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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 17, 1998
(Date of earliest event reported)
OEC COMPRESSION CORPORATION
(Exact name of Registrant as specified in its charter)
Oklahoma 0-18206 73-1345732
(State of Incorporation) (Commission File No.) (I.R.S Employer
Identification No.)
2501 Cedar Springs, Suite 600
Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code
(714) 953-9560
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ITEM 5 OTHER EVENTS
On November 10, 1998, OEC Compression Corporation (the "Company" or
"OEC") received a letter from Dennis Estis indicating that Mr. Estis was
dissatisfied with current management of the Company and was requesting that a
special meeting of the shareholders of the Company be called to remove
several directors of the Company and remove the current President/Chief
Executive Officer and Chief Financial Officer of the Company. Mr Estis, who
is a director and was chief operating officer of the Company, also demanded
access to the shareholder records of the Company and indicated that if the
Board of Directors of the Company did not call a special meeting of the
shareholders of the Company, Mr. Estis would solicit proxies or consents to
call such meeting. Mr. Estis informed the Company that he had the proxies of
two other shareholders of the Company to call a special meeting of the
Company's shareholders. Mr. Estis also informed the Company that a lawsuit
had been filed against the Company and certain directors or officers of the
Company but such lawsuit would not be served while the parties were
discussing these matters.
On November 11, 1998, the Board of Directors of the Company held a
special meeting at which Mr. Estis was given an opportunity to air his
concerns about the Company and its management. The Board of Directors
carefully considered the views of Mr. Estis and the position of management of
the Company and voted not to call a special meeting of the shareholders of
the Company. In addition, the Board of Directors gave a vote of confidence to
the President and the Chief Financial Officer of the Company. The Board of
Directors of the Company also authorized management of the Company to resist
any solicitation of consents or proxies to call a special meeting of the
shareholders of the Company and to respond to any litigation.
Following discussions between the Company and Mr. Estis, the parties
decided to resolve the issues raised by the November 10 letter and the
lawsuit and to avoid the necessity of a proxy contest. On December 16, 1998,
the Company, Mr. Estis, the two other shareholders who granted a proxy to Mr.
Estis and certain other parties entered into a Settlement Agreement, a copy
of which is attached as an exhibit and fully incorporated by reference
herein. Among other things, the Settlement Agreement (i) prohibits Mr. Estis
from participating in any proxy solicitation relating to actions that were
contemplated in the November 10 letter to the Board of Directors of the
Company, (ii) requires termination of the proxies granted to him by the two
other shareholders, (iii) requires dismissal of the lawsuit, (iv) provides
for a broad mutual release of claims between the parties, (v) provides for a
"standstill" agreement until June 30, 1999 (subject to possible extension and
reinstatement as described below) prohibiting Mr. Estis from participating in
enumerated actions relating to control
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of the Company and (vi) requires the Company to reimburse Mr. Estis for his
out-of-pocket expenses up to $35,000.
The Company has agreed to use its best effort to sell or assist Mr.
Estis to sell at least one-half of his shares of Common Stock at $2.00 or
more per share. If such a sale is not completed prior to June 30, 2000, then
Mr. Estis's non-competition agreement shall be terminated except as to Mr.
Estis' agreement not to solicit or hire employees of the Company. If the sale
by Mr. Estis occurs prior to December 31, 2001, then the standstill agreement
described above will be extended or reinstated, as the case may be, through
December 31, 2001.
Mr. Estis and the Company have agreed to terminate his employment
agreement. In consideration of the termination of his employment agreement,
he shall be entitled to certain payments and the term of his non-competition
agreements with the Company shall be reduced, all as set forth in the
Settlement Agreement. In addition the employment agreement for Andy Payne was
also terminated and Mr. Payne is to receive certain payments in connection
with such termination.
Mr. Estis has resigned as a member of the executive committee of the
Company. Mr. Payne has agreed to resign as a director of the Company. Upon
the sale of one-half of his common stock, Mr. Estis will also resign as a
director of the Company.
ITEM 6 RESIGNATIONS OF REGISTRANT'S DIRECTORS
Pursuant to the Settlement Agreement, on December 17, 1998, Mr. Andy
Payne tendered his resignation as a member of the Board of Directors of the
Company. On December 18, 1998, the Board of Directors of the Company accepted
Mr. Payne' resignation and elected James W. Bryant as a director of the
Company to fill the unexpired term of Mr. Payne.
ITEM 7 EXHIBITS
EXHIBIT NO. DESCRIPTION
10.1 Settlement Agreement.
99 Press Release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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OEC COMPRESSION CORPORATION
(formerly Equity Compression
Services Corporation)
By: /s/ Matthew S. Ramsey
-----------------------------
Matthew S. Ramsey
President and Chief Executive
Officer
Date: December 23, 1998
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
10.1 Settlement Agreement.
99 Press Release.
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SETTLEMENT AGREEMENT
This SETTLEMENT AGREEMENT (this "Agreement") is entered into as of this
16th day of December, 1998 by and among OEC Compression Corporation (the
"Company"), Ouachita Energy Corporation, a Delaware corporation (the
"Operating Sub"), Ray C. Davis ("Davis"), Kelcy L. Warren ("Warren"), Matthew
S. Ramsey ("Ramsey"), Jack D. Brannon ("JBrannon"), Richard D. Brannon
("RBrannon"), James D. Finley ("Finley"), Neal A. Hawthorn ("Hawthorn"), Jon
P. Stephenson ("Stephenson" and together with Davis, Warren, Ramsey,
JBrannon, RBrannon, Finley and Hawthorn sometimes collectively referred to
herein as the "Company Group"), HACL, Ltd. a Texas limited partnership
("HACL"), Energy Investors, a Texas joint venture ("Energy Investors"),
Dennis W. Estis ("Estis"), Andy Payne ("Payne"), Don A. Smith ("Smith") and
Robert Gregory ("Gregory" and together with Estis, Payne and Smith sometimes
collectively referred to herein to as the "Shareholder Group"). The members
of the Shareholder Group are sometimes referred to herein collectively as
"Members" and individually as a "Member." The Company, the Operating Sub,
Davis, Warren, Ramsey, JBrannon, RBrannon, Finley, Hawthorn, Stephenson,
HACL, Energy Investors, Estis, Payne, Smith and Gregory are sometimes
collectively referred to herein as the "Parties" and individually as a
"Party."
