UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)*
TEXOIL, INC.
(Name of Issuer)
Common Stock, Par Value $.01 Per Share
(Title of Class of Securities)
882906 20 9
(CUSIP Number)
Gary J. Milavec
c/o Resource Investors Management Company
600 Travis, Suite 6875
Houston, Texas 77002
(713) 229-8800
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
SEPTEMBER 11, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Check the following box if a fee is being paid with the statement |X|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of less than five percent of such class.
See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 2 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Resource Investors Management Company Limited Partnership 06-1148341
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 250,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 3 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RIMCO Associates, Inc. 06-1144208
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Connecticut
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 250,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
CO
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 4 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RIMCO Partners, L.P. 06-1208375
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 70,000
PERSON
WITH 9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
70,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
70,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.6%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 5 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RIMCO Partners, L.P. II 06-1264592
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 70,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
70,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
70,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.6%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 6 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RIMCO Partners, L.P. III 06-1291935
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 30,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
30,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
30,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 7 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
RIMCO Partners, L.P. IV 06-1327489
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 80,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
80,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
80,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.8%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
PN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 8 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Roy V. Hood
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 250,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 9 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Paul E. McCollam
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 250,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 10 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stephen F. Oakes
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 250,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 11 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David R. Whitney
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 250,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
SCHEDULE 13D
CUSIP NO. 882906 20 9 PAGE 12 OF 21 PAGES
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John B. Parsons
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS)
(A) |_|
(B) |X|
3 SEC USE ONLY
4 SOURCE OF FUNDS (SEE INSTRUCTIONS)
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(D) OR 2(E) |_|
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 0
OWNED BY
EACH 8 SHARED VOTING POWER
REPORTING
PERSON 250,000
WITH
9 SOLE DISPOSITIVE POWER
0
10 SHARED DISPOSITIVE POWER
250,000
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
(SEE INSTRUCTIONS) |_|
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.7%
14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
IN
Page 13 of 19 Pages
Item 1. SECURITY AND ISSUER
The class of equity securities to which this statement relates is
Common Stock, par value $.01 per share (the "Common Stock"), of Texoil, Inc., a
Nevada corporation (the "Company"), whose principal executive office is located
at 1600 Smith Street, Suite 4000, Houston, Texas 77002.
Item 2. IDENTITY AND BACKGROUND
The following table provides certain information about each of the
reporting persons.
<TABLE>
<CAPTION>
CITIZENSHIP OR STATE OF PRINCIPAL OCCUPATION
NAME AND BUSINESS ADDRESS INCORPORATION/ORGANIZATION OR EMPLOYMENT
<S> <C> <C>
Resource Investors Management CT Investment Management
Company Limited Partnership
("RIMCO")
22 Waterville Road
Avon, CT 06001
RIMCO Associates, Inc. CT General Partner of RIMCO
("Associates")
22 Waterville Road
Avon, CT 06001
RIMCO Partners, L.P. DEL Investment Partnership
("RIMCO I") (Energy sector securities)
600 Travis, Suite 6875
Houston, TX 77002
RIMCO Partners, L.P. II DEL Investment Partnership
("RIMCO II") (Energy sector securities)
600 Travis, Suite 6875
Houston, TX 77002
RIMCO Partners, L.P. III DEL Investment Partnership
("RIMCO III") (Energy sector securities)
600 Travis, Suite 6875
Houston, TX 77002
RIMCO Partners, L.P. IV DEL Investment Partnership
("RIMCO IV") (Energy sector securities)
600 Travis, Suite 6875
Houston, TX 77002
Roy V. Hood USA Managing Director of RIMCO;
22 Waterville Road President and director
Avon, CT 06001 of Associates
Paul E. McCollam USA Managing Director of RIMCO;
600 Travis, Suite 6875 Vice President and director
Houston, TX 77002 of Associates
Stephen F. Oakes USA Managing Director of RIMCO;
22 Waterville Road Vice President of Associates
Avon, CT 06001
Page 14 of 19 Pages
David R. Whitney USA Managing Director of RIMCO;
22 Waterville Road Vice President and director
Avon, CT 06001 of Associates
John B. Parsons USA Director of Associates
22 Waterville Road
Avon, CT 06001
</TABLE>
None of the reported persons has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
None of the reporting persons has been during the last five years a
party to a civil proceeding of a judicial or an administrative body of competent
jurisdiction and, as a result of such proceeding, was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activity subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
RIMCO I, RIMCO II, RIMCO III and RIMCO IV (the "Limited Partnerships")
entered into an agreement on September 6, 1996, with Texoil Company, a Nevada
corporation and wholly owned subsidiary of the Company ("Subsidiary"), to
acquire up to $3,000,000 of 10% Senior Secured Exchangeable General Obligation
Notes ("Exchangeable Notes") the form of which is filed as EXHIBIT B hereto and
incorporated herein by reference. Pursuant to the Guaranty and Exchange
Agreement dated as of September 6, 1996 (which agreement is attached hereto as
EXHIBIT C and incorporated herein by reference), upon funding of the
Exchangeable Notes, each of the Limited Partnerships will have the right to
exchange the outstanding principal balance of its Exchangeable Note, at an
exchange price of $0.80, subject to adjustment, for shares of Common Stock of
the Company. The following table sets forth the consideration for the
Exchangeable Notes and the number of shares exchangeable therefor, assuming that
the full aggregate principal amount of the Exchangeable Notes is then
outstanding:
PURCHASER EXCHANGEABLE NOTE PURCHASE AMOUNT SHARES TO BE RECEIVED
- --------- --------------------------------- ---------------------
RIMCO I $840,000 1,050,000
RIMCO II 840,000 1,050,000
RIMCO III 360,000 450,000
RIMCO IV 960,000 1,200,000
------------ ----------
$3,000,000 3,750,000
The funds for such purchase will be provided out of the working capital
of the Limited Partnerships, from time to time, as Texoil Company requests
advances under the Exchangeable Notes. All conditions to the initial funding
were satisfied on September 11, 1996, and $200,000 was funded under the
Exchangeable Notes on that date.
Item 4. PURPOSE OF TRANSACTION
The Exchangeable Notes were acquired for purposes of investment for the
accounts of the respective Limited Partnerships. The outstanding principal
amounts of the Exchangeable Notes are exchangeable at any time prior to the
close of business on September 1, 1999. Based on an ongoing evaluation of the
business, prospects and financial condition of the Company, the market for and
price of the Common Stock, other investment opportunities available to the
reporting persons, offers for shares of Common Stock, general economic
conditions and other future developments, the reporting persons may decide to
exchange the Exchangeable Notes, or sell or seek the sale of all or part of the
Exchangeable Notes or the beneficial holdings of the Common Stock held by the
respective Limited Partnerships.
Page 15 of 19 Pages
The Company and the Subsidiary entered into a Note Purchase Agreement
dated as of September 6, 1996 (the "RIMCO Agreement") with the Limited
Partnerships. Resource Investors Management Company ("RIMCO") is the controlling
general partner of the Limited Partnerships. Under the RIMCO Agreement, the
Limited Partnerships have agreed to provide up to $8,000,000 in two separate
financings to fund Subsidiary's 3-D seismic exploration program. In connection
with the RIMCO financing, the Company's Board of Directors expanded the number
of directors to seven and elected Gary Milavec, a Vice President of RIMCO
Associates, Inc. (RIMCO's general partner), to fill the vacancy created thereby
until the next annual stockholders' meeting.
The first financing under the RIMCO Agreement is in the form of Senior
Exchangeable General Obligation Notes issued by the Subsidiary in the maximum
amount of $3,000,000 (the "Exchangeable Notes"). The proceeds from this
financing is to be used primarily to fund leasehold, drilling and completion
costs for Subsidiary's Raceland and Greens Lake Prospects in Lafourche Parish,
Louisiana and Galveston County, Texas, respectively, on which 3-D seismic data
acquisition now is completed. The second financing is in the form of Senior
Secured General Obligation Notes (the "Senior Notes") issued by Subsidiary in
the maximum amount of $5,000,000. The Company intends that proceeds from the
second financing be used primarily to fund future leasehold, drilling and
completion costs for the Laurel Grove Prospects in Lafourche Parish, Louisiana,
subsequent wells in the Raceland and Greens Lake Prospects, and up-front land
and other costs associated with new 3-D seismic projects.
Under the terms of a Guaranty and Exchange Agreement dated as of
September 6, 1996, among the Company, Subsidiary , and the Limited Partnerships,
indebtedness outstanding under the Exchangeable Notes is exchangeable, in whole
or in part, for Common Stock of the Company at an initial per share price equal
to $.80, subject to anti-dilution adjustments. Subsidiary can require the
Limited Partnerships to make such an exchange if they have funded at least
$2,800,000 under the Exchangeable Notes and the average trading price of the
Common Stock for any consecutive 20-day trading period is $3.00 or more. The
amount of indebtedness outstanding after the first funding on September 11, 1996
was $200,000 which is presently exchangeable by the Limited Partnerships for
250,000 shares of Common Stock of the Company.
After $2,800,000 in principal has been advanced under the Exchangeable
Notes, Subsidiary may borrow under the Senior Notes until September 1, 1999. The
Senior Notes will mature September 1, 2002. There is no conversion or exchange
feature under the Senior Notes.
Other than as described in this Item 4, as of the date hereof, none of
the reporting persons has any plans or proposals that relate to or would result
in any of the actions listed in subparagraphs (a)-(j) of the instructions to
Item 4 of Schedule 13D with respect to the Company as the issuer.
The Company increased its Board of Directors by one director, such
vacancy having been filled by the designee of RIMCO pursuant to the September 6,
1996 transaction. Immediately following any date on which the aggregate
outstanding principal of the Exchangeable Notes and the Senior Notes shall
exceed $5,000,000, the Company has agreed to use its best efforts, subject to
applicable law, to increase the size of its Board of Directors by one additional
director and to cause the election of an additional designee of RIMCO to serve
as director to fill the resulting vacancy on the Company's Board. As long as the
aggregate principal amount of the Exchangeable Notes and the Senior Notes
outstanding shall exceed $2,500,000, RIMCO shall be entitled to have a total of
two directors serve on the Company's Board of Directors. So long as the Limited
Partnerships own an aggregate of 5% of more of the Company's common stock (or
any securities exchanged therefor or distributed, issued or issuable with
respect thereto), RIMCO is entitled to designate one person for election to the
Board of Directors of the Company.
The foregoing description of the Exchangeable Notes are qualified in
their entirety by reference to the form of Exchangeable Note, attached hereto as
EXHIBIT B.
Page 16 of 19 Pages
Item 5. INTEREST IN SECURITIES OF THE ISSUER
(a) - (b)
<TABLE>
<CAPTION>
NUMBER OF
SHARES SHARED SHARED SOLE SOLE
BENEFICIALLY VOTING INVESTMENT VOTING INVESTMENT
NAME OWNED * POWER* POWER* POWER * POWER* PERCENT*
- ---------------------- ------------------ ----------------- ----------------- ------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Associates 250,000 250,000 250,000 0 0 5.7%
RIMCO 250,000 250,000 250,000 0 0 5.7%
RIMCO I 70,000 70,000 70,000 0 0 1.6%
RIMCO II 70,000 70,000 70,000 0 0 1.6%
RIMCO III 30,000 30,000 30,000 0 0 0.7%
RIMCO IV 80,000 80,000 80,000 0 0 1.8%
Roy V. Hood 250,000 250,000 250,000 0 0 5.7%
Paul E. McCollam 250,000 250,000 250,000 0 0 5.7%
David R. Whitney 250,000 250,000 250,000 0 0 5.7%
John B. Parsons 250,000 250,000 250,000 0 0 5.7%
Stephen F. Oakes 250,000 250,000 250,000 0 0 5.7%
- ---------------
</TABLE>
* As of May 31, 1996
(c) No transactions by any of the reporting persons other than those
transactions identified in Item 3 have taken place in the last 60 days.
(d) - (e)Not applicable.
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
RIMCO is the managing general partner of RIMCO I, RIMCO II, RIMCO III
and RIMCO IV. RIMCO has a 1.00% interest (on a profit basis) in the portfolio
securities held by RIMCO I, RIMCO II, RIMCO III and RIMCO IV.
Associates is the managing general partner of RIMCO, which is the
managing general partner of RIMCO I, RIMCO II, RIMCO III and RIMCO IV.
Associates has a 55% interest (on a profit basis) in RIMCO, which, as indicated
above, has a 1.00% interest (on a profit basis) in the portfolio securities held
by RIMCO I, RIMCO II, RIMCO III and RIMCO IV.
Roy V. Hood, Paul E. McCollam, David R. Whitney and Stephen F. Oakes
are managing directors of RIMCO. Each of Roy V. Hood, Paul E. McCollam and David
R. Whitney is a shareholder of Associates. Mr. Hood is a 34.5% shareholder and
President and a director of Associates. Mr. McCollam is a 23.0% shareholder and
Vice President, Secretary and Treasurer and a director of Associates. Mr.
Whitney is a 23.0% shareholder and a Vice President and a director of
Associates. Mr. Parsons is a 19.5% shareholder and a director of Associates.
RIMCO I is a Delaware limited partnership engaged in the business of
making investments in the energy sector of the natural resource industry. RIMCO
I is the record owner of an Exchangeable Note exchangeable, when fully funded,
for 1,050,000 shares of Common Stock. RIMCO I has an interest in 70,000 shares
of Common Stock or 1.6% of the outstanding Common Stock as of September 11,
1996.
RIMCO II is a Delaware limited partnership engaged in the business of
making investments in the energy sector of the natural resource industry. RIMCO
II is the record owner of an Exchangeable Note exchangeable, when fully funded,
Page 17 of 19 Pages
for 1,050,000 shares of Common Stock. RIMCO II has an interest in 70,000 shares
of Common Stock or 1.6% of the outstanding Common Stock as of September 11,
1996.
RIMCO III is a Delaware limited partnership engaged in the business of
making investments in the energy sector of the natural resource industry. RIMCO
III is the record owner of an Exchangeable Note exchangeable, when fully funded,
for 450,000 shares of Common Stock. RIMCO III has an interest in 30,000 shares
of Common Stock or 0.7% of the outstanding Common Stock as of September 11,
1996.
RIMCO IV is a Delaware limited partnership engaged in the business of
making investments in the energy sector of the natural resource industry. RIMCO
IV is the record owner of an Exchangeable Note exchangeable, when fully funded,
for 1,200,000 shares of Common Stock. RIMCO IV has an interest in 80,000 shares
of Common Stock or 1.8% of the outstanding Common Stock as of September 11,
1996.
Under a Stock Ownership and Registration Rights Agreement entered into
as of September 6, 1996 and filed as EXHIBIT D hereto and incorporated herein by
reference, the Company has granted the Limited Partnerships certain demand and
"piggy back" registration rights, to register any offer of Common Stock held by
the Limited Partnerships, as well as securities (if any) issued with respect
thereto, under the Securities Act of 1933. The Stock Ownership and Registration
Rights Agreement provides for indemnification of the Limited Partnerships by the
Company and indemnification of the Company by the Limited Partnerships under
certain circumstances related to such registration rights.
RIMCO I, RIMCO II, RIMCO III and RIMCO IV entered into an agreement on
September 6, 1996, with Texoil Company, a Tennessee corporation and wholly owned
subsidiary of the Company, to acquire $3,000,000 of Exchangeable Notes the form
of which is filed as EXHIBIT B hereto and incorporated herein by reference. Upon
funding of the Exchangeable Notes, such limited partnerships will have the right
to exchange the outstanding principal balance of the Exchangeable Notes, at an
initial exchange price of $0.80, subject to adjustment, for shares of Common
Stock of the Company.
The exercise price and number of shares of Common Stock and the
exchange price and number of shares of Common Stock issuable upon exchange of
the Exchangeable Notes are subject to adjustment upon certain events such as a
reverse stock split or reclassification, merger of the Company or issuances of
Common Stock at a price less than the exercise price, conversion price, or
exchange price, as the case may be.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
A. Agreement for Joint Filing on Behalf of Each Reporting Person
B. Form of Exchangeable Note
C. Guaranty and Exchange Agreement
D. Stock Ownership and Registration Rights Agreement among the the
Company, Texoil Company, a wholly owned subsidiary of Company, and the
Limited Partnerships
E. Powers of Attorney
Page 18 of 19 Pages
SIGNATURES
After reasonable inquiry and to the best of the knowledge and belief of
each of the following reporting persons, each reporting person certifies that
the information set forth in this statement is true, complete and correct.
Date: September 19 , 1996
Signature: Resource Investors Management
Company Limited Partnership
By: RIMCO Associates, Inc.,
Its General Partner
By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Date: September 19, 1996
Signature: RIMCO Associates, Inc.
