unreasonably withheld.
2.1.4 Priority on Demand Registrations. No securities to be sold for
----------------------------------
the account of any Person (including the Company) other than a Requesting Holder
shall be included in a Demand Registration if the managing underwriter or
underwriters shall advise the Requesting Holders in writing that the inclusion
of such securities will materially and adversely affect the price or success of
the offering (a "Material Adverse Effect"). Furthermore, in the event the
------------------------
managing underwriter or underwriters shall advise the Requesting Holders that
even after exclusion of all securities of other Persons pursuant to the
immediately preceding sentence, the amount of Registrable Shares proposed to be
included in such Demand Registration by Requesting Holders is sufficiently large
to cause a Material Adverse Effect, the Registrable Shares of the Requesting
Holders to be included in such Demand Registration shall equal the number of
shares which the Requesting Holders are so advised can be sold in such offering
without a Material Adverse Effect and such shares shall be allocated pro rata
among the Requesting Holders on the basis of the number of Registrable Shares
held by the Requesting Holders.
2.1.5 Rights of Nonrequesting Holders. Upon receipt of any Demand
----------------------------------
Request, the Company shall promptly (but in any event within 10 days) give
written notice of such proposed Demand Registration to all other Holders, who
shall have the right, exercisable by written notice to the Company within 15
days of their receipt of the Company's notice, to elect to include in such
Demand Registration such portion of their Registrable Securities as they may
request. All Holders requesting to have their Registrable Shares included in a
Demand Registration in accordance with the preceding sentence shall be deemed to
be "Requesting Holders" for purposes of this Section 2.1.
<PAGE>
2.1.6 Deferral of Filing. The Company may defer the filing (but not
--------------------
the preparation) of a registration statement required by Section 2.1 until a
date not later than 180 days after the Required Filing Date (or, if longer, 180
days after the effective date of the registration statement contemplated by
clause (ii) below) if (i) at the time the Company receives the Demand Request,
the Company or any of its Subsidiaries are engaged in confidential negotiations
or other confidential business activities, disclosure of which would be required
in such registration statement (but would not be required if such registration
statement were not filed), and the Board of the Company determines in good faith
that such disclosure would be materially detrimental to the Company and its
shareholders or would have a material adverse effect on any such confidential
negotiations or other confidential business activities, or (ii) prior to
receiving the Demand Request, the Board had determined to effect a registered
underwritten public offering of the Company's securities for the Company's
account and the Company had taken substantial steps (including, but not limited
to, selecting a managing underwriter for such offering) and is proceeding with
reasonable diligence to effect such offering. A deferral of the filing of a
registration statement pursuant to this Section 2.1.6 shall be lifted, and the
requested registration statement shall be filed forthwith, if, in the case of a
deferral pursuant to clause (i) of the preceding sentence, the negotiations or
other activities are disclosed by the Company or terminated, or, in the case of
a deferral pursuant to clause (ii) of the preceding sentence, the proposed
registration for the Company's account is abandoned. In order to defer the
filing of a registration statement pursuant to this Section 2.1.6, the Company
shall promptly (but in any event within 10 days), upon determining to seek such
deferral, deliver to each Requesting Holder a certificate signed by an executive
officer of the Company stating that the Company is deferring such filing
pursuant to this Section 2.1.6 and, subject to applicable confidentiality
agreements, a general statement of the reason for such deferral and an
approximation of the anticipated delay. Within 20 days after receiving such
certificate, the holders of a majority of the Registrable Shares held by the
Requesting Holders and for which registration was previously requested may
withdraw such Demand Request by giving notice to the Company; if withdrawn, the
Demand Request shall be deemed not to have been made for all purposes of this
Agreement. The Company may defer the filing of a particular registration
statement pursuant to this Section 2.1.6 only once.
Section 2.2 Piggyback Registrations.
------------------------
<PAGE>
2.2.1 Right to Piggyback. Each time the Company proposes to register
--------------------
any of its equity securities (other than pursuant to an Excluded Registration)
under the Securities Act for sale to the public (whether for the account of the
Company or the account of any securityholder of the Company and including any
registration statement pursuant to Rule 415 under the Securities Act (such as a
"universal shelf" registration statement), including the Replacement Shelf
Registration Statement) or proposes to make such an offering of equity
securities pursuant to a previously filed registration statement pursuant to
Rule 415 under the Securities Act and the form of registration statement to be
used permits the registration of Registrable Shares, the Company shall give
prompt written notice to each Holder of Registrable Shares (which notice shall
be given not less than 30 days prior to the effective date of the Company s
registration statement), which notice shall offer each such Holder the
opportunity to include any or all of its or his Registrable Shares in such
registration statement, subject to the limitations contained in Section 2.2.2
hereof. Each Holder who desires to have its or his Registrable Shares included
in such registration statement shall so advise the Company in writing (stating
the number of shares desired to be registered and the intended method of
disposition) within 20 days after the date of such notice from the Company. Any
Holder shall have the right to withdraw such Holder's request for inclusion of
such Holder's Registrable Shares in any registration statement pursuant to this
Section 2.2.1 by giving written notice to the Company of such withdrawal.
Subject to Section 2.2.2 below, the Company shall use all commercially
reasonable efforts to include in such registration statement all such
Registrable Shares so requested to be included therein; provided, however, that
the Company may at any time withdraw or cease proceeding with any such
registration if it shall at the same time withdraw or cease proceeding with the
registration of all other equity securities originally proposed to be
registered.
<PAGE>
2.2.2 Priority on Registrations. If the Registrable Shares requested
---------------------------
to be included in the registration statement by any Holder differ from the type
of securities proposed to be registered by the Company and the managing
underwriter advises the Company that due to such differences the inclusion of
such Registrable Shares would cause a Material Adverse Effect, then (i) the
number of such Holder's or Holders' Registrable Shares to be included in the
registration statement shall be reduced to an amount which, in the opinion of
the managing underwriter, would eliminate such Material Adverse Effect or (ii)
if no such reduction would, in the opinion of the managing underwriter,
eliminate such Material Adverse Effect, then the Company shall have the right to
exclude all such Registrable Shares from such registration statement provided no
other securities of such type are included and offered for the account of any
other Person in such registration statement. Any partial reduction in number of
Registrable Shares to be included in the registration statement pursuant to
clause (i) of the immediately preceding sentence shall be effected pro rata
based on the ratio which such Holder's requested shares bears to the total
number of shares requested to be included in such registration statement by all
Persons other than the Company who have requested that their shares be included
in such registration statement. If the Registrable Shares requested to be
included in the registration statement are of the same type as the securities
being registered by the Company and the managing underwriter advises the Company
in writing that the inclusion of such Registrable Shares would cause a Material
Adverse Effect, the Company will be obligated to include in such registration
statement, as to each Holder, only a portion of the shares such Holder has
requested be registered equal to the ratio which such Holder's requested shares
bears to the total number of shares requested to be included in such
registration statement by all Persons who have requested that their shares be
included in such registration statement. If the Company initiated the
registration, then the Company may include all of its securities in such
registration statement before any of such Holder's requested shares are
included. If another securityholder initiated the registration, then the
Company may not include any of its securities in such registration statement
unless all Registrable Shares requested to be included in the registration
statement by all Holders are included in such registration statement. If as a
result of the provisions of this Section 2.2.2 any Holder shall not be entitled
to include all Registrable Securities in a registration that such Holder has
requested to be so included, such Holder may withdraw such Holder's request to
include Registrable Shares in such registration statement prior to its
effectiveness. No Holder may participate in any registration statement
hereunder unless such Person (x) agrees to sell such Person's Registrable Shares
on the basis provided in any underwriting arrangements approved by the Company
and (y) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements, and other documents reasonably required
under the terms of such underwriting arrangements; provided, however, that no
such Person shall be required to make any representations or warranties in
connection with any such registration other than representations and warranties
as to (i) such Person's ownership of his or its Registrable Shares to be sold or
transferred free and clear of all liens, claims, and encumbrances, (ii) such
Person's power and authority to effect such transfer, and (iii) such matters
pertaining to compliance with securities laws and other applicable laws and
governmental rules and regulations, if any, as may be reasonably requested;
provided further, however, that the obligation of such Person to indemnify
pursuant to any such underwriting arrangements shall be several, not joint and
several, among such Persons selling securities, and the liability of each such
Person will be in proportion to, and provided further that such liability will
be limited to, the net amount received by such Person from the sale of his or
its Registrable Shares pursuant to such registration.
Section 2.3 Shelf Registration.
-------------------
2.3.1 Replacement Shelf Registration. Upon the written request of
--------------------------------
Purchaser at any time after the Second Closing Date, the Company promptly shall
prepare and file with the SEC a universal shelf registration statement pursuant
to Rule 415 under the Securities Act to supersede and replace the Company s
existing universal shelf registration statement (registration no. 333-11703)
currently effective under the Securities Act and shall include therein such
Registrable Shares as Holder shall request (but in no event less than a
Registrable Amount) (the "Replacement Shelf Registration Statement"). The
-------------------------------------------
Company shall use all commercially reasonable efforts to cause such Replacement
Shelf Registration Statement to become effective under the Securities Act, and
at any time after the effectiveness thereof when the Company elects to effect an
offering of securities pursuant to the Replacement Shelf Registration Statement,
Holder shall be entitled to exercise its rights under Section 2.1 (subject to
the first sentence of Section 2.1.1 with respect to any demand for any offering
to be made pursuant thereto) and Section 2.2.1 with respect to such offering.
2.3.2 Use of Shelf Registration. At any time that Holder requests a
----------------------------
Demand Registration pursuant to Section 2.1 or to include Registrable Shares in
a registration statement pursuant to Section 2.2, in each case with respect to
the Replacement Shelf Registration Statement or any other "shelf" registration
statement, the provisions of Sections 2.1 and 2.2, including references in such
Sections to "file", "register" or "included in", as relating to the rights
of the Holders to request to include Registrable Shares in a registration
statement to be filed with the SEC shall be construed as referring to a
request to have Registrable Shares included in such registration statement
pursuant to Section 2.2 in the case of the initial filing of such
registration statement or to a request to include Registrable Shares in an
offering to be effected pursuant to such registration statement pursuant to
Section 2.1 or 2.2, as applicable, in the case of an offering to be effected
pursuant to a registration statement that previously has been declared
effective under the Securities Act.
<PAGE>
Section 2.4 Holdback Agreement. Unless the managing underwriter
-------------------
otherwise agrees, each of the Company and the Holders agrees, and the Company
agrees, in connection with any underwritten registration, to use its reasonable
efforts to cause its Affiliates to agree, not to effect any public sale or
private offer or distribution of any Common Stock or Common Stock Equivalents
during the ten business days prior to the effectiveness under the Securities Act
or pricing of any underwritten offering pursuant to a registration statement in
which Registrable Securities are included and during such time period after the
effectiveness under the Securities Act of any underwritten registration or
pricing of underwritten securities (not to exceed 90 days) (except, if
applicable, as part of such underwritten registration) as the Company and the
managing underwriter may agree.
Section 2.5 Registration Procedures. Whenever any Holder has requested
-----------------------
that any Registrable Shares be registered pursuant to this Agreement, the
Company will use its commercially reasonable efforts to effect the registration
and the sale of such Registrable Shares in accordance with the intended method
of disposition thereof, and pursuant thereto the Company will as expeditiously
as reasonably possible:
(i) prepare and file with the SEC a registration statement on any
appropriate form under the Securities Act with respect to such Registrable
Shares and use all commercially reasonable efforts to cause such registration
statement to become effective;
(ii) prepare and file with the SEC such amendments, post-effective
amendments, and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days (or such lesser
period as is necessary for the underwriters in an underwritten offering to sell
unsold allotments) and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(iii) furnish to each seller of Registrable Shares and the underwriters
of the securities being registered such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus), any
documents incorporated by reference therein and such other documents as such
seller or underwriters may reasonably request in order to facilitate the
disposition of the Registrable Shares owned by such seller or the sale of such
securities by such underwriters (it being understood that, subject to Section
2.6 and the requirements of the Securities Act and applicable state securities
laws, the Company consents to the use of the prospectus and any amendment or
supplement thereto by each seller and the underwriters in connection with the
offering and sale of the Registrable Shares covered by the registration
statement of which such prospectus, amendment or supplement is a part);
(iv) use all commercially reasonable efforts to register or qualify
such Registrable Shares under such other securities or blue sky laws of such
jurisdictions as the managing underwriter reasonably requests; use all
commercially reasonable efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each seller to
consummate the disposition of the Registrable Shares owned by such seller in
such jurisdictions (provided, however, that the Company will not be required to
(A) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (B) consent to
general service of process in any such jurisdiction);
<PAGE>
(v) promptly notify each seller and each underwriter and (if requested
by any such Person) confirm such notice in writing (A) when a prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to a registration statement or any post-effective amendment, when the
same has become effective, (B) of the issuance by any state securities or other
regulatory authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Shares under state securities or "blue
sky" laws or the initiation of any proceedings for that purpose, and (C) of the
happening of any event which makes any statement made in a registration
statement or related prospectus untrue in any material respect or which requires
the making of any changes in such registration statement, prospectus or
documents so that they will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and, as promptly as practicable
thereafter, prepare and file with the SEC and furnish a supplement or amendment
to such prospectus so that, as thereafter deliverable to the purchasers of such
Registrable Shares, such prospectus will not contain any untrue statement of a
material fact or omit a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(vi) make generally available to the Company's securityholders an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act no later than 30 days after the end of the 12-month period beginning with
the first day of the Company's first fiscal quarter commencing after the
effective date of a registration statement, which earnings statement shall cover
said 12-month period, and which requirement will be deemed to be satisfied if
the Company timely files complete and accurate information on Forms 10-Q, 10-K
and 8-K under the Exchange Act and otherwise complies with Rule 158 under the
Securities Act;
(vii) if requested by the managing underwriter or reasonably requested
by any seller promptly incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or any seller reasonably
requests to be included therein, including, without limitation, with respect to
the Registrable Shares being sold by such seller, the purchase price being paid
therefor by the underwriters and with respect to any other terms of the
underwritten offering of the Registrable Shares to be sold in such offering, and
promptly make all required filings of such prospectus supplement or
post-effective amendment;
(viii) as promptly as practicable after filing with the SEC of any
document which is incorporated by reference into a registration statement (in
the form in which it was incorporated), deliver a copy of each such document to
each seller;
(ix) cooperate with the sellers and the managing underwriter to
facilitate the timely preparation and delivery of certificates (which shall not
bear any restrictive legends unless required under applicable law) representing
securities sold under any registration statement, and enable such securities to
be in such denominations and registered in such names as the managing
underwriter or such sellers may request and keep available and make available to
the Company's transfer agent prior to the effectiveness of such registration
statement a supply of such certificates;
<PAGE>
(x) promptly make available for inspection by any seller, any
underwriter participating in any disposition pursuant to any registration
statement, and any attorney, accountant or other agent or representative
retained by any such seller or underwriter (collectively, the "Inspectors"), all
----------
financial and other records, pertinent corporate documents and properties of the
Company (collectively, the "Records"), as shall be reasonably necessary to
-------
enable them to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all information requested
by any such Inspector in connection with such registration statement; provided,
that, unless the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement or the release of such
Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, the Company shall not be required to provide any
information under this subparagraph (x) if (A) the Company believes, after
consultation with counsel for the Company, that to do so would cause the Company
to forfeit an attorney-client privilege that was applicable to such information
or (B) if either (1) the Company has requested and been granted from the SEC
confidential treatment of such information contained in any filing with the SEC
or documents provided supplementally or otherwise or (2) the Company reasonably
determines in good faith that such Records are confidential and so notifies the
Inspectors in writing unless prior to furnishing any such information with
respect to (A) or (B) such Holder of Registrable Securities requesting such
information agrees to enter into a confidentiality agreement in customary form
and subject to customary exceptions; and provided, further that each Holder of
Registrable Securities agrees that it will, upon learning that disclosure of
such Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company at its expense, to undertake appropriate action
and to prevent disclosure of the Records deemed confidential;
(xi) furnish to each seller and underwriter a signed counterpart of (A)
an opinion or opinions of counsel to the Company, and (B) a comfort letter or
comfort letters from the Company's independent public accountants, each in
customary form and covering such matters of the type customarily covered by
opinions or comfort letters, as the case may be, as the sellers or managing
underwriter reasonably requests;
(xii) use all commercially reasonable efforts to cause the Registrable
Shares included in any registration statement to be (A) listed on each
securities exchange, if any, on which securities of the same type issued by the
Company are then listed, or (B) authorized to be quoted and/or listed (to the
extent applicable) on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") or The New York Stock Exchange if the Registrable
------
Shares so qualify and securities of the same type issued by the Company are so
listed or quoted;
(xiii) provide a CUSIP number for the Registrable Shares included in
any registration statement not later than the effective date of such
registration statement;
(xiv) cooperate with each seller and each underwriter participating in
the disposition of such Registrable Shares and their respective counsel in all
reasonable respects in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. ("NASD");
----
(xv) during the period when the prospectus is required to be delivered
under the Securities Act, file within the required time periods all documents
required to be filed with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act;
<PAGE>
(xvi) notify each seller of Registrable Shares promptly of any request
by the SEC for the amending or supplementing of such registration statement or
prospectus or for additional information;
(xvii) prepare and file with the SEC promptly any amendments or
supplements to such registration statement or prospectus which, in the opinion
of counsel for the Company or the managing underwriter, is required in
connection with the distribution of the Registrable Shares;
(xviii) enter into such agreements (including underwriting agreements
in the managing underwriter's customary form) as are customary in connection
with an underwritten registration; and
(xix) advise each seller of such Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the SEC suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for such purpose and promptly
use all commercially reasonable efforts to prevent the issuance of any stop
order or to obtain its withdrawal at the earliest possible moment if such stop
order should be issued.
Section 2.6 Suspension of Dispositions. Each Holder agrees by
----------------------------
acquisition of any Registrable Shares that, upon receipt of any notice (a
"Suspension Notice") from the Company of the happening of any event of the kind
------------------
described in Section 2.5(v)(C), such Holder will forthwith discontinue
disposition of Registrable Shares until such Holder's receipt of the copies of
the supplemented or amended prospectus, or until it is advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and has
------
received copies of any additional or supplemental filings which are incorporated
by reference in the prospectus, and, if so directed by the Company, such Holder
will deliver to the Company all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such Registrable Shares
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the time period regarding the effectiveness of
registration statements set forth in Section 2.4(ii) hereof shall be extended by
the number of days during the period from and including the date of the giving
of the Suspension Notice to and including the date when each seller of
Registrable Shares covered by such registration statement shall have received
the copies of the supplemented or amended prospectus or the Advice. The Company
shall use its commercially reasonable efforts and take such actions as are
reasonably necessary to render the Advice as promptly as practicable.
<PAGE>
Section 2.7 Registration Expenses. All expenses incident to the
----------------------
Company's performance of or compliance with this Article 2 including without
limitation, (i) all registration and filing fees, (ii) all fees and expenses
associated with filings required to be made with the NASD (including, if
applicable, the fees and expenses of any qualified independent underwriter as
such term is defined in Schedule E of the By-Laws of the NASD, and of its
counsel), as may be required by the rules and regulations of the NASD, (iii)
fees and expenses of compliance with securities or "blue sky" laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Shares), (iv) rating agency fees, (v) printing
expenses (including expenses of printing certificates for the Registrable Shares
in a form eligible for deposit with Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by a holder of
Registrable Shares), (vi) messenger and delivery expenses, (vii) the Company s
internal expenses (including without limitation all salaries and expenses of its
officers and employees performing legal or accounting duties), (viii) the fees
and expenses incurred in connection with any listing of the Registrable Shares,
(ix) fees and expenses of counsel for the Company and its independent certified
public accountants (including the expenses of any special audit or cold comfort
letters required by or incident to such performance), (x) securities acts
liability insurance (if the Company elects to obtain such insurance), (xi) the
fees and expenses of any special experts retained by the Company in connection
with such registration, and (xii) the fees and expenses of other persons
retained by the Company, subject to Section 2.1.2., will be borne by the
Company, whether or not any registration statement becomes effective; provided
that in no event shall Registration Expenses include any underwriting discounts
or commissions or transfer taxes or the fees and expenses of counsel for the
Holders.
Section 2.8 Indemnification.
---------------
2.8.1 The Company agrees to indemnify and reimburse, to the fullest
extent permitted by law, each seller of Registrable Shares, and each of its
employees, advisors, agents, representatives, partners, members, officers, and
directors and each Person who controls such seller (within the meaning of the
Securities Act or the Exchange Act) and any agent or investment advisor thereof
(collectively, the "Seller Affiliates") (A) against any and all losses, claims,
-----------------
damages, liabilities, and expenses, joint or several (including, without
limitation, attorneys' fees and disbursements except as limited by Section
2.8.3) based upon, arising out of or resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus, or preliminary prospectus relating to the offer and sale of
Registrable Shares or any amendment thereof or supplement thereto, or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (B) against any and all
loss, liability, claim, damage, and expense whatsoever, as incurred, to the
extent of the aggregate amount paid in settlement (effected with the Company s
consent) of any litigation or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon,
arising out of or resulting from any such untrue statement or omission or
alleged untrue statement or omission, and (C) against any and all costs and
expenses (including reasonable fees and disbursements of counsel) as may be
reasonably incurred in investigating, preparing, or defending against any
litigation, or investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon, arising out of or
resulting from any such untrue statement or omission or alleged untrue statement
or omission, to the extent that any such expense or cost is not paid under
subparagraph (A) or (B) above; except insofar as the same are made in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of such seller or any Seller Affiliate specifically for inclusion
in the registration statement or arise from such seller's or any Seller
Affiliate's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such seller or Seller Affiliate with a sufficient number of copies of
the same. The reimbursements required by this Section 2.8.1 will be made by
periodic payments during the course of the investigation or defense, as and when
bills are received or expenses incurred.