W I T N E S S E T H :
WHEREAS, Estis is a party to that certain Asset Purchase and Sales
Agreement dated May 15, 1997 by and among Estis, Ouachita Energy Partners,
Ltd., Ouachita Compression Group, LLC, OEC Acquisition Corporation, and the
Company, as amended (the "Asset Purchase Agreement"); and
WHEREAS, Estis is also a party to that certain Agreement and Plan of
Merger dated May 15, 1997 by and among Estis, Ouachita Energy Corporation,
OEC Acquisition Corporation, and the Company, as amended (the "Merger
Agreement"); and
WHEREAS, Estis is a party to that certain Employment Agreement dated as
of August 1, 1997 with the Company and the Operating Sub, as amended (the
"Estis Employment Agreement"); and
WHEREAS, Payne is a party to that certain Employment Agreement dated as
of August 1, 1997 with the Company and the Operating Sub, as amended (the
"Payne Employment Agreement"); and
WHEREAS, the transactions contemplated by the Asset Purchase and the
Merger Agreement (the "Purchase Transactions") were consummated as of August
1, 1997 and in connection with the consummation of the Purchase Transactions,
Estis became the Chief Operating Officer of the Company, President and Chief
Operating Officer of the Operating Sub and a member of the board of directors
of the Company and Payne became a senior vice president of the Operating Sub
and a member of the board of directors of the Company; and
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WHEREAS, in connection with the consummation of the Purchase
Transactions, Estis and certain of his affiliates and/or associates including
Payne (the "Estis Shareholders") became the owners of 7,886,976 shares of the
Company's Common Stock, $0.01 par value per share (the "Common Stock") as
described on Exhibit "A" attached hereto and incorporated herein (the "Estis
Stock"); and
WHEREAS, Estis has obtained irrevocable proxies from each of Gregory and
Smith as to certain matters and has sent to Ray C. Davis a letter dated
November 10, 1998 (the "November 10 Letter") indicating that Estis was
contemplating a proxy contest and has demanded to inspect the corporate
records of the Company; and
WHEREAS, Estis, Gregory and Smith have filed a lawsuit described on
Exhibit "B" attached hereto against the Company and each of the members of
the Company Group (the "Lawsuit"); and
WHEREAS, HACL and Energy Investors are significant shareholders of the
Company and the transactions contemplated by this Agreement will directly
benefit such shareholders; and
WHEREAS, the Parties desire to resolve and settle the issues raised by
the November 10 Letter and the Lawsuit and to end any proxy fight with
respect to the Company and its Common Stock;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledge, the Parties,
intending to be legally bound, hereby contract and agree as follows:
1. PROXY FIGHT.
1.1 TERMINATION OF EFFORTS TO CALL A SPECIAL SHAREHOLDER MEETING. Each
of the Members of the Shareholder Group and the Shareholder Group (a) shall
immediately terminate any and all activities with respect to their efforts to
call or solicit shareholder consents to call a special meeting of the
shareholders of the Company as described in the November 10 Letter (a
"Special Meeting"), (b) shall not, directly or indirectly solicit any proxies
or participate in any "solicitation" of any "proxy" (as such terms are
defined in Rule 14a-1 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) with respect to matters to be presented at a Special
Meeting or otherwise and shall not become a "participant" (as such term is
used in Rule 14a-11 under the Exchange Act) in any election contest relating
to a Special Meeting or otherwise, (c) shall promptly terminate all
agreements and understandings supporting the call for a Special Meeting, and
shall promptly terminate any "group" pursuant to Section 13(d) of the
Exchange Act, to reflect the termination of the proxy contest and the other
provisions of this Agreement, (d) terminate any proxies granted by Gregory or
Smith in favor of
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Estis, and (e) shall not take any other actions inconsistent with the matters
contemplated hereby; provided, however, that (i) the Shareholder Group may
file an amended Schedule 13D and any other filings required by law that are
not inconsistent with the restrictions and provisions set forth in this
Agreement and (ii) that certain Shareholder's Agreement among Estis, Smith
and Gregory (the "Shareholder Agreement") shall survive until December 31,
1999. Prior to the date hereof, a true and complete copy of the Shareholder
Agreement has been provided to the Company. Prior to filing any Schedule 13d
or amended Schedule 13d, the Shareholder Group will provide the Company with
a copy of such filing and will make any reasonable changes or clarifications
requested by the Company or its counsel so as to reflect the intent of this
Agreement.
1.2 DISMISSAL OF THE LAWSUIT. On the date hereof, each Member of the
Shareholder Group and the Shareholder Group agrees to dismiss with prejudice
the Lawsuit and to file the Notice of Dismissal attached hereto as Exhibit
"C" and incorporated herein. In addition, each Member of the Shareholder
Group, the Shareholder Group, the Company and the Company Group each agree to
use their best efforts to cause the pleadings in the Lawsuit to be sealed and
agree to file a joint motion to seal such petition.
1.3 RELEASE BY THE SHAREHOLDER GROUP. The Shareholder Group and each
Member of the Shareholder Group hereby RELEASES, DISCHARGES and ACQUITS the
Company, the Operating Sub and their officers, directors, agents and
representatives (including each member of the Company Group) from any and all
claims, grievances, demands, charges, liabilities, obligations, actions,
causes of action, damages, costs, losses of services, expenses and
compensation of any nature whatsoever existing on the date hereof, whether
based on tort, contract or other theory of recovery, which any Member of the
Shareholder Group now has of any kind or nature, including, on account of, or
in any way growing out of or related to the operation of the Company or the
Operating Sub prior to the date hereof including any and all claims raised or
discussed in the November 10 Letter or in the Lawsuit and further including
any written or oral statements made by any member of the Company Group.
Notwithstanding any provision of this Section 1.3 to the contrary, this
Section 1.3 does not release, modify, amend or change in any manner the
rights of the Members of the Shareholder Group under (i) that certain
Registration Rights Agreement dated as of August 1, 1997 executed by the
Company, Estis and others in connection with the consummation of the Purchase
Transaction, (ii) the right of Andy Payne to any stock options vested or
earned on the date hereof, (iii) any compensation earned by any Member of the
Shareholder Group prior to the date hereof or (iv) the rights of the selling
parties under the Merger Agreement or the Asset Purchase Agreement or
otherwise related to the Purchase Transactions.
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1.4 RELEASE BY THE COMPANY AND THE COMPANY GROUP. The Company and each
member of the Company Group hereby RELEASES, DISCHARGES and ACQUITS the
Shareholder Group and each Member of the Shareholder Group for any and all
claims, grievances, demands, charges, liabilities, obligations, actions,
causes of action, damages, costs, losses of services, expenses and
compensation of any nature whatsoever existing on the date hereof, whether
based on tort, contract or other theory of recovery, which the Company or any
member of the Company Group now has any kind or nature, including, on account
of, or in any way growing out of or related to (i) the operation of the
Company or the Operating Sub prior to the date hereof, (ii) their actions as
employees, officers or directors of the Company or any of its subsidiaries
(including any claims for misappropriation of funds or improper expense
reimbursements from the Company), (iii) any breaches of either the Estis
Employment Agreement by Estis or the Payne Employment Agreement by Payne (iv)
the filing of the Lawsuit, (v) the matters raised by the November 10 letter
and any oral or written statements made by any member of the Shareholder
Group prior to the date hereof pertaining to the Company or any member of the
Company Group made in connection therewith or herewith or (vi) the
solicitation of proxies by the Shareholder Group. Notwithstanding any
provision of this Section 1.4 to the contrary, this Section 1.4 does not
release, modify, amend or change in any manner the rights of the Company
under the Merger Agreement or the Asset Purchase Agreement or otherwise
related to the Purchase Transactions or under the notes owed by any Member of
the Shareholder Group to the Company or the Operating Sub.