By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Date: September 19, 1996
Signature: RIMCO Partners, L.P.
By: Resource Investors Management
Company Limited Partnership,
Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Date: September 19, 1996
Signature: RIMCO Partners, L.P. II
By: Resource Investors Management
Company Limited Partnership,
Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Page 19 of 19 Pages
Date: September 19, 1996
Signature: RIMCO Partners, L.P. III
By: Resource Investors Management
Company Limited Partnership,
Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Date: September 19, 1996
Signature: RIMCO Partners, L.P. IV
By: Resource Investors Management
Company Limited Partnership,
Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Date: September 19, 1996
Signature: /S/ ROY V. HOOD
Roy V. Hood
Date: September 19, 1996
Signature: /S/ PAUL E. MCCOLLAM
Paul E. McCollam by David R.
Whitney, POA
Date: September 19, 1996
Signature: /S/ DAVID R. WHITNEY
David R. Whitney
Date: September 19, 1996
Signature: /S/ STEPHEN F. OAKES
Stephen F. Oakes by David R.
Whitney, POA
Date: September 19, 1996
Signature: /S/ JOHN B. PARSONS
John B. Parsons by David R.
Whitney, POA
INDEX TO EXHIBITS
Exhibit A - Agreement for Joint Filing on Behalf of Each Reporting Person
Exhibit B - Form of Exchangeable Note
Exhibit C - Guaranty and Exchange Agreement
Exhibit D - Stock Ownership and Registration Rights Agreement among
the the Company, Texoil Company, a wholly owned subsidiary of
Company, and the Limited Partnerships
Exhibit E - Powers of Attorney
EXHIBIT A
AGREEMENT
Pursuant to Rule 13d-1(f) under the Securities Exchange Act of 1934,
each of the undersigned hereby agrees to the filing of this Statement on
Schedule 13D on its behalf.
This agreement may be signed in one or more counterparts.
Resource Investors Management Company Limited
Partnership, Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
Date: September 19, 1996 By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
RIMCO Associates, Inc.
Date: September 19, 1996 By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
RIMCO Partners, L.P.
By: Resource Investors Management Company
Limited Partnership, Its General Partner
By: RIMCO Associates, Inc., Its General Partner
Date: September 19, 1996 By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
RIMCO Partners, L.P. II
By: Resource Investors Management Company
Limited Partnership, Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
Date: September 19, 1996 By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Exhibit A - Page 1
RIMCO Partners, L.P. III
By: Resource Investors Management Company
Limited Partnership, Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
Date: September 19, 1996 By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
RIMCO Partners, L.P. IV
By: Resource Investors Management Company
Limited Partnership, Its General Partner
By: RIMCO Associates, Inc.,
Its General Partner
Date: September 19, 1996 By: /S/ DAVID R. WHITNEY
Name: David R. Whitney
Title: Vice President
Date: September 19, 1996 /S/ ROY V. HOOD
Roy V. Hood
Date: September 19, 1996 /S/ PAUL E. MCCOLLAM
Paul E. McCollam by David R. Whitney, POA
Date: September 19, 1996 /S/ DAVID R. WHITNEY
David R. Whitney
Date: September 19, 1996 /S/ STEPHEN F. OAKES
Stephen F. Oakes by David R. Whitney, POA
Date: September 19, 1996 /S/ JOHN B. PARSONS
John B. Parsons by David R. Whitney, POA
Exhibit A - Page 2
EXHIBIT B
TRANCHE A NOTE
TEXOIL COMPANY
10% SENIOR SECURED EXCHANGEABLE
GENERAL OBLIGATION NOTE
No. [ ] September 6, 1996
------------
$[ ]
----------------------------------
FOR VALUE RECEIVED, the undersigned, TEXOIL COMPANY, a
Tennessee corporation (the "COMPANY"), hereby promises to pay to (the "TRANCHE A
NOTEHOLDER"), or registered assigns, the principal sum of and /100 DOLLARS ($ ),
or, if less, the aggregate unpaid principal amount of all Tranche A Advances (as
defined in the Note Purchase Agreement referred to below) made by the Tranche A
Noteholder under this Tranche A Note, together with interest (computed on the
basis of a 360-day year of twelve 30- day months) (a) on the unpaid principal
balance hereof at the rate of ten percent (10%) per annum from the date hereof,
until the principal hereof shall have become due and payable, and (b) on any
overdue payment of principal or interest, at a rate per annum equal to fifteen
percent (15%); PROVIDED, HOWEVER, in no event shall such rate of interest ever
exceed the Highest Lawful Rate (as defined in the Note Purchase Agreement
referred to below).
This Tranche A Note shall be due and payable as follows:
(a) commencing on October 1, 1996, on the first day of each
month, a payment equal to all accrued, but unpaid interest hereon
shall be due and payable; and
(b) on September 1, 1999, the unpaid principal balance hereof,
together with all accrued, but unpaid interest hereon, shall be fully
and finally due and payable.
This Tranche A Note is one of a series of Tranche A Notes
(herein called the "TRANCHE A NOTES") issued pursuant to the Note Purchase
Agreement dated of even date herewith (as from time to time amended, the "NOTE
PURCHASE AGREEMENT"), among the Company, Texoil, Inc., a Nevada corporation
("PARENT"), and the Noteholders named therein and is entitled to the benefits,
and otherwise subject to the provisions, thereof, including, without limitation,
the limitations on interest set forth in SECTION 14.05 thereof. This Tranche A
Note is secured by the Security Documents referred to in the Note Purchase
Agreement.
This Tranche A Note is exchangeable for shares of common stock
of Parent upon the terms and conditions of that certain Guaranty and Exchange
Agreement dated of even date herewith among Parent, the Company and the
Noteholders named therein.
All payments made by the Company on this Tranche A Note shall
be applied first, to the accrued, but unpaid interest hereon, and the remainder,
if any, shall be applied to the principal balance hereof. The Company does not
have the right to prepay this Tranche A Note, in whole or in part, prior to
maturity.
Payments of principal of and interest on this Tranche A Note
are to be made in lawful money of the United States of America at the places
designated in the Note Purchase Agreement.
This Tranche A Note is a registered Tranche A Note and, as
provided in the Note Purchase Agreement, upon surrender of this Tranche A Note
for registration of transfer, duly endorsed, or accompanied by a written
instrument of transfer duly executed, by the registered holder hereof or such
holder's attorney duly authorized in writing, a new Tranche A Note for a like
principal amount will be issued to, and registered in the name of, the
transferee. Prior to due presentment for registration of transfer, the Company
may treat the person in whose name this Tranche A Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Company will not be affected by any notice to the contrary.
Exhibit B - Page 1
If an Event of Default, as defined in the Note Purchase
Agreement, occurs and is continuing, the principal and other amounts outstanding
under this Tranche A Note may be declared or otherwise become due and payable in
the manner, at the price and with the effect provided in the Note Purchase
Agreement.
This Tranche A Note shall be governed by and construed in
accordance with the laws of the State of New York, excluding the choice of law
rules thereof.
TEXOIL COMPANY
By:
Name:
Title:
Exhibit B - Page 2
EXHIBIT C
GUARANTY AND EXCHANGE AGREEMENT
GUARANTY AND EXCHANGE AGREEMENT dated as of September 6, 1996
among TEXOIL, INC., a Nevada corporation ("PARENT"), TEXOIL COMPANY, a Tennessee
corporation (the "COMPANY") and RIMCO PARTNERS, L.P., a Delaware limited
partnership, RIMCO PARTNERS, L.P. II, a Delaware limited partnership, RIMCO
PARTNERS, L.P. III, a Delaware limited partnership, and RIMCO PARTNERS, L.P. IV,
a Delaware limited partnership.
PRELIMINARY STATEMENT
The Noteholders have entered into a Note Purchase Agreement
dated of even date herewith (said Agreement, as it may hereafter be amended or
otherwise modified from time to time, being the "NOTE AGREEMENT") with the
Company and Parent. The Company is a wholly-owned subsidiary of Parent. It is a
condition precedent to the obligation of the Noteholders to make Advances under
the Note Agreement that the Company and Parent shall have executed and delivered
this Agreement. Parent has determined that it will receive a substantial benefit
if Advances are made to the Company under the Note Agreement.
In consideration of the mutual covenants herein contained,
Parent, the Company and the Noteholders agree as follows:
ARTICLE I
DEFINITIONS, ETC.
SECTION 1.01. CERTAIN DEFINED TERMS. Capitalized terms used in
this Agreement and not otherwise defined herein shall have the respective
meanings set forth in the Note Agreement and the Annex A attached thereto (such
meanings to be equally applicable to both singular and plural forms of the terms
defined).
SECTION 1.02. COVENANT CONSTRUCTION. Each covenant contained
herein shall be construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that compliance with any
one covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
SECTION 1.03. OTHER RULES OF CONSTRUCTION. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All references herein to articles, sections, annexes, exhibits
and schedules shall, unless the context requires a different construction, be
deemed to be references to the articles and sections of this Agreement and the
annexes, exhibits and schedules attached hereto and made a part hereof. In this
Agreement, unless a clear contrary intention appears, the word "including" (and
with correlative meaning "include") means including, without limiting the
generality of any description preceding such term. The headings of the various
articles and sections of this Agreement are for convenience only and shall not
affect the meaning of the terms and conditions of this Agreement. No provision
of this Agreement shall be interpreted or construed against any party solely
because that party or its legal representative drafted such provision.
ARTICLE II
GUARANTY
SECTION 2.01. GUARANTY. Parent hereby unconditionally and
irrevocably guarantees the full and punctual payment when due, whether at stated
maturity or earlier by acceleration or otherwise, of any and all debts,
liabilities and obligations of the Company now or hereafter existing under the
Note Agreement, the Notes or any of the other Transaction Documents whether for
principal, interest (including, without limitation, all interest that accrues
after the commencement of any proceeding by or against the Company under any
bankruptcy, insolvency, liquidation, moratorium, receivership, reorganization or
other similar debtor relief law), fees, expenses or otherwise (such obligations
being the "OBLIGATIONS"), and agrees to pay any and all reasonable costs and
expenses (including counsel fees and legal expenses) incurred by the Noteholders
in connection with the protection, defense or enforcement of any rights under
this Agreement and any of the other Transaction Documents.
Exhibit C - Page 1
SECTION 2.02. GUARANTY ABSOLUTE. Parent unconditionally
guarantees that the Obligations will be paid strictly in accordance with the
terms of the Note Agreement, the Notes and the other Transaction Documents,
regardless of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the Noteholders with
respect thereto. The liability of Parent under this Agreement shall be absolute
and unconditional irrespective of: (a) any lack of validity or enforceability of
the Note Agreement, the Notes, the other Transaction Documents or any other
agreement or instrument relating thereto (unless such invalidity or
unenforceability results from a failure of consideration on the part of the
Noteholders); (b) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to departure from the Note Agreement, the Notes or the
other Transaction Documents; (c) any taking, exchange, release or non-perfection
of any collateral, or any release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations; (d) any
manner of application of collateral, or proceeds thereof, to all or any of the
Obligations, or any manner of sale or other disposition of any collateral for
all or any of the Obligations or any other assets of the Company; (e) any
change, restructuring or termination of the corporate structure or existence of
the Company; or (f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Company or a guarantor (except full
and indefeasible payment of the Obligations, including, payment of the Tranche A
Notes, via exchange for Parent Common Stock in accordance with Article III
hereof).
The obligations of Parent under this Agreement shall not be
subject to reduction, termination or other impairment by reason of any setoff,
recoupment, counterclaim or defense or for any other reason (except full and
indefeasible payment of the Obligations, including, payment of the Tranche A
Notes, via exchange for Parent Common Stock in accordance with Article III
hereof). This Agreement is to be in addition to and is not to prejudice or be
prejudiced by any other securities or guaranties (including any guaranty signed
by Parent) which the Noteholders may now or hereafter hold from or on account of
the Company and is to be binding on Parent as a continuing security
notwithstanding any payments from time to time made to the Noteholders or any
settlement of account or disability or incapacity affecting Parent or any other
thing whatsoever. This Agreement is a continuing guaranty and shall remain in
full force and effect until payment in full of the Obligations and all other
amounts payable under this Agreement.
SECTION 2.03. WAIVER. Parent hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations and this Agreement and any liability to which this Agreement applies
or may apply, and waives presentment, demand of payment, notice of intent to
accelerate, notice of acceleration, notice of dishonor or nonpayment, and any
requirement that the Noteholders institute suit, collection proceedings or take
any other action to collect the Obligations including any requirement that the
Noteholders protect, secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right or take any action against the
Company or any other person or entity or any collateral (it being the intention
of the Noteholders and Parent that this Agreement is to be a guaranty of payment
and not of collection) or that the Company or any other person be joined in any
action hereunder. Notwithstanding the provisions of SECTION 8.12, Parent hereby
expressly waives each and every right to which it may be entitled by virtue of
the suretyship laws of the State of Texas, including, without limitation, any
and all rights it may have pursuant to Rule 31 or Rule 32, Texas Rules of Civil
Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code and
Chapter 34 of the Texas Business and Commerce Code. Parent hereby waives
marshalling of assets and liabilities, sale in inverse order of alienation,
notice by the Noteholders of any indebtedness or liability to which it applies
or may apply any amounts received by the Noteholders, and of the creation,
advancement, increase, existence, extension, renewal, rearrangement and/or
modification of the Obligations.
SECTION 2.04. WAIVER OF SUBROGATION; ETC. Parent will not
exercise any rights of subrogation under this Agreement, by any payment made
hereunder or otherwise, until such time as the Noteholders have received full
payment of the Obligations. If, notwithstanding the preceding sentence, any
amount shall be paid to Parent on account of subrogation rights at any time when
all the Obligations shall not have been paid in full, such amount shall be held
in trust for the benefit of the Noteholders and shall forthwith be paid to the
Noteholders to be credited and applied upon the Obligations in accordance with
the terms of the Note Agreement.
Parent hereby subordinates all indebtedness owing to it from
the Company to all indebtedness of the Company to the Noteholders, and agrees
that upon the occurrence and continuance of an Event of Default or any event
which with the giving of notice or lapse of time could become an Event of
Default, it shall not accept any payment on the same until payment in full of
the Obligations, and shall in no circumstance whatsoever attempt to set off or
reduce any Obligations hereunder because of such indebtedness. Parent further
subordinates any lien or security interest that it has or may have on any
collateral or security securing payment of the Obligations to the liens and
security interest on said collateral and security in favor of the Noteholders,
but the
Exhibit C - Page 2
foregoing shall in no event imply or be construed to imply the Noteholders'
agreement or consent to the existence of any such security interests in favor of
Parent.
SECTION 2.05. RIGHT OF SET-OFF. Upon the occurrence and during
the continuance of any Event of Default the Noteholders are hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Noteholders to or for the credit or the account of Parent against any and
all of the obligations of Parent now or hereafter existing under this Agreement,
irrespective of whether or not the Noteholders shall have made any demand under
this Agreement and although such obligations may be contingent and unmatured.
The Noteholders agree promptly to notify Parent after any such set-off and
application, PROVIDED that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of the Noteholders under
this Section are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which the Noteholders may have.
SECTION 2.06. TRANSACTION DOCUMENTS. Parent acknowledges that
it has had full and complete access to the Note Agreement, the Notes and the
other Transaction Documents, has fully reviewed same and is fully aware of their
contents.
SECTION 2.07. EFFECT OF BANKRUPTCY PROCEEDING, ETC. This
Agreement shall continue to be effective, or be automatically reinstated, as the
case may be, if at any time payment, in whole or in part, of any of the sums due
any Noteholders pursuant to the terms of the Note Agreement or hereunder is
rescinded or must otherwise be restored or returned by the Noteholders upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or Parent, or upon or as a result of the appointment of a custodian,
receiver, trustee or other officer with similar powers with respect to the
Company or Parent or any substantial part of their property, or otherwise, all
as though such payments had not been made. If an Event of Default shall at any
time have occurred and be continuing and declaration of such Event of Default
shall at such time be prevented by reason of the pendency against the Company of
a case or proceeding under a bankruptcy or insolvency law, Parent agrees that,
for purposes of this Agreement and its obligations hereunder, the Note Agreement
shall be deemed to have been declared in default with the same effect as if the
Note Agreement had been declared in default in accordance with the terms
thereof, and Parent shall forthwith pay the amounts specified by the Noteholders
to be paid thereunder, any interest thereon and any other amounts guaranteed
hereunder without further notice or demand.
SECTION 2.08. NO WAIVER; REMEDIES. No failure on the part of
the Noteholders to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 2.09. PLEDGE AGREEMENT. Parent's obligations under
this Agreement are secured by the Pledge Agreement.