<PAGE>
2.8.2 In connection with any registration statement in which a seller
of Registrable Shares is participating, each such seller will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the fullest extent permitted by law, each such seller will
indemnify and reimburse the Company and its directors and officers and each
Person who controls the Company (within the meaning of the Securities Act or the
Exchange Act) against any and all losses, claims, damages, liabilities, and
expenses (including, without limitation, reasonable attorneys fees and
disbursements except as limited by Section 2.8.3) based upon, arising out of or
resulting from any untrue statement or alleged untrue statement of a material
fact contained in the registration statement, prospectus, or any preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with any information or affidavit so
furnished in writing by such seller or any of its Seller Affiliates specifically
for inclusion in the registration statement; provided that the obligation to
indemnify will be several, not joint and several, among such sellers of
Registrable Shares, and the liability of each such seller of Registrable Shares
will be in proportion to, and provided further that such liability will be
limited to, the net amount received by such seller from the sale of Registrable
Shares pursuant to such registration statement; provided, however, that such
seller of Registrable Shares shall not be liable in any such case to the extent
that prior to the filing of any such registration statement or prospectus or
amendment thereof or supplement thereto, such seller has furnished in writing to
the Company information expressly for use in such registration statement or
prospectus or any amendment thereof or supplement thereto which corrected or
made not misleading information previously furnished to the Company.
<PAGE>
2.8.3 Any Person entitled to indemnification hereunder will (A) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (provided that the failure to give such notice
shall not limit the rights of such Person except to the extent that the
indemnifying party is materially prejudiced thereby) and (B) unless such
indemnified party has been advised by counsel that a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided, however,
that any person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but the
fees and expenses of such counsel shall be at the expense of such person unless
(i) the indemnifying party has agreed to pay such fees or expenses, (ii) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such person, (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such indemnified party and the indemnifying party, and such indemnified party
shall have been advised by counsel in writing that there is a conflict of
interest on the part of counsel employed by the indemnifying party to represent
such indemnified party, or (iv) the indemnified party's counsel shall have
advised the indemnified party that there are defenses available to the
indemnified party that are different from or in addition to those available to
the indemnifying party and that the indemnifying party is not able to assert on
behalf of or in the name of the indemnified party (in which case of either (iii)
or (iv), if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action or proceeding on behalf of such indemnified party but shall have the
right to participate through its own counsel). If such defense is not assumed
by the indemnifying party as permitted hereunder, the indemnifying party will
not be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably withheld). If
such defense is assumed by the indemnifying party pursuant to the provisions
hereof, such indemnifying party shall not settle or otherwise compromise the
applicable claim unless (1) such settlement or compromise contains a full and
unconditional release of the indemnified party or (2) the indemnified party
otherwise consents in writing (such consent not to be unreasonably withheld).
An indemnifying party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless any indemnified party shall have been advised by
counsel in writing that a conflict of interest exists between such indemnified
party and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the reasonable fees
and disbursements of such additional counsel or counsels.
2.8.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 2.8.1 or Section 2.8.2 are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims, damages, liabilities, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, liabilities, or expenses (or actions in respect thereof) (i) in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and the indemnified party in connection with the actions which resulted in
the losses, claims, damages, liabilities or expenses or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect the relative benefits of the indemnified
party and indemnifying party from the offering of the securities covered by such
registration statement as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by such indemnifying party or
indemnified party, and the parties, relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 2.8.4 were determined by pro rata allocation (even if
the Holders or any underwriters or all of them were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 2.8.4. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities, or expenses (or actions in respect thereof) referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or, except
as provided in Section 2.8.3, defending any such action or claim.
Notwithstanding the provisions of this Section 2.8.4, no Holder shall be
required to contribute an amount greater than the dollar amount by which the
proceeds received by such Holder with respect to the sale of any Registrable
Shares exceeds the amount of damages which such Holder has otherwise been
required to pay by reason of such statement or omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Holders obligations in this
Section 2.8.4 to contribute shall be several in proportion to the amount of
Registrable Shares registered by them and not joint.
<PAGE>
If sufficient indemnification is available under this Section 2.8, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Section 2.8.1 and Section 2.8.2 without regard to the relative fault
of said indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 2.8.4.
2.8.5 The indemnification and contribution provided for under this
Stockholders Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director, or controlling Person of such indemnified party and will survive the
transfer of securities.
ARTICLE 3
RESTRICTIONS ON TRANSFER
Section 3.1 General. Any Third-Party Sale shall be subject to
-------
compliance with provisions of this Article 3.
Section 3.2 Transfer Restrictions. During the one year period
----------------------
following the date hereof, the Holder shall not engage in any Third-Party Sales
without the Company's prior written consent.
Section 3.3 Right of First Offer. (a) Until the earlier of the fifth
---------------------
annual anniversary of the date hereof or the date on which Purchaser and its
Affiliates own less than 10% of the then outstanding Common Stock (assuming
conversion of all Common Stock Equivalents, including all 8% Preference Shares,
then held by Purchaser and its Affiliates) prior to consummating any Third-Party
Sale in respect of Common Stock, 8% Preference Shares or a combination of Common
Stock and 8% Preference Shares that constitute, in the aggregate, more than 9.9%
of the then outstanding Common Stock (assuming conversion of all Common Stock
Equivalents, including all 8% Preference Shares, then held by Purchaser and its
Affiliates proposed to be sold) to any one buyer or related group of buyers in a
single transaction or a series of related transactions, Purchaser or any
Affiliate of Purchaser (the "Offeror") will deliver to the Company a written
-------
notice (an "Offer Notice") specifying the aggregate number of Registrable
-------------
Securities intended to be Transferred and the minimum consideration (the "Offer
-----
Price") for which the Offeror proposes in good faith to sell the Registrable
- -----
Securities to be offered in such Third-Party Sale (the "Offered Shares"). Upon
- --- --------------
receipt of such notice, the Company shall have 30 days to notify the Offeror in
writing (the "ROFO Notice") of the identity of one or more designated buyers
------------
(collectively, the "Designated Buyer") of the Offered Shares (which may include
----------------
the Company). The Designated Buyer shall then have an additional 30 days from
the date the Company notifies the Offeror to close the acquisition of the
Offered Shares.
<PAGE>
(b) Rights to Purchase Offered Shares. If the Designated Buyer
-------------------------------------
delivers to the Offeror a written notice (an "Acceptance Notice") within 30 days
-----------------
following delivery of the ROFO Notice (the "ROFO Acceptance Period"), stating
----------------------
that such Designated Buyer is willing to purchase all of the Offered Shares for
the Offer Price and on the other terms, if any, as are set forth in the Offer
Notice, the Offeror will sell all (but not less than all) of the Offered Shares
to such Designated Buyer, and such Designated Buyer will purchase such Offered
Shares from the Offeror, on the proposed terms and subject to the conditions set
forth in the Offer Notice and below ; provided, however, that if the Offer Price
-------- -------
is payable in whole or in part in property (which term shall include the
securities of any issuer other than the Company) other than cash, the Designated
Buyer may pay, in lieu of such property, a sum of cash equal to the fair market
value of such property as determined by the selling Holder and the Designated
Buyer in good faith or, if the selling Holder and the Designated Buyer do not
agree on the fair market value of such property within five (5) days after the
delivery of the Acceptance Notice, then each of the selling Holder and the
Designated Buyer shall select one nationally recognized independent appraiser
(with each of the selling Holder and the Designated Buyer bearing the expense of
the appraiser selected by it) to determine the fair market value of that
property and the average of the appraised fair market values of that property as
determined by those appraisers shall be deemed the fair market value of that
property for purposes of this Article 3.
(c) The ROFO Closing. The consummation of any purchase of the Offered
-----------------
Shares by the Designated Buyer pursuant to this Section 3.3 (the "ROFO Closing")
------------
will occur no later than the last day of the ROFO Acceptance Period, at such
time and place as may be agreed upon by the Offeror and the Designated Buyer or,
if such parties fail to agree to such time and place, at the offices of the
Offeror at 200 Crescent Court, Suite 1600, Dallas, Texas 75201 at 10:00 a.m.
(Central Time) on the last business day of the ROFO Acceptance Period. At the
ROFO Closing, (1) the Designated Buyer will deliver to the Offeror by certified
or official bank check or wire transfer to an account designated by the Offeror
an amount in immediately available funds equal to the aggregate Offer Price for
the Offered Shares, and (2) the Offeror will deliver one or more certificates
evidencing the Offered Shares, together with such other duly executed
instruments or documents (executed by the Offeror) as may be reasonably
requested by the Designated Buyer to acquire the Offered Shares.
(d) Right to Consummate Third-Party Sale If no ROFO Notice or no
----------------------------------------
Acceptance Notice relating to the proposed Third-Party Sale is delivered to the
Offeror prior to the expiration of the applicable period set forth above, or an
Acceptance Notice is so delivered to the Offeror but the ROFO Closing fails to
occur prior to the expiration of the ROFO Closing Period (unless the Designated
Buyer was ready, willing and able prior to the expiration of the ROFO Closing
Period to consummate the transactions to be consummated by the Designated Buyer
at the ROFO Closing), the Offeror may (without affecting its rights, if any,
arising out of such failure) consummate the Third-Party Sale, but only (1)
during the 6-month period immediately following the expiration of the applicable
30 day period (in the event that no ROFO Notice or Acceptance Notice, as the
case may be, was timely delivered to the Offering Holder) or the 6-month period
immediately following the expiration of the ROFO Closing Period (in the event
that an Acceptance Notice was timely delivered to the Offeror but the ROFO
Closing failed timely to occur) and, (2) at a price at least equal to 95% of the
Offer Price.
<PAGE>
ARTICLE 4
MANAGEMENT OF THE COMPANY AND CERTAIN ACTIVITIES
Section 4.1 Board.
-----
4.1.1 Board Representation. Subject to the provisions of Section 4.1.6
--------------------
below, Holder shall be entitled to designate individuals for nomination for
election to the Board as follows:
(i) for so long as the Board consists of ten members, Holder shall be
entitled to designate four nominees;
(ii) if the number of members constituting the entire Board shall be
increased or decreased from ten, Holder shall be entitled to designate a number
of nominees so that such nominees, if elected, would constitute that percentage
of the total number of members of the Board that the number of directors Holder
was entitled to nominate immediately prior to such increase or decrease bears to
the total number of directorships on the entire Board immediately prior to such
increase or decrease, with any fractional directorship resulting from such
calculation being rounded up to the next whole number.
Members of the Board designated by Holder pursuant to this Section 4.1.1 or
elected to fill a vacancy by members designated by Holder as provided in
subsection 4.1.4 herein shall be referred to as the "Holder Designees". Subject
----------------
to Section 4.1.6, the Company and the Board shall take such actions as necessary
to cause Holder Designees to be nominated and submitted to the shareholders for
election to the Board as provided in Sections 4.1.2 and 4.1.3.
4.1.2 Initial Board Designees. Simultaneously with the execution and
-------------------------
delivery of this Agreement, the Company and the Board shall take such actions as
necessary to cause the Board to consist of ten members, four vacancies to exist
on the Board, and to cause four Holder Designees to fill such vacancies on the
Board created pursuant to the terms of the Stock Purchase Agreement.
4.1.3 Annual Meeting.
---------------
<PAGE>
(a) At each annual meeting of the Company's shareholders or any
extraordinary meeting in lieu thereof at which the term of any Holder Designee
is to expire or prior to which there shall be less than the maximum number of
Holder Designees serving on the Board, Holder shall be entitled to designate for
nomination as a director the number of individuals as necessary so that, if such
designees are elected to the Board at such annual meeting or any extraordinary
meeting in lieu thereof, the maximum number of Holder Designees shall be serving
on the Board. The Company agrees to cause each Holder Designee so designated by
Holder to be nominated for election to the Board at each annual meeting of the
Company's shareholders or any extraordinary meeting in lieu thereof. To the
extent the Company's proxy statement for any annual meeting of shareholders, or
any extraordinary meeting in lieu thereof, includes a recommendation regarding
the election of any other nominees to the Company's Board, the Company agrees to
include a recommendation of its Board that the shareholders also vote in favor
of each Holder Designee standing for election at such meeting. The Company
shall take all actions necessary to ensure that the Articles of Association of
the Company as in effect immediately following the date hereof do not, at any
time thereafter, conflict in any respect with the provisions of this Section
4.1.
(b) If, at any time Holder fails to advise (at least 90 days prior to
the next annual meeting) the Board in writing of its intention to designate the
number of directors which Holder is then entitled to designate for nomination at
the next annual meeting of the Company's shareholders or extraordinary meeting
in lieu thereof (other than any such meeting that occurs within 90 days after
the resignation of a director designated by Holder, in which case such writing
shall be delivered within a reasonable amount of time prior to the mailing of
proxy materials for such meeting), then the rights granted under this Section
4.1 with respect to the designation of Holder Designees shall be applicable for
such meeting only with respect to the number of nominees as indicated in such
writing, if any, that Holder intends to designate, but shall continue to be
fully effective with respect to subsequent meetings and interim vacancies. At
each annual meeting or extraordinary meeting in lieu thereof for which Holder
does not advise the Board of its intention to nominate the maximum number of
directors which it is entitled to nominate for such meeting, the nominees for
election to the Board, other than those nominated by Holder, shall be determined
by the Board and the Company.
4.1.4 Board Committees. For so long as Holder is entitled to nominate
-----------------
at least one Holder Designee, the Company and the Board shall take such actions
as necessary to cause at least one Holder Designee to be elected to, and to at
all times be a member of, each committee established by the Board.
4.1.5 Vacancies. If, prior to his election to the Board pursuant to
---------
Section 4.1.1 hereof, any Holder Designee shall be unable or unwilling to serve
as a director of the Company, then the Holder shall be entitled to nominate a
replacement who shall then be a Holder Designee for purposes of this Section 4.
If, following an election or appointment to the Board pursuant to Section 4.1.1
hereof, any Holder Designee shall resign or be removed or be unable to serve for
any reason prior to the expiration of his term as a director of the Company,
then the Holder shall, within 30 days of such event, notify the Board in writing
of a replacement Holder Designee, and the Company and the Board shall take such
action as necessary to cause such replacement Holder Designee to be appointed to
the Board and each applicable committee thereof to fill the unexpired term of
the Holder Designee who such new Holder Designee is replacing.
4.1.6 Reduction/Termination of Rights. The right of the Holder to
---------------------------------
designate directors under this Section 4.1 shall be reduced and terminate as
follows:
If at any time after the Second Closing the number of shares of Common
Stock and 8% Preference Shares (assuming conversion of such shares into Common
Stock) held of record by Purchaser and its Affiliates, collectively, represent
less than the below specified percentage of the number of shares of Common Stock
into which a number of 8% Preference Shares equal to the Original Number would
be convertible as of such time of determination, the number of directors that
Holder shall be entitled to designate shall be reduced to the number indicated:
<PAGE>
PERCENTAGE HELD HOLDER
BY PURCHASER AND ITS AFFILIATES DIRECTORS
----------------------------------- ---------
Less than 75% but equal to
or more than 50% 3
Less than 50% but equal to
or more than 25% 2
Less than 25% but equal to
or more than 1% 1
Less than 1% 0
For purposes of this Agreement, "Original Number" shall mean the aggregate
---------------
number of 8% Preference Shares purchased by Purchaser pursuant to the terms of
the Stock Purchase Agreement (including 8% Preference Shares purchased pursuant
to the Rights (as defined in the Stock Purchase Agreement)).
Upon written request to Holder at any time that the number of Holder
Designees exceeds the number of directors Holder shall be entitled to designate
pursuant to this Section 4.1.5, Holder shall cause one or more Holder Designees
to resign from the Board as necessary to reduce the number of Holder Designees
to the number Holder is then entitled to designate.
4.1.7 Fees; Costs and Expenses. Except as provided in the following
---------------------------
sentence, Holder Designees shall not receive an annual retainer, meeting fees or
other consideration for serving on the Board (or committees thereof) or any
Board of Directors of any Subsidiary of the Company. The Company will pay or
reimburse each Holder Designee for all reasonable out-of-pocket expenses
incurred by such Holder Designee in connection with its participation in
meetings of the Board (and committees thereof) and the Boards of Directors (and
committees thereof) of the Subsidiaries of the Company.
4.1.8 Class Director Limitation. Notwithstanding the term of this
---------------------------
Section 4.1, if, at any time that Holder holds a majority of the outstanding 8%
Preference Shares and the holders of 8% Preference Shares are entitled, voting
separately as a class, to elect directors pursuant to Section 9(c) of the 8%
Preference Shares Authorization, the number of Holder Designees that Holder is
entitled to designate pursuant to this Section 4.1, when added to the two
directors the holders of 8% Preference Shares are entitled to elect pursuant to
Section 9(c) of the 8% Preference Shares Authorization (the "Class Directors"),
---------------
constitutes 50% or more of the members of the Board, the number of directors
Holder is entitled to designate pursuant to this Section 4.1 shall be reduced to
a number so that such Holder Designees and the Class Directors, collectively,
constitute less than 50% of the total Board until the earlier of the date on
which (i) Holder no longer owns a majority of the outstanding 8% Preference
Shares or (ii) the Class Directors and the number of Holder Designees Holder is
entitled to designate pursuant to this Section 4.1, collectively, constitute
less than 50% of the Board.
<PAGE>
Section 4.2 Other Activities of the Holder; Fiduciary Duties. It is
--------------------------------------------------
understood and accepted that the Holder and its Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable law, nothing in
this Agreement shall limit the current or future business activities of the
Holder or its Affiliates whether or not such activities are competitive with
those of the Company and its Subsidiaries. Nothing in this Agreement, express
or implied, shall relieve any officer or director of the Company (including any
designee of a Holder pursuant to Section 4.1.1) or any of its Subsidiaries of
any fiduciary or other duties or obligations they may have to the Company's
shareholders.