1.5 STANDSTILL AGREEMENT. During the period commencing on the date
hereof and ending June 30, 1999 (the "Standstill Period"), each Member of the
Shareholder Group:
A. shall cause all shares of capital stock of the Company which
have the right to vote generally in the election of directors,
including, without limitation, shares of Common Stock (collectively, the
"Voting Stock"), that are beneficially owned (within the meaning of
Regulation 13D and Rules 13d-3 and 13d-5 under the Exchange Act) by such
Party to be present, in person or by proxy, at all meetings of the
shareholders of the Company so that all such shares may be counted for
the purpose of determining if a quorum is present at such meetings and
(ii) to be voted in favor of persons nominated and recommended by the
Board of Directors of the Company in the election of directors for the
1999 meeting of the shareholders of the Company;
B. shall not, directly or indirectly, solicit any proxies or
consents with respect to Voting Stock or in any way participate in any
"solicitation" of any "proxy" with respect to shares of Voting Stock (as
such terms are defined in Rule 14a-1 under the Exchange Act) or become a
"participant" in any
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election contest with respect to the Company (as such term is used in
Rule 14a-11 under the Exchange Act) or request or induce or attempt to
induce any other person to take any such actions or attempt to advise,
counsel or otherwise influence in any way any person with respect to the
voting of Voting Stock;
C. except as provided in the Shareholders Agreement, shall not (i)
form, join or otherwise participate in any "group" (within the meaning
of Section 13(d)(3) of the Exchange Act or Rule 13d-5 thereunder) with
respect to any Voting Stock (a "13D Group"), (ii) otherwise act in
concert with any other person for the purpose of holding or voting of
Common Stock, or (iii) file any amendment to any Schedule 13D that
relates to a plan or proposal referred to in paragraphs (d) or (g) of
Item 4 of Schedule 13D or that contains any statement that is in any way
inconsistent with the provisions of this Agreement;
D. shall not deposit any Voting Stock in a voting trust or subject
any Voting Stock to any arrangement or agreement with respect to the
voting of such Voting Stock or other agreement having similar effect;
E. except as expressly contemplated hereby, shall not make any
proposal (including any proposal pursuant to Rule 14a-8 under the
Exchange Act) or bring any business before any meeting of the
shareholders of the Company and, other than actions proposed or taken at
any meeting of the Board of Directors, shall not take or seek to take
any action in the name or on behalf of the Company except pursuant to
the performance of any responsibilities attendant to any office in the
Company held by such Party or pursuant to a resolution adopted by the
Board of Directors;
F. not acquire, propose to acquire (or publicly announce an
intention to acquire by purchase or otherwise any Voting Securities or
propose (or publicly announce or otherwise disclose an intention to
propose) solicit, offer, seek to effect, negotiate with or provide any
confidential information relating to the Company or its business to any
Person (as defined in Section 3(a)(9) of the Exchange Act) with respect
to any tender or exchange offer, merger, consolidation, share exchange,
business combination, restructuring, recapitalization or similar
transaction involving the Company;
G. shall not (i) seek election to, nor seek to place a
representative on the Board of Directors of the Company, (ii) seek the
removal of any member of the Board of Directors, (iii) call or seek to
have called any meeting of the shareholders of the Company for any
purposes, (iv) take any
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other action to control the Company, or (v) demand, request or propose
to amend, waive or terminate the provision of this Section 1.5; and
H. shall not enter into any discussions, negotiations,
arrangements or understandings with any other person with respect to any
of the foregoing matters referred to in this Section 1.5;
provided, however, that clauses (B), (C) and (D) and (insofar as it relates
to clauses (B), (C) or (D), clause (H) of this Section 1.5), shall not
prevent any Party from taking any of the actions referred to in such clauses
to the extent (but solely to the extent) that such actions are taken in
response to (i) any "Extraordinary Proposal" (as hereinafter defined) that is
set forth in any preliminary or definitive proxy statement filed by the
Company with the Securities Exchange Commission (the "SEC") or (ii) tender
shares of Voting Stock to an unaffiliated third party in connection with any
tender offer or takeover proposal from an unaffiliated third party not
solicited, directly or indirectly by the Shareholder Group. For purposes
hereof, an "Extraordinary Proposal" shall mean any proposal of the Company
other than a proposal regarding any of the matters referred to in clauses (1)
- - (4) of Rule 14a-6(a) under the Exchange Act, as in effect on the date of
this Agreement.
1.6 REIMBURSEMENT. As partial compensation for the reformation of
Estis' agreement not to compete against the Company as set forth herein and
the releases set forth herein, the Company shall reimburse and/or pay on
behalf of the Shareholder Group one-half of the reasonable out-of-pocket
costs and expenses of the Shareholder Group incurred in connection with their
activities prior to the date hereof with respect to their solicitation of
proxies in connection with the proposed Special Meeting, provided however,
such reimbursement by the Company shall not exceed $35,000. Such amounts
shall be paid by the Company within five business days after receipt of
appropriate evidence of the amount and nature of such costs and expenses in
form reasonably satisfactory to the Company. The Company agrees that
satisfactory evidence of such fees will be an affidavit of Ed Rogers stating
that (i) his firm is not representing the Shareholder Group or any Member of
the Shareholder Group as to any other matter other than the matters described
in this Agreement, (ii) the total fees of the Shareholder Group related to
calling a special meeting of the shareholders, the November 10 Letter, and
the Lawsuit are in excess of $70,000 and (iii) attached to such affidavit is
a true and correct summary of (a) the hours worked on behalf of the
Shareholder Group on such matters, (b) the attorneys working such hours and
(c) the dates that such hours were worked.
1.7 CHANGE OF CONTROL. If a Change of Control (as hereinafter defined)
of the Company occurs during the Standstill
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Period in which the shareholders of the Company receive less than $2.00 per
share, then the Standstill Period will be terminated. A Change of Control of
the Company shall be deemed to take place on the occurrence of any of the
following events: (1) the Continuing Directors no longer constitute at
least two thirds (2/3) of the total number of directors of the Company; (2)
any person or group of persons (as defined in Rule 13d-5 under the Exchange
Act), together with its Affiliates, become the beneficial owner, directly or
indirectly, of fifty-one percent (51%) of the Company's then outstanding
Common Stock, or fifty-one percent (51%) or more the total voting power of
the Company's then outstanding securities entitled generally to vote for the
election of the Company's directors; (3) the approval by the Company's
shareholders of the merger or consolidation of the Company with any other
corporation or business organization, the sale of substantially all of the
assets of the Company or the liquidation or dissolution of the Company,
unless, in the case of a merger or consolidation, the continuing Directors in
office immediately prior to such merger or consolidation will constitute at
least two-thirds (2/3) of the directors of the surviving corporation or
business organization resulting from such merger or consolidation and any
parent (as such term is defined in Rule 12b-2 under the Exchange Act) of such
corporation or business organization; or (4) at least two-thirds (2/3) of the
continuing Directors in office immediately prior to any other action proposed
to be taken by the Company's shareholders or by the Company's Board of
Directors determine that such proposed action, if taken, would constitute a
Change of Control of the Company and such action is taken. Notwithstanding
any provision of this Section 1.7 to the contrary, a Change of Control shall
not include any voluntarily transaction that is either (i) accounted for as a
"pooling of interests" and in which Continuing Directors constitute at least
one-third of the board of directors of the combined entity or (ii) approved
by a majority of Continuing Directors and in which it is contemplated that
the current management of the Company would continue to manage the combined
company. "Continuing Director" means any individual who is a member of the
Company's Board of Directors on the date hereof or was designated (before
such person's initial election as a director) as a Continuing Director by
two-thirds (2/3) of the then Continuing Directors. "Affiliate" or "Associate"
shall have the meaning set forth in Rule 12b-2 under the Exchange Act.