SECTION 2.10. FURTHER ASSURANCES. Parent hereby agrees to
execute and deliver all such instruments and take all such action as the
Noteholders may from time to time reasonably request in order to fully
effectuate the purpose of this Agreement.
ARTICLE III
EXCHANGE AGREEMENT
SECTION 3.01. EXCHANGE. (a) Each Tranche A Noteholder shall
have the right, at the option of such holder at any time up to and including the
maturity date of the Tranche A Notes, to exchange the outstanding principal
amount of any Tranche A Note (or any portion thereof), plus accrued and unpaid
interest due thereon to the effective date of the exchange, into fully paid and
non-assessable shares of common stock, par value $.01 per share, of Parent (the
"PARENT COMMON STOCK"), subject to possible adjustment as provided below. The
number of shares of Parent Common Stock issuable in exchange for a Tranche A
Note shall be equal to the quotient of the principal amount of such Tranche A
Note (or the portion thereof) submitted for exchange plus accrued and unpaid
interest due thereon to the effective date of the exchange, divided by the
"Exchange Price" (as defined below). As used herein, the term "EXCHANGE PRICE"
shall mean the price of $.80 per share, or, in case an adjustment of such price
has taken place pursuant to the provisions hereof, then at the price as last
adjusted.
Exhibit C - Page 3
(b) Subject to the provisions of SECTIONS 3.01(C), 3.01(D) and
3.01(E) hereof, if at any time after an aggregate amount of at least $2,800,000
has been advanced under the Tranche A Notes, the average closing price per share
of Parent Common Stock (as reported by the principal securities exchange or
trading market, as the case may be, on which the Parent Common Stock is then
traded) during a period of 20 consecutive trading days (such 20-day average
being referred to herein as the "AVERAGE PRICE") equals or exceeds $3.00 per
share (a "SPECIAL EXCHANGE EVENT"), the Company may, at its option exercisable
in its sole discretion at any time during the 30-day period following such
Special Exchange Event, exchange all (but not less than all) of the outstanding
principal amount of the Tranche A Notes, plus accrued and unpaid interest due
thereon to the effective date of such exchange, into fully paid and
non-assessable shares of Parent Common Stock at the Exchange Price then in
effect. Such exchange shall be deemed to have been effected immediately upon the
mailing of the notice referred to in SECTION 3.02(B) hereof, which notice to be
effective must be deposited in the mail on or prior to the close of business on
the thirtieth day following the Special Exchange Event, whereupon the person or
persons entitled to receive the Parent Common Stock deliverable upon such
exchange shall thereupon be treated for all purposes as the record holder or
holders of such Parent Common Stock, and the Tranche A Notes shall be deemed to
represent only the right to receive certificates representing the number of
shares of Parent Common Stock, plus cash in lieu of fractional shares in
accordance with SECTION 3.04, for which each such Tranche A Note has been so
exchanged. If the Company does not exchange the Tranche A Notes in accordance
with this SECTION 3.01(B) within the 30-day period following any Special
Exchange Event, then a new period of trading days shall begin for purposes of
determining whether the Company may exchange the Tranche A Notes pursuant to
this SECTION 3.01(B).
(c) Notwithstanding the provisions of SECTION 3.01(B) hereof,
during any period of time in which the Parent Common Stock is not traded on a
securities exchange or other established trading market, no Special Exchange
Event shall be deemed to occur.
(d) Notwithstanding the provisions of SECTION 3.01(B), the
Company shall not exchange the Tranche A Notes for Parent Common Stock pursuant
to SECTION 3.01(B) unless the Replacement 12% Convertible Promissory Notes
evidencing the New Shareholder Debt are simultaneously converted pursuant to the
terms of such notes.
(e) Notwithstanding the provisions of SECTION 3.01(B), the
Company may not exercise its right to exchange all of the outstanding principal
amount of the Tranche A Notes for Parent Common Stock more than twice.
SECTION 3.02. EXCHANGE PROCEDURE. (a) If any Tranche A
Noteholder desires to exchange any Tranche A Note for Parent Common Stock
pursuant to SECTION 3.01(A) hereof, the holder of such Tranche A Note shall
deliver an irrevocable written notice to the Company that the holder elects so
to exchange such Tranche A Note in accordance with the terms of SECTION 3.01(A)
hereof, and specifying the name or names (with address) in which a certificate
or certificates for Parent Common Stock are to be issued.
(b) If the Company elects pursuant to SECTION 3.01(B) hereof
to exchange the outstanding principal amount of the Tranche A Notes for Parent
Common Stock, the Company shall, within 30 days after the Special Exchange Event
with respect to which such election is made, send notice (or cause notice to be
sent) by first class mail, postage prepaid, to each holder of record of the
Tranche A Notes at such holder's address as specified pursuant to the Tranche A
Note Agreement. Each such notice of exchange shall specify the date such
exchange was effected, the Exchange Price, the Exchange Rate (as defined in
SECTION 3.03), and that on and after such exchange date, interest will cease to
accrue on such outstanding principal amount of the Tranche A Notes being so
exchanged.
(c) The Company will, as soon as practicable after such
written notice specified in SECTION 3.02(A) or (B) hereof and compliance with
any other conditions herein contained, deliver or cause to be delivered, to the
holder of record of each Tranche A Note to be exchanged, certificates for the
number of full shares of Parent Common Stock to which such Person shall be
entitled upon exchange as aforesaid and a cash adjustment for any fraction of a
share of Parent Common Stock as provided in SECTION 3.04. In the case of an
exchange of a Tranche A Note pursuant to SECTION 3.01(A) hereof, such exchange
shall be deemed to have been made as of the date of the written notice delivered
pursuant to SECTION 3.02(A) hereof, and the Person entitled to receive the
Parent Common Stock deliverable upon exchange of such Tranche A Note shall be
treated for all purposes as the record holder of such Parent Common Stock on and
after such date of notice.
(d) Upon the exchange of all or a portion of the outstanding
principal amount of a Tranche A Note for common stock of Parent in accordance
with this Agreement, the amount of the outstanding principal of such Tranche A
Note and
Exhibit C - Page 4
the Tranche A Commitment of the holder of such Tranche A Note shall each be
automatically reduced by the principal amount of such Tranche A Note so
exchanged.
SECTION 3.03. ADJUSTMENTS. The Exchange Price and the number
of shares of Parent Common Stock and the number or amount of any other
securities and property as hereinafter provided into which a Tranche A Note is
exchangeable (the "EXCHANGE RATE") shall be subject to adjustment from time to
time effective upon each occurrence of any of the following events. As used in
this Section 3.03 the term "SHARES" means, collectively, (i) the shares of
Parent Common Stock issuable upon exchange of the Tranche A Notes and (ii) any
securities exchangeable for or issuable with respect to, the shares included in
clause (i) of this definition. In case by reason of the operation of this
SECTION 3.03 the Tranche A Notes shall be exchangeable for any other shares of
stock or other securities or property of Parent or of any other corporation, any
reference herein to the exchange of the Tranche A Notes shall be deemed to refer
to and include the exchange of the Tranche A Notes for such other shares of
stock or other securities or property.
(a) If Parent shall declare or pay any dividend with respect
to Parent Common Stock payable in Parent Common Stock, subdivide the outstanding
shares of Parent Common Stock into a greater number of shares of Parent Common
Stock, or reduce the number of shares of Parent Common Stock outstanding (by
stock split, reverse stock split, reclassification or otherwise than by
repurchase of its Parent Common Stock) (any of such events being hereinafter
called a "STOCK SPLIT"), the Exchange Price and number of shares of Parent
Common Stock issuable upon exchange of any Tranche A Note shall be appropriately
adjusted so as to entitle the holder thereof to receive upon exchange of its
Tranche A Note, for the same aggregate consideration provided herein, the same
number of shares of Parent Common Stock (plus cash in lieu of fractional shares)
as the holder would have received as a result of such Stock Split had such
holder exchanged such Tranche A Note in full immediately prior to such Stock
Split.
(b) If Parent shall merge or consolidate with or into one or
more corporations or partnerships and Parent is the sole surviving corporation,
or Parent shall adopt a plan of recapitalization or reorganization in which
shares of Parent Common Stock are exchanged for or changed into another class of
stock or other security or property of Parent, the holder of a Tranche A Note,
for the same aggregate consideration provided herein, shall be entitled upon
exchange of such Tranche A Note to receive in lieu of the number of shares of
Parent Common Stock for which such Tranche A Note would otherwise be
exchangeable, the number of shares of Parent Common Stock or other securities
(plus cash in lieu of fractional shares) or property to which such holder would
have been entitled pursuant to the terms of the agreement or plan of merger,
consolidation, recapitalization or reorganization had such holder exchanged such
Tranche A Note in full immediately prior to such merger, consolidation,
recapitalization or reorganization.
(c) If Parent is merged or consolidated with or into one or
more corporations or partnerships under circumstances in which Parent is not the
sole surviving corporation, or if Parent sells or otherwise disposes of
substantially all its assets, and in connection with any such merger,
consolidation or sale the holders of Parent Common Stock receive stock or other
securities convertible into equity of the surviving or acquiring corporations or
entities, or other securities or property, after the effective date of such
merger, consolidation or sale, as the case may be, the holder of a Tranche A
Note shall, for the same aggregate consideration provided herein, be entitled
upon exchange of the Tranche A Note to receive, in lieu of shares of Parent
Common Stock for which such Tranche A Note would otherwise be exchangeable,
shares of such stock or other securities (plus cash in lieu of fractional
shares) or property as the holder of such Tranche A Note would have received
pursuant to the terms of the merger, consolidation or sale had such holder
exchanged such Tranche A Note in full immediately prior to such merger,
consolidation or sale. In the event of any consolidation, merger or sale as
described in this SECTION 3.03(C), provision shall be made in connection
therewith for the surviving or acquiring corporations or partnerships to assume
all obligations and duties of Parent hereunder.
(d) If Parent shall declare or pay any dividend, or make any
distribution, with respect to its Parent Common Stock that is payable in
preferred stock or other securities, cash, assets or rights to subscribe for or
purchase any security of Parent other than Parent Common Stock, or that is
payable in debt securities of Parent convertible into Parent Common Stock,
preferred stock or other equity securities of Parent, the holder of a Tranche A
Note shall, for the same aggregate consideration provided herein, be entitled to
receive upon exchange of such Tranche A Note in lieu of the shares of Parent
Common Stock for which such Tranche A Note would otherwise be exchangeable, the
same amount of Parent Common Stock, preferred stock and other securities, cash,
assets or rights to subscribe for or purchase any security (plus cash in lieu of
fractional shares) as the holder would have received had the holder exchanged
such Tranche A Note in full immediately prior to any such dividend or
distribution being made.
Exhibit C - Page 5
(e) If Parent (other than in connection with a sale described
in SECTION 3.03(C)) proposes to liquidate and dissolve, Parent shall give notice
thereof as provided in SECTION 3.05(E) hereof and shall permit the holder of a
Tranche A Note to exchange any unexchanged portion thereof at any time, if such
holder should elect to do so, and participate as a stockholder of Parent in
connection with such dissolution.
(f) If the Exchange Price shall fall below the par value of
the Parent Common Stock, Parent agrees to use commercially reasonable efforts to
appropriately adjust the par value of the Parent Common Stock to an amount less
than or equal to the Exchange Price.
(g) In order to protect each holder of a Tranche A Note
against the dilution of its interest in Parent, if and whenever on or after the
date hereof Parent issues or sells any Parent Common Stock (except any Permitted
Issuance or any issuance pursuant to SECTION 3.03(A)) for a consideration per
share which is less than the then Exchange Price (a "SPECIAL ISSUANCE"), then
forthwith upon such issuance or sale the number of Shares (as defined in SECTION
3.03), as determined immediately prior to such Special Issuance, will be
increased to equal the New Exchange Shares (as defined below), and the Exchange
Price will be equal to the New Exchange Price, each as determined pursuant to
the following formulas:
NES = S x ((OS + SI) / (OS + X))
NEP = (OEP x S) / NES
where:
S = the Shares (as defined in SECTION 3.03), as
determined immediately prior to such Special Issuance
OS = the number of shares of Parent Common Stock
outstanding immediately prior to such Special Issuance
on a fully diluted basis without giving effect to such
Special Issuance
NES = the number of Shares (as defined in SECTION 3.03) as
determined immediately following the aggregate
adjustment made by reason of this SECTION 3.03(G) ("NEW
EXCHANGE SHARES")
SI = the number of shares of Parent Common Stock issued or
sold (or deemed issued or sold) in such Special
Issuance
X = the number of shares of Parent Common Stock that the
aggregate cash consideration actually received by
Parent for SI would purchase at OEP
NEP = the "NEW EXCHANGE PRICE"
OEP = the Exchange Price in effect immediately prior to
such Special Issuance
"PERMITTED ISSUANCES" means any and all issuances of shares of Parent Common
Stock pursuant to (x) any stock option, stock purchase or other employee or
director benefit plan of Parent and (y) any warrant or other right to purchase
Parent Common Stock, in each case existing as of the date hereof and
specifically disclosed on SCHEDULE 3.03 attached hereto.
(h) Whenever the Exchange Rate or the Exchange Price is
adjusted as provided in any provision of this SECTION 3.03:
(i) the Company shall compute the adjusted Exchange Rate and
Exchange Price, as applicable, in accordance with this SECTION
3.03 and shall prepare a certificate signed by the Senior
Financial Officer of the Company setting forth the adjusted
Exchange Rate and Exchange Price, as applicable, and showing
in reasonable detail the facts upon which such adjustment is
based, and such certificate shall forthwith be filed with the
Company or its designee; and
(ii) a notice stating that the Exchange Rate and the Exchange
Price, as applicable, has been adjusted and setting forth the
adjusted Exchange Rate and the Exchange Price, as applicable,
shall forthwith be required,
Exhibit C - Page 6
and as soon as practicable after it is prepared, such notice
shall be mailed by the Company to the holder of record of each
Tranche A Note at such holder's address specified pursuant to
the Tranche A Note Agreement.
(i) If at any time, as a result of any adjustment to the
Exchange Rate made pursuant to this SECTION 3.03, the holder of any Tranche A
Note thereafter surrendered for exchange shall become entitled to receive any
shares of Parent other than shares of Parent Common Stock or to receive any
other securities, the number of such other shares or securities so receivable
upon exchange of such Tranche A Note shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions contained in this SECTION 3.03 with respect to the Parent Common
Stock.
(j) All of the events requiring adjustments pursuant to this
SECTION 3.03 are subject to such prohibitions, limitations, restrictions and
other provisions as set forth in the Transaction Documents, as may be amended
from time to time.
SECTION 3.04. CASH IN LIEU OF FRACTIONAL SHARES. No fractional
shares or scrip representing fractional shares of Parent Common Stock shall be
issued upon the exchange of any Tranche A Note. Instead of any fractional share
of Parent Common Stock that would otherwise be issuable upon exchange of a
Tranche A Note, the Company will pay a cash adjustment in respect of such
fractional interest in an amount equal to the same fraction of the market price
per share of Parent Common Stock (as determined by the Board of Directors of the
Company or in any manner prescribed by the Board of Directors of the Company,
which shall be the last reported sale price of the Parent Common Stock on the
principal securities exchange or trading market on which the Parent Common Stock
is then traded) at the close of business on the business day prior to the day of
surrender of shares for exchange or, in the case of an exchange effected
pursuant to SECTION 3.01(B) hereof, the business day prior to the effective date
of such exchange.
SECTION 3.05. ADDITIONAL PARENT OBLIGATIONS. (a) Parent shall
at all times reserve and keep available, out of its authorized and unissued
stock, solely for the purpose of effecting the exchange of the Tranche A Notes,
such number of shares of Parent Common Stock free of preemptive rights as shall
from time to time be sufficient to effect the exchange of all Tranche A Notes
from time to time outstanding. Parent shall from time to time, in accordance
with the laws of the State of Nevada, increase the authorized number of shares
of Parent Common Stock if at any time the number of shares of Parent Common
Stock authorized but unissued shall not be sufficient to permit the exchange of
all the then outstanding Tranche A Notes into Parent Common Stock at the
Exchange Rate then in effect.
(b) If any shares of Parent Common Stock required to be
reserved for purposes of exchange of the Tranche A Notes require registration
with or approval of any governmental authority under any federal or state law
before such shares may be issued upon exchange, Parent will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly registered or
approved, as the case may be. If the Parent Common Stock is then traded on any
national securities exchange or trading market, Parent will, if permitted by the
rules of such exchange or trading market, list and keep listed on such exchange
or approved for trading on such trading market, subject to official notice of
issuance, all shares of Parent Common Stock issuable upon exchange of the
Tranche A Notes.