Section 4.3 Actions Requiring Consent of Purchaser. From and after the
--------------------------------------
First Closing and for so long after the Second Closing as Purchaser and its
Affiliates, collectively, hold of record shares of Common Stock and 8%
Preference Shares (assuming conversion into Common Stock of all 8% Preference
Shares held by Purchaser and its Affiliates) representing in the aggregate at
least (x) 50% of the number of shares of Common Stock into which a number of 8%
Preference Shares equal to the Original Shares would be convertible as of such
time of determination or (y) 10% of the number of outstanding shares of Common
Stock, determined giving effect to the full conversion of all outstanding
securities of the Company convertible or exchangeable for Common Stock, in
addition to any other vote or consent of shareholders required by law or by the
Company's Articles of Association, without the prior written consent of Holder,
the Company shall not, and shall not permit any Subsidiary to:
(i) Amend, alter or repeal any of the provisions of the Articles of
Association of the Company or the 8% Preference Shares Authorization that
affects the voting powers, rights or preferences of the holders of the 8%
Preference Shares; provided, however, that action to authorize or create or to
-------- -------
increase the authorized amount of any Junior Shares, shall not be deemed to
affect the voting powers, rights or preferences of the holders of 8% Preference
Shares;
<PAGE>
(ii) Merge, consolidate or enter into a similar business combination,
scheme of arrangement or transaction, effect any reorganization,
reclassification, recapitalization or other transaction or event in connection
with a plan pursuant to which a majority of the outstanding Common Stock or any
of the 8% Preference Shares (or, with respect to any Subsidiary of the Company,
any shares or stock of such Subsidiary) shall be exchanged for, converted into,
acquired for or constitute solely the right to receive securities, cash or other
property (whether by means of an exchange offer, liquidation, tender, offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise) or otherwise reorganize with or into one or more entities (other than
a merger of a wholly-owned Subsidiary of the Company into another wholly-owned
Subsidiary of the Company); provided that this clause (ii) shall not prohibit
--------
(x) the restructure of Triton International Oil Corporation ("TIOC") and its
----
Subsidiaries pursuant to Section 14.1 of the Shareholders Agreement between TIOC
and ARCO JDA Limited (the "ARCO Shareholders Agreement") or (y) any
-----------------------------
consolidation, merger or reorganization of a Subsidiary of the Company in
connection with a transaction permitted by clause (iv) below and which does not
affect (or result in any exchange, conversion or similar effect on) any
outstanding Common Stock or any of the 8% Preferenced Shares;
(iii) Authorize or create, modify the terms of or increase the
authorized amount of, (1) any shares of any class or series or of any security
convertible into shares of any class or series ranking prior to the 8%
Preference Shares in the distribution of assets on any liquidation, dissolution
or winding up of the Company or any Subsidiary or in the payment of dividends,
(2) any class of Parity Shares, Parity Liquidation Shares or Parity Dividend
Shares, (3) any class or series of Junior Shares or any security convertible
into or exchangeable for any class or series of Junior Shares that, pursuant to
their terms, require, or permit the holders thereof to require, the Company or
any Subsidiary to redeem all or any portion of such Junior Shares, or (4) any
class or series of any other equity security other than Junior Shares or any
security convertible into or exchangeable for any class or series of any other
equity security other than Junior Shares;
(iv) Sell, lease to a third party or otherwise dispose of (in a single
transaction or a series of related transactions) assets comprising in excess of
50% of the market value of the assets of the Company and its Subsidiaries as a
whole or dissolve, liquidate or terminate the Company;
(v) Other than regular dividends on the Company's 5% Convertible
Preference Shares in accordance with the terms thereof as in effect on the date
hereof and subject to subsection 3(i) of the 8% Preference Shares Authorization,
declare, pay or set aside for payment any dividends or other distributions
(whether in cash, shares or property) with respect to, or redeem or otherwise
purchase, any Junior Shares or, in the case of any Subsidiary of the Company,
any shares or stock held other than by the Company or any wholly-owned
Subsidiary of the Company; provided that this clause (v) shall not prohibit the
--------
payment of dividends on and/or redemption of shares of TIOC pursuant to the
ARCO Shareholders Agreement;
(vi) Directly, or indirectly through any Subsidiary of the Company,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (other than Permitted Indebtedness) or issue, or
permit any Subsidiary of the Company to issue, any Preferred Stock (except
Preferred Stock issued to the Company or a wholly owned Subsidiary of the
Company); provided, however, that the Company and its Subsidiaries may incur
-------- -------
Indebtedness and, subject to the other limitations of this Section 4.3,
issue shares ofPreferred Stock if, in either case, the Company's Leverage
Ratio at the time of incurrence of such Indebtedness or the issuance of such
Preferred Stock, as the case may be, after giving pro forma effect to such
incurrence or issuance as of such date and to the use of proceeds therefrom
is less than 2.5 to 1; provided, further, that this clause (vi) shall not
prohibit the issuance of Preferred Stock by TIOC pursuant to Section 8.3
of the ARCO Shareholders Agreement;
<PAGE>
(vii) Issue any shares of 8% Preference Shares other than (a) pursuant
to the terms of the Stock Purchase Agreement and the Rights Offering (as defined
in the Stock Purchase Agreement) and (b) as Additional Shares pursuant to
subsection 3(b) of the 8% Preference Shares Authorization;
(viii) Issue any shares of a class of shares ranking pari passu or
prior to the 8% Convertible Preference Shares with respect to dividends or to
the distribution of assets in liquidation or, in the case of any Subsidiary of
the Company, issue any shares or stock to any Person other than the Company or
any Subsidiary of the Company (provided that this clause (viii) shall not
prohibit the issuance of Preferred Stock by TIOC pursuant to Section 8.3 of the
ARCO Shareholders Agreement);
(ix) Commence or effect any tender or exchange offer made by the
Company or any Subsidiary for all or any portion of the Common Stock; or
(x) Decrease the number of shares designated as 8% Convertible
Preference Shares as provided in Section 1 of the 8% Preference Shares
Authorization.
Section 4.4 Action by Holder. At any time there shall be more than one
----------------
Holder, the designation of Holder Designees and the consent of Holder required
for actions referred to in this Agreement shall be effected by delivery to the
Company of a written instrument designating such Holder Designees or granting
(or denying) such consent executed by Holders holding a majority of outstanding
Common Stock (calculated giving effect to the full conversion of all 8%
Preference Shares held by all Holders) (a "Majority Interest"). Each such
-----------------
written instrument shall indicate the number of 8% Preference Shares held by the
Holder or Holders executing same and shall contain a certification that such
Holders 8% Preference Shares represent a Majority Interest.
ARTICLE 5
TERMINATION
The provisions of this Agreement, unless earlier terminated pursuant to
their terms, shall terminate on the tenth anniversary of the date of this
Agreement.
<PAGE>
ARTICLE 6
MISCELLANEOUS
Section 6.1 Notices. Any notices or other communications required or
-------
permitted hereunder shall be in writing, and shall be sufficiently given if made
by hand delivery, by telex, by telecopier or registered or certified mail,
postage prepaid, return receipt requested, addressed as follows (or at such
other address as may be substituted by notice given as herein provided):
<PAGE>
If to the Company:
c/o Triton Exploration Services Inc.
6688 North Central Expressway, Suite 1400
Dallas, Texas 75206
Attention: President
If to any Holder, at its address listed on the signature pages hereof.
Any notice or communication hereunder shall be deemed to have been given or
made as of the date so delivered if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and five calendar days
after mailing if sent by registered or certified mail (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders. If a notice or
communication is mailed in the manner provided above, it is duly given, whether
or not the addressee receives it.
Section 6.2 Third Party Registration Rights. The Company is not a
----------------------------------
party, or otherwise subject, to any agreement granting registration rights to
any other Person with respect to the securities of the Company. The Company
will not on or after the date of this Agreement enter into any agreement
granting (a) demand registration rights to any other Person with respect to the
securities of the Company, or (b) piggy-back registration rights to any other
Person that are not junior or subordinate to the rights granted to the holders
of Registrable Securities under Sections 2.1 and 2.2 hereof, without the written
consent of the holders of a majority of the then outstanding Registrable Shares.
Any agreement entered into pursuant to such consent shall not be amended without
a further written consent of the holders of a majority of the then outstanding
Registrable Shares.
<PAGE>
Section 6.3 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE
-----------------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. This Agreement shall be
construed, interpreted, and enforced in accordance with the laws of the State of
Texas, excluding any choice-of-law provisions thereof. Each of the parties
hereby (a) irrevocably submits to the exclusive jurisdiction of the United
States Federal District Court for the Northern District of Texas, sitting in
Dallas County, Texas, the United States of America, in the event such court has
jurisdiction or, if such court does not have jurisdiction, to any district court
sitting in Dallas County, Texas, the United States of America, for the purposes
of any suit, action or proceeding arising out of or relating to this Agreement,
including any claims by any Indemnified Persons for indemnity pursuant to
Section 5 hereof, (b) waives, and agrees not to assert in any such suit, acting
or proceeding, any claim that (i) it is not personally subject to the
jurisdiction of such court or of any other court to which proceedings in such
court may be appealed, (ii) such suit, action or proceeding is brought in an
inconvenient forum or (iii) the venue of such suit, action or proceeding is
improper and (c) expressly waives any requirement for the posting of a bond by
the party bringing such suit, action or proceeding. Each of the parties
consents to process being served in any such suit, action or proceeding by
mailing, certified mail, return receipt requested, a copy thereof to such party
at the address in effect for notices hereunder, and agrees that such services
shall constitute good and sufficient service of process and notice thereof.
Nothing in this Section 7 shall affect or limit any right to serve process in
any other manner permitted by law.
Section 6.4 Successors and Assigns. Whether or not an express
------------------------
assignment has been made pursuant to the provisions of this Agreement,
provisions of this Agreement that are for the Holders benefit as the holders of
any Registrable Shares are also for the benefit of, and enforceable by, all
subsequent holders of Registrable Shares and such subsequent holders shall be
deemed to be Holders and to have become parties to this Agreement (including
without limitation for purposes of Article IV hereof), except as otherwise
expressly provided herein; provided that the provisions of this Agreement shall
not be for the benefit of, applicable to or enforceable by any transferee, and
such transferee shall not be deemed a Holder for purposes of this Agreement of
Registrable Shares if the Holder effecting such transfer expressly shall have
designated such transferee as not constituting a Holder subject to or entitled
to the benefit of this Agreement at or prior to the effectiveness of the
transfer of Registrable Shares to such transferee. Subject to the preceding
sentence, this Agreement shall be binding upon the Company, each Holder, and
their respective successors and permitted assigns.
Section 6.5 Duplicate Originals. All parties may sign any number of
--------------------
copies of this Agreement. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
Section 6.6 Severability. In case any provision in this Agreement
------------
shall be held invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby.
Section 6.7 Specific Performance. The Company and the Holder or
---------------------
Holders recognize that if the Company refuses to perform under the provisions of
this Agreement, monetary damages alone will not be adequate to compensate the
Holder or Holders for its or their injury. The Holder or Holders shall
therefore be entitled, in addition to any other remedies that may be available,
to obtain specific performance of the terms of this Agreement.
Section 6.8 No Waivers; Amendments.
------------------------
6.8.1 No failure or delay on the part of the Company or any Holder in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
any Holder at law or in equity or otherwise.
<PAGE>
6.8.2 Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Company and
the Holders holding a majority of the Registrable Shares.
Section 6.9 No Affiliate Liability. The partners, members, officers,
-----------------------
directors, shareholders and Affiliates of a Holder, the Company or their
respective Affiliates shall not have any personal liability or obligation to any
Person arising under this Agreement in such capacities.
<PAGE>
SIGNATURES TO SHAREHOLDERS AGREEMENT
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first written above.
TRITON ENERGY LIMITED
By:/s/ Robert B. Holland, III
Robert B. Holland, III
Chief Executive Officer,
General Counsel and Secretary
HM4 TRITON, L.P.
By: HM Fund IV Cayman LLC,
its general partner
By: /s/ Daniel S. Dross
Daniel S. Dross
Senior Vice President
Address:
200 Crescent Court
Suite 1600
Dallas, Texas 75201
EXHIBIT 10.69
FINANCIAL ADVISORY AGREEMENT
------------------------------
This FINANCIAL ADVISORY AGREEMENT, effective as of August 31, 1998 (this
"Agreement"), is made and entered into between Triton Energy Limited, a Cayman
--------
Islands company (the "Company"), and Hicks, Muse & Co. Partners, L.P., a Texas
- -------
limited partnership (together with its successors, "HMCo").
----
WHEREAS, simultaneously with the execution and delivery of this Agreement,
an affiliate of HMCo, HM 4 Triton, L.P., a Cayman Islands exempted limited
partnership ("Purchaser"), is entering into a Stock Purchase Agreement of even
---------
date herewith with the Company (the "Stock Purchase Agreement") pursuant to
------------------------
which Purchaser has agreed, subject to the terms and conditions of the Stock
Purchase Agreement, to purchase a portion of the share capital of the Company
(the "Acquisition");
-----------
WHEREAS, the Company has requested that HMCo render, and HMCo has rendered,
financial advisory services to the Company and its Subsidiaries in connection
with the negotiation of the Acquisition; and
WHEREAS, the Company has requested that HMCo render financial advisory,
investment banking, and other similar services to the Company and its
Subsidiaries with respect to any future proposals for (a) the acquisition (by
direct issuance from the Company, from existing securityholders or otherwise) by
any Person or group of Persons deemed a person under Section 13(a)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of beneficial
------------
ownership of securities representing a majority of the combined voting power of
the outstanding securities of the Company entitled to vote, generally or as a
separate class or series or together with one or more class or series of shares
or stock, in the election of directors of the Company, the result of which would
result in such Person or Persons (or group) having the ability to elect a
majority of the Board of Directors, (b) a reorganization, recapitalization,
merger, consolidation or similar business combination or transaction (unless the
holders of the outstanding securities of the Company entitled to vote in the
election of directors prior to such transaction continue to own securities of
the entity resulting from or surviving such transaction (a "Surviving Entity")
----------------
entitled to vote in the election of directors sufficient to allow such holders
to elect a majority of the board of directors of the Surviving Entity upon the
completion of such transaction) or (c) a sale or other disposition (in a single
transaction or a series of related transactions) of assets with an Asset Value
(as defined in the Stock Purchase Agreement) in excess of 50% of the market
value of the assets of the Company and its Subsidiaries as a whole (any one or
more of such transactions described in clause (a) or (b) above, a "Stock
-----
Transaction"; any one or more of such transactions described in clause (c)
- -----------
above, an "Asset Transaction" and any one or more of such transactions, a "Sale
----------------- ----
Transaction");
- -----------
WHEREAS, capitalized terms used but not defined herein and defined in the
Stock Purchase Agreement shall have the meanings ascribed to such terms in the
Stock Purchase Agreement;
<PAGE>
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo to the Company and its Subsidiaries and to evidence the
obligations of the Company to HMCo and the mutual covenants herein contained,
the Company and HMCo hereby agree as follows:
1. Retention.
---------
(a) The Company hereby acknowledges that it has retained HMCo for the
benefit of the Company and its Subsidiaries, and HMCo acknowledges that it has
acted, as financial advisor to the Company and its Subsidiaries in connection
with the Acquisition.
(b) The Company acknowledges that it has retained HMCo as its exclusive
financial advisor in connection with any Sale Transaction that may be
consummated from and after the First Closing during the term of this Agreement,
and that the Company will not, and will cause its Subsidiaries not to, retain
any other person or entity to provide such services in connection with any such
Sale Transaction unless the Chief Executive Officer of the Company (the "CEO")
---
and HMCo mutually agree that the retention by the Company of a second financial
advisor in addition to HMCo would be appropriate with respect to a given Sale
Transaction; provided, however, that the Company, at the discretion of the CEO,
-------- --------
may elect not to retain a financial advisor with respect to a particular Sale
Transaction and in such event HMCo shall not be entitled to receive the cash fee
set forth in Section 3(b) below. HMCo agrees that it shall provide such
financial advisory, investment banking, and other similar services in connection
with any such Sale Transaction as may be requested from time to time by the
board of directors of the Company.
2. Term.
----
(a) The term of this Agreement shall continue until the earlier to
occur of (i) the tenth anniversary of the date hereof, (ii) the date on which
the Stock Purchase Agreement is terminated if such date occurs prior to the
First Closing or (iii) the date on which Purchaser and its Affiliates cease to
own beneficially, directly or indirectly, at least 5% of the outstanding Common
Stock (determined after giving effect to the conversion of all 8% Preference
Shares of the Company held by Purchaser and its Affiliates at the conversion
rate thereof in effect as of any date of determination) (such date on which the
term of this Agreement terminates herein referred to as the "Termination Date").
----------------
<PAGE>
(b) Notwithstanding any termination of this Agreement, (i) the rights
of the Indemnified Persons (as defined in Section 5 hereof) under Section 5
hereof shall survive any such termination of this Agreement, (ii) the Company
shall pay to HMCo (A) if the Termination Date occurs prior to the First Closing,
the Acquisition Fee contemporaneously with the termination of this Agreement,
(B) on the fifteenth (15th) day following the Termination Date, amounts payable
to HMCo pursuant to Section 3(b) which have not been paid as of the Termination
Date and (C) promptly (but not more than 10 days) after request by or notice
from HMCo, the Reimbursable Expenses for which HMCo has provided the Company
invoices or reasonably detailed descriptions relating to periods up to and
including the Termination Date which have not been paid as of the Termination
Date and (iii) the terms of this Agreement (including Section 7 hereof) shall
survive any such termination for the purpose of enabling HMCo to enforce its
rights set forth in this Section 2(b) and Section 5.
3. Compensation.
------------
(a) As compensation for HMCo s services as financial advisor to the
Company and its Subsidiaries in connection with the Acquisition, the Company
hereby acknowledges that, upon the execution and delivery by HMCo of the Stock
Purchase Agreement and this Agreement, HMCo has earned a cash fee in the amount
of US$7,000,000 (the "Acquisition Fee") and irrevocably agrees to pay to HMCo a
---------------
cash amount equal to the Acquisition Fee by wire transfer of immediately
available funds to the account designated on Schedule A hereto contemporaneously
----------
with the earlier to occur of (i) the First Closing or (ii) the termination of
the Stock Purchase Agreement.
(b) As compensation for HMCo s financial advisory, investment banking,
and other similar services rendered in connection with any Sale Transaction
pursuant to Section 1(b) hereof consummated after the First Closing, the Company
shall pay to HMCo, at the closing of any such Sale Transaction, a fee payable in
cash in an amount equal to the lesser of (i) the amount of fees then charged by
first tier investment banking firms for similar advisory services rendered in
connection with transactions similar to such Sale Transaction or (ii) 1.5% of
the Transaction Value; provided, however, that (A) such fee shall be divided
-------- -------
equally between HMCo and any additional financial advisor retained by the
Company with respect to such Sale Transaction as provided in the first sentence
of Section 1(b) and (B) HMCo shall not be entitled to a fee with respect to any
Sale Transaction for which the CEO elects not to retain a financial advisor.
<PAGE>
(c) For purposes of this Agreement, the term "Transaction Value" means
-----------------
(i) in the case of a Stock Transaction, (A) the fair market value of the sum of
(1) all outstanding common equity securities of the Company immediately prior to
such Stock Transaction and (2) the aggregate amount of common equity securities
issuable upon the conversion, exercise or exchange of any securities convertible
into or exercisable or exchangeable for common equity securities of the Company
("Common Equity Equivalents") immediately prior to such Stock Transaction (minus
-------------------------
the cash proceeds to be received by the Company upon the conversion, exercise or
exchange of such Common Equity Equivalents), (B) all cash, securities,
settlement or termination amounts, notes or other debt instruments, and other
consideration paid or to be paid, directly or indirectly, by the Company, the
acquiring Person, any Surviving Entity or their respective Affiliates pursuant
to or in connection with any consulting agreement, non-competition agreement,
confidentiality agreement, severance agreement, settlement agreement or release
agreement entered into, directly or indirectly, by the Company, the acquiring
Person, any Surviving Entity or their respective Affiliates as a part of or in
connection with the Stock Transaction (but excluding any fees payable pursuant
to Section 3(b)) and (C) the principal amount of any indebtedness and the
liquidation preference and accumulated and unpaid dividends of any preferred
stock or similar items of the Company immediately prior to such Stock
Transaction); provided, however, that if all or any part of such consideration
-------- -------
referred to in clause (B) above is payable in whole or in part in property
(which term shall include the securities of any issuer other than the Company)
other than cash, the fair market value of such property shall be determined as
follows: (x) if such property consists of securities, such value shall be the
last reported sales price, regular way on the day immediately preceding the
Stock Purchase, or, if no sale takes place on such day, the average of the
reported closing bid and asked prices on such day, regular way, in either case
as reported on the principal national securities exchange on which such security
is listed or admitted for trading or, if not listed or admitted for trading on
any national securities exchange, on The Nasdaq Stock Market or, if such
security is not quoted on The Nasdaq Stock Market, the average of the closing
bid and asked prices on such day in the over-the-counter market as reported by
the National Association of Securities Dealers, Inc. Automated Quotation System
("NASDAQ") or, if bid and asked prices for such security on such day shall not
have been reported through NASDAQ, the average of the bid and asked prices on
such day as furnished by any NYSE member firm regularly making a market in such
security selected for such purpose by HMCo and approved by the Company (which
approval shall not be unreasonably withheld) or, if no such market is regularly
made, as provided in clause (y) and (y) such value of property other than
securities (or with respect to securities in which a market is not regularly
made) shall be determined by the Company and HMCo in good faith or, if the
Company and HMCo do not agree on the fair market value of such property within
five (5) Business Days after HMCo s receipt of written notice describing and
quantifying the non-cash consideration to be paid, then the Company and HMCo
shall select one independent appraiser (with each of the Company and HMCo
bearing one-half of the expense of such appraiser) to determine the fair market
value of that property and the appraised fair market value of that property as
determined by such appraiser shall be deemed the fair market value of that
property and (ii) in the case of an Asset Transaction, the Asset Value of such
Asset Transaction.
4. Reimbursement of Expenses. In addition to the compensation to be
---------------------------
paid pursuant to Section 3 hereof, the Company agrees to reimburse HMCo,
promptly following demand therefor, together with invoices or reasonably
detailed descriptions thereof, for all reasonable disbursements and
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
incurred by HMCo (a) as financial advisor to the Company or any of its
Subsidiaries in connection with the Acquisition or (b) in connection with the
performance by HMCo of the services contemplated by Section 1(b) hereof
("Reimbursable Expenses").
----------------------
<PAGE>
5. Indemnification. The Company shall indemnify and hold harmless each
---------------
of HMCo, its affiliates, and their respective directors, officers, partners,
members, controlling persons (within the meaning of Section 15 of the Securities
Act of 1933 or Section 20(a) of the Exchange Act), if any, agents and employees
(HMCo, its affiliates, and such other specified persons being collectively re-
ferred to as "Indemnified Persons" and individually as an "Indemnified Person")
------------------- ------------------
from and against any and all claims, liabilities, losses, damages and expenses
incurred by any Indemnified Person (including those resulting from the
negligence of the Indemnified Person and reasonable fees and disbursements of
the respective Indemnified Person s counsel) which (a) are related to or caused
by or arise out of (i) actions taken or omitted to be taken (including any
untrue statements made or any statements omitted to be made) by the Company or
any of its Subsidiaries or (ii) actions taken or omitted to be taken by an
Indemnified Person with the consent of the Company or any of its Subsidiaries or
in conformity with instructions of the Company or any of its Subsidiaries or any
actions or omissions of the Company or any of its Subsidiaries or (b) are
otherwise related to or arise out of HMCo s engagement hereunder, and will
reimburse each Indemnified Person for all costs and expenses, including
reasonable fees of any Indemnified Person s counsel, as they are incurred, in
connection with investigating, preparing for, defending, or appealing any
action, formal or informal claim, investigation, inquiry or other proceeding,
whether or not in connection with pending or threatened litigation, caused by or
arising out of or in connection with HMCo s acting pursuant to the engagement,
whether or not any Indemnified Person is named as a party thereto and whether or
not any liability results therefrom. The Company will not however, be
responsible for any claims, liabilities, losses, damages or expenses pursuant to
clause (b) of the preceding sentence that have resulted primarily from HMCo s
bad faith, gross negligence or willful misconduct. The Company also agrees that
neither HMCo nor any other Indemnified Person shall have any liability to the
Company or any of its Subsidiaries for or in connection with such engagement
except for any claims, liabilities, losses, damages or expenses incurred by the
Company or any such Subsidiary to the extent the same have resulted from HMCo s
bad faith, gross negligence or willful misconduct. The Company further agrees
that it will not, and the Company will cause its Subsidiaries not to, without
the prior written consent of HMCo, such consent not to be unreasonably withheld,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which indemnification
may be sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of HMCo and
each other Indemnified Person hereunder from all liability arising out of such
claim, action, suit or proceeding. THE COMPANY HEREBY ACKNOWLEDGES THAT THE
FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES,
DAMAGES, OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED
FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE
OF HMCO OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any rights that
HMCo and/or any other Indemnified Person may have at common law or otherwise and
shall remain in full force and effect following the completion of the engagement
created hereby or any termination of the engagement or this Agreement.