2. AGREEMENTS WITH RESPECT TO ESTIS.
2.1 BEST EFFORTS TO SELL ESTIS STOCK. The Company agrees to use its
best efforts to sell or assist Estis in the sale of at least one-half of the
Estis Stock at a price of $2.00 per share or greater. The Company agrees to
contact such investment banking firms and other purchasers concerning the
sale of the Estis Stock as the Company deems appropriate. The Company hereby
waives any transfer restrictions with respect to the Estis Stock contained in
the Merger Agreement in connection with any such sales pursuant to
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this Section 2.1. If necessary in connection with such sale, the Company
will register or cause to be registered any such sales in accordance with the
terms of the Registration Rights Agreement between Estis and the Company
dated as of August 1, 1997 which notwithstanding any provision of this
Agreement shall survive the consummation of the transactions contemplated
hereby as an obligation of the Company. Neither Estis nor any other Estis
Shareholder will be required to make any representations or warranties as to
business or operations of the Company in any such sale but Estis and the
applicable Estis Shareholder will make any requested representations and
warranties as to the ownership of and title to the Estis Stock by such Estis
Shareholder.
2.2 TERMINATION OF EMPLOYMENT. Estis, the Company and the Operating
Sub agree to terminate the Estis Employment Agreement effective on the later
to occur of December 23, 1998 or seven days after the execution of this
Agreement by Estis (the "Transition Date"). From the date hereof until the
Transition Date, Estis agrees to assist in the transition of a new Chief
Operating Officer and to encourage Company personnel to work with such new
officer. On the Transition Date, the Estis Employment Agreement will be
deemed terminated except as to Article V of the Estis Employment Agreement
which shall survive as set forth in Section 2.3 hereof. On the Transition
Date, Estis will resign as (i) an officer of the Company, (ii) a member of
the Executive Committee of the Board of Directors of the Corporation and
(iii) an officer or director of all subsidiaries of the Company. On the
Transition Date, the Company, unless Estis has revoked his release as set
forth herein, shall pay to Estis (i) the compensation owed to Estis other
than a prorata portion of his guaranteed bonus under Section 3.02 of the
Estis Employment Agreement, (ii) the sum of $125,000 as partial compensation
for Estis' agreements not to compete against the Company as set forth herein.
Thereafter on each of March 30, June 30 and September 20 of 1999, the
Company shall pay to Estis payments of $60,000. The payments set forth above
shall be in complete and total satisfaction of the all of the Company's
obligations to Estis under the Estis Employment Agreement and as the complete
and sole compensation for the termination of his employment with the Company
and the Operating Sub and as compensation for his covenants not to compete
set forth in Article V of the Estis Employment Agreement; provided, however,
nothing in this Section 2.2 shall release (a) any obligations the Company may
have to Estis under the Company's 401(k) plan or similar benefit plan or (b)
any vested options to acquire shares of Common Stock (but any non-vested
options to acquire Common Stock shall terminate as of the date of this
Agreement). Until the Transition Date, Estis will work out of and be based
at the Monroe office of the Operating Sub and Estis will not be required to
devote his entire productive efforts to the business of the Company or the
Operating Sub. Following the Transition Date, Estis agrees to assist the new
Chief Operating Officer of the Company in the transition and to travel and
meet with such new officer field personnel of the
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Company and the Operating Sub for a per day fee to be mutually agreed to by
the Parties.
2.3 COVENANTS NOT TO COMPETE. Estis acknowledges that under both the
Asset Purchase Agreement and the Merger Agreement, he agreed not to compete
against the Company or the Operating Sub for a period of five years from
August 1, 1997 and that under Article V of the Estis Employment Agreement, he
agreed not to compete against the Company or the Operating Sub for a period
of thirty-six months following the termination of his employment under such
agreement. In addition, Estis agreed that, during the applicable
non-competition period, he would not solicit any employees or customers of
the Company or the Operating Sub (the "Non-Solicitation Provisions" and
together with the covenants described in the preceding sentence, the
"Non-Competition Provisions"). Estis further agreed to keep confidential all
of the Company's and the Operating Sub's trade secrets and confidential
information to the full extent set forth in the Estis Employment Agreement,
the Merger Agreement and the Asset Purchase Agreement (the "Confidentiality
Provisions"). The term of the Non-Competition Provisions is hereby reduced
to thirty-six months from the date of this Agreement (subject to a possible
reduction as set forth below). Estis further acknowledges and agrees that
the Non-Competition Provisions, as amended, and the Confidentiality
Provisions are valid, binding and enforceable obligations of Estis and are
enforceable against Estis in accordance with their terms. Upon any Change of
Control (as defined in Section 1.7 hereof) in which the Shareholders of the
Company receive less than $2.00 per share, the Non-Competition Provisions
other than Estis' agreement not to solicit future or current employees of the
Company or its subsidiaries as described in Section 2.4 hereof shall
terminate. Notwithstanding any provision of this Agreement to the contrary, a
Change of Control shall not affect the obligation of Estis to comply with the
Confidentiality Provisions.
2.4 FAILURE TO PLACE OR SELL ESTIS STOCK. If the Company is
unsuccessful in aiding Estis in selling at least one-half of the Estis Stock
for at least $2.00 per share on or before June 30, 2000, then the
Non-Competition Provisions shall cease to be applicable to or enforceable
against Estis except that until the third anniversary of this Agreement,
Estis agrees not to, directly or indirectly, hire or solicit to hire any
person who is currently an employee of the Company or any of its subsidiaries
on the date of this Agreement or who is an employee of the Company or any of
its subsidiaries on June 30, 2000. An individual will be deemed to be an
employee of the Company or any of its subsidiaries if such person was
employed anytime with thirty days prior to or after the date in question.
The Company shall be deemed to have sold shares of Estis Stock and shall
receive credit for sale of Estis Stock, if the Company finds a buyer who is
ready, willing and able to purchase all or a portion of the Estis Stock for
$2.00 per share or greater and Estis or the Estis Shareholders refuse to sell
their
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shares of Estis Stock to such buyer or fail to respond to such offer within a
reasonable time period set by the proposed buyer. The $2.00 per share
purchase price referred to above and the number of shares of Estis Stock
shall be adjusted for any stock splits, reverse stock splits or stock
dividends by the Company with respect to its Common Stock. The failure to
sell Estis Stock shall not affect the obligation of Estis to comply with the
Confidentiality Provisions.
2.5 REINSTATEMENT OF STANDSTILL PROVISIONS. If prior to December 31,
2001, the Estis Shareholders either sell or are deemed to have sold (as
described in Section 2.4 above) one-half or greater of the Estis Stock for
$2.00 or greater as set forth in Section 2.4, then the provisions of Section
1.5 of this Agreement will not lapse on June 30, 1999 or shall be reinstated
if such provisions had previously lapsed and thereafter the Shareholder Group
will comply with and be subject to the restrictions of Section 1.5 of this
Agreement until December 31, 2001.
2.6 DIRECTORSHIP. On the successful placement or sale of one-half of
the Estis Stock on the terms set forth above, Estis agrees to resign as a
director of the Company.
2.7 MISCELLANEOUS ESTIS MATTERS.
(a) DUCK LEASE. The Company and Estis agree that the Lease
Agreement between the Operating Sub and Estis for the lease of hunting
property is hereby terminated.