(c) The Company will pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Parent Common
Stock on exchange of a Tranche A Note. The Company shall not, however, be
required to pay any tax that may be payable in respect of any transfer involved
in the issue or delivery of Parent Common Stock (or other securities or assets)
in any name or names other than that in which such Tranche A Note was
registered, and no such issue or delivery shall be made unless and until the
Person requesting such issue has paid to the Company or its designee the amount
of such tax or has represented, to the reasonable satisfaction of the Company,
that such tax has been paid.
(d) Before taking any action that would cause an adjustment
increasing the Exchange Rate, such that the effective Exchange Price would be
below the then par or stated value of the Parent Common Stock, the Company and
Parent will take such corporate action as may, in the opinion of counsel to the
Company and counsel to Parent, be necessary in order that Parent may validly and
legally issue fully paid and non-assessable shares of Parent Common Stock at the
Exchange Rate as so adjusted.
(e)In case Parent proposes, to the extent then permitted by
the Transaction Documents,
Exhibit C - Page 7
(i) to pay any stock dividend upon the Parent Common Stock or
make any distribution (other than ordinary cash dividends
payable out of earnings) or offer any subscription or other
rights to the holders of Parent Common Stock, or
(ii) to effect any capital reorganization or reclassification
of capital stock of Parent, or
(iii) to effect the consolidation, merger, sale of all or
substantially all of the assets, liquidation, dissolution or
winding up of Parent, or
(iv) to take any other action that would result in any
adjustment pursuant to SECTION 3.03 in the number of Shares or
the Exchange Price,
then the Company shall cause notice of any such intended action to be given to
each holder of the Tranche A Notes not less than 30 nor more than 60 days prior
to the date on which the transfer books of Parent shall close or a record be
taken for such dividend or distribution, or the date when such capital
reorganization, reclassification, consolidation, merger, sale, liquidation,
dissolution or winding up shall be effected, or the date of such other event, as
the case may be.
SECTION 3.06. EXCHANGE RATE INCREASE. (a) The Company from
time to time may increase the Exchange Rate by any amount for any period of time
if the period is at least 20 days and if the increase is irrevocable during the
period. Whenever the Exchange Rate is so increased, the Company shall mail to
holders of record of the Tranche A Notes a notice of the increase at least 15
days before the date the increased Exchange Rate takes effect, and such notice
shall state the increased Exchange Rate and the period it will be in effect.
(b) The Company may make such increases in the Exchange Rate,
in addition to those required or allowed by this Article III, as shall be
determined by it, as evidenced by a resolution of the Company's Board of
Directors, to be advisable in order to avoid or diminish any income tax to
holders of Parent Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe for stock or
from any event treated as such for income tax purposes.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Noteholders that:
SECTION 4.01. ORGANIZATION; POWER AND AUTHORITY. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada, and is duly qualified as a foreign corporation and is in
good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified
or in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on Parent. Parent has the corporate
power and authority to own or hold under lease the properties it purports to own
or hold under lease, to transact the business it transacts and proposes to
transact, to execute and deliver this Agreement and the other Transaction
Documents to which it is a party and to perform the provisions hereof and
thereof.
SECTION 4.02. AUTHORIZATION, ETC. This Agreement and the other
Transaction Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of Parent, and this Agreement
constitutes, and upon execution and delivery thereof each other Transaction
Document to which it is a party will constitute, a legal, valid and binding
obligation of Parent enforceable against Parent in accordance with its terms,
except as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
SECTION 4.03. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by Parent of this Agreement and the
other Transaction Documents to which it is a party will not (a) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of Parent or any of its
Subsidiaries under, any indenture, mortgage, deed of trust, loan, purchase or
credit agreement, lease, corporate charter or by-laws, or any other agreement or
instrument to which Parent or any of its Subsidiaries is bound or by which
Parent or any of its
Exhibit C - Page 8
Subsidiaries or any of their respective properties may be bound or affected
(except for Liens created under the Transaction Documents) the consequence of
which would have a Material Adverse Effect on Parent or any of its Subsidiaries,
(b) conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority in respect of a proceeding to which Parent or any of its
Subsidiaries is a party or (c) to the knowledge of Parent, violate any provision
of any statute or other rule or regulation of any Governmental Authority
applicable to Parent or any of its Subsidiaries.
SECTION 4.04. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent,
approval or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution, delivery or
performance by Parent of this Agreement or the other Transaction Documents to
which it is a party that has not been obtained.
SECTION 4.05. SUBSIDIARIES. SCHEDULE 4.05 contains complete
and correct lists of Parent's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the percentage
of shares of each class of its capital stock or similar equity interests
outstanding owned by Parent and each other Subsidiary. No Subsidiary is a party
to, or is otherwise subject to any legal restriction or any agreement (other
than the Note Agreement, this Agreement and customary limitations imposed by
corporate law statutes) restricting the ability of such Subsidiary to pay
dividends out of profits or make any other similar distributions of profits to
Parent or any of its Subsidiaries that owns outstanding shares of capital stock
or similar equity interests of such Subsidiary.
SECTION 4.06. FINANCIAL STATEMENTS. The consolidated balance
sheet of Parent and its Subsidiaries as at December 31, 1995, and the related
consolidated statements of income, retained earnings and cash flows for the
12-month period then ended, copies of which Parent has delivered to each
Noteholder, fairly present in all material respects the consolidated financial
position of Parent and its Subsidiaries as of such date and the consolidated
results of their operations and cash flows for such period and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case of any
interim financial statements, to normal year-end adjustments).
SECTION 4.07. DISCLOSURE. This Agreement, the documents,
certificates or other writings delivered to the Noteholders by or on behalf of
Parent in connection with the transactions contemplated hereby and the financial
statements referred to in SECTION 4.06, taken as a whole, do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading. Since December 31, 1995, there
has been no change in the financial condition, operations, business, properties
or prospects of Parent or any of its Subsidiaries except changes that
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on Parent or any of its Subsidiaries. There is no fact
known to Parent that would reasonably be expected to have a Material Adverse
Effect on Parent or any of its Subsidiaries that has not been set forth herein
or in the other documents, certificates and other writings (including the
financial statements referred to in SECTION 4.06) delivered to the Noteholders
by or on behalf of Parent specifically for use in connection with the
transactions contemplated hereby.
SECTION 4.08. LITIGATION. Except as disclosed in SCHEDULE
4.08, there are no actions, suits or proceedings pending of which Parent has
received notice, or, to the knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries or any property of Parent or any of its
Subsidiaries in any court or before any arbitrator of any kind or before or by
any Governmental Authority that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Parent or any of its
Subsidiaries.
SECTION 4.09. OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
Neither Parent nor any Subsidiary is in default under any term of any agreement
or instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority
arising out of any proceeding to which it is a party or of which it has notice
or in violation of any applicable law, ordinance, rule or regulation (including
without limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on Parent or any of its Subsidiaries.
SECTION 4.10. TAXES. Parent and its Subsidiaries have filed
all tax returns that are required to have been filed in any jurisdiction, and
have paid all taxes shown to be due and payable on such returns and all other
taxes and assessments levied upon them or their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent, except for any taxes and assessments (i)
the amount of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested in good
faith by
Exhibit C - Page 9
appropriate proceedings and with respect to which Parent or any of its
Subsidiaries, as the case may be, has established adequate reserves in
accordance with GAAP. Parent knows of no basis for any other tax or assessment
that, if imposed, would reasonably be expected to have a Material Adverse Effect
on Parent or any of its Subsidiaries. The charges, accruals and reserves on the
books of Parent and its Subsidiaries in respect of Federal, state or other taxes
for all fiscal periods are adequate in all respects. The Federal income tax
liabilities of Parent and its Subsidiaries have been determined by the Internal
Revenue Service and paid for all fiscal years up to and including the fiscal
year ended December 31, 1995.
SECTION 4.11. TITLE TO PROPERTY. Parent and its Subsidiaries
have good and sufficient title to their respective properties that individually
or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in SECTION 4.06 or purported to
have been acquired by Parent or any Subsidiary after said date, in each case
free and clear of Liens other than Permitted Liens.
SECTION 4.12. LICENSES, PERMITS, ETC. Parent and its
Subsidiaries own or possess all licenses, permits, franchises, authorizations,
patents, copyrights, service marks, trademarks and trade names, or rights
thereto, that individually or in the aggregate are Material, without known
conflict with the rights of others. To the best knowledge of Parent, (a) no
product of Parent infringes in any material respect any license, permit,
franchise, authorization, patent, copyright, service mark, trademark, trade name
or other right owned by any other Person; and (b) there is no Material violation
by any Person of any right of Parent or any of its Subsidiaries with respect to
any patent, copyright, service mark, trademark, trade name or other right owned
or used by Parent or any of its Subsidiaries.
SECTION 4.13. COMPLIANCE WITH ERISA.
(a) Parent and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and would not reasonably be
expected to result in a Material Adverse Effect on Parent. Neither Parent nor
any ERISA Affiliate has incurred any liability pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in section 3 of ERISA), and no event, transaction or
condition has occurred or exists that could reasonably be expected to result in
the incurrence of any such liability by Parent or any ERISA Affiliate, or in the
imposition of any Lien on any of the rights, properties or assets of Parent or
any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to
such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the
Code, other than such liabilities or Liens as would not be individually or in
the aggregate Material.
(b) The present value of the aggregate benefit liabilities
under each of the Plans (other than Multiemployer Plans), determined as of the
end of such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities. The term "BENEFIT LIABILITIES"
has the meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE"
and "PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) Parent and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation
(determined as of the last day of Parent's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by section
4980B or the Code) of Parent and its Subsidiaries is not Material.
SECTION 4.14. STATUS UNDER CERTAIN STATUTES. Neither Parent
nor any of its Subsidiaries is subject to regulation under the Investment
Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935,
as amended, the Interstate Commerce Act, as amended, or the Federal Power Act,
as amended.
SECTION 4.15. CAPITALIZATION. The authorized capital stock of
Parent consists solely of 50,000,000 shares of $.01 par common stock, of which
4,157,073 shares are issued and outstanding and 10,000,000 shares of $.01 par
Series A preferred stock, of which 23,000 shares are issued and outstanding.
Exhibit C - Page 10
SECTION 4.16. ENVIRONMENTAL MATTERS. Neither Parent nor any of
its Subsidiaries has knowledge of any claim or has received any notice of any
claim, and no proceeding has been instituted of which Parent has notice raising
any claim against Parent or any of its Subsidiaries or any of their respective
real properties now or formerly owned, leased or operated by any of them or
other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as would not reasonably be
expected to result in a Material Adverse Effect on Parent or any of its
Subsidiaries. Except as otherwise disclosed to the Noteholders in writing, (a)
neither Parent nor any of its Subsidiaries has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such as would not
reasonably be expected to result in a Material Adverse Effect on Parent or any
of its Subsidiaries; (b) neither Parent nor any of its Subsidiaries has stored
any Hazardous Materials on real properties now or formerly owned, leased or
operated by any of them and has not disposed of any Hazardous Materials in a
manner contrary to any Environmental Laws in each case in any manner that would
reasonably be expected to result in a Material Adverse Effect on Parent or any
of its Subsidiaries; and (c) all buildings on all real properties now owned,
leased or operated by Parent or any of its Subsidiaries are in compliance with
applicable Environmental Laws, except where failure to comply would not
reasonably be expected to result in a Material Adverse Effect on Parent or any
of its Subsidiaries.
ARTICLE V
INFORMATION AS TO PARENT
SECTION 5.01. FINANCIAL AND BUSINESS INFORMATION. Parent
shall deliver to each of the Noteholders:
(a) Within 45 days after the end of each quarterly fiscal
period in each fiscal year of Parent, copies of (i) a consolidated balance sheet
of Parent and its Subsidiaries as at the end of such quarter, and (ii)
consolidated statements of income, changes in shareholders' equity and cash
flows of Parent and its Subsidiaries, for such quarter and for the portion of
the fiscal year ending with such quarter, setting forth in each case in
comparative form the figures for the corresponding periods in the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a
Senior Financial Officer of Parent as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments.
(b) Within 90 days after the end of each fiscal year of
Parent, copies of (i) a consolidated balance sheet of Parent and its
Subsidiaries, as at the end of such year, and (ii) consolidated statements of
income, changes in shareholders' equity and cash flows of Parent and its
Subsidiaries, for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP, and accompanied by (A) an opinion thereon of independent
certified public accountants of recognized national standing, which opinion
shall state that such financial statements present fairly, in all material
respects, the financial position of the companies being reported upon and their
results of operations and cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable basis for such
opinion in the circumstances, and (B) a certificate of such accountants stating
that they have reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event that then
constitutes a Default or an Event of Default, and, if they are aware that any
such condition or event then exists, specifying the nature and period of the
existence thereof.
(c) Within 20 days after the end of each calendar month,
copies of (i) a consolidated balance sheet of Parent and its Subsidiaries as at
the end of such month, and (ii) consolidated statements of income, changes in
shareholders' equity and cash flows of Parent and its Subsidiaries, for such
month and for the portion of the fiscal year ending with such month, setting
forth in each case in comparative form the figures for the corresponding periods
in the previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP applicable to monthly financial statements generally, and certified by
a Senior Financial Officer of Parent as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments.
(d) Promptly upon their becoming available, one copy of (i)
each financial statement, report, notice or proxy statement sent by Parent or
any Subsidiary to public securities holders generally, and (ii) each regular or
periodic report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all amendments
Exhibit C - Page 11
thereto filed by Parent or any Subsidiary with the Securities and Exchange
Commission and of all press releases and other statements made available
generally by Parent or any Subsidiary to the public concerning developments that
are Material.
(e) Promptly, and in any event within five Business Days after
a Responsible Officer of Parent becoming aware of the existence of any Default
or Event of Default or that any Person has given any notice or taken any action
with respect to a claimed default hereunder or that any Person has given any
notice or taken any action with respect to a claimed default of the type
referred to in SECTION 11.01, a written notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes to take
with respect thereto.
(f) Promptly, and in any event within five Business Days after
a Responsible Officer of Parent becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that
Parent or an ERISA Affiliate proposes to take with respect thereto: (i) with
respect to any Plan, any reportable event, as defined in section 4043(b) of
ERISA and the regulations thereunder, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date hereof; or (ii) the
taking by the PBGC of steps to institute, or the threatening by the PBGC of the
institution of, proceedings under section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan, or the receipt by
Parent or any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the incurrence of
any liability by Parent or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties
or assets of Parent or any ERISA Affiliate pursuant to Title I or IV of ERISA or
such penalty or excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could reasonably be
expected to be Material as to Parent.
(g) Promptly, and in any event within five Business Days of
receipt thereof, copies of any notice to Parent or any Subsidiary from any
Federal or state Governmental Authority relating to any order, ruling, statute
or other law or regulation that could reasonably be expected to have a Material
Adverse Effect;
(h) Promptly, and in any event within five Business Days after
a Responsible Officer of Parent becoming aware thereof, any event which would
reasonably be expected to have a Material Adverse Effect on Parent or any of its
Subsidiaries.
(i) With reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of Parent or any of its Subsidiaries or relating to the
ability of Parent to perform its obligations hereunder and under the Notes as
from time to time may be reasonably requested by any of Noteholder.
SECTION 5.02. OFFICER'S CERTIFICATE. Each set of financial
statements delivered to a holder of Notes pursuant to SECTION 5.01(A), SECTION
5.01(B) or SECTION 5.01(C) shall be accompanied by a certificate of a Senior
Financial Officer of Parent setting forth: (a) the information (including
detailed calculations) required in order to establish whether Parent was in
compliance with the requirements of SECTION 7.03 hereof during the monthly,
quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section, where applicable, the calculations
of the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and (b) a statement that such officer
has reviewed the relevant terms hereof and has made, or caused to be made, under
his or her supervision, a review of the transactions and conditions of Parent
and its Subsidiaries from the beginning of the monthly, quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event of
Default or, if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of Parent or
any Subsidiary to comply with any Environmental Law), specifying the nature and
period of existence thereof and what action Parent shall have taken or proposes
to take with respect thereto.
SECTION 5.03. INSPECTION. Parent shall permit the
representatives of each Noteholder, at the expense of Parent, upon reasonable
prior notice to Parent and during normal business hours, to visit and inspect
any of the offices or properties of Parent or any Subsidiary, to examine all
their respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs, finances
and accounts with their respective officers and independent public accountants
(and by this provision Parent authorizes said accountants to discuss the
affairs, finances and accounts of Parent and its Subsidiaries), all at such
times and as often as may be requested.