It is understood that, in connection with HMCo s engagement, HMCo may also
be engaged to act for the Company or any of its Subsidiaries in one or more
additional capacities, and that the terms of this engagement or any such
additional engagement may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
Section 1 hereof as well as to any such additional engagement(s) (whether
written or oral) and any modification of said engagement or such additional
engagement(s) and shall remain in full force and effect following the completion
or termination of said engagement or such additional engagements.
The Company further understands that if HMCo is asked to furnish the
Company or any of its Subsidiaries a financial opinion letter or to act for the
Company or any such Subsidiary in any other formal capacity, such further action
may be subject to a separate agreement containing provisions and terms to be
mutually agreed upon.
<PAGE>
6. Confidential Information. In connection with the performance of the
------------------------
services hereunder, HMCo agrees not to, and to use commercially reasonable
efforts to cause its officers, directors, employees, agents and representatives
acting on behalf of HMCo pursuant to this Agreement not to, divulge any
confidential information, secret processes or trade secrets disclosed by the
Company or any of its Subsidiaries to HMCo or any such person in connection with
the providing of services by HMCo (or any such person on HMCo s behalf) as a
financial advisor pursuant to this Agreement, unless the Company consents in
advance to the divulging thereof or such information, secret processes, or trade
secrets are publicly available or otherwise available to HMCo without
restriction or breach of any confidentiality agreement or unless required by any
governmental authority or in response to any valid legal process (in which case
HMCo will use commercially reasonable efforts to provide the Company with as
much advance notice as is reasonably practicable).
7. Governing Law; Jurisdiction and Venue. This Agreement shall be
-----------------------------------------
construed, interpreted, and enforced in accordance with the laws of the State of
Texas, excluding any choice-of-law provisions thereof. Each of the parties
hereby (a) irrevocably submits to the exclusive jurisdiction of the United
States Federal District Court for the Northern District of Texas, sitting in
Dallas County, Texas, the United States of America, in the event such court has
jurisdiction or, if such court does not have jurisdiction, to any district court
sitting in Dallas County, Texas, the United States of America, for the purposes
of any suit, action or proceeding arising out of or relating to this Agreement,
including any claims by any Indemnified Persons for indemnity pursuant to
Section 5 hereof, (b) waives, and agrees not to assert in any such suit, acting
or proceeding, any claim that (i) it is not personally subject to the
jurisdiction of such court or of any other court to which proceedings in such
court may be appealed, (ii) such suit, action or proceeding is brought in an
inconvenient forum or (iii) the venue of such suit, action or proceeding is
improper and (c) expressly waives any requirement for the posting of a bond by
the party bringing such suit, action or proceeding. Each of the parties
consents to process being served in any such suit, action or proceeding by
mailing, certified mail, return receipt requested, a copy thereof to such party
at the address in effect for notices hereunder, and agrees that such services
shall constitute good and sufficient service of process and notice thereof.
Nothing in this Section 7 shall affect or limit any right to serve process in
any other manner permitted by law.
8. Assignment. This Agreement and all provisions contained herein
-----------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, neither this Agreement nor
any of the rights, interests, or obligations hereunder shall be assigned (other
than with respect to the rights and obligations of HMCo, which may be assigned
to any one or more of its principals or Affiliates) by any of the parties
without the prior written consent of the other parties.
9. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
10. Other Understanding. All discussions, understandings, and
--------------------
agreements theretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the agreement of the parties hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TRITON ENERGY LIMITED
By: /s/ Robert B. Holland, III
--------------------------------
Robert B. Holland, III
Interim Chief Executive Officer
and General Counsel
<PAGE>
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS INC.,
its General Partner
By:_________________________
Name:_______________________
Title:______________________
<PAGE>
SCHEDULE "A"
------------
Chase Bank of Texas
ABA #: 113000609
Account #: 08805113824
Credit: Hicks, Muse & Co. Partners, L.P.
Reference: Payment of Acquisition Fees or Expenses by
Triton Energy Limited
EXHIBIT 10.70
MONITORING AND OVERSIGHT AGREEMENT
-------------------------------------
This MONITORING AND OVERSIGHT AGREEMENT (this "Agreement") is made and
---------
entered into effective as of September 30, 1998, among Triton Energy Limited, a
Cayman Islands company (the "Company"), and Hicks, Muse & Co. Partners, L.P., a
-------
Texas limited partnership (together with its successors, "HMCo").
----
1. Retention; Defined Terms.
--------------------------
(a) The Company hereby acknowledges that it has retained HMCo to
provide, and HMCo acknowledges that, subject to reasonable advance notice in
order to accommodate scheduling, HMCo will provide, financial oversight and
monitoring services to the Company as requested by the Company during the term
of this Agreement.
(b) Capitalized terms used but not defined herein and defined in the
Stock Purchase Agreement dated August 31, 1998, between the Company and HM4
Triton, L.P., a Cayman Islands exempted limited partnership ("Investor") (the
--------
"Stock Purchase Agreement"), shall have the meanings ascribed to such terms in
-------------------------
the Stock Purchase Agreement.
2. Term.
----
(a) The term of this Agreement shall continue until the earlier of (i)
the tenth anniversary of the date hereof, (ii) the date on which the Stock
Purchase Agreement is terminated if such date occurs prior to the First Closing
or (iii) the date on which Investor and its affiliates cease to own
beneficially, directly or indirectly, at least five percent of the Company's
outstanding ordinary shares (or any other securities into or for which such
shares may be converted or exchanged), determined after giving effect to the
conversion of all shares of 8% Preference Shares of the Company held by Investor
and its affiliates (such date on which the term of this Agreement terminates
herein referred to as the "Termination Date").
-----------------
(b) Notwithstanding any termination of this Agreement, (i) the rights
of the Indemnified Persons (as defined in Section 5 hereof) under Section 5
hereof shall survive any such termination of this Agreement, (ii) the Company
shall pay to HMCo (A) on the fifteenth (15th) day following the Termination
Date, amounts payable to HMCo as a Monitoring Fee for periods up to and
including the Termination Date which have not been paid as of the Termination
Date and (B) promptly (but not more than 10 days) after request by or notice
from HMCo, the Reimbursable Expenses for which HMCo has provided the Company
invoices or reasonably detailed descriptions relating to periods up to and
including the Termination Date which have not been paid as of the Termination
Date and (iii) the terms of this Agreement (including Section 7 hereof) shall
survive any such termination for the purpose of enabling HMCo to enforce its
rights set forth in this Section 2(b) and Section 5.
<PAGE>
3. Compensation.
------------
(a) As compensation for HMCo's services under this Agreement, the
Company shall pay to HMCo an annual fee of $500,000 (the "Monitoring Fee"),
--------------
which shall begin to accrue on the First Closing Date.
(b) The Monitoring Fee shall be payable, by wire transfer of
immediately available funds to the account described on Exhibit A hereto (or
---------
such other account as HMCo may hereafter designate in writing), in quarterly
installments on the fifteenth (15th) day of each January, April, July and
October during the term of this Agreement (each a "Payment Date"), beginning
------------
with the first Payment Date following the date hereof. The amount of each such
quarterly installment shall be the Monitoring Fee divided by 4 (the "Quarterly
---------
Fee Amount"), prorated on a daily basis for any partial calendar quarter during
----------
the term of this Agreement.
(c) All past due payments in respect of the Monitoring Fee shall bear
interest at the lesser of the highest rate of interest which may be charged
under applicable law or the prime commercial lending rate per annum of Chase
Manhattan Bank, N.A. or its successors (which rate is a reference rate and is
not necessarily its lowest or best rate of interest actually charged to any
customer) (the "Prime Rate") as in effect from time to time, plus 5%, from the
----------
due date of such payment to and including the date on which payment is made to
HMCo in full, including such interest accrued thereon.
4. Reimbursement of Expenses. In addition to the compensation to be
---------------------------
paid pursuant to Section 3 hereof, the Company agrees to pay or reimburse HMCo
for all "Reimbursable Expenses," which shall consist of all reasonable
----------------------
disbursements and out-of-pocket expenses (including without limitation costs of
travel, postage, deliveries, communications, etc.) incurred by HMCo or its
affiliates for the account of the Company or in connection with the performance
by HMCo of the services contemplated by Section 1 hereof. Promptly (but not
more than 10 days) after request by or notice from HMCo, the Company shall pay
HMCo, by wire transfer of immediately available funds to the account described
on Exhibit A hereto (or such other account as HMCo may hereafter designate in
----------
writing), the Reimbursable Expenses for which HMCo has provided the Company
invoices or reasonably detailed descriptions. All past due payments in respect
of the Reimbursable Expenses shall bear interest at the lesser of the highest
rate of interest which may be charged under applicable law or the Prime Rate
plus 5% from the Payment Date to and including the date on which such
Reimbursable Expenses plus accrued interest thereon, are fully paid to HMCo.
<PAGE>
5. Indemnification. The Company shall indemnify and hold harmless each
---------------
of HMCo, its affiliates, and the respective directors, officers, partners,
members, controlling persons (within the meaning of Section 15 of the Securities
Act of 1933 or Section 20(a) of the Securities Exchange Act of 1934), if any,
agents and employees of HMCo and/or any of its affiliates (HMCo, its affiliates,
and such other specified persons being collectively referred to as "Indemnified
-----------
Persons" and individually as an "Indemnified Person") from and against any and
- ------- ------------------
all claims, liabilities, losses, damages and expenses incurred by any
Indemnified Person (including reasonable fees and disbursements of the
respective Indemnified Person's counsel) which (A) are related to or caused by
or arise out of (i) actions taken or omitted to be taken (including any untrue
statements made or any statements omitted to be made) by the Company or any of
its Subsidiaries or (ii) actions taken or omitted to be taken by an Indemnified
Person with the consent of the Company or any of its Subsidiaries, or in
conformity with instructions of the Company or any of its Subsidiaries or
actions or omissions of the Company or any of its Subsidiaries or (B) are
otherwise related to or arise out of HMCo's engagement hereunder, and will
reimburse each Indemnified Person for all reasonable costs and expenses,
including fees and disbursements of any Indemnified Person's counsel, as they
are incurred, in connection with investigating, preparing for, defending, or
appealing any action, formal or informal claim, investigation, inquiry or other
proceeding, whether or not in connection with pending or threatened litigation,
caused by or arising out of or in connection with HMCo's acting pursuant to the
engagement, whether or not any Indemnified Person is named as a party thereto
and whether or not any liability results therefrom. The Company will not,
however be responsible for any claims, liabilities, losses, damages, or expenses
pursuant to clause (B) of the preceding sentence that have resulted primarily
from HMCo's bad faith, gross negligence or willful misconduct. The Company also
agrees that neither HMCo nor any other Indemnified Person shall have any
liability to the Company for or in connection with such engagement except for
any such liability for claims, liabilities, losses, damages, or expenses
incurred by the Company that have resulted primarily from HMCo's bad faith,
gross negligence or willful misconduct. The Company further agrees that it will
not, without the prior written consent of HMCo, such consent not to be
unreasonably withheld, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnifications may be sought hereunder (whether or not any
Indemnified Person is an actual or potential party to such claim, action, suit
or proceeding) unless such settlement, compromise or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding. THE
COMPANY HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO
ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR
ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR
CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED PERSON.
The foregoing right to indemnity shall be in addition to any rights that
HMCo and/or any other Indemnified Person may have at common law or otherwise and
shall remain in full force and effect following the completion of the engagement
or any termination of the engagement or this Agreement as provided in Section
2(b).
<PAGE>
It is understood that, in connection with HMCo's engagement, HMCo may also
be engaged to act for the Company in one or more additional capacities, and that
the terms of this engagement or any such additional engagement may be embodied
in one or more separate written agreements. This indemnification shall apply to
the engagement specified in Section 1 hereof as well as to any such additional
engagement(s) (whether written or oral) and any modification of said engagement
or such additional engagement(s) and shall remain in full force and effect
following the completion or termination of said engagement or such additional
engagements.
The Company further understands that if HMCo is asked to furnish the
Company a financial opinion letter or act for the Company in any other formal
capacity, such further action may be subject to a separate agreement containing
provisions and terms to be mutually agreed upon.
6. Confidential Information. In connection with the performance of the
------------------------
services hereunder, HMCo agrees not to, and to use commercially reasonable
efforts to cause its officers, directors, employees, agents and representatives
acting on behalf of HMCo pursuant to this Agreement not to, divulge any
confidential information, secret processes or trade secrets disclosed by the
Company or any of its Subsidiaries to HMCo or any such person in connection with
the providing of services by HMCo (or any such person on HMCo's behalf) solely
in its capacity as a financial advisor pursuant to this Agreement, unless the
Company consents to the divulging thereof or such information, secret processes,
or trade secrets are publicly available or otherwise available to HMCo without
restriction or breach of any confidentiality agreement or unless required by any
governmental authority or in response to any valid legal process (in which case
HMCo will use commercially reasonable efforts to provide the Company with as
much advance notice as is reasonably practicable).
7. Governing Law; Jurisdiction and Venue. This Agreement shall be
-----------------------------------------
construed, interpreted, and enforced in accordance with the laws of the State of
Texas, excluding any choice-of-law provisions thereof. Each of the parties
hereby (a) irrevocably submits to the exclusive jurisdiction of the United
States Federal District Court for the Northern District of Texas, sitting in
Dallas County, Texas, the United States of America, in the event such court has
jurisdiction or, if such court does not have jurisdiction, to any district court
sitting in Dallas County, Texas, the United States of America, for the purposes
of any suit, action or proceeding arising out of or relating to this Agreement,
including any claims by any Indemnified Persons for indemnity pursuant to
Section 5 hereof, (b) waives, and agrees not to assert in any such suit, acting
or proceeding, any claim that (i) it is not personally subject to the
jurisdiction of such court or of any other court to which proceedings in such
court may be appealed, (ii) such suit, action or proceeding is brought in an
inconvenient forum or (iii) the venue of such suit, action or proceeding is
improper and (c) expressly waives any requirement for the posting of a bond by
the party bringing such suit, action or proceeding. Each of the parties
consents to process being served in any such suit, action or proceeding by
mailing, certified mail, return receipt requested, a copy thereof to such party
at the address in effect for notices hereunder, and agrees that such services
shall constitute good and sufficient service of process and notice thereof.
Nothing in this Section 7 shall affect or limit any right to serve process in
any other manner permitted by law.
<PAGE>
8. Assignment. This Agreement and all provisions contained herein
----------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, neither this Agreement nor
-------- -------
any of the rights, interests, or obligations hereunder shall be assigned (other
than with respect to the rights and obligations of HMCo, which may be assigned
to any one or more of its principals or Affiliates) by any of the parties
without the prior written consent of the other parties.
9. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
10. Other Understandings. All discussions, understandings, and
---------------------
agreements heretofore made between any of the parties hereto with respect to the
subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto. All calculations of
the Monitoring Fee and Reimbursable Expenses shall be made by HMCo and, in the
absence of mathematical error, shall be final and conclusive. All references to
"$" or dollar amounts will be to lawful currency of the United States of
America. All fees, expenses and other amounts payable to HMCo hereunder shall
be (i) payable in U.S. dollars and if such amounts were originally expressed in
any other currency, then unless otherwise provided herein such amounts shall be
converted to U.S. dollars at the official exchange rate published by the
government of such country to which such currency relates on the date of payment
or, if such government does not have a published exchange rate on the date of
payment, the applicable New York foreign exchange selling rate as published in
The Wall Street Journal on the date of payment or, if not published on the date
of payment, on the most recent previously published rate, (ii) grossed-up to
cover any withholding, value-added or other similar taxes, and (iii) paid by
wire transfer of immediately available funds to the account described on
Exhibit A hereto (or such other account as HMCo may hereafter designate in
- ---------
writing).
<PAGE>
6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HICKS, MUSE & CO. PARTNERS, L.P.
By: HM PARTNERS, INC.,
its General Partner
By: /s/ Daniel S. Dross
Daniel S. Dross
Senior Vice President
TRITON ENERGY LIMITED
By: /s/ Robert B. Holland, III
Robert B. Holland, III
Chief Executive Officer,
General Counsel and Secretary
<PAGE>
EXHIBIT A
----------
Wire Transfer Instructions
----------------------------
Chase Bank of Texas
ABA #: 113000609
Account #: 08805113824
Credit: Hicks, Muse & Co. Partners, L.P.
Reference: Payment of Monitoring Fees or Expenses by
Triton Energy Limited
EXHIBIT 10.71
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the
15th day of July, 1998, by and among TRITON EXPLORATION SERVICES, INC. (the
"Employer"), having a business address at 6688 N. Central Expressway, Suite
1400, Dallas, Texas 75206, Robert B. Holland, III ("Employee"), having a mailing
address at 3228 Caruth Blvd., Dallas,Texas 75225, and Triton Energy Limited, a
Cayman Islands company (the "Company"), to the limited extent provided herein,
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employer is a direct or indirect wholly owned subsidiary of
the Company;
WHEREAS, the Employer and the Company consider the establishment and
maintenance of a sound and vital management to be essential to protecting and
enhancing their best interests and the best interests of their respective
shareholders;
WHEREAS, the Employer and the Company recognize that, because the Company
is a publicly held company and as is the case with many such companies, the
possibility of a change in control may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the
Employer and the Company and their respective shareholders;
WHEREAS, the Boards of Directors of the Employer and the Company have
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Employer's management,
including Employee, to their assigned duties without distraction in the face of
the potentially disturbing circumstances arising from the possibility of a
change in control of the Company;
WHEREAS, in order to induce Employee to remain in the employ of the
Employer and in the service of the Company as an officer, the Employer entered
into an Amended and Restated Employment Agreement (the "Employment Agreement")
as of January 13, 1998 with Employee that provides certain severance benefits to
Employee in the event Employee's employment is terminated or changed under the
circumstances described below and the Company is willing to guarantee the
performance of the Employer's obligations hereunder;
WHEREAS, the Employer has requested Employee, and Employee has agreed, to
act as President and Chief Executive Officer for the lesser of one year or until
the Company has appointed another individual as Chief Executive Officer on the
terms and conditions described in this Agreement;
WHEREAS, the Employer, the Company and Employee wish to amend and restate
the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL. If, while
---------------------------------------------------------
Employee is employed by Employer, the Company or any subsidiary of the Company,
a change in control of the Company (as defined in Section 1.6 below) occurs,
Employee shall be entitled to the benefits provided in Section 2 hereof upon the
subsequent termination of his employment, provided that such termination (a)
occurs within two (2) years following the change in control of the Company and
(b) is not (i) because of his death, "Disability" or "Retirement" (as defined in
Section 1.1 below), (ii) by the Employer for "Cause" (as defined in Section 1.2
below), or (iii) by Employee other than for "Good Reason" (as defined in Section
1.3 hereof). In addition, if within eighteen months following the termination of
Employee's employment with Employer, the Company or any subsidiary of the
Company, a change in control of the Company occurs, Employee shall be entitled
to the benefits provided in Section 2 hereof upon the occurrence of such change
in control, provided that the termination of his employment was not (i) because
of his death, "Disability" or "Retirement", (ii) by the Employer for "Cause", or
(iii) by Employee other than for "Good Reason".
1.1 Disability; Retirement
-----------------------
1.1-1 If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from his duties with the
Employer on a full-time basis for 120 consecutive business days, and within
thirty (30) days after written notice of termination is given Employee shall not
have returned to the full-time performance of his duties, the Employer may
terminate this Agreement for "Disability."
1.1-2 Termination by the Employer or Employee of his employment
based on "Retirement" shall mean termination in accordance with the Employer's
retirement policy, including early retirement, generally applicable to its
salaried employees or in accordance with any retirement arrangement established
with Employee's consent with respect to him.