(b) LIFE INSURANCE AND TRANSFER TO LIMITED PARTNERSHIP. The
Company agrees to transfer to Estis any rights that it may have in any
life insurance being carried on Estis. Estis and one or more Estis
Shareholders may transfer their Estis Stock to a limited partnership so
long as such limited partnership executes an agreement in form and
substance satisfactory to the Company that (i) such limited partnership
is bound by the terms of this Agreement including the releases contained
herein and (ii) that such limited partnership shall take such shares of
Estis Stock subject to any restrictions contained in the Merger
Agreement as modified by this Agreement.
(c) PERSONAL EFFECTS. The Company agrees that Estis may remove
the personal effects listed on Exhibit "D" attached hereto and
incorporated herein.
(d) DIRECTORS AND OFFICERS POLICY. The Company agrees to use its
reasonable commercial efforts to maintain the existing directors and
officers insurance policy and to renew or obtain a similar policy upon
the expiration of the current policy so long as such insurance is
commercially available to the Company for premiums equivalent to the
premiums on the current directors and officers policy.
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(e) AIRPLANE. The Company agrees that Estis, at his sole option,
may purchase that certain airplane owned by the Company (the "Airplane")
for the appraised value of the Airplane as determined by an appraiser
selected by the Company and reasonably satisfactory to Estis (the
"Appraiser"). The Appraiser shall determine the retail fair market
value of the Airplane and the Company shall pay the cost of the
Appraiser. Following receipt of the Appraiser's determination of retail
fair market of the Airplane, Estis shall elect with five business days
at whether he shall purchase the Airplane and shall notify the Company
in writing of such determination. If Estis elects to purchase the
Airplane, he shall pay the purchase price equal to the appraised value
in cash or with shares of Common Stock valued at $1.50 per share. The
closing of the purchase and sale of the Airplane shall take place two
business days after Estis' election. At such closing, the Company will
transfer all of its right, title and interest in the Airplane to Estis
for payment of the purchase price in stock or cash; provided, however,
if Estis has elected to sell the Yard Truck to the Company as set forth
below, then Estis shall transfer the Yard Truck to the Company for its
appraised value as determined below and the balance of the purchase
price for the Airplane shall be paid in cash or shares of Common Stock
as set forth above. If Estis does not agree to purchase the Airplane
for its appraised value as set forth above, then the Company may sell
the Airplane for a price equal to or greater than the appraised value of
the Airplane. If the Company desires to sell the Airplane for a price
less than the appraised value of the Airplane, then the Company shall
notify Estis of the proposed price and Estis shall have the option of
purchasing the Airplane for such proposed price on the terms set forth
above, i.e. cash or shares of Common Stock valued at $1.50 per share.
Estis shall have two business days to elect to purchase the Airplane for
such proposed price and if Estis does not elect to purchase the Airplane
for such proposed price, then the Company may sell the Airplane for the
price offered to Estis or higher. If Estis elects to purchase the
Airplane for such proposed price, then the closing of the purchase and
sale of the Airplane shall take place within three business days of such
election. The Company agrees to use its best efforts to obtain the
appraisal of the Airplane promptly after the execution of this Agreement
(subject to availability of the Appraiser). If Estis elects not to
purchase the Airplane, the Company agrees to diligently market and sell
the Airplane in a commercially reasonable manner.
(f) YARD TRUCK. Estis also has the option to sell to the Company
and the Company agrees to purchase from Estis the yard truck described
on Exhibit "E" attached hereto and incorporated herein (the "Yard
Truck") for an amount equal to the appraised value of the Yard Truck as
determined by an
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appraiser selected by the Company who shall be reasonably satisfactory
to Estis (the "Truck Appraiser"). The Truck Appraiser shall notify
Estis and the Company of the retail appraised value of the Yard Truck
and Estis shall have the option of selling the Yard Truck to the Company
for such appraised value. If Estis elects to sell the Yard Truck, then
Estis shall notify the Company in writing of such election. If Estis
has elected to purchase the Airplane as set forth above, then the
closing of the purchase and sale of the Yard Truck shall occur on the
same date as the closing of the sale of the Airplane. If Estis has
elected not to purchase the Airplane, then the closing of the purchase
and sale of the Yard Truck shall take place three business days after
Estis has made his election to not purchase the Airplane. At such
closing, the Company shall pay cash for the Yard Truck unless Estis has
elected to purchase the Airplane in which event Estis shall transfer
title to the Yard Truck to the Company for a credit against the purchase
price of the Airplane equal to the appraised value of the Yard Truck.
2.8 RELEASE OF EMPLOYMENT CLAIMS. (a) In consideration of the payments
called for herein effective on the Transition Date and subject to the
performance of the Company's obligations set forth herein, except for the
release in clause (ii) below which shall be currently effective, and the
other releases contained herein, Estis agrees and hereby does completely
release, acquit, and forever discharge the Company, the Operating Sub and
their respective officers, directors and affiliates from any and all past and
present claims, grievances, demands, charges, liabilities, obligations,
actions, causes of action, damages, costs, losses of services, expenses and
compensation of any nature whatsoever, whether based on tort, contract or
other theory of recovery, which Estis now has on account of, or in any way
growing out of his relationship with, severance of relationship with, or
separation from the Company, including, but not limited to, the following:
(i) any and all claims he might have arising under Title VII of the
Civil Rights Act of 1964, as amended (42 U.S.C. Section 2000e ET
SEQ.);
(ii) any and all claims he might have arising under the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C.
Section 621 ET SEQ.);
(iii) any and all claims he might have arising under the Americans with
Disabilities Act of 1990 (42 U.S.C. Section 12101 ET SEQ.);
(iv) any and all claims he might have arising under the Texas Commission
on Human Rights Act (TEX. LAB. CODE Section 21.001 ET SEQ.);
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(v) any and all claims he might have arising for any breaches of the
Employee Retirement Income Security Act, as amended (29 U.S.C.
Section 1001, ET SEQ.);
(vi) any and all claims he might have arising under the Older Workers'
Benefit Protection Act (29 U.S.C. Section 626);
(vii) any and all claims he might have arising under the Fair Labor
Standards Act (29 U.S.C. Section 201 ET SEQ.);
(viii) any and all claims he might have arising under Chapter 451 of the
Texas Labor Code, formerly TEX. REV. CIV. STAT. ANN. art. 8307c; and
(ix) any and all statutory and/or common law claims arising solely and
exclusively out of his employment by the Company, whether or not
specifically alleged or articulated herein but to include slander,
libel, negligence, gross negligence, negligent supervision or
training, conspiracy, intentional infliction of emotional distress,
mental anguish, invasion of privacy, assault, battery, false
imprisonment, tortious interference with contractual relations,
breach of contract and/or breach of implied covenant of good faith
and fair dealing.
(b) Estis hereby acknowledges and agrees that the release set forth
above is a general release and he further expressly waives and assumes the
risk of any and all claims for damages which exist as of the date this
Agreement is signed but of which he does not know or suspect to exist,
whether through ignorance, oversight, error, negligence, or otherwise, and
which, if known, would materially affect Estis' decision to enter into this
Agreement. Estis further agrees that he has accepted payment of the sums
specified herein as a complete compromise of matters involving disputed
issues of law and fact and that he assumes the risk that the facts or law may
be otherwise than he believes. It is understood and agreed by the parties
that this Agreement is a compromise of all doubtful and disputed claims, and
the payments are not to be construed as an admission of liability on the part
of the Company, by whom liability is expressly denied.