Exhibit C - Page 12
ARTICLE VI
AFFIRMATIVE COVENANTS
Parent covenants that so long as any of the Commitments remain
in effect or any of the Notes are outstanding:
SECTION 6.01. COMPLIANCE WITH LAW; CONTRACTS. Parent will, and
will cause each of its Subsidiaries to, comply with all laws, ordinances or
governmental rules or regulations to which each of them is subject, including,
without limitation, Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to the ownership of their respective properties or to
the conduct of their respective businesses, in each case to the extent necessary
to ensure that non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent or any of its Subsidiaries. Parent will, and will cause
each of its Subsidiaries to, comply with, and perform their respective
obligations under, each contract or agreement to which each is a party, unless,
in the good faith judgment of Parent, the failure to so comply or perform would
not reasonably be expected to have a Material Adverse Effect on Parent or any of
its Subsidiaries.
SECTION 6.02. MAINTENANCE OF PROPERTIES. Parent will, and will
cause each of its Subsidiaries to, maintain and keep, or cause to be maintained
and kept, their respective properties in good repair, working order and
condition (other than ordinary wear and tear), so that the business carried on
in connection therewith may be properly conducted at all times.
SECTION 6.03. PAYMENT OF TAXES AND CLAIMS. Parent will, and
will cause each of its Subsidiaries to, file all tax returns required to be
filed in any jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental charges,
or levies imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes and assessments have become due and payable
and before they have become delinquent and all claims for which sums have become
due and payable that have or might become a Lien on properties or assets of
Parent or any of its Subsidiaries, provided that neither Parent nor any of its
Subsidiaries need pay any such tax or assessment or claims if (i) the amount,
applicability or validity thereof is contested by Parent or such Subsidiary on a
timely basis in good faith and in appropriate proceedings, and Parent or such
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of Parent or such Subsidiary or (ii) the nonpayment of all such taxes
and assessments in the aggregate would not reasonably be expected to have a
Material Adverse Effect on Parent or any of its Subsidiaries.
SECTION 6.04. CORPORATE EXISTENCE, ETC. Parent will at all
times preserve and keep in full force and effect its corporate existence. Parent
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries and all rights and franchises of Parent
and its Subsidiaries unless, in the good faith judgment of Parent, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent or
any of its Subsidiaries.
ARTICLE VII
NEGATIVE COVENANTS
Parent covenants that so long as any of the Commitments remain
in effect or any of the Notes are outstanding:
SECTION 7.01. RESTRICTIONS ON INDEBTEDNESS. Parent will not,
and will not permit any of its Subsidiaries to, create, incur, assume, Guaranty
or permit to exist any Indebtedness, except:
(a) the Notes;
(b) the Bridge Shareholder Debt; and
(c) the New Shareholder Debt.
SECTION 7.02. RESTRICTIONS ON LIENS. Parent will not, and will
not permit any of its Subsidiaries to, create, incur, assume, or permit to exist
any Lien with respect to any asset now owned or hereafter acquired, except
Permitted Liens.
Exhibit C - Page 13
SECTION 7.03. FINANCIAL COVENANTS. Parent will not permit its
Current Assets at any time, to be less than the sum of (a) its Current
Liabilities as at such date, MINUS (b) any portion of such Current Liabilities
consisting of amounts owing on the Notes.
SECTION 7.04. RESTRICTED DISBURSEMENTS. Parent will not, and
will not permit any of its Subsidiaries, directly or indirectly, make any
Restricted Disbursements except:
(a) Permitted Investments;
(b) so long as no Default or Event of Default has occurred and
is continuing, Permitted Preferred Stock Dividends; and
(c) Restricted Disbursements by the Company that are permitted
under SECTION 10.04 of the Note Agreement.
SECTION 7.05. MERGER, CONSOLIDATION, ETC. Parent will not, and
will not permit any of its Subsidiaries to, consolidate with or merge with any
other Person or convey, transfer or lease all or substantially all of its assets
in a single transaction or series of transactions to any Person.
SECTION 7.06. RESTRICTIONS ON ASSET SALES. Parent will not,
and will not permit any of its Subsidiaries to, sell, transfer, assign, convey
or otherwise dispose of an interest in any asset now owned or hereafter
acquired, except for the sale of Hydrocarbon production in the ordinary course
of business by the Company.
SECTION 7.07. TRANSACTIONS WITH AFFILIATES. Parent will not,
and will not permit any of its Subsidiaries to, enter into directly or
indirectly any Material transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than Parent or another Subsidiary), except in the ordinary course and
pursuant to the reasonable requirements of Parent's or such Subsidiary's
business and upon fair and reasonable terms no less favorable to Parent or such
Subsidiary than would be obtainable in a comparable arm's-length transaction
with a Person not an Affiliate.
SECTION 7.08. CHANGE IN BUSINESS. Parent will not, and will
not permit any of its Subsidiaries to, directly or indirectly engage to a
material extent in any business other than those in which each such Person is
presently engaged or that are directly related thereto, or discontinue any of
its existing lines of business or substantially alter such Person's method of
doing business.
SECTION 7.09. SHAREHOLDER DEBT. Parent will not amend the
terms of the Shareholder Debt Restructure Documents without the prior written
consent of the Noteholders. The Parent will not, and will not permit any
Subsidiary to, directly or indirectly, make any payment of principal or interest
on the Bridge Shareholder Debt or the New Shareholder Debt, except for Permitted
Shareholder Debt Payments made by Parent; provided, however, that Parent will
not make any such Permitted Shareholder Debt Payments, if a Default or Event of
Default has occurred and is continuing.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. TRANSACTION EXPENSES. Whether or not the
transactions contemplated hereby are consummated, Parent will pay all reasonable
costs and expenses (including reasonable attorneys' fees of a special counsel
and any local or other counsel) incurred by the Noteholders or holder of a Note
in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement or the other
Transaction Documents (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the reasonable costs and expenses
incurred in enforcing or defending (or determining whether or how to enforce or
defend) any rights under this Agreement or the other Transaction Documents or in
responding to any subpoena or other legal process or informal investigative
demand issued in connection with this Agreement or the other Transaction
Documents, or by reason of being a holder of any Note, (b) the reasonable costs
and expenses of negotiation, preparation and execution of this Agreement and the
other Transaction Documents, and (c) the reasonable costs and expenses,
including reasonable financial advisors' fees, incurred in connection with the
insolvency or bankruptcy of Parent or any Subsidiary or in connection with any
proposed or finalized work-out or restructuring
Exhibit C - Page 14
of the transactions contemplated hereby and by the Notes. Parent will pay, and
will save the Noteholders and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses, if any, of brokers and finders
(other than those retained by the Noteholders). The obligations of Parent under
this SECTION 8.01 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement or the other
Transaction Documents, and the termination of this Agreement.
SECTION 8.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the other Transaction Documents, the purchase or
transfer by the Noteholders of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any subsequent holder of
a Note, regardless of any investigation made at any time by or on behalf of the
Noteholders or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of Parent pursuant to
this Agreement shall be deemed representations and warranties of Parent under
this Agreement.
SECTION 8.03. AMENDMENT AND WAIVER. This Agreement may be
amended, and the observance of any term hereof may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Required Holders, except that no amendment or waiver may, without the written
consent of the holder of each Note at the time outstanding affected thereby,
release Parent from its obligations hereunder. Any amendment or waiver consented
to as provided in this SECTION 8.03 applies equally to all holders of Notes and
is binding upon them and upon each future holder of any Note and upon Parent and
the Company without regard to whether such Note has been marked to indicate such
amendment or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant or agreement not expressly amended or waived or impair any
right consequent thereon. No course of dealing between Parent or the Company and
the holder of any Note nor any delay in exercising any rights hereunder or under
any Note shall operate as a waiver of any rights of any holder of such Note.
SECTION 8.04. NOTICES. All notices and communications provided
for hereunder shall be in writing and sent (a) by telecopy if the sender on the
same day sends a confirming copy of such notice by a recognized overnight
delivery service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized overnight
delivery service (with charges prepaid). Any such notice must be sent: (i) if to
a Noteholder, to its address specified for such communications in Schedule A to
the Note Agreement, or at such other address as it shall have specified to
Parent in writing, (ii) if to Parent, to Parent at 1600 Smith Street, Suite
4000, Houston, Texas 77002, Telecopy No.: 713-652-9601, or at such other address
as Parent shall have specified to the holder of each Note in writing. Notices
under this SECTION 8.04 will be deemed given only when actually received.
SECTION 8.05. LIMITATION ON INTEREST. Each provision in this
Agreement and each other Transaction Document is expressly limited so that in no
event whatsoever shall the amount paid, or otherwise agreed to be paid, by
Parent for the use, forbearance or detention of the money to be loaned to the
Company under the Notes or any other Transaction Document or otherwise
(including any sums paid as required by any covenant or obligation contained
herein or in any other Transaction Document which is for the use, forbearance or
detention of such money), exceed that amount of money which would cause the
effective rate of interest thereon to exceed the Highest Lawful Rate, and all
amounts owed under this Agreement and each other Transaction Document shall be
held to be subject to reduction to the effect that such amounts so paid or
agreed to be paid which are for the use, forbearance or detention of money under
this Agreement or such Transaction Document shall in no event exceed that amount
of money which would cause the effective rate of interest thereon to exceed the
Highest Lawful Rate.
SECTION 8.06. SUCCESSORS AND ASSIGNS. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
SECTION 8.07. SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.
SECTION 8.08. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
Exhibit C - Page 15
SECTION 8.09. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
AND THE OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
SECTION 8.10. JURY WAIVER. PARENT, THE COMPANY AND THE
NOTEHOLDERS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.11. CHOICE OF FORUM. PARENT, THE COMPANY AND THE
NOTEHOLDERS AGREE THAT ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE
FEDERAL OR STATE COURTS OF HARRIS COUNTY, TEXAS, OTHER THAN LEGAL PROCEEDINGS
INSTITUTED BY THE NOTEHOLDERS WITH RESPECT TO THEIR RIGHTS AND REMEDIES UNDER
THE SECURITY DOCUMENTS, WHICH PROCEEDINGS MAY BE BROUGHT IN THE FEDERAL OR STATE
COURTS OF HARRIS COUNTY, TEXAS OR THE COURTS OF ANY OTHER JURISDICTION DEEMED
APPROPRIATE BY THE NOTEHOLDERS TO ENFORCE THEIR RIGHTS AND REMEDIES UNDER THE
SECURITY DOCUMENTS.
SECTION 8.12. GOVERNING LAW. This Agreement shall be construed
and enforced in accordance with, and the rights of the parties shall be governed
by, the law of the State of New York excluding choice-of-law principles of the
law of such State that would require the application of the laws of a
jurisdiction other than such State.
IN WITNESS WHEREOF, Parent, the Company and the Noteholders
have caused this Agreement to be executed by their respective representatives
thereunto duly authorized effective as of the date first above written.
TEXOIL, INC.
By: /S/ RUBEN MEDRANO
Name: Ruben Medrano
Title: President
TEXOIL COMPANY
By: /S/ RUBEN MEDRANO
Name: Ruben Medrano
Title: President
Exhibit C - Page 16
RIMCO PARTNERS, L.P.
RIMCO PARTNERS, L.P. II,
RIMCO PARTNERS, L.P. III, AND
RIMCO PARTNERS, L.P. IV
By: RESOURCE INVESTORS
MANAGEMENT COMPANY LIMITED
PARTNERSHIP, their general
partner
By: RIMCO ASSOCIATES, INC.,
its general partner
By: /S/ GARY MILAVEC
Name: Gary Milavec
Title: Vice President
Exhibit C - Page 17
SCHEDULE 3.03
CAPITALIZATION SCHEDULE
AS OF JULY 31, 1996
<TABLE>
<CAPTION>
COMMON
SHARES PROCEEDS
EXPIRATION AFTER TO
NUMBER CLASS DATE CONVERSION TEXOIL
- ------ ----- ---- ---------- ------
<S> <C> <C> <C> <C>
4,058,648(1) Common 4,058,648 -0-
98,423(2) Employee Salary Compensation--'95 Plan 98,423 -0-
29,463(3) Employee Salary Compensation--'96 Plan 29,463 -0-
23,000 Class "A" Preferred 766,667 -0-
750,000 Class "A" Warrants ($3.50) 05-26-99 750,000 $2,625,000
750,000 Class "B" Warrants ($4.50) 05-26-99 750,000 3,375,000
300,000 Underwriter Warrants ($3.88) 05-26-99 300,000 1,162,500
281,384 Options to J. Graves ($.45) 12-31-99 281,384 126,623
281,384 Options to J. Richardson ($.45) 12-31-99 281,384 126,623
20,000 Employee Options ($3.00) RM 20,000 60,000
5,000 Option to Marc Countiss ($3.50) 09-15-00 5,000 17,500
1,100,000 Convertible May 96 Notes ($.80) 1,375,000 -0-
1,100,000 Convertible May 96 Note Warrants 5 years 1,100,000 1,441,000
($1.31) - to be eliminated at Closing.
50,000 Option to Bill Seagle ($1.56) 50,000 78,000
30,000 Option to Ruben Medrano ($1.31) 30,000 39,300
20,000 Option to J. D. Hughes ($1.25) - to be 20,000 25,000
issued upon Closing.
TOTAL FULLY DILUTED 9,915,969 $9,076,546
========= ==========
</TABLE>
- --------
1. Number accurate as of March 31, 1995 (see first quarter 1995 10-QSB)
2. Includes shares issued from April 1995 through February 1996
3. Includes shares to be issued from March 1996 through July 1996
Exhibit C - Page 18
SCHEDULE 4.05
SUBSIDIARIES
NAME JURISDICTION OF INCORPORATION
Texoil Company Tennessee
Texoil de Argentina, S.A. Nevada
Exhibit C - Page 19
SCHEDULE 4.08
LITIGATION
None
Exhibit C - Page 20
EXHIBIT D
STOCK OWNERSHIP AND
REGISTRATION RIGHTS AGREEMENT
AMONG
TEXOIL, INC.,
TEXOIL COMPANY
AND
RIMCO PARTNERS, L.P.,
RIMCO PARTNERS, L.P. II,
RIMCO PARTNERS, L.P. III
AND
RIMCO PARTNERS, L.P. IV
SEPTEMBER 6, 1996
Exhibit D - Page 1
STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT
AMONG
TEXOIL, INC., TEXOIL COMPANY AND
RIMCO PARTNERS, L.P., RIMCO PARTNERS, L.P. II,
RIMCO PARTNERS, L.P. III AND RIMCO PARTNERS, L.P. IV
THIS STOCK OWNERSHIP AND REGISTRATION RIGHTS AGREEMENT dated
as of September 6, 1996, (this "Agreement") among TEXOIL, INC., a Nevada
corporation ("Parent"), TEXOIL Company, a Tennessee corporation and wholly owned
subsidiary of Parent (the "Company"), and RIMCO Partners, L.P., RIMCO Partners,
L.P. II, RIMCO Partners, L.P. III and RIMCO Partners, L.P. IV (collectively, the
"RIMCO Holders," and together with their distributees, successors and assigns,
the "Holders"), is effective for all purposes as of the date specified in
Article III hereof.
W I T N E S S E T H:
WHEREAS, pursuant to the terms and subject to the conditions
of that certain Note Purchase Agreement (the "Note Purchase Agreement") dated as
of even date herewith among Parent, the Company and the RIMCO Holders, the
Company will issue and sell to the RIMCO Holders the Notes (the Tranche A Notes
and Tranche B Notes); and
WHEREAS, the Tranche A Notes are exchangeable according to
their terms and the terms of that certain Guaranty and Exchange Agreement dated
as of even date herewith among Parent, the Company and the RIMCO Holders (the
"Guaranty and Exchange Agreement") for shares of common stock of Parent, par
value $.01 per share (the "Parent Common Stock"); and
WHEREAS, the execution and delivery of this Agreement is a
condition precedent to the closing of the transactions contemplated by the Note
Purchase Agreement;
NOW, THEREFORE, to induce the parties hereto to close the
transactions contemplated by the Note Purchase Agreement (such closing referred
to herein as the "Closing") and in consideration of the aforesaid and of the
mutual representations, warranties and covenants contained herein and in the
Note Purchase Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS; PARENT AND COMPANY REPRESENTATIONS,
WARRANTIES AND COVENANTS
SECTION 1.01. CERTAIN DEFINED TERMS. Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the
Note Purchase Agreement and Annex A attached thereto. For purposes of this
Agreement,
"1933 ACT" means the Securities Act of 1933, as amended.
"1934 ACT" means the Securities and Exchange Act of 1934, as amended.
"AGREEMENT" has the meaning specified in the preamble.