1.2 Cause. The Employer may terminate Employee's employment for
-----
"Cause." For the purposes of this Agreement, the Employer shall have "Cause" to
terminate Employee's employment hereunder upon (A) the willful and continued
failure by Employee to perform his duties with the Employer (other than any such
failure resulting from incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to Employee by the Board which
specifically identifies the manner in which the Board believes that he has not
substantially performed his duties, or (B) the willful engaging by Employee in
gross misconduct materially and demonstrably injurious to the Company. For
purposes of this paragraph, an act, or failure to act, on Employee's part shall
not be considered "willful" if done, or omitted to be done, by him (A) in good
faith and (B) with reasonable belief that his action or omission was not opposed
to the best interests of the Company. Notwithstanding the foregoing, Employee
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3d's) of the entire authorized
membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice and an opportunity for Employee, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board he was guilty of conduct set forth above in clauses (A) or (B) of
the second sentence of this paragraph and specifying the particulars thereof in
detail.
1.3 Good Reason. Employee may terminate his employment for Good
------------
Reason. For purposes of this Agreement, "Good Reason" shall mean:
1.3-1 Without his express written consent, the assignment to
Employee of any duties inconsistent with his positions, duties, responsibilities
and status with the Employer and the Company immediately prior to a change in
control of the Company, or a change in his reporting responsibilities, titles or
offices with the Employer or the Company as in effect immediately prior to a
change in control of the Company, including, without limitation, the appointment
of another individual as President or Chief Executive Officer of the Company, or
any removal of Employee from or any failure to re-elect Employee to any of such
positions, except in connection with the termination of his employment for
Cause, Disability or Retirement or as a result of his death or by Employee other
than for Good Reason;
1.3-2 A reduction by the Employer in Employee's base salary as
in effect on the date hereof or as the same may be increased from time to time;
1.3-3 The Employer's requiring Employee to be based anywhere
other than the Employer's offices at which he was based immediately prior to a
change in control of the Company except for required travel on the Employer's
business to an extent substantially consistent with his present business travel
obligations, or, in the event Employee consents to any relocation, the failure
by the Employer to pay (or reimburse Employee) for all reasonable moving
expenses incurred by him relating to a change of his principal residence in
connection with such relocation and to indemnify Employee against any loss
(defined as the difference between the actual sale price of such residence and
the higher of (a) his aggregate investment in such residence or (b) the fair
market value of such residence as determined by a real estate appraiser
designated by Employee and reasonably satisfactory to the Employer) realized on
the sale of Employee's principal residence in connection with any such change of
residence;
1.3-4 The failure by the Employer or the Company to continue in
effect any benefit or compensation plan (including but not limited to any stock
option plans, convertible debenture plan, pension plan, life insurance plan,
health and accident plan or disability plan) in which Employee is participating
at the time of a change in control of the Company (or plans providing
substantially similar benefits), the taking of any action by the Employer or the
Company which would adversely affect Employee's participation in or materially
reduce his benefits under any of such plans or deprive him of any material
fringe benefit enjoyed by him at the time of the change in control of the
Company, or the failure by the Employer to provide Employee with the number of
paid vacation days to which he is then entitled on the basis of years of service
with the Employer in accordance with the Employer's normal vacation policy in
effect on the date hereof;
1.3-5 Any failure of the Employer or the Company to obtain the
assumption of and the agreement to perform this Agreement by any successor as
contemplated in Section 6 hereof; or
1.3-6 Any purported termination of Employee's employment which
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 1.4 below (and, if applicable, Section 1.2 above); and for purposes
of this Agreement, no such purported termination shall be effective.
1.4 Notice of Termination. Any termination by the Employer
-----------------------
pursuant to Sections 1.1 and 1.2 above or by Employee pursuant to Section 1.3
above shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee's employment under the
provision so indicated. In the event that Employee seeks to terminate his
employment with the Employer pursuant to Section 1.3 above, he must communicate
his written Notice of Termination to the Employer within sixty (60) days of
being notified of such action or actions by the Employer or the Company which
constitute Good Reason for termination.
1.5 Date of Termination. "Date of Termination" shall mean (i) if
--------------------
this Agreement is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period); (ii) if Employee's employment is terminated for Cause, the date on
which a Notice of Termination is given or the date on which there shall have
been delivered to Employee the resolution specified in Section 1.2, whichever is
later; (iii) if Employee's employment is terminated with Good Reason or with
Justification, the date that is specified in the Notice of Termination; and (iv)
if Employee's employment is terminated for any other reason, the date on which a
Notice of Termination is given; provided that, if within thirty (30) days after
any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
1.6 Change in Control Defined. For purposes of this Agreement, a
--------------------------
"change in control of the Company" shall mean the occurrence of any of the
following events: (i) there shall be consummated (x) any consolidation,
amalgamation or merger of the Company in which the Company is not the continuing
or surviving corporation or pursuant to which shares of the Company's Ordinary
Shares would be converted into cash, securities or other property, other than a
consolidation, amalgamation or merger of the Company in which the holders of the
Company's Ordinary Shares immediately prior to the consolidation, amalgamation
or merger have the same proportionate ownership of ordinary shares or common
stock of the surviving corporation immediately after the consolidation,
amalgamation or merger, or (y) any sale, lease, exchange or other transfer
(excluding transfer by way of pledge or hypothecation), in one transaction or a
series of related transactions, of all, or substantially all, of the assets of
the Company, (ii) the shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company, (iii) any "person" (as such
term is defined in Section 3(a)(9) or Section 13(d)(3) under the Securities
Exchange Act of 1934, as amended (the "1934 Act)) or any "group" (as such term
is used in Rule 13d-5 promulgated under the 1934 Act), other than the Company or
any successor of the Company or any subsidiary of the Company or any employee
benefit plan of the Company or any subsidiary (including such plan's trustee),
becomes a beneficial owner for purposes of Rule 13d-3 promulgated under the 1934
Act, directly or indirectly, of securities of the Company representing 15.0% or
more of the Company's then outstanding securities having the right to vote in
the election of Directors of the Company, or (iv) during any period of two
consecutive years, individuals who, at the beginning of such period constituted
the entire Board of Directors of the Company (the "Board", and such individuals
being referred to as the "Incumbent Directors"), cease for any reason (other
than death) to constitute a majority of the Directors of the Company, unless the
election, or the nomination for election, by the Company's shareholders, of each
new Director of the Company was approved by a vote of at least two-thirds of the
Incumbent Directors (so long as such new Director was not nominated by a person
who expressed an intent to effect a change in control of the Company or engage
in a proxy or other control contest) in which case such new Director shall be
considered an Incumbent Director.
2. COMPENSATION FOLLOWING A CHANGE IN CONTROL. If a change in control
-------------------------------------------
of the Company shall have occurred and the other conditions in the first
paragraph of Section 1 are met, Employee shall be entitled to the following:
2.1 Disability. During any period that Employee fails to perform his
----------
duties hereunder as a result of incapacity due to physical or mental illness, he
shall continue to receive his full base salary at the rate then in effect and
any installments of deferred portions of awards under any applicable incentive,
bonus or other plans paid during such period until this Agreement is terminated
pursuant to Section 1 hereof. Thereafter, Employee's benefits in respect of his
disability shall be determined in accordance with the Employer's Long-Term
Disability Income Insurance Plan, or a substitute plan, and any other plans
providing for the disability of a participant then in effect.
2.2 Termination for Cause. If Employee's employment shall be
-----------------------
terminated for Cause, the Employer shall pay Employee his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Employer shall have no further obligations to
Employee to make any payments under this Agreement.
2.3 Termination Without Cause; Termination for Good Reason. If the
---------------------------------------------------------
Employer shall terminate Employee's employment other than pursuant to Sections
1.1 or 1.2 hereof or if Employee shall terminate his employment for Good Reason,
then the Employer shall pay to Employee as severance pay in a lump sum in cash
not later than the tenth (10th) day following the Date of Termination, the
following amounts:
2.3-1 Employee's full base salary through the Date of
Termination at the rate in effect at the time of Notice of Termination is given;
2.3-2 In lieu of any further salary or bonus payments to
Employee for periods subsequent to the Date of Termination, an amount equal to
the product of (a) the sum of (i) the highest of Employee's annual base salary
in effect at any time from the three years prior to, through and including, the
Date of Termination plus (ii) the highest of the aggregate bonuses paid to
Employee during any fiscal year all or a part of which was included in the
foregoing three year period (which shall include, without limitation, for fiscal
1998, the $200,000 forgivable advance paid to Employee in August 1998 as an
incentive to continue to serve as an officer of the Company (the "Retention
Bonus") plus (iii) the highest of the aggregate contributions made by the
Employer on Employee's behalf in respect of Employee's participation in any
401(k) plan or plans of the Employer during any fiscal year all or a part of
which was included in the foregoing three year period multiplied by (b) the
number three (3);
2.3-3 In lieu of further payments to Employee under the
Company's Supplemental Executive Retirement Plan (the "SERP"), an amount equal
to the lump sum payment to which the Employee would be entitled under the SERP
had a change in control as defined in the SERP occurred simultaneously with the
change in control as defined in this Agreement;
2.3-4 If the Employer shall terminate Employee's employment
other than pursuant to Section 1.1 or 1.2 hereof or if Employee shall terminate
his employment for Good Reason, then Employee shall be entitled to exercise all
options ("Options"), if any, then held by Employee under the Company's stock
option plans for a period of twelve (12) months following the Date of
Termination; and
2.3-5 All relocation and indemnity payments as set forth in
Section 1.3-4 hereof, and all legal fees and expenses incurred by Employee as a
result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to obtain
or enforce any right or benefit provided by this Agreement).
2.4 Benefit Plans. Unless Employee is terminated for Cause, the
--------------
Employer shall maintain in full force and effect for the continued benefit of
Employee, for a two year period after the Date of Termination, all employee
benefit plans and programs or arrangements in which Employee was entitled to
participate immediately prior to the Date of Termination (at no greater cost or
expense to Employee than was the case immediately prior to the change in control
of the Company), including without limitation plans providing medical, dental,
life and disability insurance coverage, provided that Employee's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that Employee's participation in any such plan or
program is not possible, the Employer shall arrange to provide Employee, at the
Employer's cost and expense, with benefits substantially similar to those which
Employee is entitled to receive under such plans and programs. At the end of
the period of coverage, Employee shall have the option to have assigned to him
at no cost and with no appointment of prepaid premiums, any assignable insurance
policy owned by the Employer or the Company and relating specifically to him.
2.5 Additional Benefits. If the Employer shall terminate
--------------------
Employee's employment other than pursuant to Section 1.1 or 1.2 hereof or if
Employee shall terminate his employment for Good Reason, then in addition to the
benefits to which Employee is entitled under the retirement plans or programs in
which Employee participates or any successor plans or programs in effect on the
Date of Termination of his employment hereunder (but not in addition to the
payment required by Section 2.3-3 hereof), the Employer shall pay Employee, not
later than the tenth (10th) day following the Date of Termination, in cash an
amount equal to the difference between (a) the present value of the most
valuable retirement pension to which Employee would have been entitled under the
terms of the retirement plans or programs in which Employee participates (or any
successor plans or programs in effect on the Date of Termination hereunder)
without regard to "vesting" thereunder, if he would have accumulated three (3)
additional years of continuous credited service after the Date of Termination
under such retirement plans or programs and (b) the present value of the most
valuable retirement pension which he is actually entitled to receive pursuant to
the provisions of said retirement plans and programs. For purposes of this
Section 2.5, "present value" shall be determined using the same methods and
assumptions (including compensation increase assumptions during such additional
three year period) utilized under the Employer's retirement plans and programs
immediately prior to the change in control of the Company.
2.6 Automobiles. Upon Employee's termination for any reason, the
-----------
Employer shall enable Employee to purchase the automobile, if any, which the
Employer or the Company was providing for Employee's use at the time Notice of
Termination was given at the wholesale value of such automobile at such time.
2.7 Mitigation of Amounts Payable Hereunder. Employee shall not
-----------------------------------------
be required to mitigate the amount of any payment provided for in this Section 2
by seeking other employment or otherwise, nor shall the amount of any payment
provided for in this Section 2 be reduced by any compensation earned by Employee
as the result of employment by another employer after the Date of Termination,
or otherwise.
3. COMPENSATION NOT CONTINGENT UPON A CHANGE IN CONTROL.
-----------------------------------------------------------
3.1 Termination Benefits. If Employee's employment is terminated,
----------------------
other than due to Employee's death, Disability or Retirement, (i) by the
Employer without Cause (as defined in Section 1.2) or (ii) by Employee with
Justification (as defined below), then Employee shall be entitled to the
benefits set forth in Section 3.1. If there shall occur a change in control of
the Company while Employee is employed by the Company, Employee shall have the
option to have either the provisions of this Section 3 control or the provisions
of Sections 1 and 2 control.
3.1-1 Following the Date of Termination, Employee shall
continue to be compensated in accordance with the payroll practices of the
Employer, at the highest rate of compensation in effect in the twelve-month
period prior to the Date of Termination, for the period ending on the pay period
that next follows the 18-month anniversary of the Date of Termination of
employment pursuant to this Section 3, subject to any holdbacks or deductions
required as a matter of law. During this period, Employee shall be treated as an
employee for purposes of all employee benefit plans and programs or arrangements
in which Employee is entitled to participate immediately prior to the Date of
Termination (at no greater cost or expense to Employee than was the case
immediately prior to the termination), including without limitation plans
providing medical, dental, life and disability insurance coverage. Employee's
participation in the Supplemental Executive Retirement Plan, as it may be
amended through the date prior to the Date of Termination, shall continue until
the anniversary date of Employee's commencement of employment that next follows
the 18-month anniversary of the Date of Termination of employment pursuant to
this Section 4.
3.1-2 Any Options, if any, then held by Employee shall become
fully vested and exercisable and shall remain exercisable until the earlier to
occur of their expiration date set forth in the agreements pursuant to which
they were issued (without regard to the effect of termination of employment), as
such agreements may be amended pursuant to this Agreement or otherwise, or the
twelve (12) month anniversary of the Date of Termination.
3.1-3 If, prior to the eighteen (18) month anniversary of the
Date of Termination there shall occur a change in control of the Company,
Employee shall be entitled to receive the benefits provided in Section 2 above
assuming that the change in control of the Company occurred immediately prior to
the termination of employment pursuant to this Section 3 and Employee were
terminated without Cause following such change in control of the Company.
3.1-4 Employee shall be entitled to receive all relocation and
indemnity payments as set forth in Section 2.3-4 hereof, and all legal fees and
expenses incurred by Employee as a result of such termination (including all
such fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement).
3.2 Termination by Employee with Justification. Employee shall be
----------------------------------------------
entitled to terminate his employment with "Justification" and shall be entitled
to the benefits set forth in Section 3.1 if any of the following conditions
pertain:
3.2-1 Without his express written consent, the assignment to
Employee of any duties inconsistent with his positions, duties, responsibilities
and status with the Employer and the Company as of the date hereof, or a change
in his reporting responsibilities, titles or offices with the Employer or the
Company as in effect as of the date hereof, including, without limitation, the
appointment of another individual as President or Chief Executive Officer of the
Company, or any removal of Employee from or any failure to re-elect Employee to
any of such positions, except in connection with the termination of his
employment for Cause, Disability or Retirement or as a result of his death.
4.2-2 A reduction by the Employer in Employee's base salary as
the same hereafter may be increased from time to time.
4.2-3 The Employer's requiring Employee to be based anywhere
other than the Employer's offices in Dallas, Texas, except for required travel
on the Employer's business to an extent substantially consistent with his
present business travel obligations, or, in the event Employee consents to any
relocation, the failure by the Employer to pay (or reimburse Employee) for all
reasonable moving expenses incurred by him relating to a change of his principal
residence in connection with such relocation and to indemnify Employee against
any loss (defined as the difference between the actual sale price of such
residence and the higher of (a) his aggregate investment in such residence or
(b) the fair market value of such residence as determined by a real estate
appraiser designated by Employee and reasonably satisfactory to the Employer)
realized on the sale of Employee's principal residence in connection with any
such change of residence.
4.3 Mitigation of Amounts Payable Hereunder. Employee shall not be
-----------------------------------------
required to mitigate the amount of any payment provided for in this Section 4 by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this Section 4 be reduced by any compensation earned by Employee
as the result of employment by another employer after the Date of Termination,
or otherwise.
4.4 Outstanding Options. Any Options, if any, held as of the date
--------------------
hereof by Employee having an exercise price greater than $39.00 are hereby
amended so that they shall terminate and cease to be exercisable on December 1,
1998.
5. EXCISE TAXES.
-------------
5.1 In the event that any payment or benefit received or to be
received by Employee pursuant to the terms of this Agreement (the "Contract
Payments") or in connection with Employee's termination of employment or
contingent upon a change in control of the Company pursuant to any plan or
arrangement or other agreement with the Employer or the Company (or any
affiliate) ("Other Payments" and, together with the Contract Payments, the
"Payments"), would be subject to the excise tax (the "Excise Tax"), imposed by
Section 4999 of the Code, as determined as provided below, the Employer shall
pay to Employee, at the time specified in Section 5.2 below, an additional
amount (the "Gross-Up Payment") such that the net amount retained by Employee,
after deduction of the Excise Tax on Contract Payments and Other Payments and
any federal, state and local income or other tax and Excise Tax upon the payment
provided for by this Section 5.1, and any interest, penalties or additions to
tax payable by Employee with respect thereto, shall be equal to the total
present value of the Contract Payments and Other Payments at the time such
Payments are to be made. For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amounts of such Excise Tax,
(1) the total amount of the Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, except to the extent that, in the opinion of
independent tax counsel selected by the Employer's independent auditors and
reasonably acceptable to Employee ("Tax Counsel"), a Payment (in whole or in
part) does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in
part) are not subject to the Excise Tax, (2) the amount of the Payments that
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code (after applying
clause (1) hereof), and (3) the value of any noncash benefits or any deferred
payment or benefit shall be determined by Tax Counsel in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, Employee shall be deemed to pay
federal income tax at the highest marginal rates of federal income taxation
applicable to individuals in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at the highest effective rates of
taxation applicable to Employee in the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal income taxes that
can be obtained from deduction of such state and local taxes, taking into
account any limitations applicable to individuals subject to federal income tax
at the highest marginal rates.
5.2 Gross-Up Payments provided for in Section 5.1 hereof shall be
made upon the earlier of (i) the payment to Employee of any Contract Payment or
Other Payment or (ii) the imposition upon Employee or payment by Employee of any
Excise Tax.
5.3 The Employee shall notify the Employer in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Employer of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 20 business days after the Employee is informed
in writing of such claim and shall apprise the Employer of the nature of such
claim and the date on which such claim is requested to be paid. The Employee
shall not pay such claim prior to expiration of the 30 day period following the
date on which the Employee gives such notice to the Employer (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Employer notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim the Employee
shall:
i) give the Employer any information reasonably requested by the
Employer relating to such claim;
ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Employer and reasonably satisfactory to
the Employee;
iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
iv) permit the Employer to participate in any proceedings relating
to such claim;
provided, however, that the Employer shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest and
penalties and related legal, consulting or other similar fees) incurred in
connection with such contest, and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.
5.4 The Employer shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Employee to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Employer shall
reasonably determine; provided, however, that if the Employer directs the
Employee to pay such claim and sue for a refund, the Employer shall advance the
amount of such payment to the Employee on a interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax or other tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and provided, further, that if the Employee is required to
extend the statute of limitations to enable the Employer to contest such claim,
the Employee may limit this extension solely to such contested amount. The
Employer's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In addition, no
position may be taken nor any final resolution be agreed to by the Employer
without the Employee's consent if such position or resolution could reasonably
be expected to adversely affect the Employee (including any other tax position
of the Employee unrelated to the matters covered hereby).
5.5 As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Employer or the
Tax Counsel hereunder, it is possible that Gross-Up Payments which will not have
been made by the Employer should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder In the event that the
Employer exhausts its remedies and the Employee thereafter is required to pay to
the Internal Revenue Service an additional amount in respect of any Excise Tax,
the Employer or the Tax Counsel shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall promptly be paid by the
Employer to or for the benefit of the Employee.
5.6 If, after the receipt by Employee of the Gross-Up Payment or
an amount advanced by the Employer in connection with the contest of an Excise
Tax claim, the Employee becomes entitled to receive any refund with respect to
such claim, the Employee shall promptly pay to the Employer the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Employer in connection with an Excise Tax claim, a determination
is made that Employee shall not be entitled to any refund with respect to such
claim and the Employer does not notify the Employee in writing of its intent to
contest the denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid.
6. SUCCESSORS; BINDING AGREEMENT.
-------------------------------
6.1 Successors of the Company. The Employer and the Company will
----------------------------
require any successor (whether direct or indirect, by purchase, amalgamation,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Employer and/or the Company, by agreement in form and
substance satisfactory to Employee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Employer and
the Company would be required to perform it if no such succession had taken
place. Failure of the Employer and the Company to obtain such agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Employee to compensation from the Employer in the same amount
and on the same terms as Employee would be entitled hereunder if Employee
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
the terms, "Employer" and "Company" shall include any successor to the business
and/or assets of the Employer and/or the Company as aforesaid which executes and
delivers the agreement provided for in this Section 6 or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of law.
6.2 Employee's Heirs, etc. This Agreement shall inure to the benefit
----------------------
of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts would still be payable to
him hereunder as if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
his devisee, legatee, or other designee or, if there be no such designee, to his
estate.