(c) As to the release provided in clause 2.8(a)(ii) above, Estis
acknowledges that he has fully informed himself of the terms, contents,
conditions and effects of this Agreement. Estis further acknowledges the
following that he has waived any requirement that this release be provided to
him 21 days in advance of his execution of this Agreement; that he has been
advised to consult with an attorney prior to executing this Agreement; that
he is over the age of eighteen (18) years, of sound mind and otherwise
competent to execute this Agreement; and that he is entering into this
Agreement knowingly and voluntarily and without any undue influence or
pressures.
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(d) Estis and the Company acknowledge that Estis has seven (7) days
following the execution of this Agreement to revoke the Agreement. Any such
revocation by Estis must be in writing and received by the Company at its
offices located at 2501 Cedar Springs Road, Suite 600, Dallas, Texas 75201 on
or before the seventh calendar day after he has executed this Agreement.
3. PAYNE.
3.1 TERMINATION OF EMPLOYMENT. Payne, the Company and the Operating
Sub agree the Payne Employment Agreement is hereby terminated on the date
hereof on the terms set forth below except as to Article V of the Payne
Employment Agreement which shall survive the termination of such agreement.
On December 23, 1998 (assuming Payne does not revoke the release set forth in
Section 3.3 hereof), the Company shall pay to Payne (i) the compensation owed
to Payne under the Payne Employment Agreement other than a prorata portion of
his guaranteed bonus under Section 3.02 of the Payne Employment Agreement and
(ii) the sum of $69,583 as compensation for his covenant not to compete
against the Company or the Operating Sub as set forth in Article V of the
Payne Employment Agreement. Thereafter on each of February 28, May 30 and
August 30 of 1999 the Company shall pay to Payne payments of $37,500 as
additional payments for his covenants not to compete against the Company or
the Operating Sub as set forth in Article V of the Payne Employment
Agreement. The payments set forth above shall be in complete and total
satisfaction of the all of the Company's obligations to Payne under the Payne
Employment Agreement and as the complete and sole compensation for the
termination of his employment with the Company and the Operating Sub and as
compensation for his covenant not to compete set forth in Article V of the
Payne Employment Agreement; provided, however, nothing in this Section 3.1 or
this Agreement shall release or terminate (a) any obligations the Company may
have to Payne under the Company's 401(k) plan or similar benefit plan or (b)
any vested options to acquire shares of Common Stock (but any non-vested
options shall terminate as of the date of this Agreement). Payne acknowledges
and agrees that the provisions of Article V of the Payne Employment Agreement
as amended are valid, binding and enforceable obligations of Payne and are
enforceable against Payne in accordance with their terms. The Company agrees
that Payne may remove the personal effects listed on Exhibit "F" attached
hereto and incorporated herein.
3.2 DIRECTORSHIP. Payne hereby resigns as (i) an officer and director
of the Company and (ii) as an officer and director of any subsidiary of the
Company.
3.3 RELEASE OF EMPLOYMENT CLAIMS. (a) In consideration of the payments
called for herein effective on the Transition Date and subject to the
performance of the Company's obligations set forth herein, except for the
release in clause (ii) below which
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shall be currently effective, and the other releases contained herein, Payne
agrees and hereby does completely release, acquit, and forever discharge the
Company, the Operating Sub and their respective officers, directors and
affiliates from any and all past and present claims, grievances, demands,
charges, liabilities, obligations, actions, causes of action, damages, costs,
losses of services, expenses and compensation of any nature whatsoever,
whether based on tort, contract or other theory of recovery, which Payne now
has on account of, or in any way growing out of his relationship with,
severance of relationship with, or separation from the Company, including,
but not limited to, the following:
(i) any and all claims he might have arising under Title VII of the
Civil Rights Act of 1964, as amended (42 U.S.C. Section 2000e ET
SEQ.);
(ii) any and all claims he might have arising under the Age
Discrimination in Employment Act of 1967, as amended (29 U.S.C.
Section 621 ET SEQ.);
(iii) any and all claims he might have arising under the Americans with
Disabilities Act of 1990 (42 U.S.C. Section 12101 ET SEQ.);
(iv) any and all claims he might have arising under the Texas Commission
on Human Rights Act (TEX. LAB. CODE Section 21.001 ET SEQ.);
(v) any and all claims he might have arising for any breaches of the
Employee Retirement Income Security Act, as amended (29 U.S.C.
Section 1001, ET SEQ.);
(vi) any and all claims he might have arising under the Older Workers'
Benefit Protection Act (29 U.S.C. Section 626);
(vii) any and all claims he might have arising under the Fair Labor
Standards Act (29 U.S.C. Section 201 ET SEQ.);
(viii) any and all claims he might have arising under Chapter 451 of the
Texas Labor Code, formerly TEX. REV. CIV. STAT. ANN. art. 8307c; and
(ix) any and all statutory and/or common law claims arising solely and
exclusively out of his employment by the Company, whether or not
specifically alleged or articulated herein but to include slander,
libel, negligence, gross negligence, negligent supervision or
training, conspiracy, intentional infliction of emotional distress,
mental anguish, invasion of privacy, assault, battery, false
imprisonment, tortious interference with contractual relations,
breach of contract and/or breach of implied covenant of good faith
and fair dealing.
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(b) Payne hereby acknowledges and agrees that the release set forth
above is a general release and he further expressly waives and assumes the
risk of any and all claims for damages which exist as of the date this
Agreement is signed but of which he does not know or suspect to exist,
whether through ignorance, oversight, error, negligence, or otherwise, and
which, if known, would materially affect Payne's decision to enter into this
Agreement. Payne further agrees that he has accepted payment of the sums
specified herein as a complete compromise of matters involving disputed
issues of law and fact and that he assumes the risk that the facts or law may
be otherwise than he believes. It is understood and agreed by the parties
that this Agreement is a compromise of all doubtful and disputed claims, and
the payments are not to be construed as an admission of liability on the part
of the Company, by whom liability is expressly denied.
(c) As to the release provided in clause 3.3(a)(ii) above, Payne
acknowledges that he has fully informed himself of the terms, contents,
conditions and effects of this Agreement. Payne further acknowledges the
following that he has waived any requirement that this release be provided to
him 21 days in advance of his execution of this Agreement; that he has been
advised to consult with an attorney prior to executing this Agreement; that
he is over the age of eighteen (18) years, of sound mind and otherwise
competent to execute this Agreement; and that he is entering into this
Agreement knowingly and voluntarily and without any undue influence or
pressures.
(d) Payne and the Company acknowledge that Payne has seven (7) days
following the execution of this Agreement to revoke the Agreement. Any such
revocation by Payne must be in writing and received by the Company at its
offices located at 2501 Cedar Springs Road, Suite 600, Dallas, Texas 75201 on
or before the seventh calendar day after he has executed this Agreement.
4. AGREEMENTS OF HACL AND ENERGY INVESTORS.
4.1 VOTING AGREEMENT. Each of HACL and Energy Investors agree to vote
the shares of Common Stock held by such shareholder in favor of the election
of Estis (or if Estis elects not to run, then Gregory) and Smith as directors
of the Company at the 1999 annual meeting of the shareholders of the Company.