"BLUE SKY FILING" has the meaning specified in SECTION 2.09(A).
"CLOSING" has the meaning specified in the recitals.
Exhibit D - Page 2
"COMMISSION" means the Securities and Exchange Commission.
"COMPANY" has the meaning specified in the preamble.
"DEMAND REGISTRATIONS" has the meaning specified in SECTION 2.01(A).
"GUARANTY AND EXCHANGE AGREEMENT" has the meaning specified in the
recitals.
"HOLDERS" has the meaning specified in the preamble.
"NOTE PURCHASE AGREEMENT" has the meaning specified in the recitals.
"NOTES" means the Tranche A Notes and the Tranche B Notes.
"PARENT" has the meaning specified in the preamble.
"PARENT COMMON STOCK" has the meaning specified in the recitals.
"PERMITTED INTERRUPTION" has the meaning specified in SECTION 2.01(G).
"PIGGYBACK REGISTRATION" has the meaning specified in SECTION 2.02(A).
"REGISTRABLE SECURITIES" means the Shares and the Related Securities.
As to any particular Registrable Securities, once issued such securities shall
cease to be Registrable Securities when (a) a registration statement with
respect to the sale of such securities shall have become effective under the
1933 Act and such securities shall have been disposed of in accordance with the
plan of distribution set forth in such registration statement, (b) such
securities shall have been distributed in accordance with Rule 144 under the
1933 Act or (c) such securities shall have been otherwise transferred, new
certificates therefor not bearing a legend restricting further transfer shall
have been delivered in exchange therefor by Parent and subsequent disposition of
such securities shall not require registration or qualification under the 1933
Act or any similar state law then in force.
"REGISTRATION EXPENSES" has the meaning specified in SECTION 2.07.
"RELATED SECURITIES" means, collectively, other than the Shares, (i)
any and all securities issued or issuable as a result of adjustments made under
the Note Purchase Agreement, and in each case any and all securities otherwise
exchanged therefor or distributed, issued or issuable with respect thereto and
(ii) any and all securities of Parent or any successor thereto or assignee
thereof that are hereafter transferred, distributed, issued or issuable to the
Holders.
"RIMCO HOLDERS" has the meaning specified in the preamble.
"SHAREHOLDER NOTEHOLDERS" means the holders of New Shareholder Debt, as
defined in the Note Purchase Agreement.
"SHARES" means, collectively, shares of Parent Common Stock issued or
issuable upon exchange of the Tranche A Notes and all shares of Parent Common
Stock exchanged therefor or distributed, issued or issuable with respect
thereto.
SECTION 1.02. UNDERTAKING TO FILE REPORTS AND COOPERATE IN RULE 144
TRANSACTIONS. For as long as any Holder shall continue to hold any Registrable
Securities, Parent shall file, on a timely basis, all annual, quarterly and
other reports required to be filed by it under Sections 13 and 15(d) of the 1934
Act and the rules and regulations promulgated by the Commission thereunder, as
amended from time to time during the term of this Agreement. In the event of any
proposed transfer of Registrable Securities other than pursuant to a sale or
transfer registered under the 1933 Act, Parent shall cooperate with each Holder
so as to enable such sales to be made in accordance with applicable laws, rules
and regulations,
Exhibit D - Page 3
the requirements of Parent's transfer agents, and the reasonable requirements of
the broker through which the sales are proposed to be executed, and shall, upon
request and subject to applicable law, furnish unlegended certificates
representing Shares and Related Securities in such numbers and denominations as
any Holder shall reasonably require for delivery pursuant to such sales. The
Holders will have all of the rights set forth in this Agreement to register the
offering of the Registrable Securities notwithstanding any availability of Rule
144 under the 1933 Act with respect to the sale of all or part of the
Registrable Securities.
SECTION 1.03. ELECTION OF DIRECTOR TO BOARD OF DIRECTORS OF PARENT. (a)
Subject to compliance with applicable law, immediately following the issuance of
any of the Notes by the Company, the RIMCO Holders holding not less than a
majority (in then market value) of the then outstanding Notes held by the RIMCO
Holders, or any designee thereof, shall be entitled to designate one person to
be a member of Parent's Board of Directors. Immediately following the issuance
of any of the Notes, Parent shall commence and diligently pursue such action as
is required under its charter and bylaws to increase the size of Parent's Board
of Directors by one and will use its reasonable best efforts, subject to
compliance with applicable law, to elect or cause to be elected to fill the
vacancy so created the person designated by the RIMCO Holders or their designee,
so long as (i) any of the Notes (or any securities exchanged therefor) are
outstanding or (ii) the RIMCO Holders, together with their Affiliates, own an
aggregate of 5% or more of the Parent Common Stock, however acquired (or a then
comparable proportion of the equity securities of Parent entitled to vote for
the election of directors). In the event of any resignation, removal, death or
other termination of the director so designated by the RIMCO Holders or their
designee, or the failure of the stockholders of Parent for any reason to elect
such designee or to reelect such director, the RIMCO Holders holding not less
than a majority (in then market value) of the then outstanding Notes and
Registrable Securities held by the RIMCO Holders, or any designee thereof, shall
be entitled to designate one person to serve on Parent's Board of Directors in
place of such previously designated person, and Parent will use its reasonable
best efforts, subject to compliance with applicable law, to elect or cause to be
elected to the Board of Directors the person so designated by the RIMCO Holders
or their designee. The RIMCO Holders hereby undertake and agree that, not later
than 15 days following written request from Parent, the RIMCO Holders or their
designee shall furnish to Parent's Board of Directors such information with
respect to such director designee as is required to comply with applicable law,
rule or regulation, and with Items 401 and 404 of Regulation S-K or Regulation
S-B or any successor regulation under the 1933 Act, if then applicable to
Parent.
(b) Subject to compliance with applicable law, immediately following
any date on which the aggregate principal of the Notes outstanding shall exceed
$5 million, the RIMCO Holders holding not less than a majority (in then market
value) of the then outstanding Notes and Registrable Securities held by the
RIMCO Holders, or any designee thereof, shall be entitled to designate a total
of two persons to be members of Parent's Board of Directors. Immediately
following the date on which the aggregate principal of the Notes outstanding
shall exceed $5 million, Parent shall commence and diligently pursue such action
as is required under its charter and bylaws to increase the size of Parent's
Board of Directors by one and will use its reasonable best efforts, subject to
compliance with applicable law, to elect or cause to be elected to fill the
vacancy so created one additional person designated by the RIMCO Holders or
their designee, which person shall be in addition to the person previously
designated by the RIMCO Holders or their designee. So long as the aggregate
principal amount of the Notes outstanding shall exceed $2.5 million, the RIMCO
Holders or their designee shall be entitled to the benefits of this Section
1.03(b), which shall be applicable to each of the two directors provided for
herein (a total of two directors). In the event of any resignation, removal,
death or other termination of any director so designated by the RIMCO Holders or
their designee, or the failure of the stockholders of Parent for any reason to
elect such designee or to reelect such director, the RIMCO Holders holding not
less than a majority (in then market value) of the then outstanding Notes and
Registrable Securities held by the RIMCO Holders, or any designee thereof, shall
be entitled to designate one person to serve on Parent's Board of Directors in
place of each such previously designated person, and Parent will use its
reasonable best efforts, subject to compliance with applicable law, to elect or
cause to be elected to the Board of Directors each such person so designated by
the RIMCO Holders or their designee (a total of two directors). The RIMCO
Holders hereby undertake and agree that, not later than 15 days following
written request from Parent, the RIMCO Holders or their designee shall furnish
to Parent's Board of Directors such information with respect to each such
director designee as is required to comply with applicable law, rule or
regulation, and with Items 401 and 404 of Regulation S-K or Regulation S-B or
any successor regulation under the 1933 Act, if then applicable to Parent.
SECTION 1.04. SECTIONS 411 THROUGH 444 OF THE NEVADA GENERAL
CORPORATION LAW. If at any time Parent shall be governed by Sections 411 through
444 of the Nevada General Corporation Law, Parent hereby covenants that it will
use
Exhibit D - Page 4
its reasonable best efforts, subject to compliance with applicable law, to take
all actions necessary under Nevada law, including, without limitation, the
approval by the Board of Directors of Parent of the Transaction Documents and
the consummation of the transactions contemplated thereby, to render the
provisions of Sections 411 through 444 of the Nevada General Corporation Law
inapplicable to the RIMCO Holders and their affiliates and to the transactions
contemplated in the Transaction Documents, including, without limitation, the
acquisition of shares of Parent Common Stock by the RIMCO Holders pursuant to
the transactions contemplated by the Transaction Documents, as may be amended
from time to time.
SECTION 1.05. EXCHANGE LISTING. Parent shall as promptly as practicable
prepare and file an application to list the Registrable Securities on each
exchange or automated market on which comparable securities of Parent are then
traded, including, without limitation, the Boston Stock Exchange (if
applicable), effective as soon as practicable after the issuance of such
Registrable Securities and shall use its reasonable best efforts to cause such
application to be approved as promptly as practicable.
SECTION 1.06. OTHER REGISTRATION RIGHTS. Parent hereby represents and
warrants that there are no existing rights held by any Person to register the
offering of any securities of Parent under the 1933 Act or any successor statute
("registration rights") other than (a) the rights granted in this Agreement, (b)
the registration rights granted to the Shareholder Noteholders under that
certain Stock Ownership and Registration Rights Agreement dated of even date
herewith among Parent and the Shareholder Noteholders and (c) the registration
rights granted under that certain Underwriters' Warrant Agreement dated June 8,
1994 among Parent and Toluca Pacific Securities Corporation, Tamaron
Investments, Inc. and Grant Bettingen, Inc. Other than the existing registration
rights described in the immediately preceding sentence, Parent will not grant
any registration rights in favor of any Person with respect to any of Parent's
securities without the prior written consent of the Holders.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.01. DEMAND REGISTRATIONS. (a) GENERAL. Upon the written
request to Parent of Holders of not less than a majority (in then market value)
of the then outstanding Registrable Securities, including not less than a
majority (in then market value) of the then outstanding Registrable Securities
held by the RIMCO Holders, to Parent that Parent effect the registration under
the 1933 Act, such registration to occur at any time, of all or part of the
Registrable Securities and specifying the intended method of disposition
thereof, Parent will give prompt written notice of such request to all other
Persons, if any, who have contractual rights to request that any of their shares
be piggybacked onto any registration form proposed to be used to register the
Registrable Securities requested by such Holders, and thereupon Parent will,
subject to the provisions of this Agreement, use its reasonable best efforts to
include in the registration under the 1933 Act all shares of Parent Common Stock
that persons having contractual registration rights with respect to such shares
have requested in writing that Parent register, PROVIDED such request is given
to Parent within 20 days after the receipt of the aforesaid written notice by
Parent (specifying the intended method of disposition of such Parent Common
Stock), all to the extent requisite to permit the intended disposition of the
Registrable Securities and shares of Parent Common Stock to be so registered.
All registrations requested pursuant to this SECTION 2.01(A) are referred to
herein as "Demand Registrations."
(b) NUMBER OF DEMAND REGISTRATIONS. Subject to the provisions of
SECTION 2.01(A), the Holders shall be entitled to request one Demand
Registration; provided, however, that in the event any Tranche A Notes are
exchanged for Parent Common Stock pursuant to the provisions of Section 3.01(b)
of the Guaranty and Exchange Agreement, the Holders shall be entitled to one
additional Demand Registration with respect to any Tranche A Notes that are
still outstanding following such exchange.
(c) REGISTRATION OF OTHER SECURITIES. Whenever Parent shall effect a
Demand Registration of Parent Common Stock pursuant to SECTION 2.01(A) in
connection with an underwritten offering by the Holders, no securities other
than shares of Parent Common Stock shall be included among the securities
covered by such registration unless (i) the managing underwriter of such
offering shall have advised Parent in writing that the inclusion of such other
securities would not
Exhibit D - Page 5
adversely affect such offering or (ii) the Holders of Registrable Securities
participating in such Demand Registration shall have consented in writing to the
inclusion of such other securities.
(d) REGISTRATION STATEMENT FORM. Demand Registrations shall be on such
appropriate registration form of the Commission (excluding Form S-8 or Form S-4
(or any successor form)) (i) as shall be selected by Parent and shall be
reasonably acceptable to the Holders and (ii) as shall permit the disposition of
such Registrable Securities in accordance with the intended method or methods of
disposition specified in the Holders' request for such registration, including,
without limitation, a "shelf offering" or disposition pursuant to Rule 415 under
the 1933 Act. Parent and the Holders agree to include in any such registration
statement all information and exhibits that, in the opinion of counsel to the
Holders or counsel to Parent, is required to be included therein.
(e) EFFECTIVE REGISTRATION STATEMENT. A registration requested pursuant
to SECTION 2.01(A) shall not be deemed to have been effected and will NOT be
considered one of the Demand Registrations which may be requested pursuant to
this Agreement if (i) a registration statement with respect thereto has not
become effective or if the request for the Demand Registration is withdrawn
prior to effectiveness or such registration is interfered with by any stop
order, injunction or other order or requirement of the Commission or other
governmental agency or court for any reason and has not thereafter become
effective, (ii) after it has become effective, it does not remain effective for
a period of at least 120 days or, in the case of a "shelf" registration or
registration pursuant to Rule 415 under the 1933 Act, for a period of at least
two years (unless the Registrable Securities registered thereunder have been
sold or disposed of prior to the expiration of such 120-day period or such
two-year period, as the case may be), (iii) the conditions to closing specified
in any underwriting agreement entered into in connection with such registration
are not satisfied or waived other than by reason of the failure or refusal of
the Holders to satisfy or perform a condition to such closing or (iv) the
Holders are not able to register and sell all of the Registrable Securities
requested to be included in such Demand Registration, but only if such
registration statement is for a "firm commitment underwriting" rather than for
an "at the market sale" by the Holders. In any event, Parent shall pay all
Registration Expenses in connection with any such registration initiated but not
so effected.
(f) PRIORITY ON DEMAND REGISTRATIONS. In the event that the managing
underwriters of a requested Demand Registration advise Parent in writing that in
their opinion the number of shares of Registrable Securities proposed to be
included in any such registration exceeds the number of securities that can be
sold in such offering, Parent shall include in such registration only the number
of shares of Registrable Securities that in the opinion of such underwriters can
be sold. If the number of Registrable Securities requested to be sold in a
Demand Registration exceeds the number of shares of Registrable Securities that
can be sold, Parent shall include in such Demand Registration (i) FIRST, the
Registrable Securities requested to be included therein by the Holders, and (ii)
SECOND, other securities requested to be included in such registration.
(g) RESTRICTIONS ON DEMAND REGISTRATIONS. Parent shall not be obligated
to effect any Demand Registration within 180 days after the effective date of a
previous Demand Registration or a previous registration under which any Holder
exercised piggyback rights pursuant to SECTION 2.02 hereof. Parent may postpone
(such postponement referred to herein as a "Permitted Interruption") for a
reasonable period of time (not to exceed 90 days, which may not thereafter be
extended without approval by the Holders participating in such Demand
Registration, which approval will not be unreasonably withheld) the filing or
the effectiveness of a registration statement for a Demand Registration if, at
the time it receives a request for such registration (i) Parent is engaged in
any active program for repurchase of Parent Common Stock and furnishes to the
Holders an Officer's Certificate to that effect, (ii) Parent is conducting or
about to conduct an offering of Parent Common Stock or other securities and
Parent is advised by the investment banker engaged by Parent to conduct the
offering that such offering would be affected adversely by the registration so
demanded and Parent furnishes to the Holders an Officer's Certificate to that
effect, or (iii) the board of directors of Parent shall determine in good faith
that such offering will interfere with a pending or contemplated financing,
merger, acquisition, business combination, sale of assets, recapitalization or
other similar corporate action of Parent and Parent furnishes to the Holders an
Officer's Certificate to that effect. After such Permitted Interruption, Parent
shall effect such registration as promptly as practicable without further
request from the Holders unless such request has been withdrawn.
(h) SELECTION OF UNDERWRITERS. The Holders shall have the right to
select such investment bankers and managers as shall be reasonably acceptable to
Parent to administer the offering of Registrable Securities for which a Demand
Exhibit D - Page 6
Registration is requested. The Holders shall, in their sole discretion,
negotiate the terms of the underwriters' fees and expenses, the underwriting
discount and commission and the transfer taxes.