7. NOTICE. For the purposes of this Agreement, notices and all other
------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, or by overnight
courier service, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the Employer shall be
directed to the attention of the Chief Executive Officer of the Employer with a
copy to the Secretary of the Employer, and all notices to the Company shall be
directed to c/o Triton Exploration Services, Inc., 6688 N. Central Expressway,
Suite 1400, Dallas, Texas 75206 attention: President, or to such other address
as any party may hereafter specify in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
8. MISCELLANEOUS. No provisions of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Employee, the Employer and the Company (in whose case such
signatory shall be such officer as may be specifically designated by the Board
(which shall in any event include the Company's Chief Executive Officer)). No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This Agreement constitutes the
entire agreement of the parties regarding the subject matter hereof, and
supersedes all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
9. VALIDITY. The invalidity or unenforceability of any provisions of
--------
this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
-----------------------------
and construed under the laws of the State of Texas. The Employer and the Company
hereby irrevocably submit to the jurisdiction of any Texas State or Federal
court sitting in the Northern District of Texas, and the jurisdiction of any
arbitration panel constituted pursuant to Section 12 hereof, over any action,
proceeding or arbitration arising out of or relating to this Agreement and the
Employer and the Company hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in such Texas State or
Federal court or arbitration proceeding.
12. ARBITRATION. Any dispute or controversy arising under or in
-----------
connection with this Agreement shall be settled exclusively by arbitration in
Dallas, Texas (in accordance with the rules of the American Arbitration
Association then in effect). Notwithstanding the pendency of any such dispute
or controversy, the Employer will continue to pay Employee his full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, base salary and installments under incentive, bonus or other
plans) and continue Employee as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved in accordance with
Section 2.5 hereof. Amounts paid under this paragraph are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Employee shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
13. CAPTIONS AND GENDER. The use of captions and Section headings herein
--------------------
is for the purposes of convenience only and shall not effect the interpretation
or substance of any provisions contained herein. Similarly, the use of the
masculine gender with respect to pronouns in this Agreement is for purposes of
convenience and includes either sex who may be a signatory.
14. LEGAL FEES. The Employer shall pay Employee, no less frequently than
-----------
monthly, all legal fees and expenses reasonably incurred by Employee in
connection with this Agreement (including all such fees and expenses, if any,
incurred in contesting or disputing the nature of any such termination for
purposes of this Agreement or in seeking to obtain or enforce any right or
benefit provided by this Agreement, but excluding any legal fees and expenses
relating to a claim brought be Employee that a court has determined (in a final,
non-appealable judgment) to be brought in bad faith).
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date and year first above written.
TRITON EXPLORATION SERVICES, INC.
By: /s/ Peter Rugg
-------------------------------------
Peter Rugg, Senior Vice President
/s/ Robert B. Holland, III
-------------------------------------
Robert B. Holland, III
JOINDER OF THE COMPANY
The Company hereby joins in this Agreement for the purpose of guaranteeing,
and the Company does hereby unconditionally guarantee, to Employee the due and
prompt performance by the Employer, or its successors and assigns as provided
herein (the "Obligor") of the Obligor's obligations hereunder and covenanting,
and the Company does hereby covenant, with Employee to be bound by the
agreements of the Company as set forth herein. In case of the failure of the
Obligor to punctually perform any obligation under this Agreement, including the
making of any payment hereunder, the Company hereby agrees to cause any such
obligation to be promptly performed when and as the same shall be due. The
Company hereby agrees that its obligations hereunder shall be as if it were
principal obligor and not merely surety, and shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any provision of this Agreement, any failure
to enforce the provisions of this Agreement, or any waiver, modification or
indulgence granted to the Obligor with respect thereto, by the Employee, or any
other circumstance which may otherwise constitute a legal or equitable discharge
of a surety or guarantor. The Company hereby waives diligence, presentment,
demand, any right to require a proceeding first against the Obligor, and all
demands whatsoever, and covenants that its obligations under this Agreement will
not be discharged except by performance in full of the Obligor's obligations
hereunder. The agreements of the Company hereunder shall inure to the benefit of
and be enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
TRITON ENERGY LIMITED
By: /s/ Sheldon R. Erikson
------------------------------------
Sheldon R. Erikson, Chairman
EXHIBIT 10.72
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the
15th day of July, 1998, by and among TRITON EXPLORATION SERVICES, INC. (the
"Employer"), having a business address at 6688 N. Central Expressway, Suite
1400, Dallas, Texas 75206, __________________ ("Employee"), having a mailing
address at ________________________, Texas ________, and Triton Energy Limited,
a Cayman Islands company (the "Company"), to the limited extent provided herein,
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Employer is a direct or indirect wholly owned subsidiary of
the Company;
WHEREAS, the Employer and the Company consider the establishment and
maintenance of a sound and vital management to be essential to protecting and
enhancing their best interests and the best interests of their respective
shareholders;
WHEREAS, the Employer and the Company recognize that, because the Company
is a publicly held company and as is the case with many such companies, the
possibility of a change in control may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of management personnel to the detriment of the
Employer and the Company and their respective shareholders;
WHEREAS, the Boards of Directors of the Employer and the Company have
determined that appropriate steps should be taken to reinforce and encourage the
continued attention and dedication of members of the Employer's management,
including Employee, to their assigned duties without distraction in the face of
the potentially disturbing circumstances arising from the possibility of a
change in control of the Company;
WHEREAS, in order to induce Employee to remain in the employ of the
Employer and in the service of the Company as an officer, the Employer entered
into an Amended and Restated Employment Agreement (the "Employment Agreement")
as of January 13, 1998 with Employee that provides certain severance benefits to
Employee in the event Employee's employment is terminated or changed under the
circumstances described below and the Company is willing to guarantee the
performance of the Employer's obligations hereunder;
WHEREAS, the Employer has requested Employee, and Employee has agreed, to
act as Senior Vice President on the terms and conditions described in this
Agreement;
WHEREAS, the Employer, the Company and Employee wish to amend and restate
the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual premises and conditions
contained herein, the parties hereto agree as follows:
1. TERMINATION OF EMPLOYMENT FOLLOWING CHANGE IN CONTROL. If, while
---------------------------------------------------------
Employee is employed by Employer, the Company or any subsidiary of the Company,
a change in control of the Company (as defined in Section 1.6 below) occurs,
Employee shall be entitled to the benefits provided in Section 2 hereof upon the
subsequent termination of his employment, provided that such termination (a)
occurs within two (2) years following the change in control of the Company and
(b) is not (i) because of his death, "Disability" or "Retirement" (as defined in
Section 1.1 below), (ii) by the Employer for "Cause" (as defined in Section 1.2
below), or (iii) by Employee other than for "Good Reason" (as defined in Section
1.3 hereof). In addition, if within eighteen months following the termination of
Employee's employment with Employer, the Company or any subsidiary of the
Company, a change in control of the Company occurs, Employee shall be entitled
to the benefits provided in Section 2 hereof upon the occurrence of such change
in control, provided that the termination of his employment was not (i) because
of his death, "Disability" or "Retirement", (ii) by the Employer for "Cause", or
(iii) by Employee other than for "Good Reason".
1.1 Disability; Retirement
-----------------------
1.1-1 If, as a result of Employee's incapacity due to physical
or mental illness, Employee shall have been absent from his duties with the
Employer on a full-time basis for 120 consecutive business days, and within
thirty (30) days after written notice of termination is given Employee shall not
have returned to the full-time performance of his duties, the Employer may
terminate this Agreement for "Disability."
1.1-2 Termination by the Employer or Employee of his employment
based on "Retirement" shall mean termination in accordance with the Employer's
retirement policy, including early retirement, generally applicable to its
salaried employees or in accordance with any retirement arrangement established
with Employee's consent with respect to him.
1.2 Cause. The Employer may terminate Employee's employment for
-----
"Cause." For the purposes of this Agreement, the Employer shall have "Cause" to
terminate Employee's employment hereunder upon (A) the willful and continued
failure by Employee to perform his duties with the Employer (other than any such
failure resulting from incapacity due to physical or mental illness), after a
demand for substantial performance is delivered to Employee by the Board which
specifically identifies the manner in which the Board believes that he has not
substantially performed his duties, or (B) the willful engaging by Employee in
gross misconduct materially and demonstrably injurious to the Company. For
purposes of this paragraph, an act, or failure to act, on Employee's part shall
not be considered "willful" if done, or omitted to be done, by him (A) in good
faith and (B) with reasonable belief that his action or omission was not opposed
to the best interests of the Company. Notwithstanding the foregoing, Employee
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3d's) of the entire authorized
membership of the Board at a meeting of the Board called and held for the
purpose (after reasonable notice and an opportunity for Employee, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board he was guilty of conduct set forth above in clauses (A) or (B) of
the second sentence of this paragraph and specifying the particulars thereof in
detail.
1.3 Good Reason. Employee may terminate his employment for Good
------------
Reason. For purposes of this Agreement, "Good Reason" shall mean:
1.3-1 Without his express written consent, the assignment to
Employee of any duties inconsistent with his positions, duties, responsibilities
and status with the Employer and the Company immediately prior to a change in
control of the Company, or a change in his reporting responsibilities, titles or
offices with the Employer or the Company as in effect immediately prior to a
change in control of the Company, or any removal of Employee from or any failure
to re-elect Employee to any of such positions, except in connection with the
termination of his employment for Cause, Disability or Retirement or as a result
of his death or by Employee other than for Good Reason;
1.3-2 A reduction by the Employer in Employee's base salary as
in effect on the date hereof or as the same may be increased from time to time;
1.3-3 The Employer's requiring Employee to be based anywhere
other than the Employer's offices at which he was based immediately prior to a
change in control of the Company except for required travel on the Employer's
business to an extent substantially consistent with his present business travel
obligations, or, in the event Employee consents to any relocation, the failure
by the Employer to pay (or reimburse Employee) for all reasonable moving
expenses incurred by him relating to a change of his principal residence in
connection with such relocation and to indemnify Employee against any loss
(defined as the difference between the actual sale price of such residence and
the higher of (a) his aggregate investment in such residence or (b) the fair
market value of such residence as determined by a real estate appraiser
designated by Employee and reasonably satisfactory to the Employer) realized on
the sale of Employee's principal residence in connection with any such change of
residence;
1.3-4 The failure by the Employer or the Company to continue in
effect any benefit or compensation plan (including but not limited to any stock
option plans, convertible debenture plan, pension plan, life insurance plan,
health and accident plan or disability plan) in which Employee is participating
at the time of a change in control of the Company (or plans providing
substantially similar benefits), the taking of any action by the Employer or the
Company which would adversely affect Employee's participation in or materially
reduce his benefits under any of such plans or deprive him of any material
fringe benefit enjoyed by him at the time of the change in control of the
Company, or the failure by the Employer to provide Employee with the number of
paid vacation days to which he is then entitled on the basis of years of service
with the Employer in accordance with the Employer's normal vacation policy in
effect on the date hereof;
1.3-5 Any failure of the Employer or the Company to obtain the
assumption of and the agreement to perform this Agreement by any successor as
contemplated in Section 6 hereof; or
1.3-6 Any purported termination of Employee's employment which
is not effected pursuant to a Notice of Termination satisfying the requirements
of Section 1.4 below (and, if applicable, Section 1.2 above); and for purposes
of this Agreement, no such purported termination shall be effective.
1.4 Notice of Termination. Any termination by the Employer
-----------------------
pursuant to Sections 1.1 and 1.2 above or by Employee pursuant to Section 1.3
above shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of Employee's employment under the
provision so indicated. In the event that Employee seeks to terminate his
employment with the Employer pursuant to Section 1.3 above, he must communicate
his written Notice of Termination to the Employer within sixty (60) days of
being notified of such action or actions by the Employer or the Company which
constitute Good Reason for termination.
1.5 Date of Termination. "Date of Termination" shall mean (i) if
--------------------
this Agreement is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period); (ii) if Employee's employment is terminated for Cause, the date on
which a Notice of Termination is given or the date on which there shall have
been delivered to Employee the resolution specified in Section 1.2, whichever is
later; (iii) if Employee's employment is terminated with Good Reason or with
Justification, the date that is specified in the Notice of Termination; and (iv)
if Employee's employment is terminated for any other reason, the date on which a
Notice of Termination is given; provided that, if within thirty (30) days after
any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding and final arbitration award or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
1.6 Change in Control Defined. For purposes of this Agreement, a
--------------------------
"change in control of the Company" shall mean the occurrence of any of the
following events: (i) there shall be consummated (x) any consolidation,
amalgamation or merger of the Company in which the Company is not the continuing
or surviving corporation or pursuant to which shares of the Company's Ordinary
Shares would be converted into cash, securities or other property, other than a
consolidation, amalgamation or merger of the Company in which the holders of the
Company's Ordinary Shares immediately prior to the consolidation, amalgamation
or merger have the same proportionate ownership of ordinary shares or common
stock of the surviving corporation immediately after the consolidation,
amalgamation or merger, or (y) any sale, lease, exchange or other transfer
(excluding transfer by way of pledge or hypothecation), in one transaction or a
series of related transactions, of all, or substantially all, of the assets of
the Company, (ii) the shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company, (iii) any "person" (as such
term is defined in Section 3(a)(9) or Section 13(d)(3) under the Securities
Exchange Act of 1934, as amended (the "1934 Act)) or any "group" (as such term
is used in Rule 13d-5 promulgated under the 1934 Act), other than the Company or
any successor of the Company or any subsidiary of the Company or any employee
benefit plan of the Company or any subsidiary (including such plan's trustee),
becomes a beneficial owner for purposes of Rule 13d-3 promulgated under the 1934
Act, directly or indirectly, of securities of the Company representing 15.0% or
more of the Company's then outstanding securities having the right to vote in
the election of Directors of the Company, or (iv) during any period of two
consecutive years, individuals who, at the beginning of such period constituted
the entire Board of Directors of the Company (the "Board", and such individuals
being referred to as the "Incumbent Directors"), cease for any reason (other
than death) to constitute a majority of the Directors of the Company, unless the
election, or the nomination for election, by the Company's shareholders, of each
new Director of the Company was approved by a vote of at least two-thirds of the
Incumbent Directors (so long as such new Director was not nominated by a person
who expressed an intent to effect a change in control of the Company or engage
in a proxy or other control contest) in which case such new Director shall be
considered an Incumbent Director.
2. COMPENSATION FOLLOWING A CHANGE IN CONTROL. If a change in control
-------------------------------------------
of the Company shall have occurred and the other conditions in the first
paragraph of Section 1 are met, Employee shall be entitled to the following:
2.1 Disability. During any period that Employee fails to perform his
----------
duties hereunder as a result of incapacity due to physical or mental illness, he
shall continue to receive his full base salary at the rate then in effect and
any installments of deferred
<PAGE>
portions of awards under any applicable incentive, bonus or other plans
paid during such period until this Agreement is terminated pursuant to Section 1
hereof. Thereafter, Employee's benefits in respect of his disability shall be
determined in accordance with the Employer's Long-Term Disability Income
Insurance Plan, or a substitute plan, and any other plans providing for the
disability of a participant then in effect.
2.2 Termination for Cause. If Employee's employment shall be
-----------------------
terminated for Cause, the Employer shall pay Employee his full base salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the Employer shall have no further obligations to
Employee to make any payments under this Agreement.
2.3 Termination Without Cause; Termination for Good Reason. If the
---------------------------------------------------------
Employer shall terminate Employee's employment other than pursuant to Sections
1.1 or 1.2 hereof or if Employee shall terminate his employment for Good Reason,
then the Employer shall pay to Employee as severance pay in a lump sum in cash
not later than the tenth (10th) day following the Date of Termination, the
following amounts:
2.3-1 Employee's full base salary through the Date of
Termination at the rate in effect at the time of Notice of Termination is given;
2.3-2 In lieu of any further salary or bonus payments to
Employee for periods subsequent to the Date of Termination, an amount equal to
the product of (a) the sum of (i) the highest of Employee's annual base salary
in effect at any time from the three years prior to, through and including, the
Date of Termination plus (ii) the highest of the aggregate bonuses paid to
Employee during any fiscal year all or a part of which was included in the
foregoing three year period (which shall include, without limitation, for fiscal
1998, the $200,000 forgivable advance paid to Employee in August 1998 as an
incentive to continue to serve as an officer of the Company (the "Retention
Bonus") plus (iii) the highest of the aggregate contributions made by the
Employer on Employee's behalf in respect of Employee's participation in any
401(k) plan or plans of the Employer during any fiscal year all or a part of
which was included in the foregoing three year period multiplied by (b) the
number three (3);
2.3-3 In lieu of further payments to Employee under the
Company's Supplemental Executive Retirement Plan (the "SERP"), an amount equal
to the lump sum payment to which the Employee would be entitled under the SERP
had a change in control as defined in the SERP occurred simultaneously with the
change in control as defined in this Agreement;
2.3-4 If the Employer shall terminate Employee's employment
other than pursuant to Section 1.1 or 1.2 hereof or if Employee shall terminate
his employment for Good Reason, then Employee shall be entitled to exercise all
options ("Options"), if any, then held by Employee under the Company's stock
option plans for a period of twelve (12) months following the Date of
Termination; and
2.3-5 All relocation and indemnity payments as set forth in
Section 1.3-4 hereof, and all legal fees and expenses incurred by Employee as a
result of such termination (including all such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to obtain
or enforce any right or benefit provided by this Agreement).
2.4 Benefit Plans. Unless Employee is terminated for Cause, the
--------------
Employer shall maintain in full force and effect for the continued benefit of
Employee, for a two year period after the Date of Termination, all employee
benefit plans and programs or arrangements in which Employee was entitled to
participate immediately prior to the Date of Termination (at no greater cost or
expense to Employee than was the case immediately prior to the change in control
of the Company), including without limitation plans providing medical, dental,
life and disability insurance coverage, provided that Employee's continued
participation is possible under the general terms and provisions of such plans
and programs. In the event that Employee's participation in any such plan or
program is not possible, the Employer shall arrange to provide Employee, at the
Employer's cost and expense, with benefits substantially similar to those which
Employee is entitled to receive under such plans and programs. At the end of
the period of coverage, Employee shall have the option to have assigned to him
at no cost and with no appointment of prepaid premiums, any assignable insurance
policy owned by the Employer or the Company and relating specifically to him.
2.5 Additional Benefits. If the Employer shall terminate
--------------------
Employee's employment other than pursuant to Section 1.1 or 1.2 hereof or if
Employee shall terminate his employment for Good Reason, then in addition to the
benefits to which Employee is entitled under the retirement plans or programs in
which Employee participates or any successor plans or programs in effect on the
Date of Termination of his employment hereunder (but not in addition to the
payment required by Section 2.3-3 hereof), the Employer shall pay Employee, not
later than the tenth (10th) day following the Date of Termination, in cash an
amount equal to the difference between (a) the present value of the most
valuable retirement pension to which Employee would have been entitled under the
terms of the retirement plans or programs in which Employee participates (or any
successor plans or programs in effect on the Date of Termination hereunder)
without regard to "vesting" thereunder, if he would have accumulated three (3)
additional years of continuous credited service after the Date of Termination
under such retirement plans or programs and (b) the present value of the most
valuable retirement pension which he is actually entitled to receive pursuant to
the provisions of said retirement plans and programs. For purposes of this
Section 2.5, "present value" shall be determined using the same methods and
assumptions (including compensation increase assumptions during such additional
three year period) utilized under the Employer's retirement plans and programs
immediately prior to the change in control of the Company.
2.6 Automobiles. Upon Employee's termination for any reason, the
-----------
Employer shall enable Employee to purchase the automobile, if any, which the
Employer or the Company was providing for Employee's use at the time Notice of
Termination was given at the wholesale value of such automobile at such time.
2.7 Mitigation of Amounts Payable Hereunder. Employee shall not
-----------------------------------------
be required to mitigate the amount of any payment provided for in this Section 2
by seeking other employment or otherwise, nor shall the amount of any payment
provided for in this Section 2 be reduced by any compensation earned by Employee
as the result of employment by another employer after the Date of Termination,
or otherwise.
3. COMPENSATION NOT CONTINGENT UPON A CHANGE IN CONTROL.
-----------------------------------------------------------
3.1 Termination Benefits. If Employee's employment is terminated,
----------------------
other than due to Employee's death, Disability or Retirement, (i) by the
Employer without Cause (as defined in Section 1.2) or (ii) by Employee with
Justification (as defined below), then Employee shall be entitled to the
benefits set forth in Section 3.1. If there shall occur a change in control of
the Company while Employee is employed by the Company, Employee shall have the
option to have either the provisions of this Section 3 control or the provisions
of Sections 1 and 2 control.
3.1-1 Following the Date of Termination, Employee shall
continue to be compensated in accordance with the payroll practices of the
Employer, at the highest rate of compensation in effect in the twelve-month
period prior to the Date of Termination, for the period ending on the pay period
that next follows the 18-month anniversary of the Date of Termination of
employment pursuant to this Section 3, subject to any holdbacks or deductions
required as a matter of law. During this period, Employee shall be treated as an
employee for purposes of all employee benefit plans and programs or arrangements
in which Employee is entitled to participate immediately prior to the Date of
Termination (at no greater cost or expense to Employee than was the case
immediately prior to the termination), including without limitation plans
providing medical, dental, life and disability insurance coverage. Employee's
participation in the Supplemental Executive Retirement Plan, as it may be
amended through the date prior to the Date of Termination, shall continue until
the anniversary date of Employee's commencement of employment that next follows
the 18-month anniversary of the Date of Termination of employment pursuant to
this Section 4.