4.2 TAGALONG. If either HACL or Energy Investors proposes to sell any
of their shares of Common Stock ("Disposing Shareholder"), then such
Disposing Shareholder shall notify Estis and the Estis Shareholders of the
terms of such sale in a written notice to Estis setting forth the terms of
such sale (the "Offer Notice"). Estis and the Estis Shareholders shall have
the right within ten (10) days of such notice to elect to participate in such
sale ("Accepting Shareholder") by notifying the Disposing Shareholder of such
intent. Upon receipt of a notice from an Accepting
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Shareholder, the Disposing Shareholder shall allow such Accepting Shareholder
to dispose of such Accepting Shareholder's pro rata share of Common Stock
(based on the total number of shares of Common Stock owned by the Accepting
Shareholder(s) and the Disposing Shareholder in relation to the total number
of shares of Common Stock to be sold) on the same terms as contained in the
Offer Notice. Upon delivery of the notice referred to above, each Accepting
Shareholder shall be obligated to sell their pro rata share of their shares
of Common Stock to the purchaser specified in the Offer Notice. The co-sale
rights set forth in this Section 4.2 shall terminate on the earlier of (i)
when the Estis Shareholders have sold or are deemed as set forth herein to
have sold one-half of the Estis Stock, (ii) December 31, 2001 or (iii) upon
Estis or any Member of the Shareholder Group taking any actions inconsistent
with or which would be in violation of Section 1.5 hereof whether or not the
Standstill Period is then in effect.
5. AGREEMENT TO NOMINATE. The Company agrees to nominate Estis (or if
Estis elects not to run, Gregory) and Smith as directors for the 1999 annual
meeting of the Company's shareholders and to solicit proxies for the election
of such persons.
6. CONFIDENTIALITY. To the maximum extent permitted by law and
subject to the Company's obligations as a reporting company under the
Exchange Act and as a company listed on the American Stock Exchange and as
required by law including filings required under the Exchange to be made with
the Securities and Exchange Commission, the Parties agree to keep
confidential the terms of this Agreement and the matters raised in the
November 10 Letter and the Lawsuit. In accordance with the Parties' agreement
to seal the petition in the Lawsuit, the Parties each agree not to provide
copies of such petition to persons or to discuss the contents of such
petition with any person.
7. REPRESENTATIONS AND WARRANTIES.
7.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Each of Company and
the Operating Sub hereby represents and warrants to the Members as follows:
(a) The Company and the Operating Sub are corporations duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions of incorporation and have taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
each of the Company and the Operating Sub and constitutes the legal, valid
and binding obligation of each of the Company and the Operating Sub,
enforceable against each of them in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws
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affecting enforcement of creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(c) The execution and delivery of this Agreement by the Company and the
Operating Sub do not, and the performance by the Company and the Operating
Sub of their obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or breach
of, constitute (with or without notice or lapse of time or both) a default
under, result in or give to any person any right of termination,
cancellation, modification or acceleration of, or result in the creation or
imposition of any lien upon any of the assets or properties of the Company
and the Operating Sub under, any of the terms, conditions or provisions of
(A) the certificates or articles of incorporation or bylaws of the Company or
the Operating Sub or (B) (x) any law or order of any Governmental or
regulatory authority applicable to the Company or the Operating Sub or any of
their respective assets or properties, or (y) any contract to which the
Company or the Operating Sub is a party or by which the Company or the
Operating Sub or any of their respective assets or properties is bound,
excluding from the foregoing clauses (x) and (y) conflicts, violations,
breaches, defaults, terminations, modifications, accelerations and creations
and impositions of liens which, individually or in the aggregate, could not
be reasonably expected to have a material adverse effect on the ability of
the Company and the Operating Sub to consummate the transactions contemplated
by this Agreement.
7.2 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER GROUP. Each
Member of the Shareholder Group represents and warrants to the Company and
the Operating Sub that:
(a) Such Member of the Shareholder Group has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all action necessary to authorize the
execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, validly executed and
delivered by such Member and constitutes the legal, valid and binding
obligation of such Member, enforceable against such Member in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting enforcement of creditors'
rights generally and by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by such Member does
not, and the performance by such Member of his obligations hereunder will
not, require any filing by such Member with, or any permit, authorization,
consent or approval of, any
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governmental or regulatory authority or any third party other than an
amendment to Schedule 13D and Form 4 and/or Form 5. There is no beneficiary
or holder of a voting trust certificate or other interest of any trust of
which such Member is a trustee whose consent is required for the execution
and delivery of this Agreement or the consummation by such Member of the
transactions contemplated hereby.
(d) Such Member is not aware of any insider or preferential
transactions between the Company and any other members of the board of
directors of the Company that are not on arms length terms or otherwise fair
to the Company.
7.3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY GROUP. Each member
of the Company Group represents and warrants to the Members of the
Shareholder Group that:
(a) Such member of the Company Group has all requisite power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all action necessary to authorize the
execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, validly executed and
delivered by such member of the Company Group and constitutes the legal,
valid and binding obligation of such member, enforceable against such member
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting enforcement of
creditors' rights generally and by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).
(c) The execution and delivery of this Agreement by such member of the
Company Group does not, and the performance by such member of his obligations
hereunder will not, require any filing by such member with, or any permit,
authorization, consent or approval of, any governmental or regulatory
authority or any third party other than an amendment to Schedule 13D and Form
4 and/or Form 5. There is no beneficiary or holder of a voting trust
certificate or other interest of any trust of which such member is a trustee
whose consent is required for the execution and delivery of this Agreement or
the consummation by such member of the transactions contemplated hereby.
8. MISCELLANEOUS.
8.1 NOTICES. All notices, requests or instruction hereunder shall be
in writing and delivered personally or sent by registered or certified mail,
postage prepaid or by telecopy (or like transmission), as follows:
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(1) if to the Company:
OEC Compression Corporation
2501 Cedar Springs Road, Suite 600
Dallas, TX 75201
Attention: President
Fax: (214) 953-9584
with a copy to:
Kyle Longhofer, Esq.
Schlanger, Mills, Mayer & Grossberg, LLP
5847 San Felipe, Suite 1700
Houston, TX 75201
Fax: (713) 785-2091
(2) if to any other Party at its or his address set forth in
the records of the Company and in case the case of the
Shareholder Group or any Member of the Shareholder Group
with a copy to:
Eddy J. Rogers
Mayor, Day, Caldwell & Keeton, LLP
700 Louisiana, Suit 1900
Houston, TX 75201
Fax: (713) 225-7047
Any of the above addresses may be changed at any time by notice given as
provided above; provided, however, that any such notice of change of address
shall be effective only upon receipt. All notices and other communications
given to any party hereto in accordance with the provisions hereof shall be
deemed to have been given on the date of receipt, provided that any notice or
other communication that is received other than during regular business hours
of the recipient shall be deemed to have been given at the opening of
business on the next business day of the recipient.