(i) PREEMPTION OF DEMAND REGISTRATION. Notwithstanding anything to the
contrary contained herein, if at any time a Demand Registration has been
requested pursuant to SECTION 2.01(A), Parent may elect to effect an
underwritten primary registration on behalf of Parent if Parent's board of
directors believes that such primary registration would be in the best interests
of Parent or if the managing underwriter for the requested Demand Registration
advises Parent in writing that in their opinion in order to sell the Registrable
Securities subject to such Demand Registration Parent should include its own
securities. Promptly after receiving a request for a Demand Registration, Parent
shall notify the members of its board of directors (and the board of directors
shall consider the issue within 30 days after receiving such request), and
Parent shall meet with the managing underwriter and shall decide whether or not
to effect an underwritten primary registration on behalf of Parent, and failure
to convene such a meeting and make such determination within such 30-day period
shall constitute a waiver by Parent of its right to preempt a Demand
Registration under this SECTION 2.01(I). If Parent elects to effect a primary
registration after receiving a request to effect a Demand Registration, Parent
shall give prompt written notice (and in any event within 60 days after
receiving a request for a Demand Registration) to each Holder requesting such
Demand Registration of Parent's intention to effect such a primary registration
and shall afford such Holder or Holders rights to Piggyback Registrations
contained in SECTION 2.02 hereof. If Parent elects to effect a primary
registration after receiving a request to effect a Demand Registration, such
registration shall not count as one of the Demand Registrations of the Holders
permitted under SECTION 2.01(B) hereof, unless all Registrable Securities
requested to be included in the Demand Registration are included in such primary
registration.
SECTION 2.02. PIGGYBACK REGISTRATIONS. (a) GENERAL. Whenever Parent
proposes to register any shares of Parent Common Stock or other equity
securities under the 1933 Act (other than registrations solely for shares to be
issued in connection with any employee benefit plan or a merger, consolidation
or other business combination registered on Form S-4 (or any successor form
thereto)) and the registration form to be used may be used for the registration
of Shares or Related Securities, as the case may be (a "Piggyback
Registration"), Parent shall give prompt written notice (in any event within 10
business days after its receipt of notice of any exercise of other registration
rights) to each Holder of its intention to effect such a registration and shall
use its reasonable best efforts to include in such registration all of the
Registrable Securities with respect to which Parent receives from any Holder a
written request for inclusion therein within 20 days after the receipt by the
Holders of Parent's notice (five business days if Parent gives telephonic notice
to the Holders, with written confirmation to follow immediately thereafter,
stating that (i) such registration will be on Form S-3 (or any comparable or
successor form or comparable form then applicable to small business issuers) and
(ii) such shorter period of time is required because of a planned filing date),
which request shall specify the number of Registrable Securities requested to be
included in such registration by such Holder. If Parent elects, prior to
effectiveness, not to proceed with a primary registration of Parent Common Stock
or other equity securities, it shall not be obligated to register any
Registrable Securities pursuant to such registration unless such primary
registration was initiated as provided in SECTION 2.01(I) after Parent received
a request for Demand Registration.
(b) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of Parent and the managing
underwriter of such offering advises Parent in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can reasonably be sold in such offering, then Parent shall include
in such registration (i) FIRST, the securities that Parent proposes to sell,
(ii) SECOND, the Registrable Securities and other securities requested to be
included therein by one or more Holders or Shareholder Noteholders, on a PRO
RATA basis according to the number of securities originally requested to be
included by each Holder and Shareholder Noteholder and (iii) THIRD, securities
requested to be included therein by any other persons having registration rights
with respect to securities of Parent. If the managing underwriter of such
offering subsequently advises Parent in writing that the number of securities
that can be sold exceeds the number of securities included in the offering,
Parent shall include in the registration (i) FIRST, the securities that Parent
proposes to sell, (ii) SECOND, such additional securities that one or more
Holders or Shareholder Noteholders had originally requested be included in the
registration, on a PRO RATA basis according to the number of securities
originally requested to be included by each Holder and Shareholder Noteholder
and (iii) THIRD, securities requested to be included therein by any other
persons having registration rights with respect to securities of Parent.
Exhibit D - Page 7
(c) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
an underwritten secondary registration on behalf of holders of Parent's
securities other than the Holders and the managing underwriter of such offering
advises Parent in writing that in their opinion the number of securities
requested to be included in such registration exceeds the number that can
reasonably be sold in such offering, then Parent shall include in such
registration (i) FIRST, if such registration is being made on behalf of other
stockholders of Parent exercising demand registration rights, then the
securities so requested to be included therein in accordance with such demand
registration rights, (ii) SECOND, the Registrable Securities and other
securities requested to be included in such registration by one or more Holders
or Shareholder Noteholders on a PRO RATA basis according to the number of
securities originally requested to be included by each Holder and Shareholder
Noteholder, and (iii) THIRD, securities requested to be included therein by any
other persons having registration rights with respect to securities of Parent.
If the managing underwriter of such offering subsequently advises Parent in
writing that the number of securities that can be sold exceeds the number of
securities included in the offering, Parent shall include in the registration
(i) FIRST, the securities proposed to be sold on behalf of the other
stockholders of Parent exercising demand registration rights, (ii) SECOND, such
additional securities that one or more Holders or Shareholder Noteholders had
originally requested be included in the registration, on a PRO RATA basis
according to the number of securities originally requested to be included by
each Holder and Shareholder Noteholder and (iii) THIRD, securities requested to
be included therein by any other persons having registration rights with respect
to securities of Parent.
(d) OTHER REGISTRATIONS. If (i) Parent has previously filed a
registration statement with respect to any of the Registrable Securities
pursuant to SECTION 2.01(A) OR 2.02(A) and (ii) such previous registration has
not been withdrawn or abandoned, Parent shall not file or cause to be effective
any other registration of any of its equity securities or securities convertible
or exchangeable into or exercisable for its equity securities under the 1933 Act
(except on Form S-8 or Form S-4 or any successor form), whether on its own
behalf or at the request of any holder or holders of such securities, until a
period of at least 180 days has elapsed from the effective date of such previous
registration (and, during the period of any "shelf offering" or offering
pursuant to Rule 415 under the 1933 Act, during such time as any Holder is
engaged in selling efforts pursuant thereto, except with the prior written
consent of the Holders named in the prospectus for such "shelf offering").
(e) PIGGYBACK NOT A DEMAND REGISTRATION. Should any Holder's
participation in a registration be pursuant to a Piggyback Registration in
connection with (i) an underwritten primary registration on behalf of Parent as
described in SECTION 2.01(I) OR 2.02(B), or (ii) an underwritten secondary
registration on behalf of holders of Parent's securities other than the Holders
as described in SECTION 2.02(C), then such participation by any Holder shall not
constitute a Demand Registration for purposes of determining the number of
Demand Registrations the Holders are entitled to pursuant to SECTION 2.01(B).
SECTION 2.03. HOLDBACK AGREEMENTS. (a) GENERAL. Each Holder hereby
agrees not to effect any public sale or distribution of equity securities of
Parent, or any securities convertible into or exchangeable or exercisable for
such securities, including, without limitation, sales pursuant to Rule 144 under
the 1933 Act (or any similar rule then in effect), during the 10 days prior to
and the 90 days beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration)
unless the underwriters managing the registered public offering otherwise agree.
(b) AGREEMENT BY PARENT. Parent agrees not to effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 10 days prior to and
during the 90 days beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration in
accordance with the provisions of this Agreement) unless the underwriters
managing the registered public offering otherwise agree.
(c) REGISTRATION PROCEDURES. Whenever any Holder requests registration
pursuant to this Agreement, Parent shall use its reasonable best efforts to
effect the registration of Registrable Securities for which registration is
requested in accordance with the intended method of disposition thereof, and
pursuant thereto Parent shall as expeditiously as possible:
Exhibit D - Page 8
(i) prepare and file with the Commission a registration statement with
respect to such securities and use its reasonable best efforts to cause
such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, Parent will furnish to the counsel selected by the
Holders copies of all documents proposed to be filed, which documents
will be subject to the review of such counsel);
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith and prepare and file any related registration
statement pursuant to Rule 462 under the 1933 Act, in each case as
necessary to keep such registration statement or registration
statements effective for a period of not less than 90 days after such
registration statement is declared effective, provided that Parent
shall have no obligation pursuant to this Agreement to maintain the
effectiveness of such registration statement after the sale of the
securities registered thereunder, and shall comply with the provisions
of the 1933 Act with respect to the disposition of all securities owned
by each Holder that are covered by such registration statement during
such period in accordance with the intended methods of disposition by
such Holder;
(iii) furnish to the Holders such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as any Holder may reasonably
request in order to facilitate the disposition of the Registrable
Securities owned by such Holder;
(iv) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or Blue Sky Laws of
such jurisdictions as any Holder requests and do any and all other acts
and things that may be necessary or advisable to enable each Holder to
consummate the disposition in such jurisdictions of the Registrable
Securities (provided that Parent 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 sub-clause (iv), (B)
subject itself to taxation in any such jurisdiction or (c) consent to
general service of process in such jurisdiction);
(v) cause all such shares of Registrable Securities to be listed on
each securities exchange or qualified for trading on each market on
which securities issued by Parent that are of the same class as the
Registrable Securities are then listed or traded;
(vi) provide a transfer agent and registrar for all such Registrable
Securities no later than the effective date of such registration
statement;
(vii) obtain a "cold comfort" letter from Parent's independent public
accountants in customary form, covering such matters of the type
customarily covered by "cold comfort" letters delivered to
underwriters, and covering such other matters as any Holder may
reasonably request; and obtain an opinion of counsel for Parent in
customary form, covering such matters of the type customarily covered
in opinions of legal counsel delivered to underwriters, and covering
such other matters as any Holder may reasonably request;
(viii) if underwriters are engaged in connection with any registration
referred to in this Agreement, Parent shall provide customary
indemnification, representations, covenants, opinions, and other
assurances to the underwriters, in each case in form and substance
reasonably satisfactory to such underwriter;
(ix) notify each Holder and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in
writing, (A) when a prospectus or any prospectus supplement or
post-effective amendment (or related registration statement filed
pursuant to Rule 462 under the 1933 Act) has been filed, and, with
respect to a registration statement or any post-effective amendment,
when the same has become effective, (B) of any request by the
Commission for amendments or supplements to a registration statement or
related prospectus or for additional information, (C) of the issuance
by the Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceedings for that
purpose, (D) of the receipt by Parent of any notification with respect
to the suspension of the qualification of any of the registrable
securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (E) of the happening of
any event
Exhibit D - Page 9
that requires the making of any changes in a registration statement or
related prospectus so that such documents 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 (F) of Parent's reasonable determination
that a post-effective amendment to a registration statement would be
required;
(x) notify each Holder at any time when a prospectus relating thereto
is required to be delivered under the 1933 Act, of the occurrence of
any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not
misleading, and, at the request of any Holder, Parent shall prepare a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such shares such amended or supplemented
prospectus shall not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not
misleading;
(xi) use its reasonable best efforts to obtain as soon as reasonably
practicable the withdrawal of any order suspending the effectiveness of
a registration statement, or the lifting of any suspension of the
qualification of any of the Registrable Securities for sale in any
jurisdiction;
(xii) if requested by the managing underwriters or any Holder,
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter and the Holders agree should be
included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to
the number of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and with
respect to any other terms of the underwritten (or best efforts
underwritten) offering of the Registrable Securities to be sold in such
offering; make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
and supplement or make amendments to any registration statement if
requested by any Holder or any underwriter of such securities;
(xiii) furnish to each Holder and each managing underwriter, without
charge, such signed copies of the registration statement or statements
and any post-effective amendment thereto, including financial
statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference)
as any Holder or managing underwriter may reasonably request;
(xiv) cooperate with reasonable requests of the Holders and the
managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates representing Shares or Related Securities to
be sold and not bearing any restrictive legends unless required by
applicable law; and enable such certificates to be in such
denominations and registered in such names as the managing underwriter
may request at least two business days prior to any sale of Registrable
Securities to the underwriters;
(xv) in the case of an underwritten offering, enter into such customary
agreements (including underwriting agreements in customary form) and
take all such other actions as any Holder or underwriter reasonably
requests in order to expedite or facilitate the disposition of such
Registrable Securities; and
(xvi) make available for inspection by any Holder, any underwriter
participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any
such Holder or underwriter, all financial and other records, pertinent
corporate documents and properties of Parent, and cause Parent's
officers, directors, employees and independent accountants to supply
all information reasonably requested by any such Holder, underwriter,
attorney, accountant or agent in connection with such registration
statement.
SECTION 2.04. COMPANY REPORTS. Parent shall file all reports required
to be filed by it under the 1933 Act and the 1934 Act and the rules and
regulations promulgated by the Commission thereunder, and take such further
reasonable action as may be necessary or appropriate for Parent to use Form S-2
or S-3 (or any similar registration form then applicable to small business
issuers or hereafter adopted by the Commission) to register the Registrable
Securities for sale thereon. Upon request, Parent shall deliver to the Holders a
written statement as to whether it has complied with such requirements.
Exhibit D - Page 10
SECTION 2.05. INFORMATION TO BE FURNISHED BY THE HOLDERS. In connection
with any registration of shares of Registrable Securities hereunder, Parent may
require the Holders to furnish Parent with such information regarding the
Holders and the distribution of such shares as Parent may from time to time
reasonably request in writing in order to comply with the 1933 Act. Each Holder
agrees to notify Parent as promptly as practicable of any inaccuracy or change
in information previously furnished to Parent or of the occurrence of any event
in either case as a result of which any prospectus relating to such registration
contains untrue statements of a material fact regarding the Holders or the
distribution of such shares or omits to state any material fact regarding the
Holders or the distribution of such shares required to be stated therein or
necessary to make the statement therein not misleading in light of the
circumstances under which such statements were made, and to promptly furnish to
Parent any additional information required to correct and update any previously
furnished information or required such that such prospectus shall not contain,
with respect to the Holders or the distribution of such shares, an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which such statements are made.
SECTION 2.06. SUSPENSION OF OFFERING PENDING PROSPECTUS SUPPLEMENT OR
AMENDMENT. Each Holder agrees that, upon receipt of any notice from Parent of
the occurrence of any event of the kind described in SECTION 2.03(C)(IX)(B),
(C), (D), (E) OR (F) hereof, such Holder will forthwith discontinue disposition
of the Registrable Securities covered by such registration statement or
prospectus until such holder's receipt of the copies of the supplemented or
amended prospectus relating to such registration statement or prospectus, or
until it is advised in writing by Parent that the use of the applicable
prospectus may be resumed, and has received copies of any additional or
supplemental filings which are incorporated by reference in such prospectus,
and, if so directed by Parent, such Holder will deliver to Parent all copies,
other than permanent file copies then in such Holder's possession, of the
prospectus covering the Registrable Securities current at the time of receipt of
such notice.
SECTION 2.07. REGISTRATION EXPENSES. (a) GENERAL. All expenses incident
to Parent's performance and execution of Demand Registrations or Piggyback
Registrations, and Parent's performance of or compliance with this Agreement,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or Blue Sky Laws, expenses and fees for
listing the securities on the appropriate securities exchanges or qualifying
such securities for trading in the appropriate securities markets, costs of
liability insurance, all internal expenses, the expense of any annual audit or
quarterly review, printing expenses, messenger and delivery expenses, fees and
disbursements of counsel for Parent and all independent certified public
accountants (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), and fees and costs of
underwriters (excluding discounts and commissions and fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
relating to the distribution of the Registrable Securities) and other Persons
(all such expenses being herein called "Registration Expenses"), shall be borne
by Parent.
(b) REIMBURSEMENT FOR COUNSEL FEES. In connection with each
Demand Registration and Piggyback Registration, Parent shall reimburse the
Holders for the reasonable fees and disbursements of one law firm chosen by
Holders of a majority (in then market value) of the then outstanding Registrable
Securities.
(c) PAYMENT OF EXPENSES BY THE HOLDERS. The Holders shall pay
the underwriters' discount and commissions and the commissions and fees, if any,
payable in respect of selling brokers, dealer managers or similar securities
industry professionals, and transfer taxes allocable to the registration of the
Holders' securities so included in any Demand Registration or Piggyback
Registration pursuant to this Agreement.
SECTION 2.08. UNDERWRITTEN OFFERINGS. (a) UNDERWRITING AGREEMENT. In
any underwritten offering by one or more Holders pursuant to a registration
requested under SECTION 2.01(A) OR 2.02(A), Parent shall enter into an
underwriting agreement which shall be reasonably satisfactory in form and
substance to Parent, such Holder or Holders and the underwriters and which shall
contain representations, warranties and agreements (including indemnification
agreements to the effect and consistent with that provided in SECTION 2.09
hereof) as are customarily included by an issuer in underwriting agreements with
respect to primary distributions.