3.1-2 Any Options, if any, then held by Employee shall become
fully vested and exercisable and shall remain exercisable until the earlier to
occur of their expiration date set forth in the agreements pursuant to which
they were issued (without regard to the effect of termination of employment), as
such agreements may be amended pursuant to this Agreement or otherwise, or the
twelve (12) month anniversary of the Date of Termination.
3.1-3 If, prior to the eighteen (18) month anniversary of the
Date of Termination there shall occur a change in control of the Company,
Employee shall be entitled to receive the benefits provided in Section 2 above
assuming that the change in control of the Company occurred immediately prior to
the termination of employment pursuant to this Section 3 and Employee were
terminated without Cause following such change in control of the Company.
3.1-4 Employee shall be entitled to receive all relocation and
indemnity payments as set forth in Section 2.3-4 hereof, and all legal fees and
expenses incurred by Employee as a result of such termination (including all
such fees and expenses, if any, incurred in contesting or disputing any such
termination or in seeking to obtain or enforce any right or benefit provided by
this Agreement).
3.2 Termination by Employee with Justification. Employee shall be
----------------------------------------------
entitled to terminate his employment with "Justification" and shall be entitled
to the benefits set forth in Section 3.1 if any of the following conditions
pertain:
3.2-1 Without his express written consent, the assignment to
Employee of any duties inconsistent with his positions, duties, responsibilities
and status with the Employer and the Company as of the date hereof, or a change
in his reporting responsibilities, titles or offices with the Employer or the
Company as in effect as of the date hereof, or any removal of Employee from or
any failure to re-elect Employee to any of such positions, except in connection
with the termination of his employment for Cause, Disability or Retirement or as
a result of his death.
4.2-2 A reduction by the Employer in Employee's base salary as
the same hereafter may be increased from time to time.
4.2-3 The Employer's requiring Employee to be based anywhere
other than the Employer's offices in Dallas, Texas, except for required travel
on the Employer's business to an extent substantially consistent with his
present business travel obligations, or, in the event Employee consents to any
relocation, the failure by the Employer to pay (or reimburse Employee) for all
reasonable moving expenses incurred by him relating to a change of his principal
residence in connection with such relocation and to indemnify Employee against
any loss (defined as the difference between the actual sale price of such
residence and the higher of (a) his aggregate investment in such residence or
(b) the fair market value of such residence as determined by a real estate
appraiser designated by Employee and reasonably satisfactory to the Employer)
realized on the sale of Employee's principal residence in connection with any
such change of residence.
4.3 Mitigation of Amounts Payable Hereunder. Employee shall not be
-----------------------------------------
required to mitigate the amount of any payment provided for in this Section 4 by
seeking other employment or otherwise, nor shall the amount of any payment
provided for in this Section 4 be reduced by any compensation earned by Employee
as the result of employment by another employer after the Date of Termination,
or otherwise.
4.4 Outstanding Options. Any Options, if any, held as of the date
--------------------
hereof by Employee having an exercise price greater than $39.00 are hereby
amended so that they shall terminate and cease to be exercisable on December 1,
1998.
5. EXCISE TAXES.
-------------
5.1 In the event that any payment or benefit received or to be
received by Employee pursuant to the terms of this Agreement (the "Contract
Payments") or in connection with Employee's termination of employment or
contingent upon a change in control of the Company pursuant to any plan or
arrangement or other agreement with the Employer or the Company (or any
affiliate) ("Other Payments" and, together with the Contract Payments, the
"Payments"), would be subject to the excise tax (the "Excise Tax"), imposed by
Section 4999 of the Code, as determined as provided below, the Employer shall
pay to Employee, at the time specified in Section 5.2 below, an additional
amount (the "Gross-Up Payment") such that the net amount retained by Employee,
after deduction of the Excise Tax on Contract Payments and Other Payments and
any federal, state and local income or other tax and Excise Tax upon the payment
provided for by this Section 5.1, and any interest, penalties or additions to
tax payable by Employee with respect thereto, shall be equal to the total
present value of the Contract Payments and Other Payments at the time such
Payments are to be made. For purposes of determining whether any of the
Payments will be subject to the Excise Tax and the amounts of such Excise Tax,
(1) the total amount of the Payments shall be treated as "parachute payments"
within the meaning of Section 280G(b)(2) of the Code, and all "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code shall be treated
as subject to the Excise Tax, except to the extent that, in the opinion of
independent tax counsel selected by the Employer's independent auditors and
reasonably acceptable to Employee ("Tax Counsel"), a Payment (in whole or in
part) does not constitute a "parachute payment" within the meaning of Section
280G(b)(2) of the Code, or such "excess parachute payments" (in whole or in
part) are not subject to the Excise Tax, (2) the amount of the Payments that
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(A) the total amount of the Payments or (B) the amount of "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code (after applying
clause (1) hereof), and (3) the value of any noncash benefits or any deferred
payment or benefit shall be determined by Tax Counsel in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, Employee shall be deemed to pay
federal income tax at the highest marginal rates of federal income taxation
applicable to individuals in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at the highest effective rates of
taxation applicable to Employee in the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal income taxes that
can be obtained from deduction of such state and local taxes, taking into
account any limitations applicable to individuals subject to federal income tax
at the highest marginal rates.
5.2 Gross-Up Payments provided for in Section 5.1 hereof shall be
made upon the earlier of (i) the payment to Employee of any Contract Payment or
Other Payment or (ii) the imposition upon Employee or payment by Employee of any
Excise Tax.
5.3 The Employee shall notify the Employer in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Employer of a Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 20 business days after the Employee is informed
in writing of such claim and shall apprise the Employer of the nature of such
claim and the date on which such claim is requested to be paid. The Employee
shall not pay such claim prior to expiration of the 30 day period following the
date on which the Employee gives such notice to the Employer (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Employer notifies the Employee in writing prior to the
expiration of such period that it desires to contest such claim the Employee
shall:
i) give the Employer any information reasonably requested by the
Employer relating to such claim;
ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Employer and reasonably satisfactory to
the Employee;
iii) cooperate with the Employer in good faith in order to
effectively contest such claim; and
iv) permit the Employer to participate in any proceedings relating
to such claim;
provided, however, that the Employer shall bear and pay directly all
costs and expenses (including, but not limited to, additional interest and
penalties and related legal, consulting or other similar fees) incurred in
connection with such contest, and shall indemnify and hold the Employee
harmless, on an after-tax basis, for any Excise Tax or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.
5.4 The Employer shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Employee to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Employer shall
reasonably determine; provided, however, that if the Employer directs the
Employee to pay such claim and sue for a refund, the Employer shall advance the
amount of such payment to the Employee on a interest-free basis, and shall
indemnify and hold the Employee harmless, on an after-tax basis, from any Excise
Tax or other tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and provided, further, that if the Employee is required to
extend the statute of limitations to enable the Employer to contest such claim,
the Employee may limit this extension solely to such contested amount. The
Employer's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority. In addition, no
position may be taken nor any final resolution be agreed to by the Employer
without the Employee's consent if such position or resolution could reasonably
be expected to adversely affect the Employee (including any other tax position
of the Employee unrelated to the matters covered hereby).
5.5 As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the Employer or the
Tax Counsel hereunder, it is possible that Gross-Up Payments which will not have
been made by the Employer should have been made ("Underpayment"), consistent
with the calculations required to be made hereunder In the event that the
Employer exhausts its remedies and the Employee thereafter is required to pay to
the Internal Revenue Service an additional amount in respect of any Excise Tax,
the Employer or the Tax Counsel shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall promptly be paid by the
Employer to or for the benefit of the Employee.
5.6 If, after the receipt by Employee of the Gross-Up Payment or
an amount advanced by the Employer in connection with the contest of an Excise
Tax claim, the Employee becomes entitled to receive any refund with respect to
such claim, the Employee shall promptly pay to the Employer the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Employer in connection with an Excise Tax claim, a determination
is made that Employee shall not be entitled to any refund with respect to such
claim and the Employer does not notify the Employee in writing of its intent to
contest the denial of such refund prior to the expiration of 30 days after such
determination, such advance shall be forgiven and shall not be required to be
repaid.
6. SUCCESSORS; BINDING AGREEMENT.
-------------------------------
6.1 Successors of the Company. The Employer and the Company will
----------------------------
require any successor (whether direct or indirect, by purchase, amalgamation,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Employer and/or the Company, by agreement in form and
substance satisfactory to Employee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Employer and
the Company would be required to perform it if no such succession had taken
place. Failure of the Employer and the Company to obtain such agreement prior
to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle Employee to compensation from the Employer in the same amount
and on the same terms as Employee would be entitled hereunder if Employee
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
the terms, "Employer" and "Company" shall include any successor to the business
and/or assets of the Employer and/or the Company as aforesaid which executes and
delivers the agreement provided for in this Section 6 or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of law.
6.2 Employee's Heirs, etc. This Agreement shall inure to the benefit
----------------------
of and be enforceable by Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Employee should die while any amounts would still be payable to
him hereunder as if he had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
his devisee, legatee, or other designee or, if there be no such designee, to his
estate.
7. NOTICE. For the purposes of this Agreement, notices and all other
------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, or by overnight
courier service, addressed to the respective addresses set forth on the first
page of this Agreement, provided that all notices to the Employer shall be
directed to the attention of the Chief Executive Officer of the Employer with a
copy to the Secretary of the Employer, and all notices to the Company shall be
directed to c/o Triton Exploration Services, Inc., 6688 N. Central Expressway,
Suite 1400, Dallas, Texas 75206 attention: President, or to such other address
as any party may hereafter specify in writing in accordance herewith, except
that notices of change of address shall be effective only upon receipt.
8. MISCELLANEOUS. No provisions of this Agreement may be modified,
-------------
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Employee, the Employer and the Company (in whose case such
signatory shall be such officer as may be specifically designated by the Board
(which shall in any event include the Company's Chief Executive Officer)). No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. This Agreement constitutes the
entire agreement of the parties regarding the subject matter hereof, and
supersedes all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof.
9. VALIDITY. The invalidity or unenforceability of any provisions of
--------
this Agreement shall not effect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
10. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
11. GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
-----------------------------
and construed under the laws of the State of Texas. The Employer and the Company
hereby irrevocably submit to the jurisdiction of any Texas State or Federal
court sitting in the Northern District of Texas, and the jurisdiction of any
arbitration panel constituted pursuant to Section 12 hereof, over any action,
proceeding or arbitration arising out of or relating to this Agreement and the
Employer and the Company hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in such Texas State or
Federal court or arbitration proceeding.
12. ARBITRATION. Any dispute or controversy arising under or in
-----------
connection with this Agreement shall be settled exclusively by arbitration in
Dallas, Texas (in accordance with the rules of the American Arbitration
Association then in effect). Notwithstanding the pendency of any such dispute
or controversy, the Employer will continue to pay Employee his full compensation
in effect when the notice giving rise to the dispute was given (including, but
not limited to, base salary and installments under incentive, bonus or other
plans) and continue Employee as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice giving rise to the
dispute was given, until the dispute is finally resolved in accordance with
Section 2.5 hereof. Amounts paid under this paragraph are in addition to all
other amounts due under this Agreement and shall not be offset against or reduce
any other amounts due under this Agreement. Judgment may be entered on the
arbitrator's award in any court having jurisdiction; provided, however, that
Employee shall be entitled to seek specific performance of his right to be paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
13. CAPTIONS AND GENDER. The use of captions and Section headings herein
--------------------
is for the purposes of convenience only and shall not effect the interpretation
or substance of any provisions contained herein. Similarly, the use of the
masculine gender with respect to pronouns in this Agreement is for purposes of
convenience and includes either sex who may be a signatory.
14. LEGAL FEES. The Employer shall pay Employee, no less frequently than
-----------
monthly, all legal fees and expenses reasonably incurred by Employee in
connection with this Agreement (including all such fees and expenses, if any,
incurred in contesting or disputing the nature of any such termination for
purposes of this Agreement or in seeking to obtain or enforce any right or
benefit provided by this Agreement, but excluding any legal fees and expenses
relating to a claim brought be Employee that a court has determined (in a final,
non-appealable judgment) to be brought in bad faith).
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date and year first above written.
TRITON EXPLORATION SERVICES, INC.
By: /s/ Robert B. Holland, III
-------------------------------------
Robert B. Holland, III, Senior Vice
President
JOINDER OF THE COMPANY
The Company hereby joins in this Agreement for the purpose of guaranteeing,
and the Company does hereby unconditionally guarantee, to Employee the due and
prompt performance by the Employer, or its successors and assigns as provided
herein (the "Obligor") of the Obligor's obligations hereunder and covenanting,
and the Company does hereby covenant, with Employee to be bound by the
agreements of the Company as set forth herein. In case of the failure of the
Obligor to punctually perform any obligation under this Agreement, including the
making of any payment hereunder, the Company hereby agrees to cause any such
obligation to be promptly performed when and as the same shall be due. The
Company hereby agrees that its obligations hereunder shall be as if it were
principal obligor and not merely surety, and shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any provision of this Agreement, any failure
to enforce the provisions of this Agreement, or any waiver, modification or
indulgence granted to the Obligor with respect thereto, by the Employee, or any
other circumstance which may otherwise constitute a legal or equitable discharge
of a surety or guarantor. The Company hereby waives diligence, presentment,
demand, any right to require a proceeding first against the Obligor, and all
demands whatsoever, and covenants that its obligations under this Agreement will
not be discharged except by performance in full of the Obligor's obligations
hereunder. The agreements of the Company hereunder shall inure to the benefit of
and be enforceable by Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
TRITON ENERGY LIMITED
By:/s/ Robert B. Holland, III
----------------------------------------
Robert B. Holland, III, Chief Executive
Officer
EXHIBIT 10.73
SECOND AMENDMENT TO
-------------------
1997 SHARE COMPENSATION PLAN
----------------------------
This Second Amendment to the 1997 Share Compensation Plan (this
"Amendment") is executed by Triton Energy Limited, a Cayman Islands company
("Triton"), as of September 28, 1998.
R E C I T A L S:
---------------
A. Triton has adopted the 1997 Share Compensation Plan (as amended, the
"Plan"); and
B. In accordance with the terms of the Plan, the Board of Directors has
adopted certain amendments to the Plan.
NOW, THEREFORE, in accordance with the terms of the Plan, the Plan is
amended in the following respects:
1. Article III is amended to read in its entirety as follows:
"The Committee may not grant Stock Options or issue Elected Shares or Restricted
Shares under the Plan for more than 2,300,000 Ordinary Shares, in the aggregate
(as may be adjusted in accordance with Article XI or XII hereof), and no
Participant shall be eligible to receive more than 50% of such shares. Shares
to be distributed and sold may be made available from either authorized but
unissued Ordinary Shares or Ordinary Shares held by the Company in its treasury.
Shares that by reason of the expiration or unexercised termination of a Stock
Option or forfeited Elected Shares or Restricted Shares are no longer subject to
issuance to the Participant may be reofferred under the Plan."
2. Section 4.2 is amended to read in its entirety as follows:
4.2 Election to Receive Elected Shares and/or Stock Options. Each
------------------------------------------------------------
Participant eligible to receive Elected Shares may make an irrevocable election
(an "Election") either (a) to receive a grant of Ordinary Shares in a number
determined by the Committee from time to time in an amount or amounts determined
by the Committee (whether in a fixed amount or by formula) or (b) not to
participate in this Article IV. With respect to the participation by
Non-Employee Directors, each such Director is automatically eligible to elect to
receive a grant of 1,000 Elected Shares in conjunction with an election to
receive a grant of Stock Options to purchase 10,000 Ordinary Shares pursuant to
Section 5.7 of the Plan, except as provided in Section 5.7 of the Plan.
3. Section 5.7(a) of the Plan is amended by adding as the last sentence
to Section 5.7(a) the following:
"Notwithstanding anything in the foregoing to the contrary, in no event shall
any Holder Designee (as defined in that certain Shareholders Agreement entered
into, or to be entered into, between the Company and HM4 Triton, L.P. pursuant
to that certain Stock Purchase Agreement dated as of August 31, 1998 between the
Company and HM4 Triton, L.P.) be entitled to elect to receive Elected Shares
pursuant to Section 4.2 of the Plan or Stock Options pursuant to this Section
5.7(a), whether on an annual basis or upon his or her first appointment or
election as a Non-Employee Director."
4. Except as amended by the provisions of this Amendment, all other
provisions of the Plan remain in full force and effect.
IN WITNESS WHEREOF, Triton Energy Limited has caused this Amendment to be
executed by its duly authorized officer effective as of the date and year first
above written.
TRITON ENERGY LIMITED
By:/s/ Robert B. Holland, III
---------------------------------------
Robert B. Holland, III, Chief Executive
Officer
EXHIBIT 10.74
SEVERANCE AGREEMENT
This Severance Agreement (this "Agreement"), dated as of July 15, 1998, is
made and entered into by and among Triton Energy Limited, a Cayman Islands
company ("Triton"), Triton Exploration Services, Inc., a Delaware corporation
(the "Company"), and Thomas G. Finck ("Employee").
WITNESSETH:
WHEREAS, Employee is an employee of the Company and/or certain other
subsidiaries or affiliates of Triton; and
WHEREAS, the Company and Employee have reached agreement on the terms of
the termination of Employee's employment with the Company; and
WHEREAS, Triton, the Company and Employee desire that of this Agreement set
forth the provisions regarding Employee's termination of employment with the
Company;
NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, the Company and Employee agree as follows:
1. TERMINATION OF EMPLOYMENT.
(a) As of the date hereof, Employee hereby resigns as an officer
and director of Triton, the Company and any and all subsidiaries or affiliates
of Triton, but not as an employee of the Company. Effective as of the Effective
Date (as defined below), Employee hereby resigns Employee's employment with the
Company and any and all subsidiaries or affiliates of Triton and the Company.
Triton, the Company and Employee agree that, except with respect to the
Surviving Company Obligations (as defined in Section 4(a)(ii) hereof), from the
Effective Date, any and all employment agreements, or similar understandings or
arrangements, written or oral, express or implied, between or among Employee and
Triton, the Company and any other subsidiary or affiliate of Triton are, and all
obligations of each party to the other thereunder hereby are, terminated and of
no further force or effect, including without limitation the Amended and
Restated Employment Agreement dated as of January 13, 1998. The term "Effective
Date" shall mean September 1, 1998. Employee agrees to sign and deliver no
later than August 28, 1998 a resignation from all positions as an officer and
director of Triton and its subsidiaries in the form attached to this Agreement.
(b) Employee represents and warrants that to the best of his
knowledge, Employee has not removed any property of the Company or any of its
affiliates, except for the property identified in Section 2(c) hereof and
property that Employee has returned to the Company prior to the date of this
Agreement. In the event Employee discovers any property of the Company in
Employee's possession or control (except as provided in Section 2(c) below),
Employee agrees to promptly return such property to the Company.
2. COMPENSATION.
(a) The Company will pay Employee an amount equal to $647,700 in the
aggregate, payable in equal semi-monthly installments on the Company's regular
payroll dates through the period ending on July 15, 1999, subject to any
holdbacks or deductions required as a matter of law, and provided that Employee
has complied with all reasonable requests of the Company in connection with the
transition from Employee's services.
(b) The Company will pay employee for all accrued and unpaid vacation. The
Company and Employee agree that Employee is entitled to be paid for twenty-five
(25) days of vacation, subject to any holdbacks or deductions required as a
matter of law.
(c) Employee shall be entitled to retain the Compaq Armada 4160t (including
CD-ROM, NIC card, modem, mouse and keyboard), the HP LaserJet 4p and NEC 14 inch
monitor in his possession.
(d) The Company will continue to pay, in accordance with current practice,
the dues for club memberships maintained for the benefit of Employee immediately
prior to the date of this Agreement through the period ending September 30,
1998.
(e) The Company agrees to pay the reasonable fees and disbursements of
legal counsel for Employee in connection with the negotiation of this Agreement,
up to a maximum of $7,500.00.
(f) The Company will cause the convertible subordinated debentures held by
Employee pursuant to the Amended and Restated 1986 Convertible Debenture Plan to
be redeemed at the redemption price of 103% of the original principal amount of
the convertible subordinated debentures held by Employee and Employee will
contemporaneously pay all amounts owing by Employee under the promissory notes
delivered by Employee in consideration therefor.
(g) Any stock options held by Employee shall be unaffected by this
Agreement and shall continue to be governed by the terms of the agreement(s) and
plan(s) under which they were issued; provided that any such stock options shall
expire and terminate at the close of business on November 2, 1998.
3. CONFIDENTIALITY. Employee represents that Employee has not
knowingly removed, and agrees that Employee will not (without the Company's
prior written consent) remove, from the premises of Triton, the Company or any
other subsidiary or affiliate of Triton any documents or copies thereof that
constitute or contain any Confidential Information (as hereinafter defined).