8.2 ENTIRE AGREEMENT. This Agreement together with the Merger
Agreement, the Asset Purchase Agreement, and the agreements and documents
executed in connection with the consummation of the Purchase Transaction
contain the entire agreement between the parties hereto with respect to the
transactions contemplated hereby and supersede and amend all prior
understandings, arrangements and agreements with respect to the subject
matter hereof. No modification hereof shall be effective unless in writing
and signed by the Party against whom it is sought to be enforced. The
Parties may, by written agreement, make any modification or amendment of
this Agreement, but no such modification or amendment will be effective
unless signed by all of the Parties. The captions appearing herein are for
the convenience of the parties only and shall not be construed to affect the
meaning of the provisions of
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this Agreement. Except as specifically set forth herein, nothing in this
Agreement is intended to release, amend or modify any of the rights of the
Parties under the Merger Agreement or Asset Purchase Agreement or the
documents executed in connection with the consummation of the Purchase
Transactions.
8.3 BEST EFFORTS. Each of the Parties shall use such party's
reasonable best efforts to take such actions as may be necessary or
reasonably requested by the other Parties hereto to carry out and consummate
the transactions contemplated by this Agreement. No Party to this Agreement
shall directly or indirectly (i) challenge the validity or enforceability of
any provision of this Agreement or the matters contemplated hereby or (ii)
commence any lawsuit or other legal proceeding, or take any other action,
that seeks to frustrate the performance of this Agreement in accordance with
its terms.
8.4 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas applicable in the case of
agreements made and to be performed entirely within such State.
8.5 INJUNCTIVE RELIEF. Each of the Parties recognizes that any breach
of the terms of this Agreement may give rise to irreparable harm for which
money damages would not be an adequate remedy, and accordingly agree that, in
addition to other remedies, any nonbreaching Party shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce the terms and provisions of this Agreement by a
decree of specific performance in any action instituted in any court of the
United States or any state hereof having jurisdiction without the necessity
of proving the inadequacy as a remedy of money damages.
8.6 BINDING EFFECT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs, legal representatives and permitted assigns,
but neither this Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any of the Parties without the prior written
consent of the other parties and any such attempted assignment without
consent shall be void.
8.7 THIRD PARTY BENEFICIARIES. This Agreement is not intended, and
shall not be construed, to confer any rights or remedies hereunder upon any
party other than the Parties.
8.8 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement, or any such terms
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in any other jurisdiction. If any provision of this Agreement is so broad as
to be unenforceable, such provision shall be interpreted to be only so broad
as is enforceable.
8.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
8.10 EXPENSES. Except as provided in Section 1.6 herein, the
Shareholder Group shall bear their own expense with respect to the
transactions contemplated by this Agreement. The expenses of the Company
Group in the preparation of this Agreement shall be born by the Company.
8.11 TAXES. Notwithstanding any provision of this Agreement to the
contrary, the Company may withhold or deduct any taxes or amounts required by
applicable law to be deducted or withheld from any payments required to be
made under this Agreement as to the amounts being paid to Estis and Payne
under Sections 2.2 or 3.1 of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first above written.
OEC COMPRESSION CORPORATION
BY: /s/ Matthew S. Ramsey
-----------------------------------
NAME: Matthew S. Ramsey
-----------------------------------
TITLE: President & Chief Executive Officer
-----------------------------------
OUACHITA ENERGY CORPORATION
BY: /s/ Matthew S. Ramsey
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NAME: Matthew S. Ramsey
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TITLE: Chief Executive Officer
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COMPANY GROUP
/s/ Ray C. Davis
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RAY C. DAVIS
/s/ Kelcy L. Warren
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KELCY L. WARREN
/s/ Matthew S. Ramsey
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MATTHEW S. RAMSEY
/s/ Jack D. Brannon
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JACK D. BRANNON
-22-
<PAGE>
/s/ Richard D. Brannon
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RICHARD D. BRANNON
/s/ James D. Finley
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JAMES D. FINLEY
/s/ Neal A. Hawthorn
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NEAL A. HAWTHORN
/s/ Jon P. Stephenson
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JON P. STEPHENSON
HACL
HACL, LTD.
by Six-Da Waco, Inc., general partner
BY: /s/ Ray C. Davis
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NAME: Ray C. Davis
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TITLE: President
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ENERGY INVESTORS
ENERGY INVESTORS
BY: /s/ Ray C. Davis
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NAME: Ray C. Davis
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TITLE: President of Six-Da Waco, Inc., General Partner of
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HACL, Ltd., Managing Joint Venture Partner
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SHAREHOLDER GROUP
/s/ Dennis W. Estis
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DENNIS W. ESTIS
/s/ Andy Payne
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ANDY PAYNE
/s/ Don Smith
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DON SMITH
/s/ Robert Gregory
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ROBERT GREGORY
-23-
<PAGE>
Contact: Jack D. Brannon
Senior Vice President
(214) 953-9560
For Immediate Release
December 18, 1998
OEC COMPRESSION CORPORATION ANNOUNCES MANAGEMENT CHANGES
Dallas, Texas...OEC Compression Corporation (AMEX-OOC) today announced
that James W. Bryant has been appointed to the board of directors and joined
the company as its chief operating officer. Mr. Bryant brings 40 years of
management and engineering experience in the natural gas industry to the
company. Mr. Bryant is presently President of Cardinal Resources, Inc., an
engineering and management consulting company. Prior to Cardinal Resources,
Mr. Bryant was founder and Chief Executive Officer of Endevco, Inc.,
predecessor to Cornerstone Natural Gas, Inc. Mr. Bryant has a B.S. in
Chemical Engineering from Louisiana Tech University and is a Registered
Professional Engineer in Texas and Louisiana.
Matthew S. Ramsey, OEC's president and chief executive officer, stated,
"We are very fortunate to have a man of Jim Bryant's talent and expertise
join OEC. Jim has tremendous experience in all facets of the industry and
will be a key component in the future growth of our company."
Additionally, Dennis W. Estis, OEC's current chief operating officer has
announced that he will leave the company by the end of the year to pursue
personal interests. Mr. Estis will remain a member of the board of
directors. Mr. Estis stated, " As a significant shareholder of OEC, I am
confident in Jim Bryant's abilities to take over the day to day operations."
In other news, Andy Payne announced that he is resigning as Senior Vice
President of OEC's wholly owned subsidiary, Ouachita Energy Corporation and
from the board of directors of OEC.
OEC Compression Corporation is a Dallas-based provider of the full range
of gas compression services to the natural gas industry. OEC Compression
Corporation's common stock now trades on AMEX under the symbol "OOC".
Statements about the Company's outlook and all other statements in this
release other than historical facts are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of uncertainties and factors, many of
which are outside
<PAGE>
OEC's control, that could cause actual results to differ materially from such
statements. While the Company believes that the assumptions concerning
future events are reasonable, it cautions that there are inherent
difficulties in predicting certain important factors, especially the timing
and magnitude of technological advances; the performance of recently acquired
businesses; the prospects for future acquisitions; the possibility that a
current customer could be acquired or otherwise affected by a future event
that would diminish their business requirements; the competition within this
industry and the impact of such competition on pricing, revenues and margins;
the degree to which business entities continue to purchase and/or need goods
and/or services provided by OEC; uncertainties surrounding budget reductions
or changes in funding priorities or existing business programs; and the cost
of attracting and retaining highly skilled personnel. These factors, when
applicable, are discussed in the Company's filings with the Securities and
Exchange Commission, copies of which may be obtained through the Company
without charge. OEC disclaims any intention or obligation to revise any
forward-looking statements whether as a result of new information, future
event, or otherwise.
##