Exhibit D - Page 11
(b) CONDITION TO PARTICIPATION AND QUALIFICATIONS TO OBLIGATIONS UNDER
REGISTRATION COVENANTS. The obligations of Parent to use its reasonable best
efforts to cause the Registrable Securities to be registered under the 1933 Act
are subject to each of the conditions that no Holder may participate in any
underwritten offering hereunder unless such Holder (a) agrees to sell such
Registrable Securities on the basis provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably and customarily required
under the terms of such underwriting arrangements.
SECTION 2.09. INDEMNIFICATION. (a) BY PARENT AND THE COMPANY. In the
event of any registration of any Registrable Securities under the 1933 Act,
Parent and the Company will, and hereby do, jointly and severally, indemnify and
hold harmless, to the fullest extent permitted by law, each Holder, its
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such securities and each other Person, if any, who
controls such Holder or any such underwriter within the meaning of the 1933 Act,
against any and all losses, claims, damages, liabilities and expenses, joint or
several, (or actions or proceedings, whether commenced or threatened, in respect
thereof) to which they or any of them may become subject under the 1933 Act or
any other statute or common law, including any amount paid in settlement of any
litigation, commenced or threatened, and to reimburse them for any legal or
other expenses incurred by them in connection with investigating any claims and
defending any actions, insofar as any such losses, claims, damages, liabilities,
expenses or actions arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the registration
statement relating to the sale of such securities or any post-effective
amendment thereto or any related registration statement filed pursuant to Rule
462 or similar rule under the 1933 Act or in any filing made in connection with
the qualification of the offering under Blue Sky or other securities laws or
jurisdictions in which the Registrable Securities are offered ("Blue Sky
Filing"), or the omission or alleged omission to state therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading or (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, if used
prior to the effective date of such registration statement (unless such
statement is corrected in the final prospectus and Parent has previously
furnished copies thereof to each Holder and the underwriters), or contained in
the final prospectus (as amended or supplemented if Parent shall have filed with
the Commission, and furnished to each Holder and the underwriters of such
offering copies thereof, prior to the written confirmation of any sale to the
person asserting liability, any amendment thereof or supplement thereto) if used
within the period during which Parent is required to keep the registration
statement to which such prospectus relates current, or the omission or alleged
omission to state therein (if so used) a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the indemnification agreement
contained herein shall not (i) apply to such losses, claims, damages,
liabilities, expenses or actions arising out of, or based upon, any such untrue
statement or alleged untrue statement, or any such omission or alleged omission,
if such statement or omission was made in reliance upon and in conformity with
written information furnished to Parent by a Holder or such underwriter
expressly for use in connection with preparation of the registration statement,
any preliminary prospectus or final prospectus contained in the registration
statement, any such amendment or supplement thereto or any Blue Sky Filing or
(ii) inure to the benefit of any underwriter or any person controlling such
underwriter, to the extent that any such loss, claim, damage, liability (or
action or proceeding in respect thereof) or expense arises out of such person's
failure to send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Holder or any such director, officer or controlling person and
shall survive the transfer of such securities by such Holder.
(b) BY THE HOLDERS. Parent may require, as a condition to including any
Registrable Securities in any registration statement filed pursuant to SECTION
2.01 OR 2.02, that Parent shall have received an undertaking satisfactory to it
from the Holders to indemnify and hold harmless (in the same manner and to the
same extent as set forth in SECTION 2.09(A)) Parent, each director of Parent,
each officer of Parent and each other person, if any, who controls Parent within
the meaning of the 1933 Act, with respect to any untrue statement or alleged
untrue statement in, or omission or alleged omission from, such registration
statement, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, if such statement or omission was made in
reliance upon and in conformity with written
Exhibit D - Page 12
information furnished to Parent by a Holder expressly for use in the preparation
of such registration statement, preliminary prospectus, final prospectus,
amendment or supplement. Such indemnity shall remain in full force and effect,
regardless of any investigation made by or on behalf of Parent or any such
director, officer or controlling person and shall survive the transfer of such
securities by such Holder. In no event shall any indemnity paid by any Holder to
Parent pursuant to this SECTION 2.09(B), or otherwise, exceed the proceeds
received by such Holder in such offering.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party of notice of the commencement of any action or proceeding involving a
claim referred to in SECTION 2.09(A) OR 2.09(B), such indemnified party will, if
a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action, PROVIDED that
the failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under SECTION 2.09(A) OR
2.09(B), as the case may be. In case any such action is brought against an
indemnified party, the indemnifying party shall be entitled to participate in
and, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof other than reasonable costs of
investigation. In the event that the indemnifying party advises an indemnified
party that it will contest a claim for indemnification hereunder, or fails,
within 30 days of receipt of any indemnification notice to notify, in writing,
such person of its election to defend, settle or compromise, at its sole cost
and expense, any action, proceeding or claim (or discontinues its defense at any
time after it commences such defense), then the indemnified party may, at its
option, defend, settle or otherwise compromise or pay such action or claim. In
any event, unless and until the indemnifying party elects in writing to assume
and does so assume the defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party which
relates to such action or claim. The indemnifying party shall keep the
indemnified party fully apprised at all times as to the status of the defense or
any settlement negotiations with respect thereto. If the indemnifying party
elects to defend any such action or claim, then the indemnified party shall be
entitled to participate in such defense with counsel of its choice at its sole
cost and expense. If the indemnifying party does not assume such defense, the
indemnified party shall keep the indemnifying party apprised at all times as to
the status of the defense; PROVIDED, HOWEVER, that the failure to keep the
indemnifying party so informed shall not affect the obligations of the
indemnifying party hereunder. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its written
consent; PROVIDED, HOWEVER, that the indemnifying party shall not unreasonably
withhold, delay or condition its consent. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in or pursuant to
SECTION 2.09(A) OR 2.09(B) is due in accordance with the terms thereof, but is
held by a court to be unavailable or unenforceable in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified person as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses as well as any other relevant equitable considerations.
The relative fault of the indemnifying party on the one hand and of the
indemnified person on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party, by such party's
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement, or omission. In no event shall the liability of any
Holder be greater in amount than the amount of proceeds received by such Holder
upon such sale.
Exhibit D - Page 13
ARTICLE III
EFFECTIVE TIME AND TERM OF THIS AGREEMENT
SECTION 3.01. EFFECTIVE TIME AND TERM OF THIS AGREEMENT. This Agreement
will be effective for all purposes as of the Closing and will continue in full
force and effect until the date that no Holder owns any of the Registrable
Securities.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
SECTION 4.02. AMENDMENTS. This Agreement contains the entire
understanding of the parties with respect to the Registrable Securities, and may
be amended only by an agreement in writing signed by (i) Parent, (ii) the
Company and (iii) the Holders of not less than a majority (in then market value)
of the then outstanding Registrable Securities, including not less than a
majority (in then market value) of the then outstanding Registrable Securities
held by the RIMCO Holders, PROVIDED, HOWEVER, that in no event shall any
amendment impose any additional material obligations on any Holder without such
Holder's written consent.
SECTION 4.03. DESCRIPTIVE HEADINGS. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
SECTION 4.04. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
SECTION 4.05. NOTICES. All notices and communications provided for
hereunder shall be in writing and sent (a) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid) or (ii) by registered or certified mail with return
receipt requested (postage prepaid) or (iii) by a recognized overnight delivery
service (with charges prepaid).
(i) if to a RIMCO Holder, at its addresses set forth below, or such
other address as it shall have specified to Parent in writing,
(ii) if to any other Holder, at such address as specified to Parent in
writing in the notice provided in SECTION 4.08(B), or such other
address as such Holder shall have subsequently specified to Parent in
writing, and
(iii) if to the Company or Parent, 1600 Smith Street, Suite 4000,
Houston, Texas 77002, Telecopy No.: 713- 652-9601, or such other
address as it shall have specified to the Holders in writing.
Notices given under this SECTION 4.05 shall be deemed given only when actually
received.
SECTION 4.06. GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of New York, excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State.
SECTION 4.07. SURVIVAL. The representations and warranties made by the
Company and Parent herein shall survive the execution and delivery of the
Transaction Documents and the purchase and transfer by the Holders of any of the
Registrable Securities, regardless of any investigation made at any time by or
on behalf of the RIMCO Holders or any other
Exhibit D - Page 14
Holder. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company or Parent pursuant to this Agreement
shall be deemed to be representations and warranties of the Company and Parent
under this Agreement.
SECTION 4.08. SUCCESSORS AND ASSIGNS. (a) Subject to the provisions of
SECTION 4.08(B), all covenants and other agreements contained in this Agreement
by or on behalf of any of the parties hereto bind and inure to the benefit of
their respective successors and assigns (including, without limitation, any
subsequent holder of a Note or any Registrable Securities), whether so expressed
or not.
(b) The Registrable Securities and rights of any Holder under this
Agreement with respect to any Registrable Securities may be assigned to any
person who acquires Registrable Securities from a Holder, except that any Person
who acquires such Registrable Securities (x) pursuant to a public offering
registered under the 1933 Act or (y) pursuant to a transfer made in accordance
with Rule 144 under the 1933 Act may not be assigned rights hereunder with
respect to such Registrable Securities. Notwithstanding the foregoing, rights to
cause a Demand Registration under SECTION 2.01(A) may only be assigned if such
rights are expressly assigned in writing from a Holder. Any assignment of
registration rights pursuant to this SECTION 4.08(B) shall be effective upon
receipt by Parent of written notice from such assigning Holder (i) stating the
name and address of any assignee, (ii) describing the manner in which the
assignee acquired the Registrable Securities from such Holder and (iii)
identifying the number of Registrable Securities with respect to which the
rights under this Agreement are being assigned.
SECTION 4.09. ACTIONS BY HOLDERS OF MAJORITY OF REGISTRABLE SECURITIES.
Each of the parties hereto agrees, in connection with the taking of any action
permitted to be taken hereunder by the Holders or RIMCO Holders (as the case may
be), that the Holders or RIMCO Holders (as the case may be) holding a majority
(in then market value) of the then outstanding Registrable Securities are
entitled to take such action.
IN WITNESS WHEREOF, the Company, Parent and the RIMCO Holders have
caused this Agreement to be executed by their respective representatives
thereunto duly authorized, effective as of the date first above written.
TEXOIL, INC.
By: /S/ RUBEN MEDRANO
Name: Ruben Medrano
Title: President
TEXOIL COMPANY
By: /S/ RUBEN MEDRANO
Name: Ruben Medrano
Title: President
RIMCO PARTNERS, L.P.
RIMCO PARTNERS, L.P. II
RIMCO PARTNERS, L.P. III
RIMCO PARTNERS, L.P. III
By: RESOURCES INVESTORS MANAGEMENT
COMPANY LIMITED PARTNERSHIP,
their general partner
By: RIMCO ASSOCIATES, INC., its general partner
Exhibit D - Page 15
By: /S/ GARY MILAVEC
Name: Gary Milavec
Title: Vice President
Addresses for Notices:
22 Waterville Road
Avon, Connecticut 06001
Telecopy No.: 860-678-9382
600 Travis Street -Suite 6875
Houston, Texas 77002
Telecopy No.: 713-247-0730
Exhibit D - Page 16
EXHIBIT E
MODEL POWER OF ATTORNEY
For Executing Schedules 13D and 13G
Know all by these presents, that the undersigned hereby constitutes and
appoints each of Roy V. Hood and David R. Whitney, signing single, his/her true
and lawful attorney-in-fact to:
(1) execute for and on behalf of the undersigned Schedules 13D and 13G
(and any amendment thereto) in accordance with Section 13 of the
Securities Exchange Act of 1934 and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned
which may be necessary or desirable to complete the execution of any
such Schedules 13D and 13G and the timely filing of such form with
the United States Securities and Exchange Commission and any other
authority; and
(3) take any other action of any type whatsoever in connection with the
foregoing which, in the opinion of such attorney-in-fact, may be of
benefit to, in the best interest of, or legally required by, the
undersigned, it being understood that the documents executed by such
attorney-in-fact on behalf of the undersigned pursuant to this Power
of Attorney shall be in such form and shall contain such terms and
conditions as such attorney-in-fact may approve in his/her sole
discretion.
The undersigned hereby grants to each such attorney-in-fact full power and
authority to do and perform all and every act and thing whatsoever requisite,
necessary or proper to be done in the exercise of any of the rights and power
herein granted, as fully to all intents and purposes as such attorney-in-fact
might or could do if personally present, with full power of substitution or
revocation, hereby ratifying and confirming all that such attorney-in-fact, or
his/her substitute or substitutes, shall lawfully do or cause to be done by
virtue of this power of attorney and the rights and powers herein granted. The
undersigned acknowledges that the foregoing attorneys-in-fact, in serving in
such capacity at the request of the undersigned, are not assuming any of the
undersigned's responsibility to comply with Section 13 of the Securities
Exchange Act of 1934 and the rules thereunder.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 31st day of May, 1996.
/S/ PAUL E. MCCOLLAM
Signature
PAUL E. MCCOLLAM
Print Name
Exhibit E - Page 1
MODEL POWER OF ATTORNEY
For Executing Schedules 13D and 13G
Know all by these presents, that the undersigned hereby constitutes and
appoints each of Roy V. Hood, Paul E. McCollam and David R. Whitney, signing
single, his/her true and lawful attorney-in-fact to:
(1) execute for and on behalf of the undersigned Schedules 13D and 13G
(and any amendment thereto) in accordance with Section 13 of the
Securities Exchange Act of 1934 and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned
which may be necessary or desirable to complete the execution of any
such Schedules 13D and 13G and the timely filing of such form with
the United States Securities and Exchange Commission and any other
authority; and
(3) take any other action of any type whatsoever in connection with the
foregoing which, in the opinion of such attorney-in-fact, may be of
benefit to, in the best interest of, or legally required by, the
undersigned, it being understood that the documents executed by such
attorney-in-fact on behalf of the undersigned pursuant to this Power
of Attorney shall be in such form and shall contain such terms and
conditions as such attorney-in-fact may approve in his/her sole
discretion.
The undersigned hereby grants to each such attorney-in-fact full power and
authority to do and perform all and every act and thing whatsoever requisite,
necessary or proper to be done in the exercise of any of the rights and power
herein granted, as fully to all intents and purposes as such attorney-in-fact
might or could do if personally present, with full power of substitution or
revocation, hereby ratifying and confirming all that such attorney-in-fact, or
his/her substitute or substitutes, shall lawfully do or cause to be done by
virtue of this power of attorney and the rights and powers herein granted. The
undersigned acknowledges that the foregoing attorneys-in-fact, in serving in
such capacity at the request of the undersigned, are not assuming any of the
undersigned's responsibility to comply with Section 13 of the Securities
Exchange Act of 1934 and the rules thereunder.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 1st day of June, 1996.
/S/ JOHN B. PARSONS
Signature
JOHN B. PARSONS
Print Name
Exhibit E - Page 2
MODEL POWER OF ATTORNEY
For Executing Schedules 13D and 13G
Know all by these presents, that the undersigned hereby constitutes and
appoints each of Roy V. Hood and David R. Whitney, signing single, his/her true
and lawful attorney-in-fact to:
(1) execute for and on behalf of the undersigned Schedules 13D and 13G
(and any amendment thereto) in accordance with Section 13 of the
Securities Exchange Act of 1934 and the rules thereunder;
(2) do and perform any and all acts for and on behalf of the undersigned
which may be necessary or desirable to complete the execution of any
such Schedules 13D and 13G and the timely filing of such form with
the United States Securities and Exchange Commission and any other
authority; and
(3) take any other action of any type whatsoever in connection with the
foregoing which, in the opinion of such attorney-in-fact, may be of
benefit to, in the best interest of, or legally required by, the
undersigned, it being understood that the documents executed by such
attorney-in-fact on behalf of the undersigned pursuant to this Power
of Attorney shall be in such form and shall contain such terms and
conditions as such attorney-in-fact may approve in his/her sole
discretion.
The undersigned hereby grants to each such attorney-in-fact full power and
authority to do and perform all and every act and thing whatsoever requisite,
necessary or proper to be done in the exercise of any of the rights and power
herein granted, as fully to all intents and purposes as such attorney-in-fact
might or could do if personally present, with full power of substitution or
revocation, hereby ratifying and confirming all that such attorney-in-fact, or
his/her substitute or substitutes, shall lawfully do or cause to be done by
virtue of this power of attorney and the rights and powers herein granted. The
undersigned acknowledges that the foregoing attorneys-in-fact, in serving in
such capacity at the request of the undersigned, are not assuming any of the
undersigned's responsibility to comply with Section 13 of the Securities
Exchange Act of 1934 and the rules thereunder.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to
be executed as of this 19th day of September, 1996.
/S/ STEPHEN F. OAKES
Signature
STEPHEN F. OAKES
Print Name
Exhibit E - Page 3