Without limiting the generality of the foregoing, Employee agrees that Employee
shall (a) keep confidential all Confidential Information at any time known to
Employee, (b) not use any Confidential Information for Employee's benefit or to
the detriment of Triton, the Company or any other subsidiary or affiliate of
Triton or disclose any Confidential Information to any third persons (except
pursuant to a validly issued subpoena or court order, and then only if the
Company shall have been promptly advised thereof and consulted with regarding an
appropriate response thereto), (c) not make copies of documents embodying any
Confidential Information, (d) exercise reasonable care to prevent dissemination
of Confidential Information to third persons, and (e) return to the Company any
documents which contain Confidential Information and which are or come in
Employee's possession. "Confidential Information" shall include any information
concerning any matters affecting or relating to the businesses, operations and
financial affairs of Triton, the Company or any other subsidiary or affiliate of
Triton that are of a special or unique nature or the disclosure of which could
cause harm to Triton, the Company or any other subsidiary or affiliate of
Triton, and this Agreement (including its existence and its contents) regardless
of whether any such Confidential Information is labeled or otherwise treated as
confidential, material, or important.
4. GENERAL RELEASES; CERTAIN COVENANTS;
(a) (i) As a material inducement to Triton and the Company to
enter into this Agreement, Employee hereby irrevocably and unconditionally
releases, acquits, and forever discharges Triton, the Company or any other
subsidiary or affiliate of Triton, and their respective directors, officers,
employees, successors, assigns, agents, independent auditors and accountants,
representatives, and attorneys, and all persons acting by, through, under, or in
concert with them, or any of them (collectively, including Triton and the
Company, the "Company Releasees"), from any and all charges, complaints, claims,
liabilities, obligations, promises, controversies, damages, actions, suits,
rights, demands, costs, losses, debts and expenses (including attorneys' fees
and costs actually incurred), of any nature, known or unknown ("Claim" or
"Claims") and to the extent permitted by state and federal law, which Employee
has, owns, or holds, or claims to have, own or hold or which Employee at any
time hereafter may have, own or hold, or claim to have, own or hold, against
each or any of the Company Releasees based on any facts, circumstances, actions
or omissions existing or occurring on or before the Effective Date relating to
or arising out of Employee's employment, separation from, or affiliation with
Triton, the Company or any other subsidiary or affiliate of Triton, including
but not limited to, any Claims involving securities or securities transactions,
any Claims based on harassment or hostile work environment based on race, sex,
religion, national origin, color, disability or age, any Claims involving
contracts, agreements or obligations related thereto (including, without
limitation, any Claims relating to any express or implied employment agreement
and any benefit plans of Triton, the Company or any other subsidiary or
affiliate of Triton), any Claims involving libel, slander or defamation, any
Claims under federal, state or local law, any Claims under federal, state or
local law of discrimination on the basis of age, sex, race, national origin,
color, religion, disability, such as Claims under the Age Discrimination in
Employment Act of 1967, the Employee Retirement Income Security Act, the
Americans With Disabilities Act, Title VII of the Civil Rights Act of 1964, the
Civil Rights Act of 1991, the retaliation provisions of the Texas Workers'
Compensation Act and the Texas Commission on Human Rights Act, and any action
related to Employee's employment, separation from, or affiliation with Triton,
the Company and any other subsidiary or affiliate of Triton, and excepting only
any claims based on a breach of this Agreement. This release shall be binding on
Employee's heirs, dependents, successors and assigns.
(ii) Notwithstanding the foregoing clause (i) of this Section
4(a), in no event shall Employee be deemed to have released the Company
Releasees from any obligation they, or any one of them, have or may have (i)
under the Indemnity Agreement between Triton and Employee dated as of September
11, 1996, (ii) in respect of any benefits accrued in favor of Employee through
the Effective Date under the Retirement Income Plan, the 401(k) Savings Plan,
the Supplemental Executive Retirement Plan (the "SERP"), and the Amended and
Restated 1986 Convertible Debenture Plan, the 1985 Stock Option Plan, the 1989
Stock Option Plan, the Second Amended and Restated 1992 Stock Option Plan, and
the 1997 Share Compensation Plan (except as provided in Section 2(g)) or (iii)
the indemnity obligations of the Company, Triton or any of their affiliates to
employee under their respective governing documents (collectively, the
"Surviving Company Obligations"). The Company acknowledges that Employee shall
continue to be a "Participant" in the SERP through the Effective Date.
(b) As a material inducement to Employee to enter into this
Agreement, each of Triton and the Company, on its own behalf and on behalf of
its respective subsidiaries and affiliates, hereby irrevocably and
unconditionally releases, acquits and forever discharges Employee, and
Employee's heirs, spouse, dependents, successors and assigns, or any of them
(collectively, including Employee, the "Employee Releasees") from any Claims
which Triton, the Company or any other subsidiary or affiliate of Triton has,
owns, or holds or claims to have, own or hold or which Triton, the Company or
any other subsidiary or affiliate of Triton at any time hereafter may have, own
or hold, or claim to have, own or hold, or claim to have, own or hold, against
each of the Employee Releasees, excepting only any Claims based on a breach of
the terms of this Agreement, intentional injury to the property of Triton, the
Company or any other subsidiary or affiliate of Triton, fraud, theft,
embezzlement or misappropriation of corporate assets.
(c) Employee acknowledges and agrees that each Company Releasee
(other than Triton and the Company, which are direct contractual beneficiaries)
is expressly intended to be, and is hereby made, a third party beneficiary of
Employee's covenants and releases contained in this Agreement. The Company
acknowledges and agrees that each Employee Releasee (other than Employee, who is
a direct contractual beneficiary) is expressly intended to be, and is hereby
made, a third party beneficiary of Triton's and the Company's covenants and
releases contained in this Agreement.
(d) Each of the above releasors agrees to indemnify the releasees
described herein for all loss, cost, damage and expense, including, but not
limited to, attorneys' fees, incurred by such releasees described herein or any
one of them, arising out of any breach of the provisions of the releases as set
forth in Sections 4(a), (b) and (c) above.
<PAGE>
5. OLDER WORKER BENEFIT PROTECTION ACT CLAUSES.
(a) "Knowing and Voluntary" Waiver. You may revoke this Agreement
within seven days after execution. By your signature below, you confirm that
you: (1) have read this Agreement carefully and completely; (2) have been given
a reasonable period of time to consider and review this Agreement; (3) are aware
of your right to consult with legal counsel and acknowledge that you have had
ample opportunity to do so if you choose; and (4) understand all of the
provisions contained in the Agreement.
(b) Notice About Affected Employees. All employees of Triton
Energy Limited who are subject to the mass layoff will be terminated and offered
this additional severance package.
6. NO ADMISSION. This Agreement (or its offer and negotiation) is not
an admission by any of Triton, the Company or Employee of any wrongdoing or
liability.
7. NO REINSTATEMENT. Employee agrees that Employee waives any right to
reinstatement or future employment with the Company following Employee's
separation from the Company.
8. COOPERATION; REIMBURSEMENT OF LEGAL FEES. Employee agrees that
Employee will cooperate in good faith with the Company in connection with any
civil or criminal litigation or governmental inquiry or investigation involving
the Company or any of its subsidiaries or affiliates, or its or their
properties, assets or businesses, or to which any of them may be a party or a
subject. Employee shall not in any way cooperate or lend assistance to any
parties that are now, or may in the future be, involved in legal proceedings
adverse to the Company except as may be required by applicable law. The Company
agrees that in connection with any existing or future litigation against the
Company, Triton and/or any of their affiliates (collectively, the "Triton
Entities") in which Employee is named as a defendant and the Triton Entities
hire outside counsel to jointly represent the Triton Entities and Employee,
Employee shall be entitled to retain separate counsel of his own choosing to
monitor such litigation and the Company will promptly reimburse Employee's
counsel for all reasonable fees and expenses incurred in connection with such
representation, which fees and expenses shall not exceed $75,000, in the
aggregate, in any year.
9. REVOCATION. It is further understood that for the seven-day period
commencing upon the execution of this Agreement in duplicate originals and
ending on the July 21, 1998, Employee may revoke this Agreement by providing
written notice to the Company, and this Agreement shall not become effective or
enforceable until such revocation period has expired. Moreover, if Employee
revokes this Agreement, any and all originals or copies of this Agreement must
be returned to the Company at the time of revocation.
10. NO DURESS. This Agreement has been entered into voluntarily and
not as a result of coercion, duress, or undue influence. Employee agrees that
Employee has read and fully understands the terms of this Agreement and has been
advised to consult with an attorney before executing this Agreement.
Additionally, Employee agrees that Employee has been given at least twenty-one
days to consider this Agreement.
11. SEVERABILITY; SURVIVABILITY. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under present or future laws
effective during the term hereof, such provision shall be fully severable and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof; and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance
herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a
provision as similar in its terms to such illegal, invalid or unenforceable
provision as may be possible and be legal, valid and enforceable. The Company
and Triton expressly recognize and agree that the terms and provisions of this
Agreement shall survive any "change in control" (as defined in the SERP) and any
other transaction or occurrence to which the Company or Triton may at any time
in the future be a party.
12. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas. This Agreement is
performable in Dallas County, Texas.
13. ARBITRATION. The parties agree that any controversy or claim
arising out of or relating to this Agreement, including any questions relating
to its existence, validity or termination, which cannot be resolved amicably by
the parties within 30 days after either party has notified the other, in
writing, of the existence of a dispute, will be settled exclusively by final and
binding arbitration, before three arbitrators. Arbitration will be governed by
the Federal Arbitration Act and administered by the Judicial Arbitration and
Mediation Services Rules for the Resolution of Employment Disputes (JAMS). The
arbitrator is empowered to award all appropriate remedies under Texas or federal
law. The arbitrator shall have exclusive authority to resolve any dispute
relating to the validity, interpretation, application and enforcement of this
Agreement. Judgment on the arbitrator's award may be enforced in any court with
proper jurisdiction. Each party will equally bear all costs and legal fees of
arbitration, unless otherwise required by law. The parties further agree that
the arbitration will occur in Dallas, Texas.
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding
and agreement between or among the Company, Triton and Employee with respect to
the subject matter herein, and supersedes all prior oral or written agreements
between the parties with respect to that subject matter.
15. NOTICE. Any notice or communication hereunder must be in writing
and given by depositing the same in the United States mail, addressed to the
party to be notified, postage prepaid and registered or certified with return
receipt requested, by transmitting the same by facsimile transmission followed
by United States mail as aforesaid, or by delivering the same by overnight
delivery service or in person. Notice shall be deemed received on the date on
which it is delivered or transmitted by facsimile, or on the third business day
following the date on which it is so mailed. For purposes of notice, the
addresses of Employee shall be the most recent address as indicated in the
records of the Company, and the address of Triton or the Company shall be:
c/o Triton Energy
6688 N. Central Expressway
Suite 1400
Dallas, Texas 75206
Fax No.: (214) 691-0198
Attention: Legal Department
Any party may change its address for notice by written notice given to the other
parties in accordance with this Section.
16. PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT INCLUDES A
RELEASE OF ALL KNOWN OR UNKNOWN CLAIMS AGAINST TRITON ENERGY LIMITED, TRITON
EXPLORATION SERVICES, INC. AND THE OTHER SUBSIDIARIES AND AFFILIATES OF TRITON
ENERGY LIMITED, AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES,
SHAREHOLDERS, SUCCESSORS, ASSIGNS, AGENTS, INDEPENDENT AUDITORS AND ACCOUNTANTS,
REPRESENTATIVES, AND ATTORNEYS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
_____________________________
Employee Signature
TRITON ENERGY LIMITED
By: __________________________
TRITON EXPLORATION SERVICES, INC.
By: __________________________
<PAGE>
July 15, 1998
To Triton Energy Limited and all of its direct and indirect subsidiaries
and affiliates
Gentlemen:
I hereby resign as a director and/or officer of Triton Energy Limited and
each of its direct and indirect subsidiaries and affiliates, including without
limitation those on the attached list.
Very truly yours,
/s/ Thoman G. Finck
Thomas G. Finck
EXHIBIT 12.1
TRITON ENERGY LIMITED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEVEN MONTHS
NINE MONTHS ENDED ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31, DEC. 31,
----------------------- ----------------------------------
1998 1997 1997 1996 1995 1994
---------- ----------- --------- --------- --------- ------------
Fixed charges, as defined
<S> <C> <C> <C> <C> <C> <C>
Interest charges $ 40,401 $ 37,775 $ 50,625 $ 43,884 $ 41,305 $ 20,285
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- --- --- --- ---
----------- ---------- --------- --------- --------- -----------
Total fixed charges $ 40,401 $ 37,775 $ 50,625 $ 43,884 $ 41,305 $ 20,285
=========== ========== ========= ========= ========= ===========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ (91,533) $ 17,932 $ 16,896 $ 20,945 $ 16,600 $ (22,834)
Fixed charges, above 40,401 37,775 50,625 43,884 41,305 20,285
Less interest capitalized (19,786) (19,105) (25,818) (27,102) (16,211) (11,833)
Plus undistributed (earnings) loss of affiliates --- --- --- (118) 2,249 4,102
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis --- --- --- --- --- ---
----------- ---------- --------- --------- --------- -----------
$ (70,918) $ 36,602 $ 41,703 $ 37,609 $ 43,943 $ (10,280)
=========== ========== ========= ========= ========= ===========
RATIO OF EARNINGS TO FIXED CHARGES (1) (2) --- 1.0 0.8 0.9 1.1 ---
=========== ========== ========= ========= ========= ===========
YEAR ENDED MAY 31,
----------------------------
1994 1993
---------- -----------
Fixed charges, as defined
<S> <C> <C>
Interest charges $ 26,951 $ 16,336
Preferred dividend requirements of
subsidiaries adjusted to pre-tax basis 364 1,551
---------- ----------
Total fixed charges $ 27,315 $ 17,887
========== ==========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ (23,104) $(147,445)
Fixed charges, above 27,315 17,887
Less interest capitalized (16,863) (6,407)
Plus undistributed (earnings) loss of affiliates (645) 3,012
Less preferred dividend requirements of
subsidiaries adjusted to pre-tax basis (364) (1,551)
---------- ----------
$ (13,661) $(134,504)
========== ==========
RATIO OF EARNINGS TO FIXED CHARGES (1) (2) --- ---
========== ==========
</TABLE>
____________________
(1) Earnings were inadequate to cover fixed charges for the nine months
ended September 30, 1998 and 1997 by $111,319,000 and $1,173,000, respectively,
for the years ended December 31, 1997 and 1996 by $8,922,000 and $6,275,000,
respectively, for the seven months ended December 31, 1994 by $30,565,000 and
for the years ended May 31, 1994 and 1993 by $40,976,000 and $152,391,000,
respectively.
(2) Earnings reflect nonrecurring writedowns and loss provisions of
$198,782,000 for the nine months ended September 30, 1998, $46,153,000 and
$1,058,000 for the years ended December 31, 1996 and 1995, respectively,
$984,000 for the seven months ended December 31, 1994 and $45,754,000 and
$99,883,000 for the years ended May 31, 1994 and 1993, respectively.
Nonrecurring gains from the sale of assets and other gains aggregated
$121,117,000 and $6,253,000 for the nine months ended September 30, 1998 and
1997, respectively, $6,253,000, $22,189,000, $13,617,000 and $56,193,000 for the
years ended December 31, 1997, 1996 and 1995 and May 31, 1994, respectively. The
ratio of earnings to fixed charges if adjusted to remove nonrecurring items,
would have been 0.2 and 0.8 for the nine months ended September 30, 1998 and
1997, respectively, 0.7, 1.4 and 0.8 for the years ended December 31, 1997, 1996
and 1995, respectively. Without nonrecurring items, earnings would have been
inadequate to cover fixed charges for the nine months ended September 30, 1998
and 1997 by $33,654,000 and $7,426,000, respectively, for the years ended
December 31, 1997 and 1995 by $15,175,000 and $9,921,000, respectively, for the
seven months ended December 31, 1994 by $29,581,000 and for the years ended May
31, 1994 and 1993 by $51,415,000 and $45,183,000, respectively.
EXHIBIT 12.2
TRITON ENERGY LIMITED AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE
DIVIDENDS
(IN THOUSANDS, EXCEPT RATIOS)
(UNAUDITED)
<TABLE>
<CAPTION>
SEVEN MONTHS
NINE MONTHS ENDED ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31, DEC. 31,
------------------------ ---------------------------------
1998 1997 1997 1996 1995 1994
----------- ----------- --------- --------- --------- -----------
Fixed charges, as defined:
<S> <C> <C> <C> <c <C> <C>
Interest charges $ 40,401 $ 37,775 $ 50,625 $ 43,884 $ 41,305 $ 20,285
Preference dividend requirements of the Company 368 400 400 985 802 449
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis --- --- --- --- --- ---
----------- ----------- --------- --------- --------- ----------
Total fixed charges $ 40,769 $ 38,175 $ 51,025 $ 44,869 $ 42,107 $ 20,734
=========== =========== ========= ========= ========= ==========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ (91,533) $ 17,932 $ 16,896 $ 20,945 $ 16,600 $ (22,834)
Fixed charges, above 40,769 38,175 51,025 44,869 42,107 20,734
Less interest capitalized (19,786) (19,105) (25,818) (27,102) (16,211) (11,833)
Plus undistributed (earnings) loss of affiliates --- --- --- (118) 2,249 4,102
Less preference dividend requirements of the
Company and its subsidiaries adjusted to
pre-tax basis (368) (400) (400) (985) (802) (449)
----------- ----------- --------- --------- --------- ----------
$ (70,918) $ 36,602 $ 41,703 $ 37,609 $ 43,943 $ (10,280)
=========== =========== ========= ========= ========= ==========
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (1) (2) --- 1.0 0.8 0.8 1.0 ---
=========== =========== ========= ========= ========= ==========
YEAR ENDED MAY 31,
------------------------------
1994 1993
----------- -----------
Fixed charges, as defined:
<S> <C> <C>
Interest charges $ 26,951 $ 16,336
Preference dividend requirements of the Company --- ---
Preferred dividend requirements of subsidiaries
adjusted to pre-tax basis 364 1,551
---------- -----------
Total fixed charges $ 27,315 $ 17,887
========== ===========
Earnings, as defined (2):
Earnings (loss) from continuing operations
before income taxes, minority interest,
extraordinary item and cumulative effect of
accounting change $ (23,104) $ (147,445)
Fixed charges, above 27,315 17,887
Less interest capitalized (16,863) (6,407)
Plus undistributed (earnings) loss of affiliates (645) 3,012
Less preference dividend requirements of the
Company and its subsidiaries adjusted to
pre-tax basis (364) (1,551)
---------- -----------
$ (13,661) $ (134,504)
========== ===========
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERENCE DIVIDENDS (1) (2) --- ---
========== ===========
</TABLE>
____________________
(1) Earnings were inadequate to cover combined fixed charges and preference
dividends for the nine months ended September 30, 1998 and 1997 by $111,687,000
and $1,573,000, respectively, for the years ended December 31, 1997 and 1996 by
$9,322,000 and $7,260,000, respectively, for the seven months ended December 31,
1994 by $31,014,000 and for the years ended May 31, 1994 and 1993 by $40,976,000
and $152,391,000, respectively.
(2) Earnings reflect nonrecurring writedowns and loss provisions of
$198,782,000 for the nine months ended September 30, 1998, $46,153,000 and
$1,058,000 for the years ended December 31, 1996 and 1995, respectively,
$984,000 for the seven months ended December 31, 1994 and $45,754,000 and
$99,883,000 for the years ended May 31, 1994 and 1993, respectively.
Nonrecurring gains from the sale of assets and other gains aggregated
$121,117,000 and $6,253,000 for the nine months ended September 30, 1998 and
1997, respectively, $6,253,000, $22,189,000, $13,617,000 and $56,193,000 for the
years ended December 31, 1997, 1996 and 1995 and May 31, 1994, respectively. The
ratio of earnings to combined fixed charges and preference dividends if adjusted
to remove nonrecurring items, would have been 0.2 and 0.8 for the nine months
ended September 30, 1998 and 1997, respectively, 0.7, 1.4 and 0.7 for the years
ended December 31, 1997, 1996 and 1995, respectively. Without nonrecurring
items, earnings would have been inadequate to cover combined fixed charges and
preference dividends for the nine months ended September 30, 1998 and 1997 by
$34,022,000 and $7,826,000, respectively, for the years ended December 31, 1997
and 1995 by $15,175,000 and $10,723,000, respectively, for the seven months
ended December 31, 1994 by $30,030,000 and for the years ended May 31, 1994 and
1993 by $51,415,000 and $45,183,000, respectively.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 09/30/1998
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 59,332
<SECURITIES> 0
<RECEIVABLES> 17,754
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 126,419
<PP&E> 964,198
<DEPRECIATION> 296,237
<TOTAL-ASSETS> 911,013
<CURRENT-LIABILITIES> 105,955
<BONDS> 413,769
0
134,789
<COMMON> 366
<OTHER-SE> 220,464
<TOTAL-LIABILITY-AND-EQUITY> 911,013
<SALES> 115,178
<TOTAL-REVENUES> 178,415
<CGS> 55,067
<TOTAL-COSTS> 55,067
<OTHER-EXPENSES> 236,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,105
<INCOME-PRETAX> (91,533)
<INCOME-TAX> (31,591)
<INCOME-CONTINUING> (59,942)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (59,942)
<EPS-PRIMARY> (1.65)
<EPS-DILUTED> (1.65)
</TABLE>
